The Hindu Business Line : Seeking growth with human face

Growth is undoubtedly important, but not at any cost. It has to be fair and just, employment oriented and environmental friendly, not ruthless, rootless, voiceless and futureless.

While setting a growth target as high as 10 per cent, it is important to emphasise that it must also be equitable, pro-poor, employment generating, environmentally friendly, and so on. This is not merely to be politically correct but in line with expert advice.

A few years ago, for instance, a reputed economist, quoting the founding father of UNDP's Human Development Reports, explained that five types of economic growth must be avoided: Jobless growth that increases unemployment and misery; ruthless growth that increases income and wealth inequality; voiceless growth that continues to keep the oppressed and disadvantaged with little or no voice; futureless growth that destroys the environment and the natural resource base; and, finally, rootless growth that destroys traditional practices and cultures.

All these are perfectly sensible ideas, but need to be appreciated in contemporary contexts and challenges.

Jobless growth

First, a look at the jobless growth on the basis of a hypothetical example. A friend started a consulting company when none had thought of such a business.

With little competition and business doing well, he employed a driver, an orderly, and two secretaries to take care of his official and personal work; an accountant and two clerks to look after financial transactions; and two administrative assistants to take care of miscellaneous activities.

With liberalisation and opening up, came competition from global players. He not only has to seek output growth but also count every paise carefully. He has rationalised his work force. The accountant has got trained to use computer packages and the two clerks have been persuaded to leave with due compensation.

My friend re-learnt the joy of driving, and the orderly is out. A travel agent takes care of travel plans and one of the administrative assistants too is off. The younger of the two secretaries manages every thing with a PC. Employee strength has come down from to three from nine.

Output growth plus employment reduction means a tremendous boost to productivity — the basis on which the firm stays competitive. This is a case of jobless growth, but quite unavoidable.

The worst case of jobless growth may be witnessed in an economy where historically the public sector had a dominant position and was liberal in employment creation. It seldom happens in direct production activities where absorption of manpower is almost always dictated by plant design and operational considerations.

How does one address the problem of jobless growth? The macro picture could well be one of job growth due to increase in investment and growth rates, but there are job loss problems at firm, industry and regional levels.

Retraining manpower for new industries combined with adequate compensation for job loss will go a long way in reducing the suffering of the transition.

Innovative solutions too must be tried, such as former employees starting a backward- or forward-linked cooperative enterprise.

Once the transition ends, it is vital that the past practices are not repeated. It is best not to have "directly unproductive" jobs ; have a sound policy of continuing education and training; have job contracts signed by the employer and employee to drive home the point that no job is guaranteed for life; and ensure enough safeguards in the event of retrenchment including adequate compensation, retraining and help in locating alternative employment opportunities.

Despite the best efforts, there would be structural and transitory unemployment, but less of the fear of jobless growth. (Private insurers should deliberate on how they can provide a foolproof system of unemployment insurance.)

Ruthless growth

Next to avoid is ruthless growth that increases income and wealth inequality. Free markets that reward talent and risk can hardly be expected to aim for income and wealth equality.

The fight against inequality has to be within the realm of society and not the economy. It would appear that at the root of all inequality is the mindset, which promotes inequality in everything — housing, healthcare, education, transportation and so on.

The pursuit of inequality is no less than a cult; some simply worship it. It begins from childhood — from the school that is different for the rich and the poor and goes on thereafter. Unless the society transforms with the conviction that inequality is incompatible with civilised life, ruthless growth is here to stay.

Visibility of inequality can be addressed. State action can ensure that government schools are on a par with private institutions in infrastructure, standards and performance.

In housing, it can be easily tackled by making it a rule that all residential construction must be in high-rise buildings and by ensuring that those who purchase regular apartments make a small contribution for building simple one-room apartments (with kitchen and toilet) to be allotted to the poor. An apartment culture in addition to reducing the visibility of inequality, offers several benefits, including nurturing communal harmony and national integration, ease of planning and providing transport network, relative convenience in the provision of services such as metered supply of water, phone, sanitation services, and so on.

Voiceless growth

Third, there is voiceless growth. Here too, there is nothing in economic growth per se to either cause or cure oppression. It is a matter of political and social action.

The most oppressed of this country are women first and last. Yet, there is so much of debate and delay in the matter of reservation of Parliament/legislature seats for women — that too just a third of seats and not half.

Futureless growth

This has scant respect for environment. The mindless expansion of cities and towns has been destroying the greenery and forest cover. Free market will not restore them.

The utter chaos in enforcing environmental standards is also an example of the weak political and social fabric. Lack of strong legal provisions and/or inappropriate compliance are the culprits.

Rootless growth

Finally, as for rootless growth, there are fears with regard to cultural globalisation, especially of the younger generation.

Education has to make the youth strong-willed, learn to look at variety with detachment, and throw the transient in preference to the permanent.

(The author, formerly with the National University of Singapore and the World Bank, is Professor Emeritus, GITAM Institute of Foreign Trade, Visakhapatnam. He can be reached at bhanoji@gmail.com.)

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