Profile: Manish Sabharwal is co-founder and chairman of TeamLease Services. He has a management degree from Wharton and sees himself as a crusader for labour reforms in India. Since its inception in 2002, TeamLease has placed more than half a million people in temporary and permanent jobs.
There is a curious acceptance of a hung parliament from the 2014 polls. Even more painful is the omission of a narrative around jobs in the various election narratives being polished and readied: Secularism, socialism, corruption, national security, food and so on. Could these two tragedies be related? Indian policy and politics desperately, urgently and forcefully need to pray to one god—jobs.
India’s labour markets have been stuck for the last 20 years with 12 percent manufacturing employment, 50 percent self-employment, 90 percent informal employment and 50 percent agricultural employment. India has not had jobless growth but 100 percent of the net job creation since 1991 has taken place in the informal sector. Why are we creating so many low-quality jobs? I believe India’s job emergency has five causes.
Regulatory Cholesterol: Philosopher Balzac once said that behind every great fortune lies a great crime. This distrust of the private sector is pervasive in India and manifests itself in thousands of vague, contradictory and unnecessary regulations that smother enterprise. Most toxic is our labour law regime that makes employment contracts like marriage without divorce, ie biased against employers. Without a radical overhaul of our labour law regime—by recognising fixed term contracts, making labour a state subject, reversing over-regulation and under-supervision—we will not reverse the 90 percent informality. And informal employment is the slavery of the 21st century.
Employee Benefits Regime: In a cost-to-company world, benefits are not over and above salary but come out of it. Today the law requires employers to deduct 48 percent of salary towards mandatory benefits for wage levels up to Rs 6,500 per month. Since most employees at low wages cannot live on half their salary, they prefer informal employment. This demand for informality is amplified further by the perception of poor value for two of the biggest benefits: Provident Fund (it is the world’s most expensive government securities mutual fund and its pension scheme has an unfunded hole of Rs 50,000 crore) and ESIC (it is the world’s only health insurance plan with a claim ratio of less than 50 percent).
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(This story appears in the 23 August, 2013 issue of Forbes India. To visit our Archives, click here.)
Hi Manish, Well writtenon Dec 27, 2014
Quite an exhaustive and illustrative writeup. Urbanisation point is something which I have been thinking on and off, I agree with you our country is in need of more spread out areas rather than focussing on 5-6 cities and its satellite towns.on Aug 21, 2013
This is really well written!! Kudos!!on Aug 20, 2013