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Interview With ILO Director-General: India’s success vital for End of Poverty initiative to succeed

ILO Director-General Guy Ryder, who was on a five-day visit to India, predicts that despite the government redoubling its manufacturing push, the sector in India is unlikely to end up on the lines of the Chinese one.

Written by Aanchal Magazine | Published: July 12, 2016 4:40:48 am
International Labour Organization, ILO Guy Ryder, India economy, India manufacturing sector, business news International Labour Organization (ILO) Director-General Guy Ryder.

International Labour Organization (ILO) Director-General Guy Ryder, who was on a five-day visit to India, predicts that despite the government redoubling its manufacturing push, the sector in India is unlikely to end up on the lines of the Chinese one — both on account of inherent differences in the structures of the two economies and that manufacturing itself has changed over the last 20 years. Policy makers, he said in an interview with AANCHAL MAGAZINE, need to draw up labour regulations keeping these factors in mind and apportion due importance to the rural sector in sustaining employment generation. Edited excerpts:

Is there a tangible roadmap for the End of Poverty Initiative (part of the implementation of the UN 2030 Agenda for Sustainable Development) and where does India fit in?

The End of Poverty initiative, which is the ILO’s vehicle in playing our role to deliver the United Nations 2030 agenda on sustainable development and the overarching aim is to end extreme poverty. Is there a roadmap? The road is clear, what we now have to do is to equip ourselves to travel along that road. One of the things which I think is very positive about the 2030 UN agenda is that it recognises and it does it very explicitly that work, employment, decent work, is a key to achieving sustainable development and key to ending poverty. We have to focus on jobs and employment. By the way, the Prime Minister (Narendra Modi) takes exactly the same view here in India. So, there is a convergence of thinking… So you asked where does India fit in. Well, India is by its scale, by its size is fundamentally important to the success of this idea of this end of the initiative… So, my view is that success of the 2030 initiative will be India’s success and vice versa. India’s success will be vital for the success of the 2030 agenda.

You mentioned that India should focus on jobs first, but given that we have a weak manufacturing growth over the last year, how do you see jobs being placed first in such a situation?

Clearly the government attaches importance to the development of the manufacturing sector. That’s one way of assuring jobs and high-quality, value-added jobs as well… But you also have something every special in India. You have very large service sector but at the risk of being over simplistic, it’s pre-industrial. Now, modern economies developing a service sector is post-industrial phenomenon and it’s seen as a move up the value chain. India has in some sense and I am over simplifying to make my point, has a pre-industrial service sector and that has to be looked at. Of course, you have a very large part of the population living in rural areas, and working in agricultural and rural and agricultural production. Now I want to make a sort of confession. I think the ILO and the international system in general, rather forgot to look at rural sector as a source of good employment. I think the orthodox is that in the 1980s and the 1990s, the rural was the second best. The rural was yesterday’s news and that the forward path of development and structural change was to get people out of the rural and bring them into manufacturing. I think that was a mistake. I would be honest and I think it is right to re-focus on the rural economy and the rural sector.

In terms of the quality of employment, a couple of things that might be jarring about India are the fact that there is increasing contractualisation while the female participation in labour force is dwindling. Is that worrying?

I agree with you. These are two of what I would say are the most worrying. Firstly, the contractualisation or casualisation, you have to disaggregate this. One perpetually talks about 92-93 per cent informality in Indian labour markets. You disaggregate that labour, you see that informal sectors as such are shrinking, but you are seeing increased informality in formal sector. It sounds contradictory but you get the point and this is a phenomenon under contractualisation and casualisation and it’s something I have raised with people I have met in India… The second is the worrying situation with respect to the gender of the women. The first thing to say is that among the G20 countries, there is only one country which has a lower rate of women’s labour force participation than India, which is Saudi Arabia. So, India is in a bad place on gender participation. What is worse is that the story is getting worse, not better because we have seen very, very significant reduction in women’s participation rates in recent years. .. I think India would be very well advised to pay attention to the gender dimension of jobs for the development.

How important are rural employment guarantee schemes for a country like India and how much emphasis needs to be placed on such schemes in future?

Let me give you an international and specific answer. Brazil has been a country which has under previous governments implemented very important direct transfer, conditional transfer schemes and this has been effective in bringing down poverty rates and reaching families who have not easily been reached by past government policies. Now in India, the rural employment guarantee scheme, introduced by the previous government, seemed to be having a positive effect. So, we had worked with it, we had welcomed it and we had thought of it as a very positive addition. Now I do understand that new government is looking at the scheme again, but my deal is that well-designed and, of course, these schemes have to do well, they have to be effective in their delivery. These are important. I hope that the government, in whatever direction it chooses to pursue, will see the benefit of these schemes and will maintain them because reaching the poor in these conditions is fundamentally important. So they have a very positive outcome.

Two things criticised for these rural employment schemes is that the assets created are not permanent and that it draws a lot of people from towns and cities into rural areas because cost of living is less leaving jobs in textile belts

The first point I am familiar with and it also sort of relates to the point that I am trying to make about the need of a good design of these projects. John Maynard Keynes in the 1920s and 1930s said that a good idea at times of the Great Depression is to pay people to dig a hole and then to fill it in, do nothing productive. Just a way of getting money to them. I suspect if he was alive today, he would probably qualify that decision. I don’t think we should be providing finance simply for digging holes and filling them again. it is not about building roads to nowhere, bridges over nothing, I think that the good design of these projects and I see no reason it should not be this way to provide productive work, work which has value in itself, which does leave assets with community. But I repeat it’s a matter of design…

Disruptions that we have seen in the labour market. If we leave aside technology, how significant are the voices against free trade as a factor in impacting labour mobility across countries?

In the last 25 years, we have all acted on the assumption that the future of the global economy would be guided by ever deeper globalisation. I think that is now being questioned. People are going back, what we have seen in Brexit. I think there is a defensive nationalism in our economic affairs saying look, globalisation is not helpful… It might sound parochial, but if you look at Brexit, it sends a general message, people who voted to get out in my country and all of the analysis the votes show are the people in the lowest social strata, people who have been left behind … That is worrying.

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