📰 The cost of peace
Afghanistan should not lose the democratic gains made in the post-Taliban era
•Six months after they were first due to be held, intra-Afghan talks bringing the Taliban face-to-face with representatives of the Ashraf Ghani government and Afghan civil society finally got underway in Doha on Saturday. The talks, which were a key outcome of the U.S.-Taliban and U.S.-Afghanistan agreements signed in February this year, have been delayed for many reasons. To begin with, the Taliban set pre-conditions including the release of all its prisoners, while not accepting the basic requirement of a ceasefire. There were also delays over the composition of the Afghan negotiating team led by chief negotiator Masoom Stanekzai, and differences over appointments between the former rivals, President Ghani and Abdullah Abdullah, who was appointed as the head of the High Council for National Reconciliation. There were even concerns over whether the all-male Taliban team would deal with the negotiating team, which includes four women. However, the biggest obstacle was the release of more than 5,000 Taliban prisoners and about 1,000 Afghan soldiers and others held by Taliban militia, as stipulated in the agreements with the U.S. Last month, President Ghani said that he would release all but about 400 who were wanted for “serious crimes”, which led to the Taliban threatening to call off talks, but resolved after a Loya Jirga of representatives approved the release. One final batch of prisoner releases was held up briefly over objections from France and Australia, whose soldiers had been killed by them. The silver lining for India, which otherwise views the reconciliation process with some foreboding, is that the release of all Taliban prisoners has also meant the safe return of three Indian hostages, held since 2018 by the Taliban.
•The hard part begins now. While preliminary rounds held since Saturday have dealt with the structure and logistics, the first task for the negotiators is to declare a permanent ceasefire, and stop violence in Afghanistan that has claimed another 1,300 civilian lives in the first half of 2020. More difficult challenges will emerge as they grapple with the Taliban on how to shape Afghanistan’s future, and whether they can retain the constitution and political processes while bringing the insurgents into the mainstream. With the Ghani government giving the green signal for the talks in Doha, India has modified its stand, and External Affairs Minister S. Jaishankar attended the inaugural ceremony in Doha via videoconferencing; it was the first ever address by an Indian official at a gathering that includes the Taliban (that India still maintains is a terror group). While stating that peace in Afghanistan as a result of an “Afghan-led, Afghan owned” process is a desirable outcome, he made it clear that India hopes it will not come at the cost of gains made by Afghanistan in the post-Taliban era, including democracy, institutions of governance, and the rights of minorities and women.
The ‘Doing Business’ survey needs a revamp as it neglects health and environmental checks
•The World Bank has paused the publication of its ‘Doing Business’ report because of statistical irregularities. This provides us with an opportunity to examine this flawed survey. The index estimates the cost to business from regulations across areas including dealing with construction permits and paying taxes. But the rankings encourage countries to compete even on cutting vital regulations on health and environment.
•Indeed, erratic procedures and delays hamper business in India and simplifying procedures brings economic benefits. But rash deregulation prompts a race to the bottom that the world can ill-afford during a climate and health crises. The World Bank’s independent evaluation group (2008) and an external independent panel (2013) together flagged 15 shortcomings in the index, many of which are still relevant.
Curious scores
•Among the weaknesses are the lack of transparency and objectivity in scoring. For instance, questions have been raised on Russia’s leap in ranking from 120 out of 190 countries in 2012 to 62 in 2015. As a de jure criterion, the survey excludes the informal sector. Curiously, low scores for China and India were associated with high growth in FDI.
•The biggest drawback is that the index sidesteps societal costs of deregulating pollution, worker safety, and health risks. China and India improved their scores sharply in 2019 and 2020, though the world’s first and third largest emitters increased carbon effluents significantly. Another 2020 Index ranked China 120, and India 168, out of 180 countries on the environment. Slack business safeguards produce tragic results. The 2013 collapse of the Rana Plaza garment factory in Bangladesh, the second deadliest industrial accident after the gas leak in Union Carbide, Bhopal, resulted from slipshod factory regulation. Brazil, India, and the U.S. have slashed environmental standards. These standards have further weakened during COVID-19. The reversal of effluent benchmarks for power plants and automobiles and the boost to fossil fuels in the U.S. has been breathtaking. Yet this has not hurt its Doing Business survey ranking (six in 2020). India’s Parliament is considering an Environment Impact Assessment, the draft of which is filled with dilutions of the environmental law.
•Several indicators of the Doing Business survey presume that less regulation is better, but ignore the impact on health, ecology, worker protection and right to information. The 2008 global financial crisis resulted from too little banking supervision. Climate change is driven by lax emission control in China, the U.S., etc. The Centre and the States in India must take into consideration workers’ well-being while considering changes to labour laws, especially during the pandemic. Global lessons warn India of the pitfalls of diluting the 2005 Right to Information Act.
•The survey assumes that lower tax rates are best, which overlooks each country’s fiscal requirements. For example, Maldives and Qatar scored high on paying taxes, but are not role models for India as most of their revenue relies on unique assets. The survey supports lighter rules and taxation to encourage shifts from informal to formal sectors. But formalisation per se may not create jobs and cutting obstacles to starting a business will not necessarily expand the formal economy when facing severe capital shortage and a low-skilled workforce. The survey neglects indicators of infrastructure, entrepreneurship, and competition. It is true that overloading with too many variables makes a survey unwieldy. But when a yardstick does not consider pollution abatement or labour standards, an overhaul is in order.
•Putting the Doing Business project on hold gives the World Bank a chance to blend liberalisation of unhelpful barriers with fortification of needed regulations. A revamped indicator should reward, not penalise, investments in workers’ skills, health and safety, low polluting activities and climate resilience.
📰 Urban employment as the focal point
Given the structure of the economy and demographic profile, the vulnerabilities of informal jobs must be addressed
•The contraction of the economy raises concern on the employment situation as the shrinking sectors are those that create the maximum new jobs. While the ‘Garib Kalyan Rojgar Abhiyaan’ launched in June (aimed to provide livelihood opportunities in rural India) could be an immediate relief, the Rs. 50,000-crore employment scheme cannot be a substitute for decent urban jobs. Given the structure of the economy and demographic profile, it is important to focus on reducing the vulnerabilities of urban informal jobs in the long run.
Economy and employment
•Recent data on the contraction of the economy raises concern on the employment situation in India. The shrinking sectors that have been affected the most — construction (–50%), trade, hotels and other services (–47%), manufacturing (–39%), and mining (–23%) — are those that create the maximum new jobs in the economy. In a scenario where each of these sectors is contracting so sharply, it would lead to either a growing number of people losing jobs or failing to get one, or even both. That is, there is a possibility of a decline in employment and a subsequent rise in unemployment. This sharp contraction has to be seen in the light of India having witnessed a wave of massive ‘reverse migration’ during the early phase of the lockdown, with millions of workers returning to their home States due to a loss of livelihoods. It is doubtful as to when and whether they would return to their places of work, and it would not be unreasonable to assume that a majority of workers might not go back in the near future.
•The abrupt announcement of the lockdown exposed the severe vulnerabilities of urban low-end informal jobs as the share of vulnerable employment is higher in India than that of the world or the South Asia region. Vulnerable employment is characterised by inadequate earnings, low productivity and difficult conditions of work that undermine the basic rights of workers. They are more likely to be informally employed and lack effective representation by trade unions. According to the International Labour Organization, of the 535 million labour force in India in 2019, some 398.6 million will have poor quality jobs. The poor quality of jobs and high informality are key for the high level of “working poors” or those living on incomes of less than Rs. 198 in a day. Thus, despite higher economic growth in recent years, working poverty in India also remains high. Given the contraction and lack of demand in the economy, it is quite plausible that there would be a significant dip in urban employment generation. Thus, there are two challenges policy interventions in securing the livelihoods of workers in urban areas have to address: first, to generate more jobs and second, to reduce vulnerabilities by providing decent wages and some form of job security.
Situation in India
•The high and persistent incidence of vulnerable employment are a reflection of the nature of the structural transformation process, whereby capital and labour transfer from low to higher value-added sectors. India presents a curious case in this regard as capital and labour are moving from low value-added activities in a sector to another sector, but not to higher value-added activities. This leads to a situation where a large proportion of the jobs being created is of poor quality (and is expected to remain so). The service sector-led growth in recent years has intensified this as there is coexistence of strong job creation in some Information and Communication Technology (ICT)-intensive services, along with a significant portion of the jobs being created in ‘traditional low value-added services, where informality and vulnerable forms of employment are dominant. The outcome of such a process is the high incidence of informality which continues to undermine the prospects of reducing working poverty’. The pandemic and associated policy responses have exposed the vulnerability of these urban jobs.
Steps to take
•The present crisis calls for a multi-pronged strategy to tackle the issue of urban jobs. First, given the scale of urbanisation, the focus on urban employment generation programmes should be in coordination with local governments; this is key to ‘solving other problems faced by cities. As these problems are daunting, actors at the local level need to have more resources at their disposal. Resource mobilisation could be enabled by the formation of local alliances, involving elected representatives, trade unions, entrepreneurs and community groups’. Second, a major local initiative would be to design and implement employment-intensive investment policies. These policies should embrace the initiatives of both private entrepreneurs as well as by the government. Private investments need to be facilitated by conducive contractual relations between labour and capital. Enterprise formation needs to be an integral part of the strategy, with converging interests for workers and entrepreneurs on issues related to technology and productivity enhancement. Small and micro enterprises, the fulcrum of industrialisation, need extra support to balance the interests between labour and capital as neither have collective bargaining powers. The third element, would be to prioritise urban infrastructure as it accounts for a large share of total investments in the local economy.
Invest in infrastructure
•However, much of these investments rarely benefit ‘poor urban dwellers as housing, roads, sewerage and water systems are inadequate for their needs. A labour-intensive approach to building municipal infrastructure can be a cost-effective alternative to capital intensive-approach as wage rates are low. Infrastructure investments would spur employment, generate earnings and contribute to small enterprise formation. Construction of low-cost housing is another activity that can be carried out using labour-intensive methods, while yielding substantial collateral benefits for urban dwellers’, as an ILO document establishes. The fourth element could be an immediate launch of an urban employment scheme oriented toward building large-scale medical, health and sanitation infrastructure in cities and towns across India. Other immediate employment generation can be to expand networks of essential services as a part of welfare interventions of State and local governments. The capacity of our rural economy to absorb workers who returned from cities is low and the viability of agriculture to provide these workers with a decent living is questionable. In fact, many of these workers might have left their traditional work in the farm sector because income from agriculture would be insufficient for their survival.
Only NREGA is not enough
•Further, under the current circumstances it is not valid to assume that the Mahatma Gandhi Employment Guarantee Act (MGNREGA) or its substitutes can absorb a significant proportion of these workers. It is important that MGNREGA be expanded by both increasing the budgetary allocations and the guaranteed minimum number of days of work. At the same time, it is very idealistic to conclude that the entirety of the workforce, which has returned to the respective home States, will be accommodated by an expanded MGNREGA or by a close substitute. These workers might have chosen not to take up MGNREGA jobs in the first place and instead opted to migrate and work in other States for higher wages. MGNREGA and rural jobs schemes have to be strengthened and their capacity increased, but only a portion of the workforce might be accommodated in it. There will still be a large number of workers who need to be provided with alternative sources of employment, and generating decent urban jobs looks to be the only way out.
