The Hindu Feb 15, 2005 Panchayats & employment guarantee
By A.Vaidyanathan There is a far greater chance that left to themselves panchayats will implement employment guarantee schemes with a greater sense of responsibility. THE EMPLOYMENT Guarantee Bill, recently tabled in Parliament, has provoked extensive debate. At one extreme are those who hold that the best way to expand and diversify employment opportunities is to achieve and sustain higher growth rates. They argue - or at any rate insinuate - that a guarantee of employment will not accomplish much, and that the money spent on it will be wasted. For them, pushing forward the neo-liberal reform agenda should be the main concern of public policy. The protagonists of employment guarantee, on the other hand, cover a wide spectrum of both professional economists and politicians but they are divided over the scale, coverage, and modalities of implementing the guarantee. This article addresses the latter set of issues. First, let us consider the rationale for an employment guarantee. Some invoke the deceleration of employment growth during the latter half of the 1990s to argue that unemployment and under-employment in rural areas are rampant and increasing. A closer examination of the available data suggests that the deceleration of employment growth between 1993 and 1999 is due in part to the fact that the increase in agricultural output between 1993 and 1999 was substantially lower than the growth between 1987-88 and 1993-94; and in part to the fact that an increasing proportion of youth (especially in the age group 5-14 and to some extent in the 15-29 group) are attending schools. The decline in labour force participation of the 15-29 age group may also reflect the increasing educational levels in the group and the attendant changes in job aspirations and wage expectations. This would make it extremely unlikely that the unemployed in this class would offer themselves for unskilled manual work at the wages offered by the EGS (employment guarantee scheme). The nature and magnitude of rural employment problems can be better appreciated by looking at trends over a longer-term perspective. On the basis of data from the quinquennial employment surveys conducted by the National Sample Survey Organisation, the following features are noteworthy: a) The proportion of the rural labour force, which is normally unemployed, does not show any sustained trend over the period 1977 to 1999. b) The personday unemployment rate (i.e., the proportion of days in a year for which persons available for work do not get it) also does not show a sustained trend. The rate of unemployment by this means was about seven per cent in 1999-2000, about the same as in 1977 and 1983. c) Open employment in rural areas is largely concentrated among casual labourers; their share in the working population has been increasing steadily over the period from around 27 per cent to 36 per cent in the case of men; and from 35 per cent to 40 per cent in the case of women. d) Between 1977 and 1999, the number of men workers in rural areas increased 53 million. The majority of them (28 million) have been absorbed in non-agricultural activity; the pace of diversification away from agriculture is much less pronounced among women. But for both sexes, practically the entire increase in rural employment between 1993 and 1999 came from outside agriculture. e) Real wages of casual labour have been rising throughout the period. There is certainly no room for complacency about these trends. The pace of increase in non-farm employment needs to be accelerated; wage rates, through rising, are still far too low to provide a reasonable level of living. Under-employment is again mostly concentrated among casual labourers. Providing additional employment to meet the unsatisfied demand for work can directly increase incomes of this class to a significant extent and also - as the experience of the Maharashtra ECS showed - strengthen their bargaining position in the rural market for wage labour. A universal EGS sounds appealing but in reality its scope and impact are likely to be limited. Casual labourers are likely to be the principal claimants and potential beneficiaries of the EGS. Farmers and other self-employed persons as well as those with regular employment are unlikely to be willing to do unskilled manual work at the wage rates offered. The coverage and scale of the EGS should be decided keeping this in view. If the EGS is to cover the employment deficit indicated by current daily status unemployment rate, it is necessary to create additional employment of seven billion persondays in a year. The cost would depend on the wage rate and assumptions about the magnitude of materials and overhead costs for generating the employment. Assuming the current national average wage rate for casual labour at Rs.60 for men (the average in 1999-2000 was Rs.45 in agriculture and Rs.60 in non-agriculture) and Rs.45 for women (1999-2000 range 31 to 37) and assuming that material costs and overheads to be around a third of the wage bill, the programme would require an annual outlay of about Rs.33,000-34,000 crore. The statutory minimum wage is conceptually a more appropriate basis, provided it is the same or higher than the prevailing market rates. A better criterion, and one which takes care of differences between the market and the minimum wage rates and also self-selection of beneficiaries, would therefore be to fix EGS wage rate at the prevailing market rate or the minimum wage rate whichever is higher. This would require a State-wise review. A third set of questions concerns the role of a legal or constitutional guarantee. These include: (1) whether a national guarantee can be made effective through Central legislation alone? (2) Since the responsibility for implementation vests with the States, would it not be necessary to get the States to formulate legislation in conformity with the central law? (3) Can the legal guarantee be effectively enforced if, for whatever reasons, States do not implement the programme at all or implement it in a way that does not benefit the intended beneficiaries? The ongoing debate on the EGS focuses far too much on the scale of resources to be allocated to the programme and the feasibility of mobilising them and far too little on its content and implementation. Whether the allocation for the EGS should be Rs.25,000 crore or Rs.40,000 crore cannot be judged without clarifying whether it is to replace the ongoing RLEGP (Rural Landless Employment Guarantee Programme) or be in addition to it. Whether deficit financing can or should be used and on what scale again cannot be judged solely with reference to the EGS. The sizeable foodgrain stocks and foreign exchange reserves would seem to suggest that the economy has some cushion to absorb higher fiscal deficit to finance increased public expenditure. Foodgrain prices can be kept under control at least for some time. But foodgrain supply is no longer the only or even the major factor determining the impact of deficits. Increased spending on the EGS and rural development, even if they are more effective than in the past, cannot address deeper resource and technology constraints on achieving the rate and pattern of agricultural growth necessary to meet the rapidly diversifying patterns of food consumption at all levels. The effectiveness of the EGS depends not just on the scale of outlay on that programme, but on what activities are taken up, how they will mesh with similar activities under other programmes for rural improvement, and what steps will be taken to improve implementation. Concerns about the provisions limiting initial coverage to poorest districts and expanding it in a phased manner are understandable. The argument that even if there are large leakages to the better off, the increased spending by recipients of the leakage would have a multiplier effect and lead, in the second or third round, to increase employment and incomes for the rural unemployed is both disingenuous and dangerous. Much of the EGS as indeed of rural development consists of local works for local development. The local communities are best equipped to decide on these. Many are sceptical whether local leaders have the necessary competence and whether they are any less prone to corruption and inefficiency. The emphasis is therefore on strengthening centralised monitoring, inspection and audit, independent evaluations and freedom of information. Important as these are, experience has shown that they make hardly any dent on waste, corruption and inefficiency. It is no one's argument that panchayats are or will be free of these ills. The argument is simply that there is a far greater chance that left to themselves the panchayats will implement schemes with a greater sense of responsibility. Even under the existing, severely constrained panchayati raj regime, numerous elected panchayats have shown the willingness and the ability to decide on projects appropriate to local needs, mobilise local resources for such projects and to take the responsibility for implementing government sponsored projects. Works taken up by them have been found to be completed faster, better and cheaper than those of the government agencies. Democratically elected, representative panchayats are far more effective means for containing (though not eliminating) corruption and ensuring accountability than is generally recognised. If decentralised planning and implementation leads to even a modest reduction in waste and leakage - from the current, and widely quoted, 85 per cent to say 60 or 70 per cent - there will be a dramatic improvement in effectiveness in all aspects of the programme. The campaign for a wider and better funded EGS must be combined with a campaign to generate strong public opinion and mobilise elected panchayat members all over the country to bring strong pressure on the Central and State Governments to strengthen democratic panchayats and empower them to plan and implement all local development programmes. _________________________________ Labour Notes South Asia (LNSA): An informal archive and mailing list for trade unionists and labour activists based in or working on South asia. LNSA Mailing List: Labour Notes South Asia To subscribe send a blank message to: <[EMAIL PROTECTED]> LNSA Web site: groups.yahoo.com/group/lnsa/ Run by The South Asia Citizens Web www.sacw.net _________________________________ ------------------------ Yahoo! Groups Sponsor --------------------~--> Has someone you know been affected by illness or disease? 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