Daily Editorial Analysis 17 October 2026

The Myth of ‘Unskilled’ Labour

Context

• India’s labour market is marked by a persistent contradiction: millions of workers perform essential and demanding tasks, yet their contributions remain undervalued because they are classified as ‘unskilled’ labourers.
• This classification affects their wages, job security, training, and workplace safety.
• The distinction between skilled and unskilled work often reflects institutional and social hierarchies rather than the actual abilities required.
• Addressing this inequality is essential to ensuring labour rights, social justice, and dignity of work.

Wage Inequality and Workplace Safety

• According to the Safe in India Foundation, unskilled automotive workers earning below ₹8,000 monthly lost an average of 2.27 fingers per accident in 2024, compared with 1.54 fingers among skilled workers earning over ₹20,000.
• Employers often assign unskilled workers to operate dangerous machinery without adequate training or protective measures.
• Similarly, the International Institute of Migration and Development found that migrant workers classified as unskilled in Kerala’s construction and hospitality sectors experienced 40% more wage theft than skilled workers.
• Contractors also withhold protective equipment and wages, exploiting workers’ limited access to legal remedies.
• The unskilled label frequently justifies denying annual increments, health benefits, and safety training.

The State’s Role in Reinforcing Labour Hierarchies

• Industrial protests in Noida and New Delhi in 2026 over stagnant wages prompted the Uttar Pradesh government to announce an interim monthly wage increase to ₹13,690 for unskilled workers and ₹16,868 for skilled workers.
• Under the Code on Wages, governments consider skill levels, geographical location, arduousness, and hazardous working conditions when fixing minimum wages.
• Agricultural wage schedules in high-cost urban centres prescribed daily rates of ₹528 for unskilled workers, ₹578 for semi-skilled workers, ₹627 for skilled workers, and ₹694 for highly skilled workers.
• However, these classifications can overlook practical knowledge. Weeding and irrigation require identifying weeds, assessing soil conditions, handling tools carefully, and adapting to weather.
• Therefore, official wage classifications may undervalue practical skills acquired through experience rather than formal training.

The Hidden Skills of ‘Unskilled’ Workers

• The term unskilled misleadingly suggests that certain occupations require little knowledge or judgment.
• Construction workers must handle materials accurately and use tools effectively.
• Factory workers identify defects, maintain production standards, and troubleshoot operational problems.
• Agricultural and sanitation workers also require specialised knowledge to perform tasks safely.
• These responsibilities demand practical intelligence, technical competence, and accumulated experience.
• Nevertheless, such abilities remain unrecognised when workers lack formal qualifications.
• A fair labour market must recognise demonstrated competence and experiential learning alongside educational credentials.

A Stratified Labour Market: Caste, Class, Gender and Migration

• India’s labour market is stratified by caste, class, gender, and migration status, which influence occupational opportunities and remuneration.
• Historically marginalised communities are disproportionately associated with certain forms of manual and sanitation work, while women and migrant workers often face weaker bargaining power.
• Informal employment further reinforces inequality. Municipal corporations may recruit sanitation workers through contractors, weakening accountability and reducing job security.
• Consequently, occupational status does not necessarily reflect competence or productivity but is often shaped by social disadvantage and insecure employment arrangements.

The Self-Reinforcing Cycle of Precarious Employment

• The classification of workers as unskilled creates a cycle of vulnerability.
• Low wages restrict access to training and recognised qualifications, keeping workers in informal employment.
• Employers, in turn, have fewer incentives to invest in training, safety, or career development.
• Inadequate training and protective equipment increase workplace injuries, while wage theft and insecure contracts discourage workers from challenging exploitation.
• Thus, low wages, poor safety, limited training, and insecure employment reinforce one another.
• Reform must address these interconnected problems rather than merely expanding certification programmes.

The Way Forward

• India needs competency-based skill recognition systems that assess practical experience alongside formal qualifications.
• Minimum-wage policies should reflect actual job requirements and working conditions.
• Employers must ensure mandatory safety training, protective equipment, timely wage payments, and social security.
• Stronger inspections and accessible grievance mechanisms are particularly important for migrant and contract workers.
• Affordable vocational education and recognition of prior learning can improve career mobility.
• Labour reforms must also confront social discrimination and strengthen accountability in informal employment.

Conclusion

• The classification of workers as unskilled conceals the knowledge and experience essential to India’s economy.
• It perpetuates inequality by linking occupational labels to lower wages, inadequate protection, and limited opportunities.
• India must recognise workers’ actual capabilities, ensure fair wages, strengthen workplace safety, and expand employment security.
• Inclusive development requires every worker to receive fair compensation, meaningful protection, and the dignity their labour deserves.

The Myth of ‘Unskilled’ Labour FAQs

Q1. What is the main problem with classifying workers as unskilled?

The classification undervalues their practical skills and experience.

Q2. What did the Safe in India Foundation report reveal?

Ans. Unskilled automotive workers suffered more severe finger injuries than skilled workers.

Q3. How does the state reinforce labour inequality?

Ans. The state reinforces inequality through skill-based wage classifications that may overlook practical competence.

Q4. Which factors contribute to labour market stratification in India?

Ans. Caste, class, gender, and migration status contribute to labour market stratification.

Q5. How can India improve the conditions of unskilled workers?

Ans. India can improve their conditions through fair wages, safety measures, skill recognition, and employment security.

Source: The Hindu

Bilateral Investment Treaties (BITs) – Balancing Investor Protection with Policy Sovereignty

Context

• Foreign investment inflows are an important indicator of economic attractiveness.
• Bilateral Investment Treaties (BITs) seek to promote such investment by assuring foreign investors a predictable regulatory environment and protection against arbitrary state action.
• However, excessive investor protections can constrain a State’s regulatory autonomy, taxation powers and policy space.
• India’s experience with the Cairn and Vodafone disputes highlights how treaty protections may enable investors to challenge sovereign measures, even when such measures arise from legitimate public-policy objectives.

Investor Protection vs. Sovereign Regulatory Powers

• BITs commonly provide protections such as –
  • Fair and Equitable Treatment (FET)
  • Protection against expropriation
  • Non-discrimination
  • Protection of investments
  • Investor-State Dispute Settlement (ISDS) through international arbitration
• The concern is that broad standards such as FET may operate asymmetrically.
• Foreign investors can obtain remedies unavailable to domestic investors, while States may have limited reciprocal protection for their tax base and regulatory interests.
• India reviewed its earlier BIT framework in 2016 and subsequently adopted a new Model BIT that seeks to balance investment protection with the State’s right to regulate.

The Expropriation Question

• Historical episodes such as the nationalisation of Mexico’s oil industry (1938), Cuban expropriations (1959) and post-World War II nationalisation in Europe explain why investors seek protection against arbitrary asset seizure.
• Such safeguards remain relevant because energy and extractive industries account for a significant share of investor-State disputes.
• However, a change in ownership or control of an asset cannot automatically be equated with legitimate public regulation.
• Protection against expropriation must therefore be distinguished from restrictions on policy sovereignty.

Taxation and Forum Shopping:

• What is the problem?

  • Governments have the sovereign power to impose and collect taxes.
  • However, some BITs allow foreign investors to take disputes to international arbitration if they believe a government’s action has unfairly harmed their investment.
  • If taxation disputes are covered by BITs, a foreign company may challenge a tax measure through international arbitration.
  • A domestic company facing the same tax measure generally has to use the domestic legal system.
• Implications: This creates a potential two-tier system of justice (Foreign investor → BIT → International arbitration; Domestic investor → Domestic courts/tribunals).

• What is “forum shopping”?

  • Forum shopping means choosing the legal forum that offers the most favourable route or outcome.
  • This is why some investors have used BITs instead of tax treaties, even when tax treaties provide mechanisms for resolving taxation disputes.

• Why is India concerned?

  • India’s position is that taxation is fundamentally a sovereign function.
  • Tax disputes should therefore generally be handled through domestic tax mechanisms or the Mutual Agreement Procedure (MAP) available under tax treaties.
  • The concern is also about equality: foreign investors should not receive a special dispute-resolution mechanism that is unavailable to domestic taxpayers.

• Key takeaway

  • BITs should not allow foreign investors to bypass domestic tax mechanisms and challenge sovereign taxation decisions through international arbitration.

Alternative Dispute-Resolution Mechanisms

• India’s approach is not unique. Brazil’s Cooperation and Investment Facilitation Agreements largely avoid ISDS and emphasise State-to-State dispute settlement, Joint committees, Institutional dialogue and dispute prevention.
• For taxation disputes, India can strengthen the MAP under tax treaties, allowing the concerned States to resolve disputes through consultation rather than investor-initiated arbitration.
• Excluding tax matters from BITs is therefore compatible with evolving international practice.

Exhaustion of Domestic Remedies

• Another contentious issue is whether foreign investors should first exhaust domestic legal remedies before initiating international arbitration.
• India’s recent treaties have attempted to strike a balance. For example, its investment treaty framework with the UAE requires exhaustion of local remedies for a specified period (not longer period) before arbitration.
• However, creating an excessively fast-track system for foreign investors could undermine equality before law and delay justice for domestic investors.

Way Forward

India’s BIT policy should pursue a balanced investment regime based on –

• Predictable and transparent regulations.
• Protection against genuine discrimination and unlawful expropriation.
• Explicit exclusion or careful treatment of taxation disputes.
• Greater use of State-to-State mechanisms and MAP.
• Reasonable exhaustion of domestic remedies.
• Preservation of the right to regulate in public interest.
• Avoidance of nationality-based preferential access to justice.

Conclusion

• BITs can provide investor confidence, but their value should not be measured merely by the breadth of investor rights.
• Investment protection must coexist with fiscal sovereignty, regulatory autonomy and equal access to justice.
• The debate represents the larger challenge of reconciling globalisation and capital mobility with democratic regulatory sovereignty—a key issue in India’s evolving international economic policy.

Bilateral Investment Treaties (BITs) FAQs

Q1. How do BITs balance investor protection with a State’s regulatory sovereignty?

Ans. BITs provide protections such as Fair and Equitable Treatment, non-discrimination and protection against expropriation.

Q2. Why is taxation a contentious issue under ISDS?

Ans. Because BIT-based arbitration can give foreign investors remedies unavailable to domestic taxpayers.

Q3. What alternatives can India adopt to resolve investment and taxation disputes?

Ans. India can strengthen State-to-State dispute settlement, Mutual Agreement Procedure (MAP), joint committees, etc.

Q4. Why is the exhaustion of domestic remedies important before international investment arbitration?

Ans. It reinforces national judicial sovereignty, equality between domestic and foreign investors and institutional accountability.

Q5. Why must BITs protect investors without compromising the State’s right to regulate?

Ans. For combining regulatory certainty and protection against genuine expropriation with safeguards for fiscal sovereignty.

Source: IE

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