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70% Youth Unaware of Govt’s Skill Development Programmes: WEF

Seventy percent of youth are unaware of government-run skill development programmes in their area, yet more than seventy percent are very interested...

12 Nov 2018 Employment
Support and Outreach Initiative for MSME Sector

The Prime Minister, launched support and outreach programme for the Micro, Small and Medium Enterprises (MSME) sector. The programme includes 12...

03 Nov 2018 Employment
Arrest The Exodus In Gujarat

(The editorial is based on the article “Arrest the exodus in Gujarat” which appeared in The Hindu on 10th October 2018. It analyses the...

24 Oct 2018 Employment
6 Ways To Turn Around India’s Jobs Problem

(The editorial is based on the article “6 Ways to turn around India’s jobs problem” which appeared in Livemint on 11th October...

11 Oct 2018 Employment
'Future of Work in India' Report by WEF

Recently the "Future of Work in India" Report has been published by World Economic Forum in collaboration with the Observer Research Foundation (ORF)...

06 Oct 2018 Employment
'Future of Jobs' Report by WEF

The World Economic Forum (WEF) in its report 'Future of Jobs' found that machines are increasingly replacing jobs done by people. It projected that...

18 Sep 2018 Employment
Standardising Skill Training, Imparting Digital Literacy

To ensure standardisation of training and learning across all programmes, the Directorate General of Training (DGT) has aligned its courses with...

06 Sep 2018 Employment
ILO’s India Wage Report

According to the recently released report by International Labour Organisation, India needs to improve its wage policies to promote inclusive growth...

21 Aug 2018 Employment
Formalization of the Economy is a Form of Coercion

Here we will analyze the importance of the informal sector in an economy and what should be the motives and methods of formalization. The growth...

10 Jul 2018 Employment

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		'article_id' => (int) 856,
		'category_id' => (int) 21,
		'title' => '70% Youth Unaware of Govt’s Skill Development Programmes: WEF',
		'description' => '<p>Seventy percent of youth are unaware of government-run skill development programmes in their area, yet more than seventy percent are very interested in pursuing skills training, according to a &ldquo;Young India and Work&rdquo; study by the Observer Research Foundation and World Economic Forum.</p>
<ul style="list-style-type: square;">
<li>The findings, released recently, sheds light on a disconnect between youth sentiments and government&rsquo;s skill development programme.</li>
<li>The study surveyed a random sample of almost 6,000 youth between 15 and 30 about employment and aspirations.</li>
</ul>
<h3>Context</h3>
<ul style="list-style-type: square;">
<li>About 1.3 million people enter the working age population in India every month.</li>
<li>The half of the country&rsquo;s population of 1.3 billion is below the age of 25, there is a demographic advantage to be <g class="gr_ gr_67 gr-alert gr_spell gr_inline_cards gr_run_anim ContextualSpelling multiReplace" id="67" data-gr-id="67">realised</g>.</li>
<li>While it is clear that this will be <g class="gr_ gr_63 gr-alert gr_spell gr_inline_cards gr_run_anim ContextualSpelling multiReplace" id="63" data-gr-id="63">realised</g> in the context of technological disruption (emergence of Artificial Intelligence, Machine learning, Big data, etc.) and in the wake of dramatic changes in the economy and <g class="gr_ gr_64 gr-alert gr_spell gr_inline_cards gr_run_anim ContextualSpelling multiReplace" id="64" data-gr-id="64">labour</g> market, managing these transformations and truly leveraging the possibilities they present, will require an understanding of the expectations and aspirations of India&rsquo;s youth.</li>
</ul>
<h3>Findings of the Report</h3>
<ul style="list-style-type: square;">
<li><strong>Higher education degrees are highly valued, but youth also want new skills:</strong> 96 percent of respondents hope to achieve a bachelor&rsquo;s degree or higher. 76 percent of respondents reported being very interested in pursuing skills development training.</li>
<li><strong>Factors considered while looking for a job:</strong> Good salaries, ample opportunities for promotion and career development, and job security.</li>
<li><strong>While youth prefer public sector jobs, there is discernible interest in entrepreneurship:</strong> 49 percent of youth prefer a job in the public sector. On the other hand, 38 percent of youth selected self-employment as an entrepreneur as their ideal type of job.</li>
<li><strong>The IT Industry is the largest employer of youth:</strong> 17 percent of employed respondents in this survey report working in information technology, communications and telecommunications making the IT industry the largest employer of surveyed youth.</li>
<li><strong>More than a third of surveyed youth are neither employed nor in education:</strong> 34 percent of all surveyed youth are neither <g class="gr_ gr_69 gr-alert gr_gramm gr_inline_cards gr_run_anim Punctuation only-del replaceWithoutSep" id="69" data-gr-id="69">employed,</g> nor in education.
<ul style="list-style-type: circle;">
<li>The majority of respondents in the 15-20 age bracket are in education.</li>
<li>However, over 30 percent of 21 to 25-year-olds reported being neither employed nor in education. Fifty percent of female respondents in the 26-30 age bracket reported being neither employed nor in education.</li>
</ul>
</li>
<li><strong>Women prefer full-time careers, have less paid work experience, and feel less prepared:</strong> 82 percent of female youth prefer full-time employment as their ideal time commitment for work.
<ul style="list-style-type: circle;">
<li>The survey also reveals that men have more paid work experience than women, with 28 percent of male respondents between the ages of 26-30 years having four or more years of paid work experience compared to 18 percent of female respondents.</li>
<li>Overall, men also report feeling more prepared for their ideal job than women.</li>
</ul>
</li>
<li><strong>Areas of Disconnect between policies and aspirations of youth:&nbsp;</strong>Seventy percent of youth are unaware of government-run skill development programmes in their area. The low training participation &mdash; roughly three-fourths of the youth have never enrolled in a skills development programme &mdash; was mostly due to<strong> financial barriers, time constraints and the delay between skills training and finding an appropriate job.</strong>
<ul style="list-style-type: circle;">
<li>Youth were willing to move for work, but companies emphasized recruiting locally.</li>
<li><strong>Job searches have gone digital but employers and recruiters have not:</strong> 81 percent of respondents report relying on media and internet sources for information and updates on available employment opportunities. On the other hand, a mere&nbsp;14 percent of companies are using online sources for recruitment.</li>
</ul>
</li>
<li><strong>Information asymmetry, lack of guidance and work experience are impeding Indian youth from meeting their career aspirations:</strong> 51 percent of youth report that the<strong> lack of guidance</strong> in identifying jobs that match their skill sets is the main barrier they face when looking for a desirable job.
<ul style="list-style-type: circle;">
<li>41 percent of youth view their <strong>lack of work experience</strong> as the main barrier.</li>
<li>Further, 49 percent of youth feel that <strong>interaction with industry professionals is the most valuable form of guidance</strong>. This is closely followed by interaction with professional career counselors.</li>
<li>81 percent of youth view internships or apprenticeships as important for getting hired.</li>
</ul>
</li>
</ul>
<h3>Way Forward</h3>
<ul style="list-style-type: square;">
<li>The key findings of the survey point to a high level of optimism and ambition among Indian youth with regard to their future.</li>
<li>India has the opportunity to build a productive and inclusive future of work in the wake of technological disruption.</li>
<li>However, meaningful strategies for managing these transformations cannot evolve in isolation; the expectations and aspirations of young India must be built into solutions for them to be successful.</li>
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		'article_id' => (int) 814,
		'category_id' => (int) 21,
		'title' => 'Support and Outreach Initiative for MSME Sector',
		'description' => '<p>The Prime Minister, launched support and outreach programme for the Micro, Small and Medium Enterprises (MSME) sector.</p>
<ul style="list-style-type: square;">
<li>The programme includes <strong>12 key initiatives</strong> which will help the growth, expansion and facilitation of MSMEs across the country.</li>
<li>There are <strong>five key aspects</strong> for facilitating the MSME sector, viz. <strong>access to credit, access to market, technology upgradation, ease of doing business, and a sense of security for employees</strong>. The 12 initiatives will address each of these five categories.</li>
<li>The announcement comes when the Government is already working on <strong>steps to improve liquidity</strong> in the financial markets to provide <strong>relief to the Non Banking Financial Companies (NBFCs)</strong>, which have a high exposure to the MSME sector. After banks, NBFCs are major lenders to the MSMEs.</li>
<li>
<p>MSME entrepreneurs are facing several problems i.e. Poor infrastructure, Access to modern technology, Access to markets, Getting statutory clearances related to power, environment, labour etc.</p>
</li>
</ul>
<h3>Access to Credit</h3>
<p>1. Launch of the <strong>59 minute loan portal</strong> to enable easy access to credit for MSMEs.</p>
<ul style="list-style-type: circle;">
<li>The loans <strong>upto Rs. 1 crore</strong> can be granted in-principle approval through this portal, in just 59 minutes.</li>
<li>The link to this portal will be available through the GST portal.</li>
</ul>
<p>2. A <strong>2% interest subvention</strong> for all GST registered MSMEs, on fresh or incremental loans.</p>
<ul style="list-style-type: circle;">
<li><strong>Increase in interest rebate</strong> from 3% to 5% for exporters who receive loans in the pre-shipment and post-shipment period.</li>
</ul>
<p>3. All companies with a <strong>turnover more than Rs. 500 crore</strong>, must now <strong>compulsorily</strong> be brought on the <strong>Trade Receivables e-Discounting System (TReDS).</strong></p>
<ul style="list-style-type: circle;">
<li>Joining this portal will enable entrepreneurs to access credit from banks, based on their upcoming receivables.</li>
<li>This will resolve their problems of cash cycle.</li>
<li>Trade Receivables Discounting System (TReDS) is the institutional mechanism for facilitating the <strong>financing of trade receivables of MSMEs from corporate and other buyers</strong>, including Government Departments and Public Sector Undertakings (PSUs), through multiple financiers.&nbsp;It has been set up under the <strong>regulatory framework set up by RBI under Payment and Settlement Systems Act 2007.</strong></li>
</ul>
<h3>Access to Markets</h3>
<p>4. Public sector companies have now been asked to <strong>compulsorily procure 25%</strong>, instead of 20% of their total purchases, from MSMEs.</p>
<p>5. Out of the 25% procurement mandated from MSMEs,<strong> 3%</strong>&nbsp;must now be reserved for<strong> women entrepreneurs.</strong></p>
<p>6. All public sector undertakings of the Union Government must now compulsorily be a part of<strong>&nbsp;Government e-Marketplace (GeM)</strong>. They should also get all their vendors registered on GeM.</p>
<div class="border-bg">
<p><strong>Government e-Marketplace (GeM)</strong></p>
<ul style="list-style-type: square;">
<li>GeM is an Online Market platform to facilitate procurement of goods and services by the government ministries, departments, public sector undertakings (PSU) etc.</li>
<li>It has been envisaged as <strong>National Procurement Portal</strong> of India.</li>
<li>It has been developed by Directorate General of Supplies and Disposals (Ministry of Commerce and Industry) with technical support of National e-governance Division (Ministry of Electronic and Information Technology).</li>
<li>It functions under Directorate General of Supplies and Disposals (DGS&amp;D), <strong>Ministry of Commerce and Industry</strong>.</li>
<li>GeM is a completely<strong> paperless, cashless</strong> and system driven e-market place that enables procurement of common use goods and services with minimal human interface.</li>
</ul>
</div>
<h3>Technology Upgradation</h3>
<p>7. 20 hubs, and 100 spokes in the form of tool rooms will be established across the country to <strong>facilitate product design.</strong></p>
<ul style="list-style-type: circle;">
<li>A toolroom is a room where tools are stored or, in a factory, a space where tools are made and repaired for use throughout the rest of the factory.</li>
</ul>
<h3>Ease of Doing Business</h3>
<p>8.&nbsp;<strong>Clusters of pharma MSMEs</strong> will be formed and 70% cost of establishing these clusters will be borne by the Union Government.</p>
<p>9. In order to <strong>simplify the government procedures</strong>, the return under 8 labour laws and 10 Union regulations must now be filed only once a year.</p>
<p>10. The establishments to be visited by an Inspector will be decided through a <strong>computerised random allotment.</strong></p>
<p>11. Environmental Clearance under air pollution and water pollution laws, have been <strong>merged into one</strong>. Also, the return will be accepted through self-certification.</p>
<p>12. For minor violations under the Companies Act, the entrepreneur will no longer have to approach the Courts, but can correct them through simple procedures.</p>
<h3>Importance of Micro, Small and Medium Enterprises (MSME) sector</h3>
<ul style="list-style-type: square;">
<li><strong>Backbone of Indian economy</strong>: The importance of MSMEs is attributable to their calibre for (a) employment generation (b) low capital and technology requirement (c) promotion of industrial development in rural areas (d) use of traditional or inherited skill (e) use of local resources (f) mobilization of resources and exportability of products.</li>
<li><strong>Contribution to growth parameters</strong>: The sector contributes around 38% to the country&rsquo;s gross domestic product (GDP), 40% to overall exports and 45% to overall manufacturing output.</li>
<li><strong>Contribution to job creation</strong>: The MSME sector generates around 100 million jobs through over 46 million units situated throughout the geographical expanse of the country. MSME sector is the second largest employment providing sector in India after agriculture.</li>
<li><strong>Diversity:</strong> The MSME sector in India is quite diverse in terms of its size, level of technology employed, range of products and services provided and target markets.</li>
</ul>
<h3>Other Recent Initiatives to Promote MSME Sector</h3>
<ul style="list-style-type: square;">
<li><strong>Udyog Aadhaar Memorandum (UAM)</strong>: It is a simple one-page registration form to promote ease of doing business for MSMEs in India.</li>
<li>A Scheme for Promoting Innovation, Rural Industry and Entrepreneurship <strong>(ASPIRE)</strong>: The scheme promotes innovation &amp; rural entrepreneurship through rural Livelihood Business Incubator (LBI), Technology Business Incubator (TBI) and Fund of Funds for start up creation in the agro-based industry.</li>
<li><strong>Credit Guarantee Fund Scheme</strong>: To facilitate easy flow of credit, guarantee cover is provided for collateral free credit extended to MSMEs.</li>
<li>Prime Minister&rsquo;s Employment Generation Programme <strong>(PMEGP)</strong>: is a credit linked subsidy scheme, for setting up of new micro-enterprises and to generate employment opportunities in rural as well as urban areas of the country.</li>
<li>Scheme of Fund for Regeneration of Traditional Industries <strong>(SFURTI)</strong>: The scheme aims to make <strong>traditional industries</strong> more productive and competitive by organizing the traditional industries and artisans <strong>into clusters</strong>.</li>
<li><strong>Credit Linked Capital Subsidy Scheme (CLCSS)</strong> for Technology Upgradation: CLCSS aims at facilitating technology upgradation of Micro and Small Enterprises (MSEs) by providing <strong>15% capital subsidy</strong> for purchase of plant &amp; machinery.</li>
</ul>',
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		'article_id' => (int) 769,
		'category_id' => (int) 22,
		'title' => 'Arrest The Exodus In Gujarat',
		'description' => '<div class="border">
<p><strong>(The editorial is based on the article &ldquo;Arrest the exodus in Gujarat&rdquo; which appeared in The Hindu on 10th October 2018. It analyses the problem of migrants in India.)</strong></p>
</div>
<p>Migrant workers are indispensable to the Indian economy. Migrants play a vital role in greasing the wheels of growth in states, including states like Gujarat, by providing cheap <g class="gr_ gr_158 gr-alert gr_spell gr_inline_cards gr_run_anim ContextualSpelling multiReplace" id="158" data-gr-id="158">labour</g> in the many small and medium enterprises in the manufacturing and construction sectors. The mobility of <g class="gr_ gr_159 gr-alert gr_spell gr_inline_cards gr_run_anim ContextualSpelling multiReplace" id="159" data-gr-id="159">labour</g> pushes the economy forward.<strong> Economic Survey (2016-17)</strong> covers a whole chapter on migration. According to it, annually inter-state labor mobility averaged 5-6 million people between 2001 and 2011, yielding an inter-state migrant population of about 60 million and an inter-district migration as high as 80 million.</p>
<p>Recently thousands of migrants fled north Gujarat&rsquo;s industrial areas following violence triggered by the rape of a 14-year-old in Sabarkantha district by one such migrant worker. Many industries got affected, such as auto-ancillaries, pharma, ceramics, cotton ginning, fertilizers and chemicals, and construction, in regions around Sanand, Sabarkantha, Patan, and Aravali. No industrial economy, more so Gujarat which depends heavily on migrant workers, can thrive in an atmosphere of fear and insecurity. The situation has now cooled off a bit after State government interference in &ldquo;confidence-building&rdquo; steps.</p>
<h3>Why Do People Migrate?</h3>
<ul style="list-style-type: square;">
<li>The agricultural base of rural areas does not provide employment to all the people living there. Regional development disparity compels people to migrate from rural to urban areas.</li>
<li>Lack of educational facilities, especially those of higher education influences the rural people to migrate to urban centers for this purpose.</li>
<li>Political disturbances and inter-ethnic conflicts drive people away from their homes. For example, a large number of people has migrated out of Jammu and Kashmir and Assam during the last few years due to disturbed conditions there.</li>
<li>Poverty and lack of employment opportunity drive people to move from one place to one another.</li>
<li>People also migrate on a short-term basis in search of better medical facilities, for availing better tertiary health and financial services.</li>
<li>Some of the other push factors such as lack of food, climate change, religious oppression, civil wars lead to internal migration.</li>
<li>Pull factors which include peace and safety, a chance of a better standard of living in general as well as political and religious freedom also encourage people to move from one place to another.</li>
</ul>
<h3>Issues Related With Migrants</h3>
<ul style="list-style-type: square;">
<li><strong>Political Issues</strong>
<ul style="list-style-type: circle;">
<li>Migrants lack political agency vis-a-vis the local government machinery. As the political class ignores migrant workers because they don&rsquo;t count as votes, especially in the case of inter-state migrants.</li>
<li>Due to their mobile nature, they don&rsquo;t find any place in the manifestos of trade unions.</li>
<li>Lack of proper documents makes them vulnerable to harassment by the police and other local authorities.</li>
</ul>
</li>
<li><strong>Socio-cultural issues</strong>
<ul style="list-style-type: circle;">
<li>Lakhs of unskilled and migrant workers live on worksites in makeshift huts (usually made of tin sheets) or on roads, slums and in illegal settlements not served by municipalities.</li>
<li>They are neither able to save much to improve their conditions back in their home States nor save enough to live comfortably in a place where they work.</li>
<li>Cultural differences, language barriers, isolation from the society, lack of accessibility for quality education in mother tongue are some of the other issues faced.</li>
<li>Very few migrants are aware of their entitlements, legal and economic. Similarly, citizens who are in the majority remain apathetic to the plight of victims.</li>
<li>Because of limiting job opportunities migrants are becoming victims of resentment, as people of the state see them as encroachers of present jobs.</li>
</ul>
</li>
<li><strong>Economic issues</strong>
<ul style="list-style-type: circle;">
<li>Seasonal migrants dominate the low-paying, hazardous and informal market jobs which are key sectors in urban destinations, such as construction, hotel, textile, manufacturing, transportation, services, domestic work etc.</li>
<li>They have poor access to health services, which results in very poor occupational health. Since they cannot afford private hospitals, they often go back to their villages once they fall sick. This affects their employment opportunities, as well as the loss of wages.</li>
<li>A large number of migrants find work as unskilled <g class="gr_ gr_146 gr-alert gr_spell gr_inline_cards gr_run_anim ContextualSpelling multiReplace" id="146" data-gr-id="146">labourers</g> since they enter the job market at a very early age, experience no upward mobility and remain stuck in the most unskilled, poorly paid and hazardous jobs for their whole work-life span.</li>
<li>In an unorganized and chaotic <g class="gr_ gr_143 gr-alert gr_spell gr_inline_cards gr_run_anim ContextualSpelling multiReplace" id="143" data-gr-id="143">labour</g> market, migrant workers regularly face conflicts and disputes at worksites.</li>
<li>The common issues they face are non-payment of wages, physical abuse, and accidents.</li>
<li>Many informal sector disputes never make their way to <g class="gr_ gr_150 gr-alert gr_spell gr_inline_cards gr_run_anim ContextualSpelling multiReplace" id="150" data-gr-id="150">labour</g> courts or keep languishing in courts for lack of proof. The existing legal machinery is not sensitive to the nature of legal disputes in the unorganized sector.</li>
</ul>
</li>
</ul>
<h3>Way Forward</h3>
<ul style="list-style-type: square;">
<li>If the migrant workforce in the state is forced to leave, industries will lose their competitiveness as there will be a significant rise in <g class="gr_ gr_134 gr-alert gr_spell gr_inline_cards gr_run_anim ContextualSpelling multiReplace" id="134" data-gr-id="134">labour</g> costs.</li>
<li>The State must follow a more holistic policy of creating incentives for firms leading to greater employment, instead of merely dictating higher recruitment of locals.</li>
<li>Enforcement of <g class="gr_ gr_136 gr-alert gr_spell gr_inline_cards gr_run_anim ContextualSpelling multiReplace" id="136" data-gr-id="136">labour</g> laws and enactment of a comprehensive law should be done at the workplaces, stricter enforcement of existing <g class="gr_ gr_138 gr-alert gr_spell gr_inline_cards gr_run_anim ContextualSpelling multiReplace" id="138" data-gr-id="138">labour</g> laws, including the Interstate Migrant Workmen Act, is essential.</li>
<li>Segmenting the <g class="gr_ gr_137 gr-alert gr_spell gr_inline_cards gr_run_anim ContextualSpelling multiReplace" id="137" data-gr-id="137">labour</g> market and creating a separate <g class="gr_ gr_139 gr-alert gr_spell gr_inline_cards gr_run_anim ContextualSpelling multiReplace" id="139" data-gr-id="139">labour</g> market for migrant workers with <g class="gr_ gr_133 gr-alert gr_gramm gr_inline_cards gr_run_anim Grammar only-ins replaceWithoutSep" id="133" data-gr-id="133">security</g> of tenure should be developed across India.</li>
<li>Identity cards can be issued by governments to make them avail essential basic facilities.</li>
<li>There should be <g class="gr_ gr_130 gr-alert gr_spell gr_inline_cards gr_run_anim ContextualSpelling" id="130" data-gr-id="130">development</g> in small and medium industries such as village and cottage industries, handlooms, handicrafts <g class="gr_ gr_129 gr-alert gr_gramm gr_inline_cards gr_run_anim Punctuation only-ins replaceWithoutSep" id="129" data-gr-id="129">and</g> food processing and agro-industries to reduce rural-urban migration.</li>
<li>The focus should be on ensuring basic entitlements and social security. A major policy focus has to be on ensuring that migrant households have citizenship rights in the destination areas and are able to access basic facilities, benefits of public programmes, and social security schemes meant for poor households.</li>
<li>Special policy focus should be made under the Right to Education (RTE) Act to ensure educational access of migrant <g class="gr_ gr_127 gr-alert gr_spell gr_inline_cards gr_run_anim ContextualSpelling multiReplace" id="127" data-gr-id="127">labourers</g>. Skill development should also be a priority to include them in organized sectors.</li>
<li>Information base and bargaining strength of migrant workers should be improved to protect them from vulnerability.</li>
<li>Panchayats should emerge as the focus of the resource pool for migrant workers residing in their area. They should maintain a register of migrant workers and issue identity cards and passbooks to them.</li>
<li>Making the migrant workers aware of their rights is the first thing to do by authorities.</li>
<li>Diversity and free interaction between various groups make states and the country economically, socially and culturally stronger. According to Dr. B.R. Ambedkar, &ldquo;An ideal society should be mobile, should be full of channels for conveying a change taking place in one part to other parts.&rdquo;</li>
<li>The challenges are still complex and the lack of recognition for migrants is still to be fully addressed. Unless we view migrant workers as a dynamic part of a changing India, we will not be able to solve the problem of migrant workers.</li>
</ul>
<div class="border-bg">
<p><strong>Laws in support of migrant workers</strong></p>
<ul style="list-style-type: square;">
<li>Inter-State Migrant Workmen (Regulation of Employment and Conditions of Service)Act (1979)</li>
<li>Child Labour (Prohibition and Regulation) Act (1986)</li>
<li>Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act (1996)</li>
<li>Unorganized Workers Social Security Act (2008)</li>
<li>Contract Labour (Regulation and Abolition) Act (1970)</li>
</ul>
<p><strong>Constitutional provisions</strong></p>
<ul style="list-style-type: square;">
<li>The Constitution of India guarantees freedom of movement for all citizens. The foundational principles of free migration are enshrined in clauses (d) and (e) of Article 19(1) of the Constitution, which guarantee all citizens the right to move freely throughout the territory of <g class="gr_ gr_141 gr-alert gr_gramm gr_inline_cards gr_run_anim Punctuation only-del replaceWithoutSep" id="141" data-gr-id="141">India,</g> and reside and settle in any part of the territory of India.</li>
<li>Article 15 prohibits discrimination on the basis of place of birth, among other grounds.</li>
<li>While Article 16 guarantees equality of opportunity for all citizens in matters of public employment, and in particular prohibits the denial of access to public employment on the grounds of place of birth or residence.</li>
<li>The Supreme Court&rsquo;s decision in Charu Khurana v. Union of India and Others case clearly renders restrictions based on residence for the purposes of employment unconstitutional.</li>
</ul>
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		'article_id' => (int) 708,
		'category_id' => (int) 22,
		'title' => '6 Ways To Turn Around India’s Jobs Problem',
		'description' => '<div class="border">
<p>(The editorial is based on the article &ldquo;6 Ways to turn around India&rsquo;s jobs problem&rdquo; which appeared in Livemint on 11<sup>th</sup> October 2018. It provides an insight on India&rsquo;s jobless growth.)</p>
</div>
<p><strong>Human capital is now the fastest-growing component of India&rsquo;s wealth,</strong> but to reap the benefits of this &lsquo;demographic dividend&rsquo;, creation of sufficient new jobs is need of hour.</p>
<p>The World Bank, in its publication, <em>&ldquo;South Asia Economic Focus, Spring 2018: Jobless Growth?&rdquo;,</em> says that over the long-term, India has been creating 7,50,000 new jobs for everyone per cent rise in gross domestic product (GDP), at an average of 7% growth, India should be creating at least 5.25 million jobs, if not more.</p>
<p>Centre for Monitoring Indian Economy (CMIE) with the latest survey (May-August 2018) showed a dip of nearly 3.5 million jobs from the previous survey.</p>
<p>It is argued that India&rsquo;s problem is not jobless growth, but lack of potential of the economy to create jobs.</p>
<h3>Inter relation between growth and jobs</h3>
<ul style="list-style-type: square;">
<li>The old link between growth and jobs is now much weaker than before. In the 1990s, the employment elasticity in India was nearly 0.4. Now, this elasticity is down to 0.2 or lower.</li>
</ul>
<div class="border-bg">
<p><strong>Employment Elasticity</strong> is a measure of the percentage change in employment associated with a 1 percentage point change in economic growth. The employment elasticity indicates the ability of an economy to generate employment opportunities for its population as per cent of its growth (development) process.</p>
<p><strong>Centre for Monitoring Indian Economy (CMIE)</strong> is a leading business information company. It was established in 1976, primarily as an independent think tank which conducts the survey to estimate household incomes, pattern of spending and savings; it runs a unique monitoring of new investment projects on hand and it has created the largest integrated database of the Indian economy.</p>
</div>
<ul style="list-style-type: square;">
<li>Falling employment elasticity is partly the result of large-scale substitution of labour with capital and automation.</li>
<li>It is a easy decision for promoters to use capital and automation when labour is heavily regulated in the economy.</li>
<li>Agriculture is no longer supporting half the population, and the fresh pressure on jobs is becoming apparent from rural to urban migration in search of employment.</li>
<li>The demand of traditional landed castes like the Patidars, Gujjars, Jats, Marathas and Kapus for job reservations can be seen as a symptom of the overburdened farm sector seeking an outlet in the urban jobs market.</li>
<li>While technology will surely create some jobs, in the short-term it polarize jobs. (the demand will be for very high skills, or very average skills, with middle-skilled jobs being phased out).</li>
<li>Cyber-security, artificial intelligence (AI) and machine learning experts are in short supply, while jobs at the bottom-end grow rapidly.</li>
<li>&ldquo;Blue collar&rdquo; service jobs are booming in logistics, warehousing, home services, mobility, retailing, etc. Education, tourism and healthcare will also throw up millions of jobs in the years ahead. But jobs disappearing are middle skill ones like plain-vanilla java coders or bank branch staff and telecom back-office workers.</li>
<li>Skilling increases the supply of labour, but jobs emerge only when there is a demand for specific skills.</li>
</ul>
<h3>Solutions</h3>
<ul style="list-style-type: square;">
<li><strong>Improving the labour market information system</strong> where emerging demand for skills are spotted quickly and the necessary training and certifications for the same are created.</li>
<li>Quick <strong>improvements in public-private partnership in capturing demand for skills</strong> and following through with quick investments in skill-building to match demand with supply.</li>
<li><strong>Jobs and skills planning should be decentralized</strong> and it has to be done at state and district levels, where there is granular information on education, skills and job options.</li>
<li>Implementing <strong>a new model of manufacturing which is high-skilled,</strong> and where high-end cottage manufacturing can create employment at the small scale level.</li>
<li>If urbanization is good and well planned, then job growth will be positive. <strong>Government should concentrate on the development of towns</strong> and narrow areas and service it with good infrastructure to generate employment alongside development.</li>
<li>If <strong>government starts spending on public goods</strong> (schools, hospitals, dams, roads etc..) instead of spending on freebies (deep subsidies on food, farm loan waivers etc..) the capacity of government to create employment increases.</li>
</ul>
<h3>Way Forward</h3>
<ul style="list-style-type: square;">
<li>To fix employment problem, right high-frequency data should be gathered and nature of employment problem should be defined.</li>
<li>If policy makers focus on employment, GDP growth will grow along gradually.</li>
<li>Government should concentrate on skill development of human resource, suitable as per the demand of the market.</li>
<li>Millions of jobs will be displaced by artificial intelligence (AI), robotics, and automation in near future, but new jobs can be created if the balance between human workers and machines can be maintained.</li>
</ul>
<p><img class="content-img" src="http://drishtiias.com/images/uploads/354Job and Joblessness.jpg" width="582" height="392" style="display: block; margin-left: auto; margin-right: auto;" /></p>',
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		'article_id' => (int) 687,
		'category_id' => (int) 21,
		'title' => ''Future of Work in India' Report by WEF',
		'description' => '<p><span style="font-weight: 400;">Recently the "Future of Work in India" Report has been published by </span><b>World Economic Forum</b><span style="font-weight: 400;"> in collaboration with the </span><b>Observer Research Foundation (ORF)</b><span style="font-weight: 400;"> according to which </span><span style="font-weight: 400;">the future of work in India is uncertain, but full of opportunities</span><span style="font-weight: 400;">.</span></p>
<ul style="list-style-type: square;">
<li><b>This report highlights the impact of transformative technology in India on job creation, workplaces, employment trends and relations, and the nature of work itself</b><span style="font-weight: 400;">.</span></li>
<li>Further it found that companies in India are optimistic about the future and are open to the possibilities presented by new technologies and digitisation which is likely to stimulate innovation and adoption of new technology and drive transformation, growth and progress.</li>
<li><b>The report has found that companies in India experiencing the highest growth prefer hiring men and that technology led job growth benefits men more than women</b><span> which is a big reason to worry for India's drive towards gender equity and women empowerment.</span></li>
</ul>
<h3>Key Insights</h3>
<ul style="list-style-type: square;">
<li><span style="font-weight: 400;"><strong>Companies anticipate job creation not job loss:</strong> Contrary to widespread concern that machines and technology are displacing human workers, companies are hiring additional workers owing to the adoption of industrial technologies and machinery in the last five years and they expect this trend to continue in the medium term. If managed carefully, technological disruptions in India can in fact lead to the creation of sufficient gainful employment opportunities for the growing working-age population.</span></li>
<li><b>Companies recognise the potential of the Internet of Things (IoT) and big data:</b><span> Companies have reported that aspects of IoT are present in their companies or that they are planning to introduce aspects of it in the next five years. Similarly there is a growing trend of the use of big data.</span></li>
<li><b>Skills gaps and financial constraints are the main barriers to technology adoption:</b><span> Companies reported a lack of know-how among their employees as the most important barrier to technology adoption along with lack of investment capital in newer technologies.</span></li>
<li><b>Retraining and learning on the job to address changing skill requirements:</b><span> Companies plan to address gaps in knowledge and skills internally through retraining existing workers in new capabilities, or having employees learn new requisite skills on the job.</span></li>
<li><b>Companies are hiring, but not women:</b><span> The inclusion of women in the labour market in India is both a social and an economic imperative. </span><b>The IMF estimates that India would be 27 percent richer if there was equal participation of women in the workforce</b><span>. Despite years of high growth in India, women are severely under-represented in the labour market. In fact, India has seen a decline in female labour-force participation in recent decades. Today, it stands at a mere 27 percent. This is one of the lowest in the world, with a global average of 49 percent.</span></li>
<li><b>Contractualisation is increasing:</b><span> The drivers of contractualisation include stringent labour regulations, the </span><b>wage differential between permanent workers and contract workers (which is one and a half times greater for permanent workers on average)</b><span>, increasing import competition, and the lack of bargaining power of contract workers compared to that of the unionised and regular workforce.</span></li>
<li><b>There is a significant need to rethink worker protections, security and benefits: </b><span>The existing provisions of worker protection and benefits like paid annual leave, paid sick leave, both for permanent and contract workers, is grossly insufficient.</span></li>
<li><b>An independent future:</b><span> Independent work is on the rise in many advanced economies across Europe and the United States. Similarly in india, freelancing is becoming increasingly common. For individuals, however, working as a freelance worker has both advantages and disadvantages. Some of the advantages include flexibility in working hours, the ability to work remotely, and the autonomy and control that self-employment enables. On the other hand, work hours can be long and unpredictable, diminished employment rights such as paid sick leave etc.</span></li>
</ul>
<h3>Way Forward</h3>
<ul style="list-style-type: square;">
<li><span style="font-weight: 400;">Economic growth is a necessary but not a sufficient condition for job creation. </span><b>It is estimated that India must create more than 8.4 million jobs a year to maintain its current employment rate</b><span style="font-weight: 400;">. With the current rate of job creation per percentage point of economic growth, the country will need to grow at a rate of more than 10 percent.</span></li>
<li>Creation of decent jobs with better wages, security, protections and safety, are necessary for improving individual and household welfare and well-being.</li>
<li>It is high time to ensure equal opportunities for women, youth and other marginalised communities who were previously unable to participate equally in the paid economy.</li>
<li>India needs to establish an ecosystem better equipped to prepare the workforce for changing skill and educational requirements.</li>
<li>Creation of an inclusive policy environment which balances the need for job creation with the interests of workers is also urgently required.</li>
</ul>
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		'article_id' => (int) 612,
		'category_id' => (int) 21,
		'title' => ''Future of Jobs' Report by WEF',
		'description' => '<p>The World Economic Forum (WEF) in its report 'Future of Jobs' found that machines are increasingly replacing jobs done by people. It projected that more than half of all workplace tasks will be carried out by machines by 2025.</p>
<ul style="list-style-type: square;">
<li>It predicts the loss of some 75 million jobs worldwide by 2022, but also says 133 million new jobs will be created.</li>
<li>According to WEF, despite bringing widespread disruption, the advent of the Fourth Industrial Revolution could actually have a positive impact on human employment.</li>
</ul>
<h3>Key Findings</h3>
<ul style="list-style-type: square;">
<li>Four specific <strong>technological advances</strong>: universal high-speed mobile internet; artificial intelligence; widespread adoption of big data analytics; and cloud technology&mdash;are set to dominate the 2018&ndash;2022 period as drivers positively affecting business growth.</li>
<li>By 2022, large proportions of companies are likely or very likely to have expanded their adoption of technologies such as the internet of things, big data analytics and app and web enabled markets, and to make extensive use of cloud computing.</li>
<li>Companies across all sectors are most likely to <strong>adopt the use of stationary robots</strong>, in contrast to humanoid, aerial or underwater robots, however leaders in the Oil &amp; Gas industry report the same level of demand for stationary and aerial and underwater robots, while employers in the Financial Services industry are most likely to signal the planned adoption of humanoid robots in the period up to 2022.</li>
<li>When determining job location decisions, companies overwhelmingly prioritize the <strong>availability of skilled local talent</strong> as their foremost consideration.&nbsp;A range of additional relevant factors such as the flexibility of local labour laws, industry agglomeration effects or proximity of raw materials were considered of lower importance.</li>
<li>In 2018, humans performed an average of 71% of total task hours across the 12 industries spanning manufacturing, services and high tech. By 2025, that will drop to just 48%. Machines will perform the remaining 52% task.</li>
<li>Among the range of established roles that are set to experience increasing demand in the period up to 2022 are Data Analysts and Scientists, Software and Applications Developers, and Ecommerce and Social Media Specialists, roles that are significantly based on and enhanced by the use of technology.</li>
<li><strong>Roles that leverage distinctively human skills</strong>, such as Customer Service Workers, Sales and Marketing Professionals, Training and Development, People and Culture, and Organizational Development Specialists as well as Innovation Managers, are expected to grow.</li>
<li>There is extensive evidence of <strong>accelerating demand for a variety of wholly new specialist roles</strong> related to understanding and leveraging the latest emerging technologies: <strong>AI and Machine Learning Specialists, Big Data Specialists</strong>, Process Automation Experts, Information Security Analysts, User Experience and Human-Machine Interaction Designers, Robotics Engineers, and Blockchain Specialists.</li>
<li>By 2022, no less than 54% of all employees will require significant re- and upskilling. Proficiency in new technologies is only one part of the 2022 skills equation, however, as&nbsp; human skills such as creativity, originality and initiative, critical thinking, persuasion and negotiation will likewise retain or increase their value.</li>
<li><strong>Emotional intelligence, leadership and social influence</strong> as well as service orientation also see an exceptionally large increase in demand relative to their current prominence.</li>
</ul>
<h3>Suggestions</h3>
<ul style="list-style-type: square;">
<li>The need for a comprehensive <strong>&lsquo;augmentation strategy</strong>&rsquo;, an approach where businesses look to utilize the automation of some job tasks to complement and enhance their human workforces' comparative strengths and ultimately to enable and empower employees to extend to their full potential.</li>
<li>Rather than narrowly focusing on automation-based labour cost savings, an augmentation strategy takes into account the broader horizon of value-creating activities that can be accomplished by human workers, often in complement to technology, when they are freed of the need to perform routinized, repetitive tasks and better able to use their distinctively human talents.</li>
<li>To unlock this positive vision, workers will need to have the appropriate skills enabling them to thrive in the workplace of the future and the ability to continue to retrain throughout their lives.</li>
<li>Crafting a sound lifelong learning system, <strong>investing in human capital</strong> and collaborating with other stakeholders on workforce strategy should thus be key business imperatives, critical to companies&rsquo; medium to long-term growth, as well as an important contribution to society and social stability.</li>
<li>A mindset of <strong>agile learning</strong> will also be needed on the part of workers as they shift from the routines and limits of today&rsquo;s jobs to new, previously unimagined futures.</li>
<li>Finally, <strong>policy-makers, regulators and educators</strong> will need to play a fundamental role in the development of new agile learners in future workforces by bringing improvements in education and training systems, as well as updating labour policy to match the realities of the Fourth Industrial Revolution.</li>
</ul>
<h3>In Context of India</h3>
<ul style="list-style-type: square;">
<li>An overreliance on <strong>automation is expected to shrink job creation&nbsp;</strong>in India. Automation and robotics in industrial manufacturing are better suited for countries with low productive populations. But it does not suit countries like India, where 12&ndash;13 million people enter the job market every year.</li>
<li>There is a <strong>natural fear of job loss</strong> resulting from automation and robotics in India. Repetitive processes are being increasingly automated. Banks in India are already using chatbots and even humanoid robots.&nbsp; For eg. HDFC Bank has the <strong>Ira robot</strong>, which helps customers choose the right service and financial products.</li>
<li>However, loss of jobs can be countered by reskilling, and by creating new opportunities.</li>
<li>Fourth Industrial Revolution&nbsp; also brings <strong>tremendous opportunities</strong> to leapfrog many stages of development, hastening its journey towards becoming a developed economy. In many ways, the Fourth Industrial Revolution can be seen as a leveller. The technologies being used in India will be the same as those in use in the developed world. Robots, AI, IoT are all technologies transforming industry in the West and are ready to do the same in India.</li>
<li>New industry sectors are being created. These have potential to create work for millions. There is already industry associations for producing and promoting the use of drones in India.&nbsp;</li>
<li>India needs a collaborative effort. It will have to create a long term ecosystem that trains and educates professionals. India could collaborate with the US, Germany, and the EU. The central government can consider a joint platform between ministries, state governments and industry bodies to create a mission for making the most of the Fourth Industrial Revolution technologies.</li>
</ul>
<div class="border-bg">
<h3>Fourth Industrial Revolution</h3>
<ul style="list-style-type: square;">
<li>The <strong>first Industrial Revolution</strong> began in Britain in the last quarter of the 18th century with the <strong>mechanisation of the textile industry, harnessing of steam power</strong>, and birth of the modern factory.</li>
<li>The <strong>second revolution</strong> began roughly a century after the first and peaked at the beginning of the 20th century, exemplified in <strong>Henry Ford&rsquo;s</strong> creation of the moving <strong>assembly line that resulted in mass production</strong>. Factories could produce countless numbers of identical products quickly and cheaply.</li>
<li>The <strong>third industrial revolution</strong>, beginning in 1970s, was digital and <strong>applied electronics and information technology</strong> to processes of production.</li>
<li>The <strong>fourth industrial revolution</strong> is conceptualised as an <strong>upgrade on the third revolution</strong> and is marked by a fusion of technologies extending the physical, digital and biological worlds. The speed of change is utterly unprecedented as it is disrupting almost every industry in every country, and it heralds the transformation of entire systems of production, management, and governance.</li>
<li>WEF describes the new revolution as the advent of <strong>cyber-physical systems</strong> which, while being reliant on the technologies and infrastructure of the third industrial revolution, represent entirely new ways in which technology becomes embedded within societies and even our human bodies. Examples, include genome editing, new forms of machine intelligence, and breakthrough approaches to governance that rely on cryptographic methods such as blockchain.</li>
<li>It is <strong>marked by emerging technology breakthroughs</strong> in a number of fields, including<strong> robotics, artificial intelligence, nanotechnology, quantum computing,</strong> biotechnology, the Internet of Things, the Industrial Internet of Things (IIoT), fifth-generation wireless technologies (5G), additive manufacturing/3D printing and fully autonomous vehicles.</li>
</ul>
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		'article_id' => (int) 493,
		'category_id' => (int) 21,
		'title' => 'Standardising Skill Training, Imparting Digital Literacy ',
		'description' => '<p>To ensure standardisation of training and learning across all programmes, the Directorate General of Training (DGT) has aligned its courses with National Skills Qualifications Framework (NSQF), a competency-based framework.</p>
<ul style="list-style-type: square;">
<li>An instruction trainer manual for imparting NSQF aligned training has been launched by Ministry of Skill Development and Entrepreneurship.</li>
<li>Aim: To create a standardised skilled workforce with high degree of horizontal and vertical mobility</li>
<li>A tripartite MoU has also been signed between DGT, National Skill Development Corporation (NSDC) and Adobe India on skill development.</li>
</ul>
<h3>Digital literacy</h3>
<p><strong>Adobe Digital Disha</strong></p>
<ul style="list-style-type: square;">
<li>The collaboration with Adobe will follow the launch of Adobe Digital Disha &mdash; a programme to impart digital literacy to over one million students and teachers across India by the year 2020.</li>
<li>The programme is focused on helping vocational institutes leverage the power of a free online and mobile graphic design app "Adobe Spark" to integrate creativity and digital literacy into classrooms and curriculum.</li>
<li>Adobe Spark is a storytelling Creative Cloud application that runs in any web or mobile browser.</li>
<li>This will enable students to quickly express themselves via graphics, web stories and video to creatively approach their assignments as well as develop digital portfolios. Teachers can easily create digital lesson plans and tutorials using Spark applications.</li>
</ul>
<p><strong>UAV/ Drone Pilots</strong></p>
<ul style="list-style-type: square;">
<li>A new course, &ldquo;Unmanned aerial vehicle/drone pilot&rdquo;, has also been launched to create trained people who can fly drones observing standard guidelines and carry out its maintenance.</li>
</ul>
<div class="border-bg">
<h3>NOTE</h3>
<p><strong>NSQF: The National Skills Qualifications Framework (NSQF)</strong> is a competency-based framework that organizes all qualifications according to a series of levels of knowledge, skills and aptitude.</p>
<ul style="list-style-type: square;">
<li>These levels, graded from one to ten, are defined in terms of learning outcomes which the learner must possess regardless of whether they are obtained through formal, non-formal or informal learning.</li>
<li>The NSQF would also help shift emphasis to outcome based learning - both in the general and vocational space.</li>
<li>NSDC: National Skill Development Corporation (NSDC) is a not-for-profit public limited company incorporated under Companies Act, 1956 .</li>
<li>NSDC was set up by Ministry of Finance as Public Private Partnership (PPP) model. The Government of India through Ministry of Skill Development &amp; Entrepreneurship (MSDE) holds 49% of the share capital of NSDC, while the private sector holds 51% of the share capital.</li>
<li>NSDC aims to promote skill development by catalyzing creation of large, quality and for-profit vocational institutions. NSDC acts as a catalyst in skill development by providing funding to enterprises, companies and organizations that provide skill training. It also develops appropriate models to enhance, support and coordinate private sector initiatives.</li>
</ul>
<p><strong>National Digital Literacy Mission (&lsquo;NDLM&rsquo;)</strong> has been initiated with the vision to empower at least one person per household with crucial digital literacy skills by 2020.</p>
<ul style="list-style-type: square;">
<li>NDLM is an effort to complement government&rsquo;s vision to transform one from each household as digitally literate.</li>
<li>The project aims at helping adults with low technological literacy develop the skills they need to interact in an increasingly digital world.</li>
</ul>
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		'article_id' => (int) 407,
		'category_id' => (int) 21,
		'title' => 'ILO’s India Wage Report',
		'description' => '<p>According to the recently released report by International Labour Organisation, India needs to improve its wage policies to promote inclusive growth even as low pay, gender wage gap <g class="gr_ gr_44 gr-alert gr_gramm gr_inline_cards gr_run_anim Punctuation only-ins replaceWithoutSep" id="44" data-gr-id="44">and</g> informality remain pervasive.</p>
<h3>Key Findings</h3>
<p><strong>Positives</strong></p>
<ul style="list-style-type: square;">
<li>Based on the Employment and Unemployment Survey (EUS) of the National Sample Survey Office (NSSO), the report estimates that <strong>real average daily wages have almost doubled</strong> between 1993&ndash;94 and 2011&ndash;12, increasing more rapidly in rural than in urban areas and increasing more rapidly for casual than for regular workers.</li>
<li><strong>Average wages have increased faster for women</strong> than for men and rose faster in the unorganized sector than in the organized sector.</li>
</ul>
<p><strong>Negatives</strong></p>
<ul style="list-style-type: square;">
<li>Only a limited number of regular/salaried workers, mostly in urban areas, and highly skilled professionals earn substantially higher average wages.</li>
<li>Although overall wage inequality in India seems to have stabilized or even declined somewhat since 2004&ndash;05, <strong>wage inequality remains very high</strong>.</li>
<li>The <strong>gender wage gap also remains very high</strong> by international standards, although it has marginally declined from 1993&ndash;94 to 2011&ndash;12.
<ul style="list-style-type: circle;">
<li>This gender wage gap can be observed among all types of workers: regular and casual, urban and rural.</li>
<li>Of all worker groups, the average daily wages of casual rural female workers is the lowest (INR 104 per day).</li>
</ul>
</li>
<li>Because average <g class="gr_ gr_37 gr-alert gr_spell gr_inline_cards gr_run_anim ContextualSpelling multiReplace" id="37" data-gr-id="37">labour</g> productivity (as measured by GDP per worker) increased more rapidly than real average wages, <strong>India&rsquo;s </strong><g class="gr_ gr_38 gr-alert gr_spell gr_inline_cards gr_run_anim ContextualSpelling multiReplace" id="38" data-gr-id="38">labour</g><strong> share has declined.</strong>
<ul style="list-style-type: circle;">
<li>Labour share refers to the proportion of national income which goes into <g class="gr_ gr_36 gr-alert gr_spell gr_inline_cards gr_run_anim ContextualSpelling multiReplace" id="36" data-gr-id="36">labour</g> compensation, as opposed to capital or landowners.</li>
<li>Wage levels and distribution of wages are, to a large extent, influenced not only by skills and productivity levels but also by the role of <g class="gr_ gr_43 gr-alert gr_spell gr_inline_cards gr_run_anim ContextualSpelling multiReplace" id="43" data-gr-id="43">labour</g> market institutions, particularly minimum wages and collective bargaining.</li>
</ul>
</li>
</ul>
<h3>Recommendations</h3>
<ul style="list-style-type: square;">
<li>In its <g class="gr_ gr_45 gr-alert gr_gramm gr_inline_cards gr_run_anim Punctuation only-ins replaceWithoutSep" id="45" data-gr-id="45">report</g> ILO also recommends other complementary actions to comprehensively address how to achieve decent work and inclusive growth.</li>
<li>These include fostering accumulation of skills to boost <g class="gr_ gr_41 gr-alert gr_spell gr_inline_cards gr_run_anim ContextualSpelling multiReplace gr-progress" id="41" data-gr-id="41">labour</g> productivity and growth for sustainable enterprises, promoting equal pay for work of equal value, formalizing the informal economy and strengthening social protection for workers.</li>
</ul>',
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		'title' => 'Formalization of the Economy is a Form of Coercion',
		'description' => '<p><em>Here we will analyze the importance of the informal sector in an economy and what should be the motives and methods of formalization.</em></p>
<p>The growth curve of Indian economy has been essentially a dichotomous one, with the informal branch occupying more than 80% of the economy despite continued efforts to formalize it, while the other branch dominated by law-abiding big firms, seen as a source of revenue to the state and thus, nurtured and supported. In recent years, there has been increasing focus on a formalization of economy and financialization of savings. However, it is still debatable that how smooth this transition is going to be, given its coercive and compulsive nature.</p>
<table border="1" style="border-collapse: collapse; width: 100%;">
<tbody>
<tr style="height: 10px;">
<td style="width: 100%; text-align: justify; height: 10px;"><strong>Informal Sector:</strong><br />
<ul style="list-style-type: square;">
<li style="text-align: justify;">NSSO defines the informal sector enterprises as all unincorporated proprietary and partnership enterprises.</li>
<li style="text-align: justify;">National Accounts Statistics (NAS) defines the unorganised sector in addition to the unincorporated proprieties or partnership enterprises, includes enterprises run by cooperative societies, trust, private and limited companies. The informal sector can, therefore, be considered as a subset of the unorganised sector.</li>
</ul>
</td>
</tr>
</tbody>
</table>
<h3>The Problems Posed by Informal Economy</h3>
<ul style="list-style-type: square;">
<li><strong>Productivity:</strong> The informal sector basically comprises of MSMEs and household businesses which are not as big as firms like Reliance. They are unable to take advantage of economies of scale.
<table border="1" style="border-collapse: collapse; width: 100%;">
<tbody>
<tr>
<td style="width: 100%; text-align: justify;"><strong>Economy of scale:</strong> When more units of a good or a service can be produced on a larger scale, yet with (on average) fewer input costs, economies of scale are said to be achieved. Alternatively, this means that as a company grows and production units increase, a company will have a better chance to decrease its costs.</td>
</tr>
</tbody>
</table>
</li>
<li><strong>Inability to raise tax revenue:</strong> As the businesses of the informal economy are not directly regulated, they usually avoid one or more taxes by hiding incomes and expenses from the regulatory framework. This poses a challenge for the government as a major chunk of the economy remains out of the tax net.</li>
<li><strong>Lack of control and surveillance:</strong> The informal sector remains unmonitored by the government. Further, no official statistics are available representing the true state of the economy, which makes it difficult for the government to make policies regarding the informal sector in particular and whole economy in general.</li>
<li><strong> Low-quality products and less value-addition per employee:</strong> Although the informal sector employs more than 75% of the Indian population, the value-addition per employee is very low. This means that a major portion of our human resource is under-utilized.</li>
</ul>
<h3>The Problem with Formalization</h3>
<p>Although the informal sector is often blamed for competing unfairly with the formal sector, it needs to be seen as a characteristic of underdevelopment rather than the cause. In this light, we need to take a look at the issues faced by the informal sector.</p>
<ul style="list-style-type: square;">
<li><strong> Red-Tapism:</strong> According to a 2015 study by Centre for Civil society, starting an MSME requires 12 licenses, 27 construction permits and 7 property registration requirements. There are 44 central statutes and over 150 state statutes governing every aspect of the employee-employer relationship. The process of formalization is too burdensome and costly for small enterprises to remain competitive.</li>
<li><strong>GST:</strong> The imposition of Goods and Services Tax has added to the woes of small entrepreneurs. The aforementioned study says that almost 61.7% of the profit goes into taxes which is way beyond what is affordable for MSMEs. The complexity and the cost of adhering to it are very high. The required computational skills, frequent filing and navigating an impossible classification system lead the small businesses to fall into the trap of middlemen and incurs further costs.</li>
<li><strong>Demonetization:</strong> Demonetization proved to be a double-edged sword for the informal sector. One one side it pulled the customers away from the cash-reliant informal sector and on the other hand created a negative <strong>demand-side shock</strong> for the informal sector. It also pushed informal sector workers out of their jobs, the worst affected being the daily-wage earners. According to Economic Survey 2016-17, Demonetization triggered a rush for distressed labour under MGNREGA.</li>
<li>
<table border="1" style="border-collapse: collapse; width: 100%;">
<tbody>
<tr style="height: 51px;">
<td style="width: 100%; height: 65px; text-align: justify;"><strong>Demand Shock:</strong> A demand shock is a sudden surprise event that temporarily increases or decreases demand for goods or services. A positive demand shock increases demand while a negative demand shock decreases demand. Both a positive demand shock and a negative demand shock have an effect on the prices of goods and services.</td>
</tr>
</tbody>
</table>
<strong></strong></li>
<li><strong>Low level of human capital of the entrepreneurs:</strong> The informal sector suffers from the low level of human capital of its entrepreneurs and workers. Most of them are uneducated and unskilled.</li>
<li><strong>Compromising labour rights:</strong> The focus on making the economy competitive via formalization is often met with accusations of compromising with labour rights, discouraging unionization, and favouring the rich at the cost of poor. At the same time, the informal sector often employs workers on a contractual basis and a low-pay and the employer is not bound to not provide the workers with any social security. Outright formalization is therefore not a solution for the workers as well as the employers of the informal sector.</li>
</ul>
<h3>The Solution</h3>
<ul style="list-style-type: square;">
<li><strong>Simpler regulatory framework:</strong> The transition of the informal sector to the formal sector can only occur when the informal sector is given relief from the burden of regulatory compliance and is given enough time to adjust with the modern, digitized formal system.</li>
<li><strong>Skilling the labour:</strong> Unless the labour force is not skilled and educated, they will not be accommodated in the formal sector and the efforts to formalization will result in unemployment.</li>
<li><strong>Social security:</strong> Investing in social security schemes like Atal Pension Yojna, PM Jeevan Jyoti Yojana, Rashtriya Swasthya Bima Yojana, Aam Aadmi Bima Yojana can help improve the condition of workers. The mention of Universal Basic Income in Economic Survey 2016-17 is a positive step in this direction.</li>
<li><strong>Financial support:</strong> Giving financial support to help small-scale industries stand on their own is a crucial step in bringing them to the organized sector. Schemes like MUDRA loans and Start-up India are helping the youth carve a niche in the organized sector.</li>
<li><strong> Policy reforms:</strong> The structural policies designed to promote formality should be implemented with caution, aimed at encouraging formalisation rather than explicitly discouraging informal activity.</li>
<li><strong>Labour law reforms:</strong> The archaic labour laws need to be dealt afresh so that they are more flexible. This should be done along with upkeeping the rights of the labourers and not allowing for their exploitation.</li>
</ul>
<p>It is important to highlight the fact that the <strong>informal sector employs the majority of the uneducated and unskilled labour force</strong> which, otherwise, may not find a place in the formal sector. So, any effort to formalize the informal economy coercively is fraught with serious socio-political ramifications and backlash. Therefore, it is important to ensure that the transition to formal economy is a smooth, encouraging process and not a process of vitiating or punishing the informal sector. The aim of formalization should not be surveillance but rather the growth of individuals and firms of the country.</p>',
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