The debates around work and the welfare architecture in India need to be urgently reframed and translated into practical reform.
The Indian economy is in trouble. The COVID-19 pandemic has exposed and exacerbated the debilitating insecurity that has been a pervasive feature of the Indian labour market for a while now. Even as a small section of the population was able to shift to remote work and learning, for the large majority, sustenance has meant a choice between life and livelihood. The pandemic has also accelerated automation anxiety, giving us an inkling of the kind of disruption that should be expected on a grander scale — from the climate crisis to the gnawing realisation of the growing levels of inequality and concentration of economic power in the country. These are not new concerns, but have been rendered existential issues today, and demand renewed perspective.
There is a moral reconfiguration taking place around the question of work across the world, accompanied by a call for greater social security and a larger role for the State. This essay is an attempt to look at the question of work and social protection in India, and to place these topics within the broader debates around structural transformation, the future of work, informality and State capacity. The debates on automation and the impact of emerging technology on employment have often been conducted as though they have nothing to do with the broader labour market. This essay is an endeavour to engage with the vital linkages and interconnections between these issues.
What has contributed to a situation where most of the country’s workforce is falling through the cracks due to the impact of the pandemic? Critically analysing the prevailing constructs of work, contracts and welfare will help us arrive at an answer, and reimagining them for a changing world of work will show us the way ahead.
The pandemic-induced lockdown hit the Indian economy in a fell swoop, causing the urban unemployment rate to triple in a record three weeks; <1> 67 percent of workers were rendered unemployed, with the urban and self-employed (non-agricultural) workforce hit disproportionately hard. About 80 percent to 90 percent of India’s workforce is part of the ‘unorganised informal sector,’ which is outside the ambit of social security frameworks. <2> Even the salaried class was not spared by the pandemic, with 70 percent of salaried and casual-wage workers either losing work during this period or seeing massive pay cuts. <3>
Gig workers have borne extra responsibility and have been essential workers at the frontline during this pandemic. Illustration: Svetlana Aganina — iStock/GettyIn recent years, India has seen an increasing casualisation of work even in the so-called ‘organised sector’. One of the largest good-quality employers in the economy — the organised manufacturing sector — is now increasingly employing swathes of temporary contract workers who are ready to work at a fraction of the normal wage. <4> The platform economy’s numbers are also rising, with both highly-skilled workers and low-wage earners looking towards platforms for gig work. <5> The platform economy produces a different variant of informality and precarity for workers by leveraging a large pool of flexible workers who are available on-demand without contractual arrangements. Gig workers have borne extra responsibility and have been essential workers at the frontline during this pandemic, ferrying essential supplies to people stuck at home, without any protection gear or financial safety net for themselves. <6>
It is widely recognised that this precariousness is the product of a poorly regulated labour market. However, it is also emblematic of a brewing employment crisis in the Indian economy. India’s growth story has been sharply affected by the pandemic, with the country seeing a 24 percent GDP contraction in the first quarter of 2020. <7> However, growth had been slowing even before the pandemic struck, and for long before that, India had been witnessing a period of “jobless growth.” According to an analysis by the Azim Premji University, a 10 percent GDP increase in India now sees only a 1 percent employment spurt; 2013-15 numbers show job numbers shrinking overall. <8>
Even in 2019, there was talk of an unsustainable rate of open unemployment (at over 6 percent), with even higher rates for the rising young and well-educated workforce, which is not usually seen in low-to-middle income countries. <9> Unable to find well-paying satisfactory employment opportunities, high-skilled workers are increasingly choosing to postpone their entry into the labour market by enrolling in higher education, agitating for government jobs, turning to gig employment or choosing to opt out of the workforce altogether. The labour force participation rate in India is strikingly low — estimated at 49.8 percent in 2017-18. <10> Good work is getting scarcer, and fast.
This crisis is the consequence of several factors. A crucial reason is India’s structural transformation trajectory, which has played out in a rather unexpected way. Instead of labour moving from agriculture to the manufacturing sector, India witnessed de-industrialisation and an expansion of services at the expense of manufacturing employment. A period of jobless growth ensued, with surplus labour creating a construction sector boom. <11> The economy was simply unable to create employment avenues for its demographic dividend to power growth. There was also a neglect of agriculture and a rise in farm distress that compounded the problem and drove urban migration, creating the large body of migrant labour in construction and other low-wage urban contract employment, and also drove people into the crowded rural non-farm sector. <12>
The changing dynamics of work due to emerging technology has also played a role in the current crisis. Emerging technologies had already begun to contribute to a growing polarisation in employment in favour of high-skilled workers. However, automation anxiety has seen a sharp escalation across the world due to the pandemic, which has created new incentives to replace humans with machines that are more productive and immune to infectious disease. Will there still be plenty of jobs to go around? Experts are no longer sure. <13> We have so far relied on the labour market to provide the logic for the distribution of material prosperity and provide meaning and purpose to people. This may no longer be viable. <14>
Digital transformation has also given rise to the platform economy, powered by a flexible, global pool of labour. As incomes and jobs in the traditional labour market decline for a highly-educated workforce, many have turned to low-paid freelance work. <15> However, even as these platforms provide additional opportunities for flexible work to underemployed jobseekers, they also create exploitative work relationships where labour has no bargaining power. There are huge asymmetries of power between the employer and employee, no scope for career progression and volatile work patterns with access to no form of security and social protection. <16> India is now the largest supplier of digital labour in the world. <17> In their seminal book Ghost Work, Siddharth Suri and Mary Gray have written about the invisible and increasingly large labour force that powers the global digital economy. India is the biggest supplier of these ghost workers — on-demand workers who are the force behind the seamless running of artificial intelligence and computing systems across the world, hired through platforms like Amazon Mechanical Turk that procure and anonymise their labour. These workers are independent contractors, working behind computer screens at home, alienated and invisible to employers and regulators alike. <18>
This precariousness does not affect all sections of the population equally. India’s labour market remains an exceptionally segmented one, perpetuating social prejudice and discriminatory attitudes along the faultlines of gender, caste, class and disability, inhibiting social mobility for some more than others.
Disadvantaged in the labour market due to patriarchal norms and structures, women are underrepresented in services and manufacturing, at 16 percent and 22 percent respectively, but over-represented in care work, comprising 60 percent of all domestic workers. <19> Women have also found employment in chronically underpaid but essential work, such as frontline health work as anganwadis and ASHA workers, who, incidentally, have proven themselves indispensable during this pandemic. India’s female labour force participation rate is exceptionally low — 23.3 percent in 2017-18. <20> To add to their woes, women are also in the most precarious forms of employment and, therefore, have found their livelihoods hit first as the pandemic struck. <21> Lower-caste and lower-class women have found themselves in a much worse situation, with even more restricted employment options, such as those in the leather tanning industry. <22> Women are also overwhelmingly low-skilled workers, and are therefore likely to be the first in line to be replaced by automation; up to 12 million Indian women could find themselves displaced due to automation by 2030. <23> Women also remain marginal participants in the platform economy due to lower access to technology and structural constraints. <24>
Caste-based segregation also persists to a high degree in India, restricting work opportunities for a vast segment of the population. Scheduled caste and scheduled tribe groups in India are over-represented in low-wage occupations and ‘traditional’ jobs such as the leather industry, even as they are now well-represented in public posts due to successful reservation policies. Caste segregation also creates inefficiencies in the labour market, dissuading upper-caste workers from applying to certain occupations that are considered the domain of the lower castes. <25> Such low-wage jobs have been particularly vulnerable to the pandemic’s impact, with job losses for lower-castes exceeding those for upper-castes by a factor of three. <26> This discrimination inherent in the labour market has been one reason for attracting many to ghost work — women and marginalised communities have found succour in the anonymity and have been attracted towards the opportunity to have a level playing field. <27>
With its headline “Virus lays bare the frailty of the social contract,” the Financial Times <28> succinctly captured how COVID-19 exposed the world’s threadbare social systems and the precarity of contracts in economies that are, in Martin Sandbu’s terms, not “economies of belonging” <29> but vastly unjust and unequal. The dichotomisation of welfare and growth — treating welfare as a temporary means to keep people afloat while prioritising growth — was never really fit for use but feels especially dated today. It is certainly not fit for a future in which work is likely to be both structurally underpaid and scarce. We require an architecture that can support workers in making the transition to a greener economy and a world of less work. <30> Social security can no longer be a luxury or an avoidable cost, it has to be seen as an investment in building a more equitable, just society. <31>
It is time for India to revisit its old welfare versus growth debate. Social security must complement quality employment and needs to be designed as such. <32><33> With this in mind, the paper proposes a set of recommendations for how India must re-adjust its paradigms of work and welfare.
The pandemic has triggered a fierce debate on “essential workers” around the globe, as countries paralysed by the pandemic discovered some parts of the workforce to be indispensable for societies to function. Crucially, the crisis has also revealed how these ‘essential’ workers pay is at complete odds with the value they create for society and the economy. The market value of work is evidently not in consonance with lived reality, and this is one of the major reasons for the current precariousness that plagues our economies.
For far too long, cognitive ability has been privileged over other forms of work like manual and care work. Illustration: GettyThe neoclassical economic view of labour markets has rested on an assumption of ‘just deserts’ — in a competitive labour market, a worker’s wage is equal to her marginal product (contribution to output). Nancy Folbre’s pathbreaking work has unraveled this assumption, by pointing out that markets are not competitive, they are skewed by monopolies and powerful corporations; by prejudice along the lines of ethnicity, gender, caste, class amongst others; and by collective action, and they’re also not well governed. Additionally, a lot of work is performed outside the market and is a determinant of living standards. Therefore, wages do not really reflect contribution to social output. <34> This necessitates a revaluation of what we believe to be a meritocratic method for the distribution of incomes and wealth. <35>
For instance, good work is fundamentally dependent on good care and yet the burden of care is hosted disproportionately by women for little to no pay. <36> More than 33 percent domestic workers have no form of regulation of work or pay, nor any leave or benefits. <37> The traditional metrics of growth and wellbeing like GDP need to be updated to reflect work that contributes to society, such as unpaid domestic work. In some ways, these metrics take us in a completely counterproductive direction; for example, care work is an area where we deliberately seek lower productivity and growth as we prefer nurses give their full attention to five beds instead of 50 in a day. <38>
Reformed measurement must also be accompanied by a change in norms for it to be effective. For far too long, cognitive ability has been privileged over other forms of work like manual and care work. This has created a meritocracy that denigrates certain forms of expertise, making way for social cleavages and conflict. <39> India remains a society where dehumanising work like manual scavenging still exists, which is illegal, determined by caste-affiliations and unpaid/lowly paid. Laws have proven to be ineffective where norms have remained unchanged. <40>
In a conversation about their new book In Service of the Republic, Vijay Kelkar and Ajay Shah lamented that the reason Indian economic reforms have been unsustainable is because the Indian state did not make efforts to bolster its institutional capacity and think through the role of the State very well, thereby, slipping into a convenient form of paternalism. <41> Deregulation did not have to mean a shrinking role for the state. It should have meant a dynamic and renewed role for the State. This vision required greater public investment and expanded capacity to build robust institutions, however, state capacity remains poor in India and public spending has actually fallen, from 18 percent of GDP in 1990-91 to 12.2 percent in 2019-20. <42>
To create broad-based quality employment for the masses, India must build a vibrant manufacturing sector through robust industrial policy. India still needs to create 16 million new jobs every year to meet our target to reach the ‘Lewis Turning point’ (the point at which surplus rural labour is fully absorbed into the manufacturing sector) in 15 years. <43> The country also requires serious investment in rural and agricultural productivity. Policymakers could go back to the Swaminathan Commission’s recommendations for inspiration in this regard. <44>
India also needs to consider its vast informal economy as a crucial sector that actively contributes to GDP and not as a temporary aberration in pursuit of formality. For far too long, the informal economy has been considered an anomaly that has to be kept afloat through social security measures. Careless and actively debilitating policies like demonetisation and the abrupt imposition of a lockdown in India due to the pandemic have neglected the fact that the informal economy is a particularly precarious and important part of the economy, which contributes to both growth and a majority of livelihoods. <45>
Automation anxiety is a phenomenon as old as the Industrial Revolution, but does the current technological revolution augur a future we have not seen before? Technological revolutions create considerable social turbulence, bringing new wealth to some and dislocation and economic pain to others. <46> They are a recipe for social unrest and populism but historically have also been the source of growing wealth and prosperity for societies in the long-run, as the complementary benefits of new technology outweighed its substituting impact. However, this particular technology revolution is likely to be very different.
Daniel Susskind of the University of Oxford argues, along with several others, that the current technological revolution is likely to create substituting effects that overwhelm the complementary effects. According to Susskind, there is no sensible way to predict how far automation can go, instead we must prepare ourselves for “task encroachment” in every sphere. <47> The State must therefore prepare to play an outsized role in directing the gains of emerging technology in an equitable direction, by creating the conditions for investment and growth, and robust institutions that are able to distribute the benefits of a technology revolution equitably. <48>
The future of work will also require the revival of the capabilities approach to welfare. As demand for high-skilled work increases, investment in the requisite capabilities will be critical to be able to leverage technology gains. Social spending therefore needs to be reimagined as an enabling investment towards generating capabilities rather than just a safety net. <49>
The post-pandemic economy is likely to see an exacerbation of unemployment, swelling the ranks of gig and unorganised workers. Cushioning the impact will require a well-regulated labour market.
India has recently sought to simplify and upgrade its labour regulations in the form of four labour codes. Some provisions are particularly encouraging. For instance, the 2020 Occupational Safety Bill has provided for a social security corpus for unorganised workers. However, a major chunk of recommendations offered by the relevant Standing Committee have not been added to the final versions of the codes. Economists reckon that the reforms appear to have been designed in favour of employers, to the detriment of workers. <50>
According to the new codes, social benefits will continue to be linked to establishment size; this excludes informal workers and those working in small firms from social security coverage. The delivery of benefits will continue to be fragmented, and crucial concerns such as portability and the need for comprehensive registration of workers have not been addressed by the code. <51> Pegging establishment size thresholds has also meant that there is no disincentive to hire contract labour — a major concern in the labour market today. <52> The provision of hiring ‘fixed-term’ employees does not remedy this problem. It offers employers the opportunity to hire temporary workers and those workers are entitled to benefits, but this works out majorly in favour of employers as the power to renew contracts rests with them and there is nothing to prevent employers from hiring fixed-term employees in lieu of permanent employees, which ultimately weakens labour bargaining power. <53> The new Industrial Relations Code has also made strikes and lock-outs harder, rendering labour unions weaker in the process. <54>
About the gig economy, the Code on Social Security has made a beginning, but it has hardly been as far-reaching as had been anticipated. The definitions of “gig” and “platform” workers are ambiguous and overlapping. Additionally, the legislation recommends much and mandates very little. Controversially, the Bill also mandates workers to provide their Aadhaar number to avail of social security benefits, potentially going against Supreme Court guidelines. <55> The code’s provisions fall far short of the standard emerging globally, which is to treat gig workers as employees and not independent contractors, following California’s AB5 in 2019. <56>
The need of the hour today is for policymakers to think ahead and consider the concept of social security as a universal right, decoupled from employment. To do that, governments will also need to think about the related concern of taxing the digital economy effectively to raise funds. <57> Regulating the digital economy will also require multilateral, cross-border negotiation. <58>
Labour unions have a crucial role to play in bolstering workers’ bargaining power in the traditional economy, as also in the digital economy where labour from the Global South is disproportionately subject to exploitation due to the disintermediation and decentralisation of work.
Information asymmetry is significantly higher for platform work, where the employer is invisible and there is virtually no human interaction. Illustration: Bernhard Lang/GettyBuilding solidarity is often hard over platforms, though there have been some encouraging instances observed during this pandemic, with Amazon workers staging walkouts in protest and the Indian Federation of App based Transport Workers successfully organising a quiet and socially-distanced protest demanding adequate personal protective equipment and better pay. <59> Information asymmetry is significantly higher for platform work, where the employer is invisible and there is virtually no human interaction. <60> This is also true for ghost work, where people have tried to find each other by creating online communities because the platform does not allow for any interaction or collaboration. <61> Cooperative platforms built by workers have done the trial of organising and building solidarity, and they have worked considerably well. <62>
Policy must enable and not hurt worker unionisation; India’s new Labour Codes have taken a discouraging stand on the subject, which does not augur well for worker rights in the country.
Building a resilient welfare architecture requires a recognition of the value of social capital and communities. The Legatum Institute’s Prosperity Index ranked India at a very low 101 out of 142 countries in terms of social capital, and rated Indians as the least likely to trust and be altruistic towards strangers. <63> Social capital is an underappreciated but extremely critical aspect of resilience. It is an especially invaluable resource for developing countries, which are plagued by limited State capacity and find their strength in communities and social networks. Subhamoy Chakraborty and Reunka Sane have written on how one in ten households relied on borrowing from shops to survive post-demonetisation stress in India. <64>
Generating social capital will require bridging the trust deficit between citizens and the State, and the rising mistrust between the Centre and states in India. Building trust requires active civil society engagement and the empowerment of local governments. The centralised deployment of technology solutions needs to be buffered by real people interacting with the claimants of social benefits to address real concerns effectively. <65>
Worryingly, the gulf between the Centre and states in India has also widened significantly. The Indian State has squandered social capital during the pandemic, through its high-handed decision-making. Centre-state consultation and negotiation mechanisms have slowly eroded, and the states have been rendered fiscally weakened. It will require considerable effort and an investment in horizontal rather than vertical institutions (like inter-state councils for example) to restore deliberative democracy to India. <66>
The pandemic has provided the impetus for academics and policymakers to take on particularly thorny challenges with renewed vigour and moot ideas that were previously considered too radical to be discussed. This is just as well; the pandemic has accelerated the forces that are transforming work and made the imperative for structural transformation even more urgent than before. The debates around work and the welfare architecture in India need to be urgently reframed and translated into practical reform. India must use the pandemic to switch to a more forward-looking sustainable growth trajectory before it becomes too late to matter.
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<2> Barbara Harriss-White, “The Modi Sarkar’s project for India’s informal economy”, The Wire, May 20, 2020.
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<4> State of Working India Report 2018, Azim Premji University.
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<7> National Statistical Office (NSO), “Press Note On Estimates Of Gross Domestic Product For The First Quarter (April-June) 2020-2021”, Ministry Of Statistics & Programme Implementation, Government Of India, August 31, 2020.
<8> State of Working India Report 2018, Azim Premji University.
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<11> State of Working India Report 2018, Azim Premji University.
<12> Sainath, “The migrant and the moral economy of the elite”, People’s Archive of Rural India, June 8, 2020.
<13> Peter Dizikes, “MIT report examines how to make technology work for society”, MIT News, September 4, 2019.
<14> “A world without work: technology, automation and how we should respond with Daniel Susskind”, YouTube, January 21, 2020.
<15> Zothan Mawii and Eona Eckstein, “What Strengthening Worker Protection in the Post-Pandemic World Would Entail”, Tandem Research, August 13, 2020.
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<17> Filipe Calvão and Kaveri Thara, “Working Futures: The ILO, Automation and Digital Work in India”, International Development Policy | Revue internationale de politique de développement, November 2019, 223-246.
<18> Greg Epstein, “How ‘ghost work’ in Silicon Valley pressures the workforce, with Mary Gray”, TechCrunch, August 17, 2019.
<19> State of Working India Report 2018, Azim Premji University.
<20> State of Working India Report 2018.
<21> Divya J.Shekhar, “Big story: Making it work for women”, Forbes India, August 19, 2020.
<22> Amit Basole and Arjun Jayadev, “The Employment Question in India- Politics, Economics, and the Way Forward”, State of Working India Report 2019.
<23> Zothan Mawii, “Feminist Perspectives on the future of work in India”, Tandem Research, September 2019.
<24> Mawii, Feminist Perspectives on the future of work in India.
<25> Amit Basole and Arjun Jayadev, “The Employment Question in India- Politics, Economics, and the Way Forward”, State of Working India Report 2019.
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<28> “Virus lays bare the frailty of the social contract”, Financial Times, April 3, 2020.
<29> Diane Coyle, “The Economics of Belonging — can globalisation work for the left behind?”, Financial Times, June 10, 2020.
<30> Jenny Anderson, “A social activist’s radical plan to use human relationships to fix the broken economy”, Quartz, January 21, 2020.
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<32> “The Work of the Future: Shaping Technology and Institutions”, MIT Task Force on the Future of Work, Fall 2019 Report.
<33> Hillary Cottam, “Welfare 5.0: Why we need a social revolution and how to make it happen.” UCL Institute for Innovation and Public Purpose, Policy Report, (IIPP WP 2020-10).
<34> Arjun Jayadev, “Are our earnings really our “just deserts?” Institute for New Economic Thinking, October 5, 2016.
<35> Nancy Folbre, “Does the one percent deserve what it gets?”, Equitable Growth, October 04, 2016.
<36> Francis Kuriakose and Deepa Iyer, “Automation and the future of jobs in India”, Center for the Advanced Study of India, November 5, 2018.
<37> “Gig work on digital platforms Case Study 3: SweepSouth – Platform-Based Domestic Work”, USAID, March 2020.
<38> David Goodhart, “Understanding the Balance Between Head, Hand, and Heart During Times of Crisis”, ThriveGlobal, September 09, 2020.
<39> Goodhart, Understanding the Balance Between Head, Hand, and Heart During Times of Crisis.
<40> Vishaka George, “Pavagada’s social hierarchies of sorrow”, People’s Archive Of Rural India, August 2, 2018.
<41> Udit Misra, “Interview with Vijay Kelkar & Ajay Shah: ‘The middle-income trap can happen here’“, The Indian Express, December 17, 2019.
<42> Rathin Roy, “It is not too late, but it soon will be”, Business Standard, August 7, 2020.
<43> State of Working India Report 2018, Azim Premji University.
<44> State of Working India Report 2018.
<45> T Barbara Harriss-White, “The Modi Sarkar’s project for India’s informal economy”, The Wire, May 20, 2020.
<46> Hillary Cottam, “Welfare 5.0: Why we need a social revolution and how to make it happen.” UCL Institute for Innovation and Public Purpose, Policy Report, (IIPP WP 2020-10).
<47> “A world without work: technology, automation and how we should respond with Daniel Susskind”, YouTube, January 21, 2020.
<48> Hillary Cottam, “Welfare 5.0: Why we need a social revolution and how to make it happen.” UCL Institute for Innovation and Public Purpose, Policy Report, (IIPP WP 2020-10).
<49> Cottam, Welfare 5.0: Why we need a social revolution and how to make it happen.
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<51> “Issues for Consideration: Labour Codes – Three Bills on Occupational Safety and Health; Industrial Relations; and Social Security, 2020”, PRS Legislative Research, 2020.
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<53> “Issues for Consideration: Labour Codes – Three Bills on Occupational Safety and Health; Industrial Relations; and Social Security, 2020”, PRS Legislative Research, 2020.
<54> Issues for Consideration: Labour Codes – Three Bills on Occupational Safety and Health; Industrial Relations; and Social Security, 2020.
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<56> Cover note: overview of labour reforms.
<57> Christina Behrendt, Quynh Anh Nguyen and Uma Rani, “Social protection systems and the future of work: Ensuring social security for digital platform workers”, International Social Security Review, 10 September 2019.
<58> Rosa Abraham, Amit Basole and Surbhi Kesar, “Pandemic as a lens: Identifying and addressing livelihood vulnerabilities”, Ideas for India, 13 July 2020.
<59> Zothan Mawii and Eona Eckstein, “What Strengthening Worker Protection in the Post-Pandemic World Would Entail”, Tandem Research, August 13, 2020.
<60> Urvashi Aneja and Zothan Mawii, “Strengthening labor protections for 21st century workers", Global Solutions Journal Issue 5.
<61> Ann Toews, “Ghost work in Modi’s India: exploitation or job creation”, Foreign Policy Research Institute, June 28, 2019.
<62> “Gig work on digital platforms Case Study 2: Online Support Tools and Forums for AMT Crowdworkers”, USAID.
<63> Hemal Shah, “Prosperity and social capital: Is India missing out?”, LSE Blogs, November 02, 2012.
<64> Ajay Shah, “The economy of relationships as opposed to the economy of contracts”, Business Standard, 13 July 2020.
<65> Yamini Aiyer, “The Opportunities and challenges confronting India’s welfare architecture,” Centre for Policy Research, 5 July 2019.
<66> Rathin Roy, “GST, Farm Bills and 4 Other Events that widened Centre-State Trust Deficit,” Business Standard, 02 October 2020.
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