Reaching Inclusive Growth Through Employment Guarantee Programme: Outline of a Strategy

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Reaching Inclusive Growth Through Employment
Guarantee Programme Outline of a Strategy

• Indira Hirway
• Centre for Development Alternatives, Ahmedabad
• JNU IIAS Conference, 28-29 June 2007

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This Presentation

• Argues that a well designed EGP can be viewed as
  a an important component of a full employment
  strategy in a developing country like India
• Such a strategy can lead to economic growth that
  is inclusive in terms of employment by addressing
• Some of the major concerns that India is facing
  with respect to its growth that has caused
  multiple exclusion in the economy.

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What is Inclusive Growth With Respect to
employment?

• Generation of productive employment (decent work)
  for labour force in the economy, as employment is
  a key to inclusive growth,
• Employment generation in all sectors, regions and
  for all socioeconomic groups
• Particularly (1) for poorer sections of
  population, (2) backward regions, (3) lagging
  sectors and (4) ST / SC / OBC / women etc
• Inclusion of small enterprises / producers
  preferably in a decentralized framework
• Controlling inequalities and disparities

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ELR Strategy or Employment Guarantee for
Achieving Full Employment

• New Deal was the first major programme in
  industrialized countries that showed how
  employment generation by government can promote
  full employment
• This approach is now developed in to a major
  strategy under which government is seen as
  Employer of Last Resort (ELR) to promote full
  employment in industrialized countries (Minsky,
  Abba Lerner, Philip Harvey)
• In the case of developing countries also state
  sponsored EGP can lead to full employment though
  the context will be different.

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The Indian Scene of Employment

• The high growth rate has failed miserably to
  generate adequate decent employment for the
  labour force
• In fact, there is deceleration in aggregate
  employment generation in spite of high growth
• Neo liberal policies promote technical progress,
  i.e. high growth in labour productivity leading
  to high growth of GDP, but lack any built in
  mechanism to ensure full employment
• Higher growth or labour flexibility though
  offered as solutions are not real solutions

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Manifestation of Exclusion / Hurdles to Full
Employment

• Low productivity leading to subsistence status
• Low incomes and low levels of living
• Inadequate avenues for productive employment
• Poor quality of employment in terms of social
  protection

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Contd..

• Supply side constraints poor physical economic
  infrastructure
• Poor social infrastructure and low human
  capabilities / skills
• Degradation depletion of natural resources
  which support livelihood of 60 population
• Unstable and lagging agriculture
• Rising inequalities and disparities
• High incidence of poverty with poor at the bottom
  frequently starving
• Demand side constraints

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An Alternative Approach

• In stead of addressing these constraints
  directly, the neo liberal policies advocate a
  development path that focuses on economic growth
  through privatization, liberalization and
  globalization
• And when this path poses problems, we think of
  controlling technical progress or using surpluses
  for social sectors
• Why cant we start with what we have and what we
  lack rather than what others have

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EGP can construct

• Social infrastructure (for care, education,
  health, water sanitation) for improving human
  capabilities / skills, and quality of life
• Economic infrastructure (for example, roads) to
  promote economic growth,
• Infrastructure for agriculture (WSD, irrigation,
  etc)
• Natural capital building (related to land
  development, water augmentation, forestry) for
  raising productivity of workers in allied
  activities
• Assets (farm ponds and other asset building) for
  private farms / enterprises particularly for
  small producers

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EGP and Gender

• Womens unpaid work consists of (1) drudgery like
  collection of fuel, fodder, water etc, (2) child
  care and other care, (3) other low productivity
  activities that deprive them from accessing
  productive activities
• These can be seen as hidden vacancies, as many
  of these activities can be shifted to the market
  through public provisioning, infrastructure
  development and public services, and this in turn
  can release women for productive work
• EGP can substitute portions of this unpaid work
  by creating suitable assets that can reduce
  burden of unpaid work of women (and men) that is
  particularly taxing for the poor.
• EGP has proved to be attractive to women, who can
  also gain in terms of employment and wages

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Unpaid work of Poor and EGP

• Non-market economic Activities Acquiring /
  Collecting basic necessities like water, fuel
  wood etc
• Non-market economic activities collection of raw
  material for income generating activities (fodder
  for animal husbandry, bamboo for craft, raw
  materials for manufacturing - NTFP)
• Non-market subsistence production at low
  productivity (crop cultivation, subsistence
  fishery, forestry etc)
• Unpaid domestic work care related activities
• Unpaid domestic work household repair in non
  durable shelter
• Unpaid work Traveling

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Role of EGP Short Run

• Reduce drudgery
• Improve quality of life
• Improve public provisioning / infrastructure
• Improve productivity / technology in income
  generating activities
• Release women and poor for productive activities
• Promote capital formation
• Improve labour absorbing capacity of the main
  stream economy

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EGP in the Long Run

• Promote labour intensive development
• Encourage sustainable development
• Increase labour productivity / technology in
  economic activities
• It engenders development
• Promote manufacturing and structural
  transformation in the economy
• Integrate small producers / poor in to the growth
  process
• Participate in the world trade based on advantages

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EGA A Full Employment Strategy

• Employment guarantee for the poorest to ensure
  their full employment
• Insurance in terms of employment for the poor in
  crisis
• Labour intensive growth for the economy in the
  second round through assets that generate main
  stream employment
• Rising aggregate demand that will push up growth
  along with changing its composition, and push up
  employment

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EGP is only a component / Starting point

• EGP is not for creating a permanent army of
  unskilled workers it is successful when it is
  not needed (Dantwala)
• It is a tool for transition of the economy from
  labour surplus economy to labour using economy
• It requires productive use of the assets
  generated including infrastructure
• It requires a set of supplementary policies in
  the areas of skill formation, credit, marketing,
  institutions etc
• It needs a long term vision and suitable
  interventions

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EGP based strategy is not a Low Income Strategy

• This strategy involves up gradation of technology
  and improved labour productivity
• It incorporates globalization based on
  comparative advantages
• It promotes economic growth that is broad based
  and inclusive
• It answers some of the concerns that India is
  facing today

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Assessing NREGA

• NREGA lacks a long term perspective in designing
  and in implementation
• Weak planning component (1) lack of perspective
  planning, (2) lack of convergence and (3) lack of
  multi level planning
• Designing problems of NREGA role of institutions
  / social mobilization not recognized
• Lack of commitment, and poor supervision
  monitoring
• Lack of political strategy to address structural
  issues

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Concluding Observations

• This is an outline of a strategy, needs further
  detailing
• We are not recommending some thing that is not
  doable, not feasible.
• We have an EGP Act, an EGS and we have to build
  on it