Dignity of Labour

Dr Haseeb A Drabu, J&K’s Labour & Employment Minister is working on an idea to improve the situation of private sector in such a way that pressure on government jobs reduces significantly. He is leveraging twin Rs 2700 crore corpuses to engineer a change


For all these years, our focus has been on government employment. So the role of government as a regulator of labour markets was ignored. Labour and Employment department is one of the least profiled departments of government despite the fact that it has a huge role to play, especially in an economy that is now transitioning towards a free market.

When you have the free market, you will have people getting sacked; losing jobs, so the role of government as a regulator of these markets becomes very critical. When you have liberal labour laws which industry does want, then how do you protect, how do you provide a safety net for the most marginalized people – the labour class? That is the key role. But somehow that role has never been either articulated or even performed in the last sixty years.

Employment department per se really is about today collecting data of those who register with employment exchanges. Since there is no connection between registering in an employment exchange and getting a job, it has not really evolved the way it should have been. I see more potential in the labour part of it and there are two or three things which I think are very important and need to be highlighted.

For instance, in the employment part of it government is a custodian of EPFO, the Private Employers Provident Fund. It is perhaps least known organization and in a state like J&K, which is traditionally known and so much is talked about its cash position, the JKEPFO is sitting on a cash of Rs 2200 crore!

Now, this is the government collecting Provident Fund of private employers. The worker makes a contribution, the employee makes a contribution, the employer makes a contribution and government holds it. There is a proper organization and I have tried to restructure it because government is custodian of their welfare. More importantly, you can invest these Rs 2200 crore. Today there is no investment, it is not happening on recurring basis. In the last board meeting, I had asked for investment policy because we pay at 8.5 percent return on this. We must earn that amount of money to be able to pay that. And this (Rs 2200 crore) is a long term fund which can be used after adequate policy measures are taken for infrastructure development.

Table;-Cess-collected-since-the-formation-of-BoardIf you see minutely, JKEPFO like small organization can virtually act as a small bank because they will invest money subject to guidelines (there are guidelines from Government of India and state government) and its autonomous board can work out an investment policy which will give us some returns and those returns can be deployed to create assets.

So, when you are strapped for cash of Rs 100 or Rs 200 crore, you see these funds could be leveraged adequately to benefit not the government but the employees.

Similarly, another organization, which is again relatively unknown, is the J&K Construction Workers Board.

Every employer who has construction workers, we charge a cess on it and that cess is collected by the government and is spent on the welfare of the construction workers. Again there has been a lack of transparency, like who these construction workers are and how much they get? There is lack of awareness about this. Because there are lots of schemes we do, we fund the education of construction workers children, marriages of their wards and we take care of their illness.

Somehow this whole process had been hijacked, either by political parties or by unionized labor groups.

The idea would be to make it autonomous, independent and genuinely help those who actually are construction workers.

I have asked my department to look at the top twenty construction sites, and provide for making the construction sites safer. This is in addition to the schemes we implement – funding them up to one lakh for chronic sickness, Rs 50,000 for marriage, and Rs 25,000 for all kinds of schemes. I am going to start an initiative at Athwajan where we see stone workers. They should have a proper shed, tools and clothing. We will provide all that to all the construction workers. Once the construction moves from there the sites can be wound up.

The idea really is that there are two or three organizations that we can use to provide what is traditionally called the human face to capitalism.  I am reorganizing the entire labour and employment department to ensure that the maximum financial physical benefits go to the labour class.

Now, within the labour class there are segments. One is construction workers segment. Other is a white collar worker for whom we can do provident fund management. Put together, you see it from two perspectives. Firstly, as an investible corpus, which you can generate assets from.


Secondly, how do you ensure long term security for all those people? If you do this well, one un-intending benefit of this is that the pressure on government jobs becomes less. The more you provide them in terms of future benefits, the more they become acceptable options for dignified living.

JK Construction Workers Board has a corpus of Rs 400 crore and that is substantial to be leveraged for the benefit of the workers.

It is an annual cess that we collect. Ideally, we should not be saving this. We should be redeploying it to them and make their working condition better. Somehow the culture seems to have evolved that we built a corpus. Good that we now have a corpus and will use it in different ways. Now the idea should be to create an environment for the working class.

On JKEPFO, we should set an example for the PF of the government, which as I said in my budget speech, is all over the place in accounting and other norms.

This is a smaller corpus. We have already issued an advertisement to see what is the best we can get (from the market)? We don’t have to use risk instruments in those but we should get at a good return and ensure that the future of these people, who are in private employment, get secure.

Kindly explore. What makes government jobs so attractive? It doesn’t pay that much. What makes a government job attractive is the pension, the Provident Fund. In other words the government job is attractive not because of the salary that it fetches or the working conditions but because of a secure future.

If you are able to do some security through these organizations you will automatically put less pressure on government jobs.

So that is where the whole organizational restructuring has to come. For instance we don’t have the kind of people in JKEPFO who can handle this kind of corpus.

Easiest is to outsource it but you also want to build some competence. I have asked for a complete revamp of people we should hire in these organizations. We can even put on deputation these people in these organizations. They must have some understanding of these matters. Because, these departments like JKEPFO, the JKCWB can become game changers outside government. And because they are autonomous, the others have a say in it, its boards represent all the stakeholders. It is not like one government officer decides everything. There is a proper board which has all kinds of stakeholders and they will discuss it and work towards it. So that is where I am trying to restructure all these organizations.

J&K’s labour market is witnessed an interesting change. Right now for the last many years, it tells a very basic story. It is a classic syndrome all over the world what we are observing in Kashmir. It is called backward sloping labour supply curve. When incomes rise, labor supply need not rise. Typically you will expect higher the wages and higher the supply of labour. But it doesn’t work because the class reaches a certain level at which point they don’t want to supply labour. Hence the word backward sloping labour supply curve. It turns backwards so people don’t supply labour which is where need for outside labour comes. I think because of a variety of reasons the labour class in J&K has got a certain level of income at which point beyond they don’t supply physical labour.

This may be because of land reforms that have happened for the last 40 years. This may be because everybody has a parcel of land, small bit of orchard somewhere.

It is not unusual. It’s known to happen when the level of income rises. So we are seeing that level.

details-of-amount-utilized-by-the-districts-on-construction-labourYou can see that in paddy fields where you have workers from Bihar. Even for something which is as specialized and as intriguing to our culture is the waza mohnew in a Wazwaan, the guy who pounds the flesh on a stone is today a Bihar worker because he is cheaper than the one who used to do all this earlier.

So that change has happened and I think that is a major change. We have in some ways made a major shift in terms of, when you take 50 years or 70 years of span into work, that from a major labour exporting economy we have become a labour importing economy. At one point of time, we used to be major labour suppliers to Punjab and now we have stopped and instead we import.

In J&K, we are not providing any amenity to non local labour class. If there is a construction site then it is as per standard norm where we don’t make a distinction. We are interested in labour as a class not labour as a nationality. But the board I was referring to is mandated to take care of the local labour class.

At the same time, however, the labour import story offers an interesting analysis. There are two factors of production: labour and capital. We have a regulation on both in J&K. For the labour side we have in terms of state subject and for capital we have our own ownership of land.

But what is curious to me is capital never comes except small but labour does.

If this place is not a secure environment to work, how is it secure for labour and not for capital? I see it all the time that the smallest of the small entrepreneurs like one man selling gol gappas, another selling wada-paw, all over the place. They are incidental enterprises. He has a certain amount of money, he comes and does business here. Nobody ever disturbs him. He makes his money here, he prefers to come here from Punjab or UP and then goes back in six months time with his earnings.

So when that kind of capital comes in what prevents the bigger capital to come in? It is a curious case because for bigger capital coming in, you have hundreds of other reasons like that of land.

You go to Tulip garden you will find a class of thriving businessmen. Out of twenty people supplying various things there, 18 are non-locals. There is no requirement of security.

Somehow we have created a perception at the national level that when larger capital is involved there is an issue in Kashmir, issues of regulations, land, and security. None of these issues exists in case of labour which contributes to local and non local economies. We need to build on those.

I think the bigger the business, the greater amounts of politics involved. When larger business houses take a view on investment in J&K, it is more political than anything else. Whereas these people use mass transport, earn and contribute and go home. There has to be some way in which we as an economy are able to capitalize on this.

-As told to Masood Hussain


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