Mains Paper 3: Economy | Inclusive growth & issues arising from it.
From UPSC perspective, the following things are important:
Prelims level: universal Basic Income
Mains level: Debate surrounding Universal Basic Income and alternatives such as good jobs.
Neither is quotas in limited government jobs, nor raining down cash on farmers and informal workers in the garb of universal basic income are solutions for the Indian economy’s failure to create more good jobs at the bottom of the pyramid.
Need for Universal Basic Income
- The fear is that unless fundamental economic structures are changed, further advances of technologies into the realms of “Industry 4.0″ will deprive even larger numbers of people of opportunities for work from which they can earn adequate and steady incomes.
- UBI and its many variants—quasi-UBI and income supplements for targeted groups—treat only the symptoms of the disease.
- The root cause of the disease is that many people do not have work that provides adequate incomes.
- The “gig” economy is creating many opportunities for earning incomes. However, the incomes are insecure and often insufficient. Moreover, the conditions in which people have to work to earn their incomes are not always satisfactory.
What is a good Job?
- A good job implies a contract between the worker and society.
- The worker provides the economy with the services it needs. In return, society and government must create conditions whereby workers are treated with dignity and can earn adequate incomes.
- Good jobs require good contracts between workers and their “employers”.
- Therefore, the government, to discharge its responsibility to create a good society for all citizens, not only for investors, must regulate contracts between those who engage people to work for the enterprise and those who do the work, even in the gig economy.
Good Jobs Instead Of UBI
- The solution is not to endow workers with a UBI—that way leads to dependency, unfulfillment, depression and marginalization.
- Employers to employ more numbers of less-skilled workers and pay them well. If they are provided good working conditions and opportunities to learn and grow, they will lead more satisfying lives.
- To increase the productivity of firms, too often governments subsidize labour-replacing, capital-intensive technologies, rather than pushing innovation in socially more beneficial directions to augment rather than replace less skilled workers.”
- India’s political leaders are challenged to provide more good jobs for the country’s huge number of young jobseekers.
- Panic solutions are quotas for everyone in the limited numbers of government jobs and raining down cash to farmers and workers in informal sectors in the garb of “universal basic income”.
- Economists and policymakers must go to fundamental principles: one, “fairness” for workers must be a stronger principle than “flexibility” for employers.
- Reduce the number of labour regulations but be very firm about the essential regulations to ensure good incomes and good working conditions.
- Two, tax incentives should be directed towards hiring of less-skilled workers, rather than attracting more capital investments that displace workers, so that people at the bottom of the pyramid can step on to the formal escalator for upward mobility in society.