IASbhai Daily Editorial Hunt | 5th Nov 2020
“If the wind will not serve, take to the oars.” – Latin Proverb
EDITORIAL HUNT #226 :“Gig Economy and Income Inequalities in India | UPSC”
Gig Economy and Income Inequalities in India | UPSC
Arun Maira is author of ‘The Learning Factory: How the Leaders of Tata Became Nation Builders’
Fixing the rules of the economy
The fundamentals of the game have to change as they currently favour wealthy investors and not workers and tiny enterprises
SYLLABUS COVERED: GS 3 : Economy
Hire and Fire strategy on a short term basis increases migration and income inequalities in a Gig Economy. Comment -(GS 3)
- Income inequalities
- Three Solutions
- What are Good markets ?
- Japanese strategy
- Way Forward
- INCOME INEQUALITIES : India has an incomes crisis: incomes of people in the lower half of the pyramid are too low.
- KEY PROPOSALS : The solutions economists propose are: free up markets, improve productivity, and apply technology.
- MARKET DRIVEN ECONOMY : Economists say markets should be freed up for agricultural products so that farmers can get higher prices; and freed up for labour to attract investments.
- ADEQUATE INCOME : Without adequate incomes, people cannot be a good market for businesses.
- SCALING IS ESSENTIAL : The purpose of freeing up markets for labour is to reduce the burden of wage costs on investors just when wages and the size of markets must be increased.
- DEFINITION : Good markets enable smooth transactions between buyers and sellers of commodities.Human rights must prevail over economic considerations.
- KEY TO PRODUCTIVITY : Humans are not commodities, like agricultural produce and minerals are.Improvement of ‘productivity’ is key to economic progress.
- FOUL IDEA : Human rights activists fought a long, hard battle to abolish the abhorrent idea that humans can be considered as commodities in markets.
- A UNIVERSAL METER : Economists generally use labour productivity as a universal measure of the productivity of an economy.
- NET PRODUCE OF A COUNTRY : The number of people in the system (the country/the economy) is the denominator, and the gross domestic product the people produce is the numerator.
- CORPORATE PRODUCTIVITY : Companies also measure their productivity similarly, by dividing the total output of the enterprise by the numbers of workers employed.
CAPITAL INTENSIVE STRATEGIES
TOTAL QUALITY MANAGEMENT : JAPANESE STRATEGY
- MANAGEMENT : They can take the managerially more difficult route of increasing the total output of the factory while maintaining the number of workers.
- TECHNOLOGICAL INTERVENTIONS : This may require adding more machines and technology to supplement the capacity of workers to increase total output.
- SKILL DEVELOPMENT : Alternatively, employers can enhance their workers’ skills and create a culture of continuous improvement in the factory.
- JUDICIOUS USE OF RESOURCES : Workers and managers cooperate to improve the capability of their system, and squeeze more output from limited capital resources.
- LIFE TIME CONTRACTS : The Japanese companies had lifetime employment contracts with their workers.
- INVESTMENT METHODS : They invested in their workers; and the workers — the companies’ ‘appreciating assets’ — grew their capabilities as well as contributed to the improvement of the total productivity of their enterprises.
- APPRECIATING ASSETS : Humans are the only ‘appreciating assets’ an enterprise has.They can improve their own abilities.
- DEPRECIATING ASSETS : The values of machines and buildings depreciate over time, as any accountant knows.
- HUMAN RESOURCE DEVELOPMENT : Whereas human beings develop when they are treated with respect, and are provided with environments to learn.
- LAZY MANAGEMENT STRATEGY : The lazy management strategy for improving productivity is ; Hire them when times are good, and fire them when the company cannot compete any more.
THE SOCIAL CONTRACT
- GOOD EMPLOYMENT : A good job implies a contract between workers and society.
- SOCIETAL BALANCE : In return, society and the economy must create conditions whereby workers are treated with dignity and can earn adequate incomes.
- GOOD CONTRACTS : Good jobs require good contracts between workers and their employers.
- PROSPECTS OF A GIG ECONOMY : Not only the government, investors must regulate contracts between those who engage people to do work for their enterprises, even in the gig economy.
- POST PANDEMIC APPROACH : An authority on industrial policy , advocates reforms that will induce firms to employ more numbers of less skilled workers.
- INCREASE PRODUCTIVITY OF FIRMS : Too often states subsidise labour-replacing, capital-intensive technologies, rather than pushing innovation in socially more beneficial directions to augment rather than replace less skilled workers.
- A MIGRANT CAPITAL : A turbo-charged, financial globalisation has made life very easy for migrant capital, while making the lives of migrant workers more precarious.
- POWER TO FIX : The rules of the game has become concentrated with wealthy investors and large multinational corporations.
- VULNERABLE SECT : The rules do not favour workers and tiny enterprises because they have too little power.
- DEMOCRATIC SETUP #UNIONS : Large enterprises employ fewer people within their own organisations; therefore, labour unions have lost their traditional support bases.
Small enterprises and workers must combine into larger associations, in new forms, using technology, to tilt reforms towards their needs and their rights.
SOURCES: THE HINDU EDITORIAL HUNT | Gig Economy and Income Inequalities in India | UPSC