Labour should be viewed as ‘human capital’: CUTS International

India Education Diary, May 05, 2020

On the occasion of the International Labour Day (1st May), CUTS International launched a report on the conditions of labour in India, with insights from jobs in Textiles and Clothing (T&C) sector. It was a part of its on-going project on ‘Strengthening the Discourse on Good and Better Jobs in India’, supported by the Ford Foundation.

The report was launched through a Webinar on ‘Covid-19 and Textiles & Clothing Sector in India’, where eminent speakers from the industry, academia and research organisations deliberated on the challenges being faced by workers and enterprises in the T&C sector and the way forward, in a post pandemic economy. More than 50 stakeholders participated in it.

The panel discussion that followed was steered by Arun Maira, Former Member of the Planning Commission of India, who stressed on three inter-linked structural reforms which are imperatives for improving the health and resilience of the economy.

First and foremost, there is a need to shift from measuring the economy using economic indicators such as gross domestic product, which reflects the size of an economy to qualitative indicators such as well-being of enterprises and workers, which reflects the health of an economy. Secondly, there is a need to adopt a fresh lens to look at the workforce and their needs. Thirdly, there is a need to ‘hear the unheard voices’ in order to formulate policies, which are sensitive to ground realities.

This was followed by insights from Amit Kapoor, Honorary Chairman of the Institute of Competitiveness, who brought macroeconomic dimensions to the discussion. The primary challenge, according to him, is that of high production costs, particularly cost of finance which is affecting the health of the T&C sector. As a way forward he argued for a gradual shift from globalisation to the creation of a self-sufficient economy and integrating it in the global value chains. He also flagged off the imminent problem of regulatory capture daunting the governance of this sector.

Sabina Dewan, President and Executive Director of the JustJobs Network, highlighted the necessity for adopting an ecosystem-based approach to foster business competitiveness in this sector, whereby economic upgradation of industries can go hand-in-hand with labour welfare. This approach becomes far more relevant in a post-pandemic scenario wherein building resilience of the workforce becomes a way forward for building resilience of the sector, she concluded.

Rituparna Chakraborty, Executive Vice-President, Teamlease, focused on the impact of emerging uncertainties in the retail value chain in a post- Covid scenario on jobs across the spectrum. This may arise due to a shift in consumer spending patterns from discretionary to necessity-based. She concluded by highlighting the need for ‘economies of scale’ in order to foster growth and development in the T&C sector.

The industry perspective was brought forth by S K Gupta, Director and Advisor, Raymond Ltd, who recommended a two-pronged approach. The resolution of enterprise related issues and effective implementation of the Minimum Wages Act. He went on to stress on the need for universal coverage of these measures across the spectrum of enterprises and workers. He concluded by highlighting the need for a ‘collective conscience of all stakeholders and political will’ to bring about an effective transformation of this sector.

R. Nagraj, Professor, Indira Gandhi Institute of Development Research brought in a number of academic perspectives while highlighting the role of investments in offsetting the high production costs in domestic manufacturing of T&C. In this context, he mentioned that after the abolition of the Multi-Fibre Agreement, in 2005, while China reached newer heights as it restructured its production strategy and focused towards large-scale production, manufacturing in India has remained scattered leaving it much behind in the race. He also stressed on the need to look at labour welfare within the realm of compliance to social security provisions and skill development. As a way forward he proposed a long-term planned expansion of the sector.

Finally, Samar Verma, Program Officer, Ford Foundation reiterated the need for adopting a new lens for analysing the health of the economy. He went on to add that a focus on ‘race to the bottom’ for improving labour welfare may not always be the most efficient measure. To strengthen his argument, he cited the example of Bangladesh where more than 1000 people were killed in a garment factory collapse in the Rana Plaza in 2013. According to him, there should be a focus on effective resource utilisation and ecosystem building for holistic development of workers and enterprises in the T&C sector.

Arun Maira rounded up the panel discussion by emphasising the need for ‘economies of scope’ as opposed to ‘economies of scale’ and to focus on ‘human’ aspects of human capital.

In his concluding remarks, Pradeep Mehta informed the participants that as a part of this project CUTS International has also undertaken extensive field research on labour and enterprise welfare aspects of the food processing sector in India. It will be followed by similar work in construction and gig economy sectors. “Taken together, they will create a better-informed discourse on necessary paradigm shifts for enhancing labour as well as enterprise welfare in India,” he concluded.

The launch was kicked off by Pradeep Mehta, Secretary General of CUTS International, who underlined the historical significance of the Labour Day and stressed that the report focused on the quality of jobs rather than the quantity of job creation and that it is about labour and enterprise welfare as against another study on the T&C sector in India.

This was followed by a presentation by Bipul Chatterjee, Executive Director, CUTS International, on key insights from the extensive field based research conducted by the CUTS team. The presentation brought to light structural issues that exist in the T&C sector, on the enterprise side as well as on the labour front.

It highlighted the need for a better-informed discourse on the well-being of labour as well as enterprise through directed measures to mitigate supply-side distortions, including those related to higher wages, improved social security and skill-based employment generation, amongst others.

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