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Saturday, December 14, 2019

Eighteen to sixty-four

Eighteen to sixty-four should be the age range of the working population factored into policy, since enrolment in senior secondary school is rising.

Written by Bibek Debroy | Updated: May 10, 2018 12:08:41 am

Plucked completely out of context, here is a quote from one of Francis Bacon’s essays: “Certainly it is good to compound employments of both; for that will be good for the present, because the virtues of either age may correct the defects of both; and good for succession, that young men may be learners, while men in age are actors; and, lastly, good for extern accidents, because authority followeth old men, and favour and popularity youth.” I have no intention of wading into the debate, raging in these columns, of compounding the employment of the old and the young. That debate is about 2016 numbers, compared to 2017. I have broader points to make.

Who is old? That is somewhat subjective. At the age of 93, Geriatrix didn’t think he was old. He continued to attend village council meetings. I am reminded of something a respected economist once told me. “At the age of 50, I used to wonder, why don’t the old dotards get out of the way? Now that I am 70, I realise I have such a lot to contribute.” Old is a function of what you do and a self-employed person (not just in agriculture) will look at retirement somewhat differently from the way a person in an employer-employee relationship looks at it. For those in employer-employee relationships, there is a retirement age, 60 or 65. If you are more than 60, you become a senior citizen. That’s the definition in Maintenance and Welfare of Parents and Senior Citizens Act.

Ergo, notwithstanding qualifications about self-employment and informality in the economy, both of which are in process of transition, those who are 65 and more aren’t expected to work. That’s the reason there is a standard cross-country definition of working age population as 15-64. For those who are 65 and more, there are issues of how they fund their needs (social security, insurance, pensions). For entire societies, there are issues of how contributions from new entrants into the workforce fund ageing populations, one that becomes acute if there are imbalances in demographic pyramids. In the 2011 Census, there were 66.2 million people who were aged 65 and more. In the 2001 Census, there were 49.1 million people who were aged 65 and more. Today (2016) that number is estimated at 76.9 million. The share of 65+ in total population has increased, as has the absolute figure. Since the working age population is defined as 15-64, it is usually difficult to find labour force participation rates (LFPRs) for 65+. Robust NSS (National Sample Survey) data are old. With that qualification, what do we know about LFPRs for 65+ using NSS? It hasn’t changed much for rural 65+. But it has declined for the urban 65+. I repeat, this is not about 2016 versus 2017, but a trend across three decades.

In the ‘Boscombe Valley Mystery’, Sherlock Holmes said, “There is nothing more deceptive than an obvious fact.” He went on to add, “Besides, we may chance to hit upon some other obvious facts which may have been by no means obvious to Mr Lestrade.” The LFPR decline for 65+ in urban India is fact. We can then hypothesise about what has caused it. Is it voluntary or involuntary?

Now consider this. Even if the LFPR is unchanged, the absolute numbers of 65+ have increased and will continue to increase. Add to that a decline in LFPR for urban areas. Elementary arithmetic means there will be an increase in the absolute number of 65+ who do not work. Indeed, they are unemployed. But also indeed, that unemployment may be voluntary. One shouldn’t immediately arrived at any normative value judgement about an increase in the absolute numbers of 65+ who don’t work. It is precisely because of retirement and the voluntary nature of unemployment that working age population is defined as 15-64. That range should be the focus of serious discussion. Geriatrix has fought in the battles of Gergovia and Alesia, but that’s over and done with.

I would actually like the range, for policy discussions, to be narrowed further. There is a concept of a legal working age, which is how that 15+ kicks in. For many purposes, including the UN Convention on Rights of the Child and the legal age when one becomes a major in India, the threshold is 18+. I am not suggesting the legal age for working be increased to 18. That’s unworkable and unenforceable, given India’s heterogeneity. There has been quite a sharp increase in gross enrolment ratios (GER) for secondary and senior secondary (14-17 age-group) and higher education (18-23 age-group). (We can complain about quality, but that’s a different issue.) If this leads to voluntary unemployment, that’s not an unmitigated disaster. As of now, GERs are quite high for secondary and senior secondary, much less so for higher education. For secondary education, the threshold of 75 per cent has been crossed, for senior secondary that of 50 per cent. For higher education, we have just crossed the threshold of 25 per cent. Therefore, the policy discourse should probably be for 18-64.

In the world of Dickens, a lot of children worked. Oliver Twist was nine-years old. Times change. We should accept that those under 18 shouldn’t work, as a goal, not as something legally ensured by amending the Child Labour (Prohibition and Regulation) Act. That’s the reason I mentioned 18-64. I think that’s more important for policy. The next time there is a debate between adults, let it be about adults.

The writer is chairman, Economic Advisory Council to the PM. Views are personal

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