What to Read in The Hindu Editorial( Topic and Syllabus wise)

 

Editorial 1: Indian industry needs innovation, not mindless toil

Context

With an over-reliance on cheap labour for growth, captains of the Indian industry have been shooting themselves in the foot

 

Introduction

A few months ago, this writer and his colleagues interviewed migrant industrial workers in Ludhiana, Punjab, for a research project. The respondents worked in factories (producing garments, auto components, and other products) for 11 hours to 12 hours a day. When orders were high, they worked for days on end without a break. Away from the shop floor, their waking hours were spent almost entirely on cooking and in their daily commute.

 

Call for Longer Working Hours by Corporate Leaders

• Some well-known corporate leaders in the country have been urging Indians to work longer hours.
• It is puzzling as they may not be aware of the existing work conditions in India.
• Most of India’s workers are informal and must work extremely long hours.
• These include manual workers and household helpers who sweat to earn a living.
• Employment Statistics (2023-24): The Periodic Labour Force Survey showed:
  1. Only 21.7% of India’s workers were in regular jobs with a salary.
  2. The rest were casual workers or self-employed.
• Informality Even Among Regular Workers: Even within regular workers:
  1. Approximately half had to face informal working conditions.
  2. They did not have a written job contract.
  3. They were not eligible for paid leave.
  4. They did not receive any social security benefit.

 

Competing with the cheap labour advantage

• By publicly expressing their preference for having longer working hours, industry bosses have inadvertently confirmed a well-known, yet not-much-discussed, fact.
• Indian industry continues to derive its competitive advantage mainly from cheap labour rather than technology and innovation.
• In the developed world, the mode of surplus extraction underwent a transformation long ago, from making workers labour longer hours to employing them more efficiently with superior technologies and management practices.
• Based on workers’ conditions during the Industrial Revolution in Britain in the 18th century, Marx wrote:
  1. “In its …werewolf hunger for surplus-labour, capital oversteps even the merely physical maximum bounds of the working day. It steals the time required for the consumption of fresh air and sunlight. It haggles over a meal-time….”
• Working conditions in Britain improved by the middle of the 19th century, following regulations brought about by labour union pressures and the sweeping economic and technological changes.
• Although exploitative labour practices continued unabatedly in the colonies.

 

Work Hours and Productivity: India vs. Rich Countries

• Today, workers in rich countries put in much fewer hours but have significantly higher productivity than those in developing countries.
• According to data reported by the International Labour Organization (ILO) in 2024:
  1. United States – 38 hours per week
  2. Japan – 36.6 hours per week
  3. India – 46.7 hours per week
• India’s capitalists have deployed one strategy after another to ensure that they have at their disposal a large labour force willing to work long hours for low wages.
• Big businesses in India have abetted a structural shift in industry from the organised sector, which is governed by regulations of wages and working conditions, to the unorganised sector, where such rules do not apply.

 

Predominance of Small Industrial Units

• In industrial clusters across the country, there is a predominance of small units with six or fewer workers.
• At any time in a crowded industrial area in Coimbatore or Ludhiana, one hears the sounds of several hundreds of machines (lathes, milling and rolling machines, foundries) operating in small sheds.
• Each shed produces a small part or a component that feeds into a production network coordinated by more prominent firms to manufacture a range of products, including pumps, automobiles, and agricultural tools.
• In most small firms, the owners, often former workers, work alongside the hired labourers.
• Over 70% of India’s manufacturing workforce (68 million in 2021-22) are in small, unregistered enterprises(each with less than 10 workers).

 

Losing out on innovation

Unequal Relations Between Small and Large Firms

• The relations between small and large firms in India have not been mutually enriching (as seen in Japan) but have instead weakened small firms even more.
• Issues faced by small firms (based on interviews with owners):
  1. Delayed payments – Bigger firms delay payments for several months after receiving supplies, leaving small firms desperate for fresh funds.
  2. Unfair pricing – Bigger firms refuse to pay more for parts despite increases in material and production costs, pushing small firms into cutthroat competition.
  3. Lack of state support – Small firms suffer due to inadequate bank credit and rising competition from cheaper imports.

 

Dependence on Contract Workers in Factories

• India’s factories are increasingly dependent on contract workers rather than directly employed workers.
• Statistics (Post-2011-12):
  1. 56% of workers who joined India’s factory sector were contract workers.
• Contract workers’ conditions:
  1. Not protected by labour regulations.
  2. Paid much lower wages than directly employed workers.

 

Migrant Workers and Wage Suppression

• Migrant workers form the core labour supply for Indian industry.
• Their low wages reflect multiple disadvantages:
  1. Social position.
  2. Lack of asset ownership.
  3. No access to social security benefits.
• As wages declined, profits soared, especially after COVID-19.
• Profit as a share of value added:
  1. 2019-20 – 31.6%
  2. 2021-22 – 46.4%

 

The garment industry

Over-Reliance on Cheap Labour: A Long-Term Hindrance

• Indian industry has been shooting itself in the foot by relying excessively on cheap labour, hindering its global competitiveness in the long run.
• Example: India’s Garment Industry
  1. Despite being a labour-surplus country, India has failed to dominate this low-wage industry.
  2. India’s share of worldwide garment exports has remained stagnant at 3.1% for two decades.
  3. China, Bangladesh, and Vietnam have outperformed India in the garment industry.

 

Key Barrier: Reluctance to Modernise

• Chinju Johny and this writer (Economic and Political Weekly, August 24, 2024) argued that:
  1. The main obstacle to India’s progress in the garment industry is capitalists’ reluctance to modernise firms.
  2. They lack ambition beyond the limited advantages of low wages.
  3. India remains confined to domestic and niche export markets, which are dominated by western multinational companies.

 

Negative Impact on Broader Industry Growth

• Easy availability of cheap labour has lulled Indian industry into complacency, ignoring technological and managerial changes.
• This has undermined growth across all fields, including new-generation industries like IT.
• Low wages and long working hours have:
  1. Reduced the purchasing power of the working class.
  2. Depressed the domestic market, reinforcing negative economic momentum.

 

Conclusion

Stretching the limits of the working day, allowing little time for recuperation for tired minds and bodies, and having all these driven by the greed for profits, is unconscionable. And the industry’s gains, if any, are only in the short run. In the long run, the swelling ranks of impoverished workers will strangle the industry, leaving it gasping for innovation and growth. The earlier the masters of the Indian industry realise this, the better.

 

Editorial 2: Talent shortage — global challenge, India’s opportunity

Context

The demand for skilled workers is set to exceed supply, and India must move quickly to tap the needs in key geographies.

 

Introduction

The global labour market does not seem to be future-ready. No one has the crystal ball to tell the future exactly, but it can be safely said that the skills needed in 2030 will be quite different from what we have today. This is a challenge for the entire world — and an opportunity for India.

 

FICCI-KPMG Study

‘Global Mobility of Indian Workforce’: By 2030, the demand for skilled workers will exceed supply, leading to a talent shortage of over 85.2 million people.

•  
  1. This global skills shortage could result in $8.45 trillion in unrealised annual revenue—equivalent to the combined GDPs of Germany and Japan.
  2. India’s opportunity lies in capturing as large a share as possible of this $8.45 trillion potential.

 

Strategies for Workforce Readiness

• Addressing the challenge requires:
  1. Targeted strategies to develop relevant skills.
  2. International cooperation to facilitate global workforce mobility.
  3. Proactive policy interventions to enhance economic productivity.
• A properly coordinated effort is essential between:
  1. Government
  2. Private sector
  3. Other key stakeholders

 

Geographic regions and their demands

• Gulf Cooperation Council (GCC), Europe (including the UK), and Australia are the three key regions where workforce mobility will be critical.
• Talent shortages will vary regionally, with specific workforce demands in each area.
• Health care will be a common requirement across all three regions.
• Aging populations and increasing health-care needs will drive high demand for health-care professionals.

 

Sector-Specific Workforce Needs

• GCC and Australia:
  1. Manufacturing and construction will be pivotal.
• Europe:
  1. As the oldest post-industrial society, service-sector workers will be in high demand.

 

Emerging Sectors and Skills

• Growing demand for skills in:
  1. Automation
  2. Artificial Intelligence (AI)
  3. Big data & predictive analytics
  4. Internet of Things (IoT)
  5. Blockchain
  6. Management
  7. Resource efficiency & sustainability

 

Existing barriers and strategies

• Regulatory and immigration barriers: Complex visa processes and stringent work permit regulations hinder skilled migration.
• Recruitment malpractices and trafficking: Exploitative recruitment practices and human trafficking pose serious threats to migrant workers’ safety and rights. In his recent visit to the United States, Prime Minister Narendra Modi highlighted this menace and underlined the need to fight it.
• Policy barriers and skill mismatches: Many Indian degrees, particularly in medicine, are not recognised everywhere in Europe, leading to underemployment or unemployment of qualified professionals.
• Language and cultural barriers: Integration challenges, including language proficiency and cultural adaptation, affect workforce efficiency and productivity.

 

Government Initiatives to Address Challenges

• Bilateral Agreements and Free Trade Agreements (FTAs): India has several agreements with the GCC nations to protect the rights of Indian workers. For instance, the Joint India-United Arab Emirates Vision recognises the importance of skill cooperation between the two nations.
• Skill development programmes: Align workers’ skills with global market needs.
• Digital platforms for workforce support: Online recruitment systems are focused on ensuring legal protections for workers. Shielding them from fraudsters, particularly in GCC countries.

 

Strategic Measures to Capitalise on Global Demand

• Sector-specific skill training: Workforce training should be aligned with the needs of target geographies and preparation must be made for emerging sectors.
• Regulation of recruitment practices: Authorities must implement stricter oversight on recruitment agencies to prevent exploitation and trafficking.
• Recognition of qualifications: International collaborations must focus on mutual recognition of academic and professional qualifications to ease workforce integration.
• Incentivising public-private partnerships: Governments at the Centre and in the States should encourage private sector involvement in training programmes and global employment facilitation.
• Promoting circular migration and mobility: Temporary work visas and rotational workforce models can address labour shortages without causing demographic imbalances.

 

Changing Political Climate on Immigration Policies

• Political climate: The political climate regarding immigration policies is ever-changing.
• Europe vs Australia: While Europe may tighten its regulations, Australia remains more open to skilled migration.
• Indian diaspora: In the FICCI-KPMG study, the Indian diaspora is the second largest and fastest-growing diaspora in Australia.

 

India’s advantage

• Immigration policies and illegal migration: Strict immigration policies mainly target illegal migration. India must remain resilient in its efforts to position its skilled workforce globally, undeterred by shifting political rhetoric.
• Advantage of Indian workers: A major advantage for Indian workers is the absence of significant hostilitytowards them, and towards India, in most global markets.
• Opportunities despite anti-immigration sentiments: Even in countries with growing anti-immigration sentiments, skilled Indian workers continue to find opportunities.
• Curbing illegal migration: The Indian government must take measures to curb illegal migration.
• Benefits of preventing illegal immigration:
  1. Protects Indian workers from exploitative agents.
  2. Enhances India’s global reputation as a reliable supplier of skilled labour.

 

Conclusion

This will also help us realise the dream of becoming Viksit Bharat. The Chairman of the Sixteenth Finance Commission, Arvind Panagariya, recently projected that India’s GDP could reach between $6.5 trillion and $9 trillion by 2030. India’s ability to move closer to the $9-trillion mark will be directly linked to how much of the estimated $8.45 trillion in unrealised global economic potential it can tap into.