Imperatives of Globalization and Facilitating Employment Rights of Labour Through Vocational Training Law in India

Imperatives of Globalization and Facilitating Employment Rights of Labour Through Vocational Training Law in India

Debi S. Saini

Professor

Human Resource Management

Management Development Institute

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Abstract

The key social security issue in the post-globalization developing world, in general, is providing employment- or self-employment opportunities to semi-literate, literate and educated sections of masses that are unemployed or are under-employed. Apart from employment and employability, another important social security question in developing countries is promoting basic minimum needs of common people like health care, basic education, housing, drinking water, and food security. Quite understandably, therefore, social scientists have begun advocating a wider definition of social security—arguing for a movement away from contingencies-based approach to a more comprehensive minimum-basic-needs approach including employment-generation efforts.

In the above context, the paper seeks to examine the changing issues in Vocational Training (VT) at the global level and especially in developing economies like India in view of emergence of new realities due to the adoption of globalization policies. It maps the ways in which the Indian VT scene responds to industry’s needs of developing skills and thus attempts poverty alleviation through facilitating faster economic growth and employment generation. VT in India is supply-led rather than demand-driven. It has got so structured that it is viewed as an end in itself rather than as a response to the skill-availability needs of industry or the employability needs of the masses.

The paper argues that the new dispensation warrants a shift from the present supply-led VT approach, and advocates for a long-term demand-driven VT policy with backing of an appropriate legal framework. It notes that some of the smaller developing countries like Malawi in Africa and Philippines in Asia have enacted far more modern VT laws nearly a decade ago. But Indian VT discourse is merely shuttling in the corridors of bureaucracy for more than ten years. It suggests enacting a law envisaging a non-bureaucratic, participatory, professionally-led prospective “Authority” which can coordinate, plan, accredit and administer VT-related activities for variegated sectors across the length and breadth of the country.

Keywords:social security, vocational training, employment generation, Authority

I. Introduction

As is well-known in most countries of South Asia barely 5 to 10 per cent of the labour force is covered by social security schemes. In India this figure has shrunk from nearly 11 per cent in the pre-globalization period to a mere 7 per cent today; 93 per cent of the workforce enjoys almost no state-sponsored social security whatsoever. These economies also suffer from high incidence of poverty. In India a quarter of its more than one billion population lives below the poverty line; the main reason for which is lack of meaningful employment opportunities. Thus, the key social security issue in the post-globalization developing world, in general, is providing employment- or self-employment opportunities to semi-literate, literate and educated sections of masses that are unemployed or are under-employed. Western social security models are contingencies-based; their adoption does not help most citizens in developing countries; for since these citizens are generally not employed in the organized sector they can not become (and are not even allowed to become) members of any social insurance scheme.Apart from employment and employability, another important social security question in these countries is promoting basic minimum needs of common people like health care, basic education, housing, drinking water, and food security. Quite understandably, therefore, social scientists have begun advocating a wider definition of social security—arguing for a movement away from contingencies-based approach to a more comprehensive minimum-basic-needs approach. A sustainable poverty-alleviation effort in Indian context will include facilitating skill development of people who can then find employment or self-employment as per exigencies of the globalizing world.

Accessibility to reasonably decent jobs enables people to raise their living standards by own efforts, and without attracting any stigma of pauperism and social indignity. Therefore, providing “a fishing rod rather than fish itself to the needy is known to be a more viable measure” (Saini, 2003: 269). In particular, unskilled people are in a more disadvantageous position in facing the market rationalities in the era of globalization, where profit maximizing employers are looking for best possible skills to compete in the global market. This paper looks at the issue of legal framework for promoting employment rights of people through provision of vocational training (VT) in the Indian context.

The paper first examines the changing issues in VT at the global level as well as in developing economies. It then maps in the Indian context the country’s contemporary skills-base, workforce structure, employment scenario, and the issues in poverty alleviation arising from the present VT-related policies of the Government. The paper mainly focuses on examining the present legal and policy framework of skills-development in India. But this is done in a comparative framework through examination of the structure and working of the VT laws and policies in two other developing countries facing many similar problems in poverty-alleviation in the new economy. The formulations made are rooted in the Government reports reflecting the working of the VT system(s), four interviews of the concerned officials (two officials associated with the Indian VT system, one with that of Malawi and the fourth with that of the Philippines), a comparative study of the legal and policy documents of the three countries, and the existing literature on the subject including the published and other researches.

It makes a case for developing a facilitative legal framework that supports creation of an autonomous statutory authority for designing and administering the country’s skill development system. This law should be so designed that it leads to development of a professionally-managed,goal-focused,needs-driven,competency-based,stake-holders-owned, and democratic system of VT. Eventually, the paper projects how lessons in comparative law-making can be learned by the developing world by drawing on the experiences of three such countries i.e. Malawi, Philippines and India.

II. The Changing Dynamicsof VT Issuesin Developing Countries

After the initiation of the economic reforms programmes at the global level, the world of work has changed substantially. Massive expenditures are being made by developed as well as developing countries in manpower training––more so in the formal sector––so as to respond to the needs of the new economic order. In the post-industrial economy, work and workplace have been considerably influenced by changes in technology, management innovations, and competition in the global market; these influences have transformed the kind of knowledge, skills and attitudes needed for successful employment and work performance (Stasz, 2001). We have the example of Southeast Asian countries to suggest how widespread acquisition of human capital has helped raising productivity and earnings and development of skill-centred industries (Stiglitz, 1996; World bank, 1995; Saha and Sarkar, 2002). Thus, in the new export-promotion model success requires the use of improved technology and appropriately-trained world-class manpower; these are also viewed as a strategic choice for poverty alleviation.

As is noticeable from Table-1, in case of countries such as Asian tigers like Hong Kong, Republic of Korea, Singapore, Taiwan and China imparting of training is guided by the demand; but it is supply-led in most other countries of Asia and Africa (ILO, 1999). Informal sector, which employs the bulk of poor, powerless and unskilled people needs VT the most, and meeting their training needs are a very common important problem in developing countries like India.. This is symptomatic of Government’s indifference or inability to focus on the real issues at stake.

Many new issues in relation to skills development through VT in formal as well as informal sectors have now emerged as important determinants of the kind of skills needed. These must receive critical attention of Governments, framers of any VT law, and employers in the developing world in the era of globalization. They can be understood as follows:

1.From Import substitution to export promotion: Globalization has altered the

developmental models of most developing countries, which have moved from import substitution to export promotion. In most developing countries a higher incidence of skills is required for producing goods and services that can be competitively exported in the global market. This introduces an element of global relevance of skills.

2.From supply-led to demand-driven skill formation Policy: As can be seen from

the case of newly industrialized countries (NICs) of Asia, any meaningful VT programmes have to be built on the demand-led skill formation. But most Asian countries are far from building their VT models on the basis of demand for skills in different sectors. Various agencies involved in VT in India, for example, operate in water-tight compartments and in a highly inflexible manner treating VT as if it is an end in itself rather than as a means to sustained livelihood and employability. The requisite framework of industry–institution linkage is not seen emerging. The curriculum at various levels of learning in Government-run institutions in India is not relevant to the diverse needs of the economy (Shaljan, 2002; Government of India, 2001).

3. Training Modules for Unorganized sector: Developing countries need to evolve

appropriate incentives that will motivate training institutions to respond to the needs of the small entrepreneurs in the making. Of course, this strategy can work only if there is in vogue an effective system of market-needs assessment. The data on training needs will help carving out appropriate training modules on the basis of the gaps discovered (Mathur and Mamgain, 2002: 1041).

4. Focus on labour market information: Often a total mismatch of skills generated

\and skills in demand is noticed especially in less developed systems. This creates serious hurdles in responding to the needs of globalization leading to surpluses and scarcities.A large number of studies report inadequacies of the institutional frameworks of skill development in meeting the social demands; this is more so in Indian informal sector (Ghosh, 2002; Bashir, 2002; Agrawal and Naqvi, 2002; Sasikumar, 2002).Development of an appropriate Labour Market Information System (LMIS) will help in knowing, among others, skill training linkages with the community; assessment of demand and supply of skilled workers including qualitative dimensions of skills and wage structure; and dropout rates of those admitted to formal and non-formal streams of VT.

5. Training of VT trainers: Trainers in today’s business world have to be exposed to

the state-of-the-art methods of imparting knowledge and skills among workers to save themselves from the problem of skill redundancy.Instructors in Government-run training institutes in India are often found not interested in revising the curricula as that would involve the burden of preparation for them (Shaljan, 2002: 4651). This requires systems of adequate sanctions and motivation for them to undertake updation of methodologies and syllabi.

6. Exigencies of flexible manufacturing: So as to cope with the decline in mass

production, industry is switching over to a newer method of work organization. Focus is thus shifting from Fordism (mass production) to “flexible manufacturing”––also known as “flexible specialization” or “Toyotaism” (Venkata Ratnam, 2001: 80). The approach emphasizes multiple-skills that are necessary for adopting flexible manufacturing. These developments are worsening the employment prospects of the less skilled (ILO, 1998). Thus employers need to impart skills of high order among the employees over and above their core skills so as to facilitate labour flexibility.

7. Skill development through re-training: Perhaps, one of the most difficult issues in

the structural adjustment programme (SAP) before the developing world is that of training the retrenched workforce (Lucas, 1994). In fact, what the workers displaced by the SAP want the most is relevant training so as to make themselves available in the labour market at reasonably acceptable conditions. In order to be meaningful, skill upgradation for the retrenched workers should be started before and not after the retrenchment (Mathur and Mamgain, 2002: 1042).

8. Importance of constant learning: Life-long learning is replacing one-time skill

acquisition globally. Developing a learning organization is becoming the key to organizational survival and growth. This requires development of a sophisticated VT system by the state, the use of which could be a starting point for adapting to a culture of life-long learning.

9. VT through public–private partnership: It is understandable that in the

post-globalization world, Governments can not be expected to provide and fund the entire range of training activities. The Indian case, for example, shows that private sector industrial training institutes (ITIs) have performed far better than those run by government (Adams and Krishnan, 2003). The experience of the developed world is also on similar lines (Ramachandran, 2002: 1012). Therefore, in order to be workable, the new models of VT in the Asian countries have to be informed by these realities.

III. Workforce StructureinIndia

India had been predominantly an agricultural economy till it became independent from the British rule in 1947. The country has the second highest population in the world, which as per the latest Census of 2001 stood at 1027 million. Some of the relevant national data as on 1 March, 2001 can be noted as follows:The literacy rate for the population belonging to the category of seven years and above stands at 65.38 percent. The country’s 28 states and 6 union territories are divided into 600 districts, which are administrative units of its 5161 towns and 6.4 lakh villages.

Post-Independence India chose to pursue the policy of self-reliance in its economic development. Consequently, it preferred an import-substitution rather than free-trade developmental model for more than 40 years. The Planning Commission that has been constituted by the Central Government is continuously involved in making plans and arranging their reviews. Presently, the Tenth five-year plan is in operation (2002-07). The government policies till lately have been focused on widening the employment in the organized sector. However, this sector never represented more than 10 per cent of the workforce in the country; and presently employs a barely 7 per cent of the Indian workforce.

The mixed economy approach stressed on the need to nurture the public as well as the private sectors as per priorities laid down in the Five-year plans. By 1990, the Central (Federal) Government had invested around 1000 billion rupees in 244 central PSEs employing 2.3 million people. The State Governments had also invested some 382 billion rupees in 875 enterprises under their control (Ramaswamy, 2000: 45). Jobs in Government and public sector have always been most-sought-after by one and all; the most attractive being the civil service whose power has its genesis in the governance structure adopted by the colonial British empire. The whole protectionist economic framework in the country so far has revolved around the PSEs and economic planning which followed a modernization programme of industrialization on the western pattern, with projections of securing to the people jobs in the formal sector. As seen in Table-1, even the VT system in the country has been guided by this thinking; and bureaucratic indifference, that will be discussed in subsequent paras, has to do a good deal with it.

The failure of the import-substitution model of development became too evident with the beginning of the decade of the nineties when the country started the reforms process in July 1991 through the New Economic Policy (NEP). Despite the tall claims of the success of the globalization process India is comparatively slow in implementing the reforms process, which has resulted in lower rankings1 by global agencies in reforms implementation.

The country has multiplied its foreign direct investment (FDI) several times since adopting the New Economic Policy (NEP) in July 1991 but is still far behind its neighbour China and countries in South-East Asia in this regard. This will necessitate appreciating, among others, the factors influencing skills development policies and activities in the Indian context. These factors, among others, include availability of requisite skills and competencies; required mindsets, values and customs; facilitative legal framework and institutions; and conducive cultural environment. These factors are product of a country’s socio-politico-economic realities. It is believed that India needs a growth rate of GDP between 8 and 9 per cent over the next 10 years if it wants to see a significant improvement in employment (Government of India, 2001). But this rate in the recent years has been between 4 to 6 per cent, averaging around 4.4 per cent (UNDP, 2003). Therefore, active state intervention for a meaningful facilitation of skills development has no substitutes.