Author: Yan

Rahul Bhatia writes: ‘The Indian government is in thrall of the dazzle and promise of technology…’ Perhaps the best example of this is the biometric identification system that India has embarked on. As the New York Times reports, ‘India is scanning the fingerprints, eyes and faces of its 1.3 billion residents and connecting the data to everything from welfare benefits to mobile phones.’ The end-product is the so-called ‘Adhaar’ system or the ‘foundation’ on which everything else is based. It is redefining the very essence of what it means to be an Indian citizen.

The scheme is both controversial and ambitious. In terms of ambition, it is one of the first examples of its kind of a large country engaging in such a scheme. Civil libertarians are horrified and view this as a huge Orwellian experiment. Large-scale invasion of privacy of citizens is seen as a major risk.  Others have argued that the biometric identification system performs significantly worse than old-fashioned manual methods in the case of delivering welfare benefits, although this conclusion is based on one case study.

Of course, those who are closely associated with the system see only benefits. They dismiss fears of a putative surveillance state as overblown and argue instead that the biometric ID system has empowered, rather than disenfranchised, millions of Indians – especially among the poor and the illiterate. Previously, they could not establish their identity; now they can.

Trust in institutions – political leaders, the government machinery in general, the business community, civil society, academia and the media – is an intangible, but a vital, element in fostering social cohesion and driving economic prosperity. Edelman, a leading US-based private sector entity, offers some intriguing evidence on cross-country patterns and trends in trust. Such evidence draws on an online survey in 28 countries, 18 years’ worth of data, and a sample size of well over 30,000 respondents. It makes a distinction between the ‘general population’ and the ‘informed public’ who are considered to be better educated and in the top 25 percent of household income per age group in each country.

It is tempting to suggest that trust is high in liberal democracies in the West and low in authoritarian and semi-authoritarian regimes in the non-western world. Yet, the ‘global trust barometer’ provides evidence that militates against such a presumption. If we take two contrasting exemplars – the US as the self-appointed leader of the ‘free world’ and China as the authoritarian upstart flexing its muscle as the next global power – where do they stand in the global trust barometer? The authors are dismayed to report the dramatic rise of China and the equally dramatic decline of the United States. The authors of the report ruefully reflect that ‘the public’s confidence in the traditional structures of American leadership is now fully undermined and has been replaced with a strong sense of fear, uncertainty and disillusionment’.

Based on a scale of 0 -100, the Edelman report offers three categories of respondents, ‘trusters’ with an average score exceeding 50, ‘neutral’ (50-59) and ‘distrusters’ (less than 50). It appears that trust is highest in China among all the nations surveyed (74 points for the general population, 83 for the informed public). At the bottom languishes the United States among the informed public (45 points), while the lack of trust is also prominent among the general population (43 points). While China gained by 27 points relative to last year, the US registered a 37-point fall relative to 2017. It is plausible to argue that the ascendency of the Trump Presidency has played a key role in the changing nature of trust in the United States. Perhaps the average American has become the victim of ‘fake news’.

Margaret Macmillan, the distinguished historian and former Warden of St. Anthony’s College, Oxford University, offers the following advice on how to ‘ learn from history’. It is indeed a case of ‘looking into the rear-view mirror; if you only look back, you will land in the ditch, but it helps to know where you have come from and who else is on the road’.

Will economists tethered to so-called Dynamic Stochastic General Equilibrium (DSGE) models learn from history in the spirit that Professor Macmillan meant or will they continue with their model-driven approach to how economies in the real world are supposed to work? Two well-known macroeconomists – David Vines and Samuel Wills – ran an Oxford-based project dedicated to ‘the rebuilding of macroeconomic theory’ that brought together both supporters and detractors on whether DSGE models have a future after their dismal failure following the global financial crisis. Their answer seems to be a cautious ‘yes’ provided the profession is prepared to learn from history in the way that Keynes did and carry out the necessary intellectual adjustments that would challenge the hegemonic sway of the benchmark New Keynesian DSGE model and a yield a more pluralist discipline. But…detractors are not convinced, notably Paul Krugman, who simply said that there has been no new ‘big idea’ in macroeconomics since Keynes. In any case, he opines that the old-fashioned IS-LM model or some variation of it was good enough to enable one to understand how governments could respond to the global recession that was unleashed by the GFC. Hence, there was no failure of macroeconomics as an intellectual discipline, merely a particular version of it because the DSGE adherents failed to learn from history.

Until the advent of the SDGs at the beginning of 2016, there was a discrepancy between the monitoring framework on global poverty and the international community’s quest to eradicate – or at least ameliorate – the incidence of child labour. On the one hand, the international community ratified the ‘elimination of the worst forms of child labour’ as one of the eight fundamental principles and rights at work (or core conventions) under the auspices of the ILO. On the other hand, the MDGs, which preceded the SDGs, did not specifically express any commitment to the eventual elimination of child labour, especially in the developing world. The Millennium Development Goals (MDGs) were certainly committed to improving the welfare of children, but it took the form primarily of improving the health and educational status of children, not their status and vulnerability in the world of work. The employment indicators of the MDGs that were subsumed under goal 1 (eradication of poverty and hunger) were, by default, focused on adults.

This lacuna in the MDGs has now been overcome with the advent of the SDGs. As is well known, the SDGs grew out of a meeting at the United Nations Headquarters in New York from 25-27 September 2015 that coincided with the celebration of the seventieth anniversary of the UN. This historic meeting of all member states of the UN decided on new global Sustainable Development Goals (SDGs). There are now 17 goals, 169 targets and 230 indicators under these targets – all to be accomplished by 2030!These goals, targets and indicators range across the themes of poverty, hunger, health and education, gender inequality, inequality in general, sustainability, industry and innovation, economic growth and decent work, peace, justice and institutions and development partnership. Of course, most of these themes are also present in the MDGs. This is to be expected as the SDGs build on the MDGs.

An explicit commitment to deal with challenge of child labour is now embodied under goal 8 of the SDGs which seeks to ‘promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all’. Target 8.7 under this goal states that member states of the UN should :

Take immediate and effective measures to eradicate forced labour, end modern slavery and human trafficking and secure the prohibition and elimination of the worst forms of child labour, including recruitment and use of child soldiers, and by 2025 end child labour in all its forms.

What are the global trends pertaining to child labour as monitored within the framework of the SDGs? The progress report, as compiled by the UN, notes that:

While the number of children from 5 to 17 years of age who are working has declined from 246 million in 2000 to 168 million in 2012, child labour remains a serious concern. More than half of child labourers (85 million children) participate in hazardous work and 59 per cent of them work in the agricultural sector. Girls have made greater progress than boys, with the number of girls engaged in child labour declining by 40 per cent during the period 2000-2012, compared to a decline of 25 per cent for boys.

Under current and prospective trends, what are the chances of eliminating child labour by 2025? In a recent evaluation, the ILO has suggested that, under current trends and despite commendable progress, the elimination of child labour by 2025 is unlikely to be achieved. It thus called on the international community to ‘dramatically’ accelerate its efforts to cope with the challenge of child labour.

A sizeable literature has grown up trying to understand how digital technology has enabled relatively new forms of work and employment to emerge. There are various terms used to describe this evolving feature of the labour market. Examples include: the ‘sharing economy’, the ‘gig economy’, the ‘platform economy’, ‘digitally-enabled independent work’, ‘digital labour’ and ‘online labour’. In the discussion that follows, these terms will be used interchangeably while recognizing that the common tie that binds these terms is the ILO’s notion of ‘non-standard form of employment’ (NSFE).

Sundararajan is probably among the most influential scholars making the case that the ‘sharing economy’ propelled by a community of ‘micro-entrepreneurs’ and working through digital platforms has transformed – and will continue to transform – the world of work as we know it. He even suggests that one might be witnessing the ‘end of (formal) employment’.

One can readily think of iconic examples of the digital economy that ‘commercialize’ personal assets, whether they pertain to transportation (Uber), short-term accommodation (Airbnb), buying and selling of goods (Amazon) or freelance labour platforms (Upwork). The absolute numbers are impressive. Airbnb, for example, has more than two million users; Upwork has 12 million registered free lancers.

Sundararajan argues that the ‘sharing economy’ holds a great deal of promise for developing countries where ‘full-time institutional employment is not yet dominant and traditional economic institutions vary in effectiveness’. In such situations, economic exchange through credible and reputable digital platforms can ‘stimulate a self-employed and entrepreneurial population…and raise …living standards’.

There are, it appears, governments in the developing world that have embraced digital labour as an innovative strategy of employment creation. As one analyst puts it: ‘For policy makers in the Global South, the digital labour market is seen as an infinite source of employment that should be tapped rather than restricted or regulated.’

Some studies that have evaluated the market for digital labour in developing countries based on surveys of online workers and transactions in leading online platforms find a mixed picture. An OECD study concludes that:

(Much) work in the platform economy is carried out in small units and irregularly. Platform workers may therefore have multiple jobs, work long hours and under high stress…In addition, such work frequently has no social security coverage, can be terminated at will, and wages are low due to a high level of competition. While platform work has created many opportunities for workers in emerging economies, it has also risked engendering a “race to the bottom” in both pay and working conditions. Moreover, it is likely that a great deal of work remains undeclared, fomenting the informal economy.

Media reports do not seem to paint a positive picture of the conditions faced by some types of workers that form part of this new wave of ‘micro-entrepreneurs’.  Consider, for example, the case of the 900,000 ‘driver-partners’ for Uber and Ola in India. For Uber in particular India has turned out to be the biggest market in Asia. However, expansion of this kind of business is constrained by the low level of car ownership in India. Not surprisingly, both Uber and Ola have instituted car loan programmes for their driver-partners as a means of increasing car ownership which then can be converted into a commercial asset. However, loan repayments form a major part of the expenses of maintaining a car. This drives down the income of Ula and Ola drivers. Discontent has broken out among Uber driver-partners leading to temporary stoppages of the ride-hailing service.

The idea of large numbers of flourishing micro-entrepreneurs enabled by digital technology seems to ignore a well-established literature that document disappointing labour market outcomes of the self-employed in developing countries as revealed by rigorous evaluations of interventions intended to stimulate self-employment and entrepreneurship. Banerjee and Duflo have coined the term ‘reluctant entrepreneurs’ to depict this situation. They draw on a survey of poor people’s attitude to self-employment in a number of developing countries. Their conclusion? ‘The poor don’t see becoming an entrepreneur as something to aspire to’ and overwhelmingly prefer stable jobs in the formal sector and that too in public services.

One should not, of course, downplay the tangible benefits that flow from the evolution of new work opportunities enabled by digital technology. On the other hand, it is essential to engage more critically with the future of the platform economy and the way it will shape the world of work. Systematic evaluations of wages and working conditions in the digital economy are required. This will enable policy-makers and regulatory authorities to devise appropriate policy interventions, such as amending labour laws to cover wages and working conditions in the platform economy. The challenge is to reduce the incidence of precarious work in the digital economy while preserving the benefits that flow to consumers in the form of lower prices and wider options.