World - New initiatives for labour

The world’s wage earners are in for hard times. With the developed world’s liquidity crisis triggering a global economic downturn, the first Global Wage Report by the International Labour Organisation has made a timely call for the reassertion of labour market institutions, minimum wages, and collective bargaining, in particular. Premonitions of a decline in jobs and a cutback on wages, as a consequence of the spreading economic contagion, have come true. Read along with the ILO’s recent projections of a rise in unemployment and an increase in the number of working poor (those with jobs but earning less than $2 a day), the report’s forecast of a decline in real wages in 2009 is the clearest early warning signal yet of hard times for workers, particularly low wage-earners. The unkindest cut is that these predictions are to overtake the world’s workforce when market forces are fast eclipsing the economic role of the state. Safeguarding wage earners is critical. Shrinking wages directly affect the world’s middle- and low-income classes, which account for 89 per cent of the world’s population (2002 data). The accompanying dip in consumer expenditure will drag economic growth and delay recovery from recession.

The Indian wage earners’ woes are exacerbated by several factors. First, the fragmented unionisation and the changing composition of trade union membership post-1991 provide minimal scope for collective bargaining. Secondly, the effete status of minimum wages, even in occupations where these are mandated, offers no meaningful economic sustenance or protection. As an initial step, the coverage of minimum wages should be widened to protect most vulnerable groups — urban non-formal workers, for instance. Keeping the system simple is equally important. A meaningful and universal minimum wage policy should precede any further initiative on labour reforms. Another imperative is to step up income support measures. One sector where these are required immediately is also one that is going through a major labour market transformation: the rural agrarian workforce, which suffers from lower job prospects. Seen along with the big-picture of a shrinking organised and public sector workforce there is an urgent need for a comprehensive labour protection policy. These call for a further strengthening, not weakening, of labour market institutions. The challenges are huge, but given the hardships that wage earners are likely to experience, governments in India and elsewhere should strengthen their protective role through new initiatives.