India’s informal labour force

(Mains GS3 : Issues relating to development and management of Social Sector/Services relating to Health, Education, Human Resources.)

Context:

• The global economic order is dependent on the migration of skilled and unskilled labour which makes this dynamic interaction between physical and human capital catalyses the world’s economies in varying proportions.
• India’s huge inexpensive labour force, characterized by the largest working-age population in the world, is one of the reasons why foreign investors find the country attractive.

Ineffective schemes for informal workers:

• India has numerous policies for social security when it comes to education, healthcare, skilling, food security and pensions, but most of these schemes are restricted to the organized sector. 
• A large part of India’s informal labour force relies on various social welfare schemes from the government, which has been quite ineffective amidst the crisis. 
• Further, pandemic-induced unemployment has started to shoot up across sectors, increasing poverty and income inequality.

Twofold problem:

• The Indian economy functions with relatively high labour mobility, low wage rates and minimal-to-no barricades on inter-sectoral and inter-state movement of labour. 
• Migrant workers returning to their places of origin would bring down wages on account of an oversupply of labour in these regions. 
• This will not only affect the quality of labour, but also aggravate the problems of poverty, hunger and health. 
• Contrastingly, labour-scarce regions will see an increase in wages in the short term, which many business operations might not be able to afford. 
• Hence in both the cases, domestic and foreign firms with smaller subsidiary operation units involving informal migrant labour are bound to suffer.

Sustainability of SMEs:

• Small businesses associated with foreign companies might not be able to sustain themselves in the short or medium term. 
• This is mainly because production processes might turn inefficient due to the lack of a combination between physical assets and complementary human skill sets from migrant labourers that will no longer be available in the specific regions.

Conclusion:

• India has been grappling with low consumption demand for quite some time and the loss of livelihoods for the migrant workers would undoubtedly aggravate the problem. 
• The government can play a critical role by improving food security and executing fiscal measures in the spectrum of social security and welfare benefits.
• In India, an estimated 22 million workers have relocated to other states in search of livelihood. The current distress of migrant labour is appalling.