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Employment issues in India UPSC NOTE

 Employment issues in India 

  • Ever since the Keynesian Revolution in economics, we know that output is determined by aggregate demand.

  •  It is the demand for the total volume of goods and services produced in an economy

  • The demand for labour is entirely dependent upon this demand

  • There is no demand for labour independent of the demand for goods. 

  • Firms that employ more labour while aggregate demand has not increased will find themselves with unsold goods. 

  • So, an offer by workers to work longer hours will not ensure that they will find employment so long as firms are unwilling to hire them.

  • Firms are guided by the profit motive and will employ more labour only if there is increased demand for their product

  • There is not an iron law of the market pinning us down helplessly to high unemployment through low aggregate demand in India.

  •  There are two strategies economic policy here can attempt. 

  • The first is to use the global market or world demand to grow the domestic economy, but India’s goods would have to be globally competitive. 

  • The experience of South Korea is relevant. 

  • As most of the produced inputs into production are available to all countries via trade, a country’s competitiveness is ultimately determined by the productivity of its workforce and the physical infrastructure that complements labour. 

  • The strength and dexterity of a workforce, manifested as productivity, is related to its health and skill. 

  • In both these categories, India’s workers are at a disadvantage compared to the most successful economies of Asia. 

  • To have not brought its workers on a par with the rest has prevented India from using the world market to grow. 

  • A second route to greater output and employment is to expand the domestic market .

  • To see how this can be done, recognise that the economy produces both food and non-agricultural goods and services. 

  • These are placed differently in relation to our consumption needs. 

  • If food can be produced at lower cost, the real income of the majority of Indian households would rise. 

What can we learn from south Korea

  • Another economy that saw long working hours in this period was South Korea. 

  • Some of its features are similar to those that had prevailed in Germany and Japan then. 

  • It too was recovering from a war, though a different one, and its resurgence was supported by considerable foreign aid received from the U.S., of which it was an ally. 

  • However, a political aspect beyond finance, common to all these three countries, is a strong nationalistic element that is likely to have accompanied their post-war reconstruction. 

  • It is not inconceivable that there was a voluntary supply of effort to rebuild the nation after a shared catastrophe imposed by ‘foreigners’.

  • There is insufficient recognition of the fact that the manufacturing success of the east is underpinned by prior success in agriculture

  • The high working hours that contributed to this are unlikely to have been witnessed in a system in which labour was allocated according to consideration of profit.



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Learnerz IAS | Concept oriented UPSC Classes in Malayalam: Employment issues in India UPSC NOTE
Employment issues in India UPSC NOTE
Learnerz IAS | Concept oriented UPSC Classes in Malayalam
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