4th Five Year Plan
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Chapter 22:
LABOUR AND EMPLOYMENT

Labour

The number of Industrial Training Institutes for iraining craftsmen increased from 163 at the end of March 1961 to 356 in March 1969. The seating capacity increased from 43,000 at the end of 1960-61 to 114,000 at the end of 1965-66, thus exceeding the Third Plan target of 58,000 additional seats. It further increased to 147,000 at the end of March 1969. In order to supplement the institutional training provided through Industrial Training Institutes, the apprenticeship training programme was instituted. Under the Apprenticeship Act, 1961; 195 industries and 50 designated trades where apprentices are to be engaged have been specified. Nearly 37,000 apprentices are at present undergoing training in more than 3000 establishments in " the public and private sectors. A Central Institute for Research and Training in Employment Service was set up in 1964 for conducting research in the field of em-playment and imparting training to employment ofiicers. During the same year, the Indian Institute of Labour Studies was established to train the industrial relations ofiicers of Central and State Governments.

22.2. The Employees' State Insurance Scheme expanded steadily. It covered about 3.78 million insured persons and 3.76 million insured persons' families spread over 313 centres at the end of October 1969, as compared to 1.94 million insured persons and 0.68 million insured persons' families spread over 120 centres in March 1961. The medical, cash and other benefits extended to workers increased from about Rs. 6 ci-ores in 1960-61 to Rs. 28 crores during 1968-69. The benefits received by workers during 1961-62 to 1968-69 amounted to Rs. 134 crores. Under the Coal Mines Labour Welfare Fund scheme, the expenditure on medical, educational, housing and other facilities increased from about Rs. 1.63 crores in 1960-61 to about Rs. 4.33 crores in 1968-69; the value of benefits under the scheme amounted to Rs. 28 crores during 1961-69. The Employees' Provident Fund scheme was extended to about 5.38 million workers in 123 industries and about 45,000 establishments by June 1969 as against 2.9 million workers in about 46 industries and 12,000 establishments in 1961. The total contributions under the scheme increased from Rs. 266 crores in 1961 to Rs. 1391 crores by June 1969. The rates of contribution were raised from 6-1/4 per cent to 8 per cent in 81 industries during the same period. The Coal Mines Provident Fund scheme covered 1327 coal mines and ancillary organisations benefiting nearly 349,000 workers by September 1969. The total contributions increased from about Rs. 27 crores as at the end of 1960-61 to Rs. 91 crores by September 1969.The worker's education programme which was initiated towards the end of the Second Plan made rapid progress. Over 921,000 worksrs and 17,000 worker teachers had been trained up to July 1969. Measures were taken to provide workers with more facilities in the form of welfare and recreational centres and holiday homes. The number of consumer cooperative stores and fair price shops set up for workers was 2,760 towards the end of 1968-69 covering about 69 per cent of industrial establishments employing 300 or more workers. The coverage was about 95 per cent in the case of Central public sector undertakings.

22.3. Labour relations continued to be regulated by the protective legislative measures introduced in earlier Plan periods and the tripartite arrangements. A mention may be made of the enactment of the Payment of Bonus Act, 1965, Shops and Commercial Establishments Act and Labour Welfare Fund Acts in States. A National Safety Council was set up in 1966. Out of the 22 Wage Boards set up so far covering almost all the major industries nineteen have submitted their reports. Undi-r the Minimum Wages Act, 1948, minimum wages were fixed and periodically revised by State Governments in respect of various agricultural and other trades.

22.4. In December 1966, the Government of India had set up a National Commission on Labour to study and make recommendations on various aspects of labour including wages, working conditions welfare, trade union development and labour-management relations. The Commission submitted its report in August 1969. The Report is under consideration of the Union Govern-mert in consultation with the State Governments and the employers' and workers' organisations.

22.5. The expenditure incurred during 1961—69 on labour welfare and craftsmen training programmes was :

Table 1 : Expenditure incurred during 1961—69 on Labour Welfare and Craftsmen Training Programmes
(Rs. crores)

year centre union territories states total
(1) (2) (3) (4) (5)
1961-66 32.7 2.2 20.9 55.8
1966—69 21.0 0.8 13.7 35.5

22.6." Training.—The Craftsmen Training and Employment Service programmes which were treated as Centrally sponsored schemes up to 1968-69 have been transferred to the States during the Fourth Plan. The Directorate General of Employment and Training wiH be responsible for the overall co-ordination of the programme in States and Union Territories by laying down standard for training and syllabus and for the control of teccnical quality. The Directorate will also conduct the training of highly skilled craftsmen the apprenticeship programme in Central establishments and the training programme for instructors in the Central Training Institute .

22.7. Only a marginal expansion of the seating capacity of the industrial training institutes from 147,000 to 150,000 to cover new trades such as tool and die making, electronics and chemicals, is envisaged in the Fourth Plan as this is considered adequate to meet the likely requirements of craftsmen. In view of this, large additional capital investment will not be required. It is proposed to diversify the existing seating capacity by reducing certain trades where there is inadequate demand, introducing more popular trades and consolidating the facilities in the existing institutes. Three institutes for training special categories of craftsmen for industry and supervisory staff are proposed to be established in the early years of the Fourth Plan. These are the Advanced Training Institute at Madras, the Central Staff Training and Research Institute at Calcutta and the Foreman Training Institute at Bangalore. Increasing emphasis will be placed on the apprenticeship programme including provision of basic training facilities. The number of apprentices is expected to increase from the present level of 37,000 to about 75,000 by the end of the Fourth Plan.

22.8. Employment Exchanges.—There was a steady increase in the number of employment exchanges including University Employment Information and Guidance Bureaux from 312 at the end of March 1961 to 458 at the end of October 1969. The employment service is proposed to be expanded by strengthening the employment exchange machinery, university, employment information and guidance bureaux, vocational guidance and counselling centres, and employment market information programme for collection of employment data.

22.9. The activities of the Employees'State Insurance Corporation are proposed to be expanded in order to provide hospitalisation to families of all insured workers, to cover shops and commercial establishments in selected centres as also non-power factories employing ten or more persons, running staff of Road Transport Undertakings, and to cover all centres having an industrial concentration of 500 or more insurable workers. Programmes for welfare centres, holiday homes and recreational centres have been included in State Plans. The workers education programme is proposed to be reorganised in the light of the experience gained so far.

22.10. The industrial Safety 'Health and Hygiene Divisions of the Central and Regional Labour Institutes are proposed to be strenthened. The activities of the f , National Safety Council will be intensified. The Direc-i i' torate General of Mines Safety is expected to concentrate ' faon more effective administration of mine safety legislation Greater emphasis will be placed on promoting safety practices, and on the development of indigenous mine safety equipment.

22.11. Stress "will be laid on strengthening labour adminislration for better enforcement of labour laws,research in labour relations and labour laws, expansion of training programmes for labour officers, introduction of training in industrial relations for management personnel and for university professors and lecturers associated with the labour subject, evaluation work study, inspection and improvement of labour statistics. The Labour Bureau proposes to conduct a comprehensive family living survey among industrial workers in 1970-71. In the field of industrial relations, priority will be accorded to the growth of a healthy trade union movement, the promotion of collective bargaining and the raising of productivity through labour-management cooperation

22.12. Outlay.—A provision ofRs. 39.90 crores has been made in the Fourth Plan for labour welfare and draftsmen training programmes. Of this Rs. 10.00 crores will be in the Central Plan, Rs. 27.02 crores in the State Plans and Rs. 2.88 crores in Union Territory Plans.

22.13. In the pa and t, the Planning Commission used to present estimates of the backlog of unemployment at the beginning of th and Plan, of the estimated increase in the labour force during the plan period and of additional employment likely to be created through implementation of the Plan as forumulated. In view of the considerable divergence of opinion regarding the appropriate definitions of and suitable, yardsticks.for measuring unemployment and under-employment in rural and urban areas and in view of the widely differing magnitudes of unemployment worked out on the basis of various sources such as the Census, the National Sample Survey and the Employment Exchange data, it was felt that the various aspects needed a closer scrutiny. Accordingly, the Planning Commission set up in August 1968 a Committee of Experts to enquire into the estimates of unemployment worked out for the previous Plans and the data and methodology used in arriving at them and to advise the Planning Commission on the various connected issues. The Committee has submitted its main conclusions and recommendations pending the finalisation of the report.

22.14. In the opinion of the Committee, the data available to the Planning Commission for estimating unemployment and under-employment in the past have not been adequate and that the conclusions based on them were, therefore, unavoidably subject to an unknown margin of error. Many of the limitations of the estimates of labour force, employment and unemployment are inherent in the socio-economic conditions of our country and cannot be wholly overcome by the conceptual refinements or improvements in the technique of estimation. While appreciating the desire on the part of general public for precise estimates on such vital problems as employment and unemployment, the Committee has observed that in the nature of our socio-economic situation, such precision is not possible. The concept of labour force as adopted in developed economics is unsuitable for an economy like ours with its preponderance of self-employment and production within the house-hold enterprises. The main problem is that a sizeable proportion of labour input in household enterprises is provided by some members of the famliy who have only a partial attachmenMo the labour market. They work in the family enterprise, without receiving any wages. They work on family farms and similar enterprises as and when required, and when they do so, technically they become part of the 'labour force', but when there is no such work, they generally revert to household work. In all probability, they would neither seek work nor be available for 'outside work.' Thus, while their inclusion in labour force—and in the calculation of unemployment-—becomes misleading, their total exclusion would also fail to reflect the reality of the economic situation. In an economy like this, there is very little open or outright unemployment throughout the year, but there would be considerable seasonal unemployment or under-employment. The question of the extent of under-employment is important but its measurement solely in terms of man-years is inappropriate because the income levels of underemployed, the nature of the additional work desired by them and the terms on which their labour will, in fact, be available are all relevant aspects of the problem.

22.15. As regards estimation of employment potential generated during a Plan period, the Committee has observed that reliable data are necessary on additional employment per unit of investment and/or increase in output in different sectors for making such estimates. The relevant ratios not only differ from industry to industry but are seldom the same at the margin as on the average for the same industry. Changes in technology and organisation also necessitate changes in the coefficients. While estimates of employment potential may be possible in limited sectors of the economy, it may not be feasible for large segments of the service sector and agriculture, in view of paucity of reliable data. It is also important to recognise that in a situation characterised by household and small-scale enterprises based largely on family labour and the prevalent differences both in the attachment of family labour to such enterprises and in the intensity of their employment, it is not possible to judge how a given increase in employment potential is likely to get distributed among the labour force, even if such an increase could be somehow estimated. This is so particularly in the construction sector, which accounts for sizeable investment activities in the Plan, as in reality, construction tends to be seasonal activity and a substantial proportion of the persons engaged in construction projects tends to be employed on daily or weekly wages. The construction employment generated is therefore, likely to be spread over a larger number of persons than the estimates generally made in terms of full-time employment for 300 days. After examining various aspects, the Committee has suggested that the most that can be attempted by way of estimation is the likely growth of employment in a few segments of the economy and for the rest, reliance has to be placed primarily on recording at frequent intervals the changes taking place in the composition of the labour force, its industry-wise distribution, the wage rates for different types of labour, the intensity of employment and the numbers seeking employment. Such studies could perhaps be done through quinquennial sample surveys, which would help to throw light on the trends in labour market and make possible dependable projections of the trends in employment and unemployment in the future.

22.16. In the light of the above, the Committee has observed that the estimates of labour force, additional employment generated and unemployment at the beginning or end of a Plan period, presented in one-dimensional magnitude are neither meaningful nor useful as indicators of the economic situation and that the method adopted by the Planning Commission so far might be given up. The Committee has stressed that the character of our economy and consequently that of the labour force, employment and unemployment is too heterogeneous to justify aggregation into single dimensional magnitudes. It has, therefore, recommended that studies should be undertaken to get information on the different segments of labour force, taking into account such important characteristics as region, sex, age, rural-urban residence, status or class of worker and educational attainment and to identify the demand likely to be gnerated for particular categories of labour as a result of the developments envisaged under . the Plan. It has further suggested that attempts should . be made to obtain separate estimates of the level of unemployment during different seasons of a year among various homogeneous groups of the labour force. Various improvements have also been suggested in the collection and presentation of data collected through population Census, National Sample Survey, employment Market Information and Employment Exchanges. In view of the Committee's recommendations no attempt has been made in this document to present data on the lines followed in previous Plans.

22.17. The Committee is of the view that the problem of unemployment is most serious for workers who seek wage employment and in the course of development, both their proportion in the labour force and their characteristics are likely to change. Special care should, therefore, be taken to collect information r-garding their position in greater depth and at short intervals.

22.18. Though of late attention has been focussed on unemployment among certain categories of highly educated or trained persons such as engineers, the problem is perhaps more acute, at any rate in terms of numbers, for those who are only nominally educated in the sense that they .have not acquired adequate proficiency in any vocation. Many of these nominally educated are probably in the category of persons who leave schools before matriculation or obtain a bare pass class in higher examinations. The Committee has emphasised that the problems of this group need closer study.

22.19. Through its Employment Market Information programme the Directorate General of Employment and Training has been collecting information on employment regularly from all establishments in th public sector and non-agricultural establishments in the private sector employing 25 or more workers up to 1965-66 and 10 or more workers thereafter. Tha programme does not cover employment in agriculture and household establishments, the self-employed and the defence forces. On the basis of information avail 1 able from this source, employment increased from about 12.09 million at the end of 1960-61 to about 15.46 million at the end of 1965-66 or by about 28 per cent, the average annual growth rate being 5 per cent during the Third Plan period. The growth of employment in 1966-67 was considerably lower at about 0.8 per cent and during 1967-68 it was almost negligible. In 1968-69, the employment, however, increased by about 2 per cent partly reflecting signs of economic recovery Industry-wise analysis of employment growth is given below :

Table 2 : Industry-wise Employment during 1961—69
(million)

sl.no industry employment in march
19611 1966' 1966' 19672 19688 19692
(0) (1) (2) (3) (4) (5) (6) (7)
1 plantations, livestock, forestry, fishing, etc 0.85" 1.10 1.13 1.10 1.10 1.07
2 mining and quarrying 0.68 0.66 0.57. 0.65 0.61 0.60
3 manufacturing 3,39 4.26 4.53 4.45 4.44 4.53
4 construction 0.84 0.99 1.02 0.99 0.90 0.94
5 electricity, gas, water and sanitary services 0.26 0.35 0.34 0.38 0.39 0.41
6 trade and commerce 0.25 0.39 0.49 0.51 0.53 0.55
7 transport, storage and communications 1.81 2.21 2.21 2.24 2.24 2.27
8 services 4.01 5.50 5.80 6.00 6.12 6.26
9 Total 12.09 15.46 16.19 16.32 16.33 16.63

'Covers all public sector establishments and non-agricuitural establishments in the private sector employing 25 or more workers. "Covers all public sector establisments and non-agricultural establishments in the private sector employing 10 or more workers, in complete coverage.

22.20. In a recent report on the World Employment Programme, the International Labour Organisation has forcefully argued for the integration of employment creation to economic development through the maximum possible productive use of available labour to accelerate economic growth and more particularly, to substitute labour for scarce capital where this is economically feasible. The International Labour Organisation has suggested that this could be attained through a strategy of development involving comprehensive programmes of rural development, labour intensive public works programmes and fuller utilisation of industrial capacity, promotion of labour intensive industrial products for domestic and foreign markets and application of economically sound labour intensive techniques in industrial production. The adoption of such a strategy will have far reaching implications for investment planning. There will be need for more investment (at least of certain kinds) in "human as compared with physical capital". A greater volume of investment will have to be directed to rural development rather than to urban development. Investment plan will have to give some preference to small scale over the large scale projects. A shift in investment towards economically sound labour intensive industries rather than capital intensive industries will have to be necessary. As a corollary it will also be necessary to adapt the choice of techniques and product mix to this approach. Investment in capital intensive industries would, as a corollary, have to be limited to those industries in which only intensive technology is available and necessary to exploit particular natural resources of the country. More industrial investment will have to be directed to the production of essential rather than non-essential consumer goods. This is a necessary counterpart to any policy for employement promotion.

22.21. The strategy of development envisaged in the Fourth Five Year Plan is in broad confirmity with what has been indicated above. The emphasis on labour intensive programmes through development of agriculture, rural infra-structure including communication and transport links, rural electrification, water management, rural industries, decentralisation and dispersal of industrial investments, rural and urban housing in the investment programmes is in line with this strategy. Large scale capital intensive investments are limited to projects where technological considerations and economy of scale do not permit adoption of labour intensive techniques. While creation of employment opportunities has been an important consideration, emphasis has equally been placed on productive employment on a sufficiently high level of efficiency.

22.22. The extent to which new employment opportunities will be created or there will be improvement in the earnings of those already employed in different sectors during the Fourth Plan period cannot be precisely quantified. The Fourth Plan lays considerable emphasis on labour-intensive schemes such as roads, minor irrigation, soil conservation, rural electrification, village and small scale industries, housing and urban development. The Planning Commission has also suggested to the Central Ministries and the State Governments and Union Territories to take effective steps to remove any restrictive policies which inhibit the faster growth of employment, to give employment orientation to the programmes to be taken up under the Fourth Plan, to lay emphasis on promotion of medium and small scale industries and on adoption of appropriate labour-intensive technology with due regard-to efficiency and economy, and to ensure adequate and timely supplies of raw materials at reasonable prices to industries.

22.23. The increasing tempo of agricultural development in the Fourth Plan is expected to create new employment opportunities on a large scale in the rural areas and also provide fuller employment to these who are already engaged in agriculture. The Fourth Plan envisages a substantial increase in the agricultural production through the extension of area under cultivation, multiple and relay cropping, and high-yielding varieties, expansion of major and minor irrigation, including large-scale energisation of pumpsets through rural electrification, and integrated use of ground and surface water, fertilisers and manuies and adoption of plant-protection measures. These measures will be suppoited by increasing the supply of machinery for farm operations, reorganisation of credit facilities and strengthening the rural infra-structure including better marketting and storage facilities. In the agricultural sector, considerable financial allocations are envisaged in the Plan for the activities of the financial institutions such as, the cooperative Banks, the National Cooperative Development Corporation, the Agricul-cultural Refinance Corporation, the Land Development Banks, Rural Electrification Corporation, Agricultural Credit Corporation, the Agro-Industries Corporations etc. Substantial credit is also expected to flow to the agricultural sector from the State Bank of India and the nationalised banks. In addition to the objective of maximising agricultural production, the Fourth Plan aims at enabling a large section of the rural population including the weaker sections such as small cultivators and landless labourers to participate in development and share its benefits. The special programmes formulated for sub-marginal farmers and for dry farming in which stress will be laid on improved farm technology envisage a significant expansion in employment oppoitunities by way of both fuller employment and new avenues of employment. The rural works programmes proposed to be undertaken in 40 chronically drought-prone districts in different States for which an outlay of Rs. 100 crores is contemplated is expected to provide unemployment relief in such areas. The increasing emphasis on programmes of soil conservation and waste land reclamation are also expected to contribute more employment opportunities to agricultural labour. The expansion of the dairy and milk supply schemes and the development of inland and marine fisheries are expected to generate employment avenues for various categories of skilled, semi-skilled and unskilled personnel.

22.24. Considerable emphasis is placed in the Fourth Plan on the development of major, medium and minor irrigation schemes and flood control, which are expected to provide increasing employment opportunities apart from under-employment relief in the rural areas. Small farmers are likely to benefit particularly from the programmes of minor irrgigation. Allied to the irrigation schemes are programmes of flood control, drainage and anti-water logging which involve substantial construction activities providing extensive employment opportunities to skilled and semi-skilled workers apart from civil engineers and other highly trained technical personnel.

22.25. A substantial volume of construction activities is inherent in the various schemes relating to generation, transmission and distribution of electricity, and rural electrification which would open employment avenues for various categories of personnel, nc hiding semi-skilled and unskilled workers. The inter-linking of various regional power systems to form an All-India Grid would help more equitable distribution of power in the country and lead to the diversification of industrial growth and reduction of regional disparities in terms of employment opportunities. The rapid expansion in the rural electrification programme is expected to give an impetus to the development of small industries leading to generation of considerable rural employment.

22.26. Special schemes have been formulated by the Maharashtra and Gujarat Governments to provide increasing employment avenues in the rural areas. The Maharashtra Government's pilot Employment Guarantee Scheme aims at providing unskilled manual work to all able bodied persons looking for employment. The scheme will form part of the State Plan programme of the Integrated Area Development Scheme for small farmers and agricultural labourers. The works proposed to be taken up under the scheme relate to contour bunding, irrigation, roads and village industries. The Gujarat Government's scheme 'Right to work' provides for unskilled jobs to the unemployed workers on multi-purpose, major, medium and minor irrigation works, capital projects, roads and soil conservation works. The experience gained in this field so far has been utilised in working out and launching special programmes for small farmers with viable and non voable units of cultivation, agricultural and landless labour and rural artisans particularly in dry areas as well as in backward districts, the allocations on which have been considerably stepped up. Attention has been renewed on problems of coordination which such schemes demand.

22.27. Non-farm employment is expected to grow at a fast rate during the Fourth Plan. The accelerated growth of organised mining and manufacturing, the encouragement of ancillary and small scale industries, continued assistance to village and household industries, greater provision for rural electrification and for widespread development of repair and maintenance services, the rising level of construction activity, the increased provision for building the infra-structure of communications, transport and power and expansion of training facilities, will all contribute to larger opportunities for direct employment including self-employment. Organised industries and mining are likely to offer large job openings to engineers, technicians, skilled, semi-skilled and unskilled workers. The programmes of khadi and village industries are suspected to generate a substantial volume of employment the bulk of which will be part-time and mostly benefiting women. The development programmes for small-scale industries is expected to provide employment opportunities on a full time basis and on a large scale. A special scheme has been formulated by the Ministry of Industrial Development for promoting self employment among engineer enterpreneurs by imparting suitable training and by encouraging commercial banks to advance loans to them for starting small scale industries. Similarly, the State Bank of India and some of the nationalised banks have also schemes for giving financial assistance to technically trained persons to start busi-less on their own. Items of machinery and equipment are also made available to the entrepreneurs on hire-•purchase basis by the Small Industries Corporations.

22.28. Under the transport sector, most of the schemes particularly under railways and roads are. highly labour intensive. The main schemes under railways which are expected to generate a large volume of employment relate to the conversion of metre gauge into broad gauge, doubling of tracks, expansion of suburban traffic, construction of bridges, laying of new: lines, building of quarters for staff and provision of; mass transit facilities in the metropolitan cities ofr Bombay, Calcutta, Madras and Delhi. Under the roads development programmes, schemes relating to building of bridges on National Highways, recons--truction of weak bridges and culverts, and widening of important sections of the National - Highways, the development of village roads etc. are likely to proyide' employment to,a large number of skilled and unskilled", workers. The expansion programmes of the existing -ports and the construction of satellite ports and various ; developments under inland water transport and shipping and improvement of international airports at Bombay, Calcutta, Delhi and Madras are likely to provide job opportunities for various categories of workers particularly the technically trained persons and semi-skilled arid unskilled labourers. Under the communications' sector, large scale expansion is envisaged by way of extending telephone connections, development of trunk telephone services and establishment of 31,000 . new post offices during the Fourth Plan period which has considerable potentialities for employment. The . extensive development of programmes for promoting tourisin'in the country is expected to provide a large .number of employment openings in hotels, transport -and other tourist services.

22.29 Theexpansbh programmes in the field of a general and technical, education are expected to absorb a large number of trained'teaching, personnel, instructors, inspecting and other office 'staff. The setting up of new educational institutions and the extension of existing; ones" would increase the tempo of construction;activity in school and college buildings, laboratories, hostels and staff quarters. Similarly the health and family ' planning programmes -are expected to provide large employment avenues 'for medical and para medical ' personnel and other categories of administrative personnel. . Under housing, various programmes are envisaged including , and revolving fund of Rs. 200 crores, which is expected to create large employment in construction activities.

22.30. The trends in the employment, growth in the , organised sector during the past deeaide reveal that the . rate of employment growth has been maximum in the tertiary sector of trade and commerce, transport, storage and communications and services. This sector is expected to grow at a faster rate in the .coining years. , There has been a notable increase in .the participation of women in almost all activities during the past decade. This trend will continue and lead to an improvement in their economic and social status. The principal means of enlarging employment opportunities is to get the economy move as fast as possible with the maximum dispersal of productive activity throughout the country.

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