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Tuesday, June 28, 2022

Our geography of work

Urbanisation and migration are born out of hope. Policy must reflect that

Written by Manish Sabharwal |
November 28, 2011 3:22:53 am

For centuries the earth’s biggest annual migration occurred when two million wildebeests accompanied by large numbers of zebra and smaller numbers of Grant’s gazelle,Thomson’s gazelle,eland and impala trekked across Africa searching for fresh grazing and water every May. But after Deng Xiaoping catalysed the Chinese job creation explosion in 1978,the biggest migration now happens in February and involves humans — 340 million people get on a train to go home every Chunyun,China’s two-week lunar New Year holiday. This migration brings China’s economy to a halt as workers evacuate cities for their villages.

The lack of a similar migration in India is not only sabotaged by pending reforms in employment and skills but our low urbanisation — China has 200 cities with more than a million people while India has 35. India has 6.3 lakh villages,of which 3.9 lakh have less than 1,000 people and 1 lakh have less than 200 people. Non-farm job creation tends to cluster and requires soft and hard infrastructure that many of our villages are too small for. In the next decade,India can’t take jobs to people but needs to take people to jobs.

The Western press often views the non-economic costs of urban migration as too high — the Los Angeles Times wrote about Chinese New Year: “These few days are a fleeting reunion for a large population painfully split from families by economic necessity as self-conscious spouses are reunited. Children peer shyly at parents they haven’t seen in a year. The migrants’ salaries have bought bricks and lumber to replace the grass and mud once used to build homes. But the price is paid in absence. Most of the year,these hamlets are ghostly,drained of the young and fit.”

I will make the economic case for urbanisation later but the most articulate non-economic case for urbanisation was made by Nandan Nilekani in his book Imagining India: “It has been fashionable in our cultural commentary to refer to India’s cities as places of vice,corruption and loss of innocence. But cities are,and have historically been,a powerful catalyst for political reform. Leaders such as B.R. Ambedkar recognised this and found the Indian city liberating after the sink of localism and den of inequity that was the village. Upward mobility for the backward castes is therefore most tangible in our cities because it becomes difficult to enforce silly notions of caste purity and pollution in the forced proximity of our city buses and trains.”

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The economic case for cities has been made by several economists — a great recent book is Triumph of the City by Edward Glaeser — who explain why cities develop and highlight their multiplier benefits and positive externalities. Job creation clusters as cities become hubs of innovation,energy and entrepreneurship. But the three popular arguments against urbanisation are: the sentimental kind,the food scarcity kind,and the cities are a disaster kind. The first is usually made by people who don’t live in villages. The “we won’t be able to feed India” argument does not recognise the pathetic productivity of our agriculture with only 40 per cent of the cultivated area under irrigation. The third is less of an argument against urbanisation but is a crib against the inability of our few job creation magnets to handle more people.

Being born in an advanced country was the biggest prize in the lottery of life. A study by Branko Milanovic of the World Bank shows that if each nation’s population is divided into 20 income classes,then climbing nine rungs from the bottom — a tough task in countries with arthritic physical and social infrastructure like India — will take a person the same distance as being born in a country twice as rich. Country of birth explains about 60 per cent of one’s position in global income distribution. The poorest 5 per cent of Germany are,as a group,at the 73rd percentile of world income distribution,that is,more affluent per capita than the richest 5 per cent of Indians. This ovarian lottery is amplified within India; much of the country’s demographic dividend over the next decade will occur in states with weak 3E (education,employability and employment) ecosystems; Uttar Pradesh,Bihar and Madhya Pradesh will account for 40 per cent of the increase in 15-59-year-olds but only 10 per cent of the increase in GDP. Maharashtra,Gujarat,Tamil Nadu and Andhra Pradesh will account for 45 per cent of the increase in GDP but less than 20 per cent of the addition to the workforce.

Over the next decade India’s mismatch between economic energy and population growth becomes a crisis because of our demographic dividend. Our demographic dividend needs school reform,higher education deregulation and skill expansion. But these supply side interventions are necessary but not sufficient without demand side — job creation — interventions. Reforming labour laws is crucial to transforming our labour force; higher manufacturing,formal,non-farm and wage employment. But accelerating urbanisation (water and sewage infrastructure,public transport,town planning,balancing tenancy and landlord rights,etc) and facilitating migration (employment exchanges,resisting local hire requirements,apprenticeship programmes,taking training to people rather than bring people to training,etc) are key to sabotaging the ovarian lottery.

Contrary to perceptions,India’s biggest geography of work intervention — the National Rural Employment Guarantee Scheme (NREGS) — has not reduced migration or made farm labour unavailable. When landowners say they cannot find farm labour,they mean they cannot find it at the price they used to. NREGS is like the LIBOR rate,a benchmark not used directly but as a basis for negotiation. This wage rise is not all horrible; one of the primary objectives of economic reforms is raising wages as productivity rises. But NREGS sets wages far ahead of productivity and sabotages India’s labour transformation. NREGS was created and is sustained out of despair; urbanisation and migration are born out of hope. Policy must choose hope.

The writer is chairman,Teamlease Services

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