The restaurant-and-bar economy - I

By Gail Omvedt

HAS POVERTY declined in the 1990s, the years of ``reform''? The question has been heatedly debated, and unfortunately the most recent of India's prestigious National Sample Surveys, the 55th round carried out in 1999-2000, has not provided a clear answer. It is true that the NSS shows a striking decline in poverty, but the use of a ``new' methodological frame, asking people to remember for a week rather than a 30-day period, casts doubt on comparability. Today estimates of the percentage of housholds in poverty range wildly from the mid-1960s to as low as 13 per cent (urban) and 18 per cent (rural).

``Poverty'' itself is a variable and debated concept. We might do better by looking at the more concrete data on employment and income. These also derive from the NSS, but uncertainties about methodology are not so strong here: people can remember and report about days employed and earnings, probably much more easily than about the food and other items they have recently consumed and which are used as the base to estimate poverty.

A recent article in the Economic and Political Weekly (March, 17) by K. Sundaram, a noted economist and scholar of employment, brings forward some striking points about what has been happening to the world of casual labourers in India. The overall picture is positive, but there are some distressing features about the nature of the new economy.

Four basic aspects are noted by Sundaram: (1) First, there has been a significant decline in employment itself, both in terms of the work participation ration (percentage of the population employed) and in terms of days worked during the year. (2) Offsetting this, however, labour productivities and, more important for the labourers themselves, real wages, have been rising - in every category and for every group (rural and urban men and women are separately studied) including the most low- paid, women agricultural labourers. (3) Along with this, real per capita incomes have been rising for all groups: that is, labouring families are able to work less but still earn more. (4) Finally, there are some significant changes in the nature of work, changes which have very mixed implications.

In terms of work participation, a decline is not necessarily bad. Some of this, Sundaram notes, is due to a large number of people in schools - and a growth in the student population is to be welcomed. (Also there is less educated unemployment). However, this does not explain all the decline in work participation. The greatest decline, for example, is for rural females, at all levels. Now this is both good and bad. Good, in the sense that for casual manual labourers, work is a heavy and ill-paid burden for women; a little prosperity in the family, and women will quite happily withdraw from the workforce. This seems to be what is happening, since the least unemployment is shown in the poorest States, Bihar and Uttar Pradesh. What is bad about it is that in the long run, unemployed women have less weight in the family, and a decline here can indicate the hardening of patriarchal practices. In the long run, it is their ability to work and earn equally along with men that is significant for women's social position - and the employment and wage data indicate that women are far behind, that wage rates remain significantly lower than those of men.

The rise in real wages, based evidently on rising labour productivities, is significant and important. Sundaram shows a 2.80 per cent rise per year for rural men and a 2.94 per cent rise a year for rural women between 1993-34 and 1999-2000 in the lowest paid work, casual labour in agriculture. (Women were still getting about 2/3 of what men get in agriculture, however). The rise is higher for casual labour in non- agricultural activities. Wages in almost all activities for urban casual labourers, both men and women, have also risen. Even though people are getting less work, this translates into higher yearly incomes. Sundaram estimates average yearly wage earnings per worker and per capita, shows that these have increased, in real terms, for all categories during the period studies. Rural females have the lowest increase (1.95 per cent growth per annum per capita in earnings) but, interestingly, urban females have the highest (2.86 per cent increase per annum per capita). This has resulted in a significant improvement in income during most of the 1990s, and backs up claims for an overall decline in poverty ratios.

The question remains of exactly where people are getting jobs. There is a decline in employment in agriculture - the share of agriculture and allied activities has shown a decline of over 4 percentage points from 63.9 per cent of the workforce in 1993-94 to 59.8 per cent in 1999-2000. For the first time, then, it seems that the percentage of the workforce in agriculture in India is dropping below 60, something the census should confirm. Since population employed in agriculture declines with economic development this is a very positive feature. What is negative about it is perhaps that the growth of productivity in agriculture is a growth in labour productivity, that is, fewer people are producing slightly more on about the same amount of land, and not very much of a growth in per-acre productivity, which is something India badly needs. Crop productivities in India remain among the lowest in the world.

If the decline in agriculture is a good thing, the ongoing stagnation in manufacturing employment is not. Statistics here show a minor rise, from 10.7 per cent of the workforce in 1993-94 to 11.1 per cent in 1999-2000. This is almost all explained by a rise in the urban share of the total workforce. Overall, then, rural manufacturing has not increased, and manufacturing remains stagnant as an employer.

It should also be remembered that the largest amount of ``manufacturing'' employment in India is really household manufacturing. Human Development Report (1997) and World Development Report (1995) data (which are based on ILO statistics and differ slightly from the NSS statistics) show that industrial employment in India rose from about 11 per cent in 1960 only to 16 per cent in 1990; but in 1991 only 3.7 per cent was in waged industrial work, while 10.5 per cent of total workers were in nonwaged industry! Industrial development in India for most of the period of independence has been highly capital intensive, and has employed only a very minor proportion of the workforce. This pattern may derive from the heavy industrial focus of the Nehru years, but opening up under liberalisation has failed to break the pattern.

Then where are people who are leaving agriculture finding jobs? The growing employment sectors, as Sundaram notes, are first construction, and even more strikingly, the sector described as ``trade, hotels and restaurants''. The latter has increased its share of total employment at a compound rate of 6.2 per cent per annum, from 7.6 per cent in 1993-94 to 10.4 per cent in 1999- 2000. In other words, it is only slightly behind manufacturing, and it now employs a little under 41 million people, as compared to about 43 million in manufacturing.

In other words, for the majority of the working poor in India, the ``new economy'' is not one of information technology; nor is it one of growing participation in manufacturing. It is the economy represented by the burgeoning shops, hotels, restaurants and bars, servicing the middle classes and the rich, but employing the poor, including the rural poor, in new jobs outside of agriculture. It would not be inaccurate to call it a ``restaurant-and-bar economy.''

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