Labour, Jobs and Employment – Harmonization of labour laws, gender gap, unemployment, etc.

[op-ed snap]Diagnosing the job crisis

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Mains Paper 2: Social Justice|Issues relating to development and management of Social Sector/Services relating to Health,Education, Human Resources.

From UPSC perspective, the following things are important:

Prelims level:Nothing as such.

Mains level: The news-card analyses the problem of India’s MSME sector, in a brief manner.


Context

  • It has been observed by some experts that the regulatory framework that has choked MSMEs has contributed to the farm crisis and quota demands in India.
  • And that farm loan waivers, migration restrictions and10 per cent economically backward reservation in government jobs does not represent a sustainable approach.

Overhauling India’s MSME sector

  • The only way to create millions of jobs with decent wages is a policy re-imagination of the rights, needs, and treatment of formal MSME entrepreneurs.
  • The average employer in India is not a formal MSME or somebody large like Marico, Lupin or the Tatas, but an informal MSME because the present regulatory framework are not pro-informal sector MSME.
  • Fewer than 2 per cent of our 63 million MSME’s are formal.

Labour market interventions in MSMEs can be by:

  • Taking the long view:a 10-year plan is not 10-one-year plans for formalisation, urbanisation, industrialisation, financialisation and human capital.
  • Recognise progress made:6 million new formal enterprises and 30 million new social security payers in the last three years), and
  • Get bolder with structural interventions that matter most to MSME entrepreneurs.

India’s problem is no longer jobs but wages

  • Creating millions of well-paying jobs needs ending killing of millions of MSMEs (small but formal employers that will grow and pay the wage premium because of enterprise productivity).

Formalisation of MSMEs need

  • lower regulatory framework,
  • labour law rationalisation,
  • e-governance, and
  • education effectiveness
  • all in turn need civil service reform.

Way Forward

  • The only solution to helping farmers is having less of them and making the remaining productive — US farms with more than $1 million in sales are only 6 per cent of farms but produce 66 per cent of output.
  • The need of the hour is to have enough formal MSME employers.
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