Anupama Ghosh, Senior Research Associate, CPPR comments in a news story published in Live Mint on the Union Budget 2019
During the one-hour drive along the winding mountain pass connecting Kerala’s Wayanad to the rest of India, Jithin Raj, 25, checks the budget highlights and expresses a mix of hope and apprehension. He’s hopeful because he has found a ticket to middle-class life with a job in online retail. He is worried because he hasn’t found an exit plan, as his salary isn’t going to grow beyond a point.
Raj works with a logistics company that delivers goods for online retailers like Amazon. The e-commerce boom has provided employment to hundreds of people from places like Wayanad, as couriers, delivery boys and parcel agents.
“I have a diploma in engineering, but like most others who studied with me, I couldn’t find a job after college,” said Jithin, while loading a colleague’s bike with parcels for delivery. “Many are trying to get government jobs. In the meantime, they take up jobs that pay about ₹6,000 a month. I earn ₹10,000.”
Raj landed the job while returning a product to Amazon—he chatted with the pick-up agent who told him that the logistics company he worked for was looking for more hands. He walked into the office, produced his identity card, his bike’s registration papers and Android phone, and secured the job. Today, he handles hundreds of orders every day, and manages a team of seven.
There are more such jobs, but many more applicants, Raj said. Last month, he posted an ad on online classifieds portal OLX to hire two people—20 applied. Most were like him in their 20s and fresh out of college.
The rise of online retailers such as Flipkart and Amazon, on-demand services like Swiggy and Dunzo, and ride-hailing apps Uber and Ola have given rise to a new set of jobs that aren’t just concentrated in tech hubs like Bengaluru and Gurugram. In way-out Wayanad, and other corners of the country, tens of thousands of young men and women find jobs in logistics companies and other ancillary businesses that serve the online giants.
Wayanad, suddenly famous after Congress’ Rahul Gandhicontested from here, is one of the most backward districts of Kerala with the lowest per capita income, lowest literacy rate, and lowest sex ratio, apart from poor infrastructure and medical facilities.
Yet, like everywhere else, India’s domestic consumption story, at its peak now partly because of the online-economy, holds good in Wayanad, too. Driven by discounts, buyers are now purchasing mobile phones online. Many retail mobile shops in Wayanad have shut down, said locals.
Some order phones online, take a cut, and sell offline. One of the most popular items that Raj and his team deliver is nappies and diapers, which are far cheaper online, more so, if you purchase in bulk on a monthly subscription.
“Jobs are going to every corner of India, but the biggest gainer will probably be south India. If you see the GDP contribution, south India’s contribution is higher than the north,” said Rituparna Chakraborty, who tracks the emerging job market as co-founder and executive vice president of staffing firm TeamLease. “My simple measure of this are open positions for a vacancy. About 80% of our customers are in Mumbai and Delhi, 70% of my open positions are from south India,” she added.
The logistics sector has increasingly become formalized after the introduction of the goods and services tax (GST). Since the GST rollout two years ago, there is an incentive for large companies to choose the services of tax-compliant staffing firms, as GST allows them to claim input tax credit. This probably explains why 4.7 million new formal enterprises emerged within one year of GST.
Raj and his colleagues receive provident fund, pension and other benefits, making them part of the formal economy, a marked departure from the days when those in logistics and allied services were mostly part of the informal economy. Yet, there are problems.
They do not see their wages growing beyond a point and a large part of the formal sector still remains quite unattractive.
This is partly linked to labour laws in India, which are in urgent need of reforms. “Our labour laws are clearly limiting,” said Chakraborty. “Labour laws ensure that 45% of wages are taken away in the name of mandatory deductions. That’s what makes the informal sector more attractive for both employers and employees. So, today, if I tell my driver that I’m not going to pay him in cash, but put him on my company’s rolls, he will run away. He knows that my cost to company will remain the same. Essentially, I’ll deduct 45% of his wages for PF (provident fund) and ESIC (Employees’ State Insurance Corporation). Suddenly, it is no more an attractive job for him,” she explained.
“As far as outlays for labour reforms are concerned, some significant announcements have been made in the new budget,” said Anupama Ghosh, senior research associate, Centre for Public Policy Research. One, the announcement of the Pradhan Mantri Shram Yogi Maan-dhan Yojana (PM-SYM), to provide pension to unorganized sector workers, has been given an outlay of ₹500 crore and an estimated three million workers have joined the scheme. The four labour codes can ensure the process of registration and filing of returns more streamlined and standardized.
“A similar idea had been floated in 2015, but it did not see the light of the day.
It was proposed to reduce 44 labour laws to four broad codes— Industrial Relations Code Bill, Wage Code Bill, Small Factories (Regulation of Employment and Conditions of Services) Bill, and Employees Provident and Miscellaneous Provisions (Amendment) Bill. The reason why it did not happen was the lack of consensus on the part of the government,” she said.
“I don’t think Americans are smarter than us, but they are richer than us,” said economist and Teamlease chairman Manish Sabharwal, while discussing how to grow India to a $5-trillion economy.
“Joe six-pack, who drinks beer and watches college football, makes $50,000 a year, and Ram-bharose makes ₹50,000 a year. It’s got nothing to do with Joe six-pack and Ram-bharose, it’s about being productive. So, I think the process of getting to ₹5 trillion is rooted in productivity. It is in better formalization, better urbanization, better financialization, more human capital,” he said.
This news story can be also read at Live Mint website.