Context

• The recent debate surrounding corporate leaders urging Indians to work longer hours sheds light on the structural issues in India's labour market.
• While these appeals might stem from a desire for economic growth, they fail to acknowledge the harsh realities of India’s predominantly informal workforce.
• The over-reliance on cheap labour, rather than technological advancement, continues to hinder India's long-term industrial progress.
• Amid these debates, it is important to examine the implications of this labour-dependent strategy, highlighting its impact on productivity, innovation, and economic sustainability.

The Informality of India's Workforce

• India’s workforce is overwhelmingly informal, with only 21.7% of workers in salaried jobs, according to the 2023-24 Periodic Labour Force Survey.
• Even among these salaried workers, nearly half lack formal contracts, paid leave, or social security.
• The call for longer working hours disregards the reality that most Indian workers, particularly manual labourers and household helpers, already endure gruelling schedules simply to survive.
• Unlike developed nations where productivity gains have reduced working hours, India continues to extract economic value by extending the workday rather than improving efficiency.

Striking Aspects of India’s Industrial Structure

• Cheap Labour as a Competitive Strategy
  • One of the most striking aspects of India’s industrial structure is its heavy reliance on cheap labour as the primary source of competitive advantage.
  • Instead of investing in technological innovation, automation, or efficient management practices, Indian businesses continue to extract economic gains by keeping wages low and increasing working hours.
  • This approach, while beneficial for short-term profits, ultimately hinders long-term economic growth and industrial competitiveness.
• A Historical Perspective: The Evolution of Labour Exploitation
  • Throughout history, economies have used labour-intensive methods to drive industrial growth, particularly in their early stages.
  • During the Industrial Revolution in Britain, factories exploited workers by enforcing excessively long hours under inhumane conditions.
  • Karl Marx famously described how capitalists had a ‘werewolf hunger for surplus labour,’ pushing workers beyond their physical limits in pursuit of higher profits.
  • However, by the mid-19th century, labour reforms, unionisation, and technological progress led to a shift from sheer labour exploitation to efficiency-driven productivity.
• The Structural Shift Toward Informality
  • Indian businesses have systematically shifted away from the organised sector, where labour laws ensure minimum wages, job security, and worker benefits, to the unorganised sector, where such regulations are largely absent.
  • This structural transformation has allowed industries to sidestep labour protections and exploit workers without facing legal repercussions.
  • One of the key strategies used to maintain low labour costs is the proliferation of small, unregistered firms.
  • Industrial hubs such as Coimbatore and Ludhiana are filled with micro-enterprises, often operating in small sheds, producing components that feed into larger manufacturing networks.
  • These businesses lack formal employer-employee relationships, with many owners being former workers themselves.
  • In such environments, wages remain depressed, and technological investment is minimal.
• The Rise of Contract Labour and Migrant Workforces
  • Another major factor in the persistence of the cheap-labour model is the increasing use of contract workers.
  • Over half (56%) of all workers who joined India’s factory sector after 2011-12 were employed on a contract basis rather than as permanent employees.
  • Contract workers receive significantly lower wages and are excluded from essential benefits such as job security, health insurance, and pension schemes.
  • Moreover, India's industry relies heavily on migrant workers who leave their villages in search of employment in urban and industrial centres.
  • These workers often belong to disadvantaged social groups, lack access to land or assets, and have no bargaining power in the labour market.
  • As a result, they are forced to accept extremely low wages and poor working conditions.

Why Cheap Labour Fails as a Long-Term Strategy

• Low Productivity and Stagnation
  • Unlike developed economies, where productivity growth drives economic expansion, India’s reliance on cheap labour has stifled innovation.
  • Businesses remain reluctant to invest in technology or skill development, leading to a workforce that is overworked but underproductive.
• Weak Domestic Demand
  • Suppressing wages weakens the purchasing power of the working class, limiting the growth of the domestic market.
  • When a large segment of the population earns barely enough to survive, demand for consumer goods, services, and housing remains low, slowing economic progress.
• Inability to Compete Globally
  • India's failure to modernise its industries has resulted in declining competitiveness in global markets. The garment industry is a prime example.
  • Despite its abundant workforce, India’s share in global garment exports has remained stagnant at 3.1% for two decades.
  • In contrast, countries like China, Bangladesh, and Vietnam have invested in modern factories, automation, and efficient management practices, allowing them to dominate the sector.
• Increased Worker Exploitation and Social Unrest
  • The continued exploitation of workers, through long hours, low wages, and informal contracts, leads to worsening living conditions, rising income inequality, and social unrest.
  • Without adequate protections, workers remain trapped in cycles of poverty, preventing overall economic development.

The Case of the Garment Industry: A Lost Opportunity

• India’s garment industry exemplifies how over-reliance on cheap labour has stunted progress.
• Despite its abundant workforce, India has failed to expand its share in global garment exports beyond 3.1% over the past two decades.
• In contrast, China, Bangladesh, and Vietnam have surged ahead due to their willingness to modernise and invest in productivity-enhancing technology.
• Indian manufacturers, by clinging to the advantage of low wages, have remained uncompetitive in the global market.
• A similar problem plagues India’s IT and other new-generation industries, where the reluctance to invest in workforce skill development and technological infrastructure limits their potential.
• Instead of creating a high-value, innovation-driven economy, industry leaders continue to rely on extensive work hours and minimal wages to sustain profits.

The Need for a New Industrial Strategy

• Invest in Technology and Automation: Embracing advanced manufacturing technologies, artificial intelligence, and automation can boost productivity without extending working hours.
• Prioritise Skill Development: Enhancing workforce skills through education and vocational training will create a more capable and efficient labour force.
• Strengthen Labour Laws and Worker Protections: Enforcing fair wages, job security, and social benefits will not only improve living standards but also stimulate domestic consumption.
• Encourage Formalisation of Enterprises: Incentivising businesses to operate within the formal sector will promote accountability, better wages, and stable employment opportunities.

Conclusion

• India’s continued dependence on cheap labour as a competitive strategy is
• While it has provided short-term gains for industries, it has stifled innovation, weakened domestic demand, and limited global competitiveness.
• If Indian industry is to thrive in the 21st century, it must move beyond exploitative labour practices and adopt a more forward-thinking approach that prioritises productivity, innovation, and worker welfare.
• The shift from a labour-intensive model to a technology-driven economy will be critical in ensuring long-term industrial and economic growth.

Q1. Why do Indian industries rely heavily on cheap labour instead of technology?
Ans. Indian businesses prioritize low wages and long hours over innovation to keep costs down and maximize short-term profits.

Q2. How has the shift to informal and contract-based employment affected workers?
Ans. It has led to job insecurity, lower wages, and lack of social benefits, making workers more vulnerable to exploitation.

Q3. Why has India's garment industry struggled in global exports despite a large workforce?
Ans. Unlike competitors like China and Vietnam, Indian manufacturers have been reluctant to modernize and invest in advanced technology.

Q4. What are the negative consequences of relying on cheap labour?
Ans. It leads to low productivity, weak domestic demand, lack of global competitiveness, and increased worker exploitation.

Q5. What should Indian industries do to improve long-term competitiveness?
Ans. Invest in technology, enhance worker skills, enforce better labour laws, and transition towards a formal, innovation-driven economy. 

Source:The Hindu

Context

• The global labour market is undergoing a significant transformation, and it is evident that the skills required in 2030 will be markedly different from those needed today.
• This shift presents both a challenge and an opportunity for India. While the world faces an impending shortage of skilled workers, India is uniquely positioned to leverage its workforce potential.
• However, to fully capitalise on this opportunity, India must address various challenges, including regulatory barriers, skill mismatches, and immigration restrictions.

An Overview of The Global Talent Shortage and India’s Potential

• A recent study by FICCI-KPMG, Global Mobility of Indian Workforce, predicts a global talent shortage of over 85.2 million people by 2030, which could result in $8.45 trillion in unrealised annual revenue.
• This underscores the urgent need for nations to develop a future-ready workforce.
• India, with its vast pool of young and skilled workers, has a unique opportunity to fill this gap and contribute significantly to the global economy.
• However, realising this potential requires strategic interventions at multiple levels, including government policies, international collaborations, and workforce training programs.

Key Geographic Regions and Sectoral Demands

• GCC and Australia: These regions have a strong demand for workers in manufacturing and construction, sectors that require large-scale labour mobility.
• Europe: As one of the oldest post-industrial societies, Europe has a growing need for service-sector workers, particularly in healthcare, due to its aging population.
• Emerging Sectors: Across all regions, there is a rising demand for expertise in automation, artificial intelligence (AI), big data, predictive analytics, the Internet of Things (IoT), blockchain, and sustainability.

Barriers to Workforce Mobility and Strategies to Enhance Workforce Mobility

• Barriers to Workforce Mobility
  • Regulatory and Immigration Barriers – Complex visa processes and stringent work permit regulations restrict skilled migration.
  • Recruitment Malpractices and Trafficking – Exploitative recruitment practices and human trafficking pose risks to migrant workers, a concern highlighted by Prime Minister Narendra Modi.
  • Policy Barriers and Skill Mismatches – Many Indian degrees, particularly in medicine, are not universally recognized, leading to underemployment or unemployment of skilled professionals.
  • Language and Cultural Barriers – Integration challenges, such as language proficiency and cultural adaptation, affect workforce productivity.
• Strategies to Enhance Workforce Mobility
  • Bilateral Agreements and Free Trade Agreements (FTAs): Agreements with GCC nations and other key markets aim to protect the rights of Indian workers and facilitate their smooth migration.
  • Skill Development Programs: Government initiatives focus on aligning workforce training with global market demands.
  • Digital Platforms for Workforce Support: Online recruitment systems are designed to prevent exploitation and protect migrant workers, especially in the GCC region.
  • Sector-Specific Skill Training: Training programs must be tailored to meet the specific demands of different geographic regions.
  • Regulation of Recruitment Practices: Stricter oversight of recruitment agencies is necessary to prevent worker exploitation.
  • Recognition of Qualifications: International collaborations should ensure mutual recognition of academic and professional qualifications.
  • Public-Private Partnerships: The private sector should play an active role in skill development and global employment facilitation.
  • Circular Migration and Mobility: Temporary work visas and rotational workforce models can help address labour shortages while maintaining demographic balance.

The Political Climate, India’s Resilience and Economic Future and the Road to ‘Viksit Bharat’

• The Political Climate and India’s Resilience
  • The political climate regarding immigration policies is constantly evolving.
  • While Europe may tighten its regulations, Australia remains more open to skilled migration.
  • The FICCI-KPMG study highlights that the Indian diaspora in Australia is one of the largest and fastest-growing.
  • Strict immigration policies mainly target illegal migration, making it crucial for India to position its skilled workforce globally while ensuring legal compliance.
  • Unlike some other migrant groups, Indian workers generally face minimal hostility in international labour markets.
  • However, India must continue efforts to curb illegal migration to maintain its positive global reputation and safeguard its workers from exploitation.
• India’s Economic Future and the Road to ‘Viksit Bharat’
  • India’s ability to capitalise on global labour market opportunities will significantly influence its economic trajectory.
  • Arvind Panagariya, Chairman of the Sixteenth Finance Commission, has projected that India’s GDP could reach between $6.5 trillion and $9 trillion by 2030.
  • The extent to which India taps into the $8.45 trillion global economic opportunity will determine how close it gets to the higher end of this projection.
  • By effectively addressing workforce mobility challenges and strategically positioning its skilled labour force in international markets, India can not only contribute to the global economy but also realize its vision of Viksit Bharat, a developed India.

Conclusion

• As the global labour market undergoes a transformation, India stands at a crucial juncture.
• With a rapidly growing workforce, the country has a unique opportunity to fill the talent shortage projected for 2030.
• However, achieving this goal requires a coordinated effort involving government policies, skill development initiatives, and international collaborations.
• By addressing regulatory challenges, streamlining workforce mobility, and leveraging its young and skilled population, India can secure a significant share of the global labour market and drive its own economic growth in the process.

Q1. What is the estimated global talent shortage by 2030?
Ans. According to a FICCI-KPMG study there are over 85.2 million skilled workers.

Q2. Which three regions have the highest demand for skilled workers?
Ans. The Gulf Cooperation Council (GCC), Europe (including the UK), and Australia.

Q3. What are some key barriers to workforce mobility?
Ans. Immigration regulations, recruitment malpractices, skill mismatches, and language barriers.

Q4. How can India enhance global workforce mobility?
Ans. Through skill development programs, bilateral agreements, and recognition of qualifications.

Q5. How does workforce mobility impact India’s economic future?
Ans. It can help India reach a GDP of up to $9 trillion by 2030 and achieve Viksit Bharat. 

Source:The Hindu

Context:

• India, as the world’s largest democracy, relies on the Election Commission of India (ECI) to conduct free and fair elections.
• Concerns have been raised regarding the appointment process of Election Commissioners (ECs) and its impact on the independence of the ECI.
• Civil society organizations (CSOs) and political leaders have long demanded a transparent and bipartisan appointment process.

The Role of Civil Society Organizations in Electoral Reforms:

• Several CSOs, including Association for Democratic Reforms (ADR), Internet Freedom Foundation, etc. have been advocating for electoral reforms.
• ADR has been at the forefront, filing legal challenges to reform the EC appointment process.

Legal Battle for a Transparent Appointment Process:

• 2015: ADR filed a petition challenging the executive’s exclusive control over EC appointments, citing concerns over independence.
• 2018: The case was referred to a Constitution Bench, but hearings were delayed.
• March 2, 2023:
  • In Anoop Baranwal vs Union of India, the Supreme Court (SC) noted that no legislation outlining the appointment process for these positions had been passed in more than 70 years.
  • This is in spite of the constitutional provision under Article 324(2) that required Parliament to pass a law.
  • It ruled that, until Parliament enacts a law, the Chief Election Commissioner (CEC) and ECs should be appointed by a committee comprising:
    • The Prime Minister
    • The Leader of the Opposition (LoP) in the Lok Sabha
    • The Chief Justice of India (CJI)
  • The ruling aimed to reduce executive dominance and ensure transparency.

The 2023 Legislation and Its Controversies:

• The government passed the Chief Election Commissioner and Other Election Commissioners (Appointment, Conditions of Service, and Term of Office) Act, 2023, modifying the SC’s ruling.
• The Act excluded the CJI from the selection panel. Instead, it created a new selection committee comprising:
  • The Prime Minister
  • A Union Cabinet Minister (nominated by the PM)
  • The Leader of the Opposition
• Critics argue that this change undermines impartiality, as the executive holds a majority in the selection panel.

Judicial Review and Government Action:

• January 2024: ADR and other petitioners challenged the 2023 Act in the SC, arguing it allowed the ruling party to dominate the selection process.
• March 2024: Despite the pending judicial review, the government appointed two new ECs under the new selection framework.
• February 18, 2025: The incumbent CEC retired, and the government made new appointments via a midnight order.
• February 19, 2025: The SC was scheduled to hear the case but adjourned it without a new date, prolonging uncertainty.

Global Best Practices in EC Appointments:

• United States: Commissioners appointed by the President with Senate approval.
• South Africa: President appoints on the recommendation of the National Assembly.
• Brazil: Appointments made by the Federal Supreme Court.
• United Kingdom: The Speaker’s Committee on the Electoral Commission (cross-party) makes appointments.
• France: Joint appointments by the President, Legislature, and Judiciary.
• Nepal: President appoints CEC and ECs based on recommendations from the Constitutional Council, followed by a parliamentary hearing.

Way Forward:

• The integrity of India’s electoral process hinges on the independence and impartiality of the Election Commission, real and visible.
• The need of the hour is to embrace a bipartisan and neutral collegium-based appointment system, drawing from global best practices.
• This would not only fortify the ECI’s autonomy but also bolster public confidence in the democratic process.

Conclusion:

• The 2023 Act has been criticized for reintroducing executive control over EC appointments, despite the SC’s attempt to ensure impartiality.
• If the government reinstates the CJI in the selection panel, legal challenges could be resolved.
• The issue remains unresolved, with the judiciary’s role in safeguarding democratic institutions under scrutiny.

Q1. What was the ruling of the Supreme Court in the Anoop Baranwal vs Union of India case (2023)?

Ans. The SC ruled that the Chief Election Commissioner (CEC) and Election Commissioners (ECs) should be appointed by a committee comprising the PM, the LoP, and the CJI.

Q2. How did the CEC and Other ECs (Appointment, Conditions of Service, and Term of Office) Act, 2023 alter the appointment process?

Ans. The 2023 Act excluded the CJI from the selection panel and replaced them with a Union Cabinet Minister nominated by the PM.

Q3. What are the main concerns raised by civil society organizations (CSOs) regarding the appointment process of Election Commissioners?

Ans. CSOs argue that the appointment process lacks transparency, allows excessive executive control, and compromises the independence and impartiality of the ECI.

Q4. How do election commission appointment processes in other democracies ensure neutrality and transparency?

Ans. Various democracies follow different models - for example, appointments in the U.S. require Senate approval, South Africa relies on parliamentary recommendations, etc.

Q5. Why is an independent ECI critical for India’s democratic integrity?

Ans. An independent ECI ensures free and fair elections, maintains public trust in the democratic process, and upholds constitutional principles of impartiality and transparency. 

Source:IE