Geography of work
Manish Agarwal is an evangelist
for temping. I shall not dwell on his arguments, which are summarized in the
white paper (actually, it is blue), India’s Labor Market: Case for Temporary
Staffing Reform to reduce Unemployment, which can be downloaded from www.teamlease.com, his company’s web
site. He runs a temping firm, and finds the law stacked against them. In
particular, the Contract Labour (Regulation) Act of 1970 compels every user of
temping services to get a “licence” and to register every temping contract with
the state government, and imposes obligations on him – regarding payment of
salary, provident fund, minimum wage – which should really be imposed on the
temping firm that employs the worker. It imposes absurdly high statutory
deductions from temps’ wages. Essentially, it discriminates against contract
labour and in favour of contract production which is an inferior form of
contract labour. I think Manish Agarwal is right, but I shall leave it to him
to campaign for his cause.
I was struck by something he said
to me. His is by no means a giant firm; the number of temps it handles runs
into thousands, not more. But he said that he was already running into a
shortage of workers in the big cities, and was looking for more in smaller
cities. I and people like me have always worked in big cities. I once got
disgusted with the dirty politics of Delhi and went to Trivandrum intending to
build a little hut on the beach. But the local politics was so much more
vicious that I came back to Delhi in a year. But it is not politics alone;
there are more jobs in big cities – relatively to the people available. That is
not just for pen-pushers for me; there are more jobs even for useful people
like drivers and car washers.
Why is the labour market tighter
in cities? Essentially because there is more purchasing power per square foot.
Someone like me earns thousands in a little cabin of 50 square feet, whereas a
farmer may have an acre or two – an acre is 43,660 square feet – and may earn
less than a thousand a month. Naturally I generate far more demand per acre
than the farmer.
So all the unemployed people
across the country should rush to Delhi to clean my shoes, cut my hair, feed me
betel nut and so on. Why do they not? To do so, they would have to find
somewhere to stay in Delhi, and somewhere to provide me with their service.
Both require space, which is rationed out in some or other fashion in every
city. In a well administered city, for instance in Europe, no one would be
allowed to squat. Everyone would be required to have a place of residence with
an address; and no dwelling could be built without the municipal corporation’s
permission and approval of the plans. So the supply of dwelling space limits
the number of city dwellers. But in cities in rich countries, there is
generally a surplus of both dwelling and working space; both have outrun the
demand created by urban purchasing power.
In India, however, both are in
short supply; this is why the interstices of Indian cities get filled up with
slums. There are jobs enough, but municipal corporations do not approve enough
houses to accommodate the people who can be employed. That is not entirely
accurate. What happens is that the land prices in cities do not permit houses
to be built which those who get low-paid jobs can afford. So the latter occupy
land without paying for it. And the authorities allow them to occupy it on
certain conditions: for instance, the rule in Bombay that a slum house should
not exceed two stories and 14 feet.
Thus in a well administered city,
the high price of real estate would choke off supply of labour and raise its
price; in poorly administered Indian cities, it creates a dual market for space
– an overpriced market for middle classes and an underpriced market for the
poor.
However, this supply-demand
imbalance is greater in bigger than in smaller cities. Whenever I go to smaller
cities I am struck by how much better living conditions there are – the roads
are less cluttered, the inner spaces are less slummy, the middle classes live
in better houses and spend less time commuting.
So why do we not all go to
Chandigarh or Guntur? Because there is no work there for people like us. That
was true in my lifetime. But it does not have to be so any longer. All the
amenities of big cities can now be supplied in small ones. Azim Premji should
stop complaining of the backwoodsmen who rule Bangalore. With the thousands he
employs, he can create his own town in the jungles of Jharkhand, as Jamshedji
Tata did a hundred and fifty years ago. Let a hundred cities bloom.
