The Hindu Business Line : Job schemes must effect grassroots changes

The final test of the Employment Guarantee Act will lie in the poverty alleviation it promises and the quality of assets it builds. That the assets it helps build should be maintained properly goes without saying. But whether the programme will succeed in alleviating poverty is doubtful.

Job guarantee schemes must strike a balance between improving the lives of the target group and putting better infrastructure in place.

THE National Common Minimum Programme (NCMP) announced an Employment Guarantee Scheme (EGS), designed to protect the interests of the poor. The Bill to provide the guarantee has already been prepared and is expected to be enacted in the current session of Parliament. The draft has drawn on the provisions of the Maharashtra Employment Guarantee Act, which has been in force for 30 years.

There have been criticisms that this make-work programme will be so much money down the drain, and will not leave any long-term assets. Fiscal reformers have been quick to target its heavy burden on an already strained fiscal system. The programme is bound to be implemented, given the mandate of the NCMP.

The issues involved in the implementation of the proposed guarantee, however, deserve to be discussed in detail. For the purpose of this discussion, I have drawn on an exhaustive survey of the relevant issues by Ms Indira Hirway in the latest issue of the Economic and Political Weekly (December 3).

The need for addressing unemployment is obvious from the data cited in the Tenth Plan. The rate of growth of employment was lower in the 1990s at 1.07 per cent compared to 2.7 per cent in the 1980s. This is in spite of the fact that the rate of growth of GDP was higher in the 1990s (6.7 per cent) compared to 5.2 per cent in the 1980s. The Tenth Plan states that if the present trends continue, it will not be possible to create enough employment during the Tenth Plan to absorb even the addition to the labour force during the Plan period.

This will still leave the backlog of unemployment unabsorbed. As the Plan document rightly observes, this emphasises the need for a higher rate of growth and, if possible, an alternative labour-intensive strategy of development. However, given the compulsions of globalisation and technological developments, the latter option does not seem to be feasible if we have to compete with the rest of the world on equal terms.

These facts and figures are grounds enough for the NCMP to think of and promise an Employment Guarantee Scheme. Attention has necessarily to be focussed on the working poor — persons employed at a low level of productivity and low wages. There will be a significant number of poor people, who will not be absorbed in the mainstream economy by the end of the Tenth Plan period. This emphasises the "urgent need to support these people with jobs to enable them to come out of poverty".

Ms Hirway's article points out that there are four main approaches to this problem of providing jobs for the poor. One is the communitarian approach adopted by China where the workers are entitled to minimum needs by belonging to a communal society. It is obligatory for workers to work according to the needs of the community. They are ensured a minimum standard of living. China itself has moved away from this mode.

The second approach cited by Ms Hirway is the right to income, which was deployed by Netherlands after the Great Depression of the 1930s. The un/under-employed have a right to a minimum income from the State.

In return, they have to work whenever work is made available to them. This presumes an open-ended commitment on the State. The US has a variant of this scheme, in its unemployment doles. India may find it difficult to implement this mode.

The third approach is the one adopted by India so far. The author calls this the "wage employment model". In this approach, wage employment on public works is provided for the poor without any guarantee.

This is typified by the number of different schemes — NREP (National Rural Employment Programme), the Jawahar Rozgar Yojana, the Sampurna Gram Vikas Yojana, and so on.

A fourth approach is that adopted by Maharashtra (and now by the Centre). The Government has to learn from the lessons of the Maharashtra Employment Guarantee Scheme and incorporate them in its Scheme.

According to the proposed Act, employment will be provided for 100 days to at least one adult member of every household in rural areas at a minimum wage. Guarantee is for casual and manual work on public works, work to be provided within 15 days of demanding it and to be located within a five-km distance.

If work is not provided to a person within a given time, he will be paid a daily allowance, which will be at least one-third of the minimum wage. Also, if work is provided outside the five-km limit, the worker will get an allowance for travelling and living there.

Workers on public works under this Act will be provided amenities such as medical treatment and hospitalisation in the case of injury at work along with a daily allowance of not less than half the statutory minimum wage.

In case of death or disability, compensation is to be provided in the manner laid down in the Workmen's Compensation Act. Deductions are to be made from the wages for Welfare Schemes, such as Health Insurance, Accident Insurance, survivor benefits, allowance is to be paid if work is not provided within 15 days of demand.

The Gram Sabha will be involved in the monitoring of the programme through social audit. (I wonder how many Gram Sabha members will be aware of the implications of this responsibility! Even sophisticated corporates fight shy of social audit). The Collector of the District will be responsible for the programme at the district level. He will maintain the accounts of the Scheme. Each Gram Panchayat will prepare an annual report on the implementation of the programme. All this requires a gigantic bureaucratic effort in terms of administration, accounts and evaluation.

One of the problems enumerated by the author relates to the question on selection of projects. A roster of projects, with detailed estimates and, where possible, a financial evaluation of benefits have to be evolved. These works will have to be supervised and paid for from time to time.

Inevitably, there will creep in a tender system of allocating the works to successful bidders. Here begins the process of political manipulation and Panchayat intrigues. There seems to be no escape from the panoply of rules and regulations to prevent corruption and underperformance in respect of projects.

Whether and how the Collectors will be able to discharge these additional responsibilities are difficult questions to answer. But it is clear that a comprehensive collection of projects and their proper selection is an important prerequisite to ensure that the Employment Guarantee Scheme does not mean so much money down the drain figuratively, if not literally. The funding for the proposed Employment Guarantee Scheme will be earmarked separately.

Each State will share the material component outlay with the Centre. (The logic for the latter arrangement is not clear, unless it be to ensure "ownership" by the State in the projects concerned.) Workers' organisations will be recognised for the implementation of the Act. Whether this will lead to strikes and gheraos by employed workers, who will hinder the implementation of the Employment Guarantee Act is not clear.

Even after three decades of Employment Guarantee Schemes, Maharashtra still scores poorly in the inter-State rankings of proportion of "above poverty line". It has also not diminished the number migrating from the drought-prone areas of Maharashtra to the urban areas.

Whether the experience of the All Indian Employment Guarantee Scheme in alleviating poverty will be any different depends on successful design of projects and their effective implementation. Much depends on the cooperation and involvement of State Governments and panchayat administrations and the participation of civil society, such as NGOs, at local levels.

Ultimately, the macroeconomic answer to the question of employment generation lies in the policies and programmes at Central and State levels. It also turns on the issues of technological choice. A conscious effort will be made to shift the emphasis in the Tenth Plan and beyond to jobs as against growth per se.

It would seem far more important to lay stress on a job-oriented strategy for overall economic growth rather than on creating jobs per se through make-work programmes, such as are implied in an Employment Guarantee Scheme. While the jobs created as a result of irrigation works, road works, housing projects, railways and small industry development add to the overall pool of available jobs, they are distinct from the EGS type, which has an emphasis on schemes for the sake of jobs, instead of jobs as an offshoot of projects.

It is desirable to maintain a balanced approach and not be carried away by a programme such as EGS, which has a focus on jobs instead of on asset creation and asset maintenance. Such a balanced approach is bound to guarantee more jobs in the long term while the EGS approach is bound to remain a flash in the pan — however desirable for short-term electoral and cosmetic reasons.