26 Nov 2020: UPSC Exam Comprehensive News Analysis

E. Editorials

Category: ECONOMY

1. Refining trade union strategies to strike a chord

What’s in News?

Ten central trade unions (CTUs) have called for a nation-wide strike to condemn what they consider to be the anti-people and anti-labour economic policies of the government.

• The strike follows strikes in the coal and defence sectors protesting privatisation and the corporatisation policies of the government.

Why has the nation-wide strike been called?

Codes and flaws:

• With the introduction of economic reforms since 1991, employers and the global financial institutions have been lobbying for labour market and structural reforms.
• The recently introduced Codes are based on the fundamental unproven premise that labour laws and inspection system are obstacles in attracting investment, and, hence the government must promote a cheaper and flexible labour market.
• While the Codes extend some labour rights such as universal minimum wage, statutory recognition of trade unions, formalisation of employment contracts, and social security to gig and platform economy workers, they also afford substantial flexibility to the employers in terms of easy hire and fire, freedom to hire contract labour and unregulated fixed-term-employment, etc.
• The Codes have created tremendous insecurity among workers.
• Trade unions also have contended that many of their suggestions have not been incorporated in the Codes and the COVID-19 relief measures.

Read more on the Labour Codes in the linked article.

COVID-19 and migration:

• Migrant and informal workers underwent woeful experiences during the COVID-19 period.
• The COVID-19 period has witnessed a maximum amount of legal and extra-legal measures issued by the state.

What are the demands?

In this context, the central trade unions have these demands:

• Direct cash transfer of ₹7,500 per month for all non-income tax-paying families.
• 10 kg of free ration per person per month to all the needy.
• Expansion of MGNREGA to provide 200 days of work in a year in rural areas at enhanced wages.
• Extension of employment guarantee to urban areas.
• Withdrawal of all anti-farmer laws and anti-worker labour codes.
• A halt to privatisation.
• Protection of government employment
• Restoration of old pension schemes, etc.

The demands reflect disappointment, hurt and anger experienced by the working class not only during the time of COVID-19 but also for events of the last three decades.

Options before the Trade Unions:

The central government, as per trade unions, did not conduct an effective and sustaining social dialogue, though it held a few symbolic parleys with them. At the State level, social dialogue institutions are largely absent or weak. The trade unions have six options to confront or soften these measures:

1. Social dialogue
2. Political lobbying
3. Political confrontation through Opposition parties
4. Legal action by approaching the judiciary
5. Seek the International Labour Organization’s intervention
6. Direct industrial action

Way forward:

• Approaching the judiciary seems to be a suitable option, in the current scenario, provided they have strong legal grounds to challenge reforms introduced by Central or State governments.
  • Though the Supreme Court of India did not respond quickly to provide relief to migrant workers, it has struck down the Gujarat government’s amendment of the Factories Act.
• Trade unions must explore other avenues such as seeking the ILO’s intervention, judicial action and social dialogue.
  • The ILO’s intervention in May 2020 only provided a temporary respite to trade unions.
• The labour unions have now resorted to the final option i.e, demonstrative industrial action followed by sustained protest actions.

Conclusion:

• This strike is a signal to the larger society of the concerns of workers. Hence, it is legitimate but such action alone will not change the Codes.
• There is no alternative to social dialogue in a pluralistic democracy which all the parties in the industrial relations system must make effective use of.
• Suitable amendments must be made to the Codes to aid both ease of doing business and to promote labour rights.
• This strike must be seen as a reminder of potential, positive reconstruction of laws.

2. Jobs, exports and the trade pacts link

Context:

As per the figures presented by the Reserve Bank of India, India is in an economic recession for the first time in its independent history.

Issues:

Job loss:

• Jobs are the first casualty during a recession.
  • Thousands of people lost their jobs due to the slowing economy in 2018-19 and 2019-20. Unemployment had reached a 45-year high.
  • More than 2 crore people lost their jobs and incomes during the lockdown.
• In any country, the ultimate economic test is, to ensure that are there sufficient jobs, incomes and livelihoods for all in the workforce. The single biggest challenge confronting India today is jobs.

Reduction in export volumes:

• Despite the “Make in India”, export volumes have decreased in the last six years.
• The reason for this is seen as the complete reversal in the direction of India’s foreign trade policy with higher tariffs, non-tariff barriers, quantitative limits, the return of licensing, border country restrictions and the appreciating value of the rupee.

Trade agreements:

• Exports are linked to trade agreements.
  • The member-countries of a trade agreement promote trade among themselves with easy rules but restrict trade with non-members with hard rules.
• Some historic trade agreements that were successful were the Association of Southeast Asian Nations (ASEAN), North American Free Trade Agreement (NAFTA) and the Southern Common Market (MERCOSUR). Half-hearted and hesitant agreements like the South Asia Free Trade Agreement (SAFTA) failed.
• Unfortunately, India has turned towards what seems like an anti-FTA policy.

Way Forward:

Job creation:

• The biggest priority for India must now be to recover the jobs that were lost and create new well-paying jobs.
  • According to the Economic Survey 2016-17: If the government makes available ₹10 lakh as a loan to four companies for capital investment; a steel manufacturing company will create one new job with this amount. An automobile manufacturer will create three new jobs. A producer of leather goods will create 70 new jobs. An apparel and garment maker will create 240 new jobs including 80 for women (Economic Survey 2016-17).
  • Large numbers of good quality jobs can be created only in sectors that are labour intensive, and where India has a comparative advantage, such as apparel, leather goods, value-added agriculture and so on.
  • These job-creating sectors depend not only on the domestic market but, significantly, on export markets.
  • More than one-half of the leather goods and one-third of the apparel produced in India is exported to other countries.

Export promotion:

• India’s economy is in shambles and exports are one of the main engines to revive economic growth and create many new jobs.
• In order to revive exports, India needs greater and frictionless access to global markets.
• India needs to find more export markets, nurture them, and sustain them amid intense global competition.
  • There is irrefutable evidence that India’s new trade policy, unveiled first in 1991-92, and taken forward by every subsequent government until 2014, has paid rich economic dividends in generating jobs, incomes and consumption.
  • Also, exports were the most significant factor that drove the Indian economy in the ‘boom years’ of 2003-2012.
• Merchandise exports also create supporting jobs. It is therefore very important to encourage and incentivise exports to be able to create many new jobs in the country.

Bilateral Free Trade Agreements:

• India needs to shed exaggerated fears of trade agreements.
• India cannot protect its domestic industry with high trade barriers while aspiring for bilateral trade treaties to promote exports.
• Most manufacturing today has a long supply chain that cuts across many countries.
  • To be able to export goods, India must import raw materials or equipment or technology from other countries in the supply chain.
• Hence, India must re-learn to engage with other countries and negotiate favourable trade agreements through the bilateral and multilateral routes.

The art of survival in a fiercely competitive world is engagement and negotiation.

Q1. Consider the following pairs:

Q2. Which of the following statements best describes the UMANG App?

Q3. Consider the following statements with respect to Jallikattu:

Q4. North American Free Trade Agreement (NAFTA) is a free trade agreement between 
which of these countries?

I. UPSC Mains Practice Questions

1. With India on the verge of an unprecedented economic catastrophe, it is time for India to let its guard down and consider Free Trade Agreements. Critically comment. (15 Marks, 250 Words) (GS 3 Economy).
2. With recently introduced labour reforms set to change industrial relations, trade unions must include effective social dialogue to get their grievances redressed. Elucidate. What are the other options available to the trade unions to confront the recent reforms? (15 Marks, 250 Words) (GS 3 Economy).

Read the previous CNA here.