“Vulnerability to Impoverishment Depends to a Large Extent on the Prevailing Nature of Labour Regimes”

 Azwar Surahman (2012)

Introduction: Basic Issues and Related Concepts

Referring to Dollar and Kraay (2004), In the light of macro development policies in reducing poverty, some sort trickle down mechnanism through inducing economic growth is ‘invariably at work’ (Wuyts, 2011: 3). This arguement is supported by the result of Mishel et al (2009) study about the boom period of the US economy from 2000 to 2007. It showed ‘how well working people fare’ hinged on the broadness to which it translates into growth in labour earnings and on whether or not this goes together with employment growth (Wuyts, 2011: 4). Therefore, I agree that vulnerability to impoverishment depends to a large extent on the prevailing nature of labour regimes. I will describe the endorsement of the contention further below.

            The discussion of the arguement comprises two major issues: the vulnerability to impoverishment and the wide range of the prevailing nature of labour regimes. The former issue is related with the exposure (possibilities) of becoming poor. The later issue is about the various social, economy and political context which embedded to the labor regimes as different methods of mobilizing labour and organizing it in production (Bernstein, 1988: 31-32).

            Commonly people, since wake up from their sleep to start the day until they sleep again to take a rest, aware or not aware, they are barely hard not to do an economic activity. Bernstein (1988: 54) mentioned economic life as something which concerned with production, the distribution of what is produced, and its consumption. The condition that so many people living in absolute poverty can be understood by thinking about these three processes: production, distribution and consumption as interconnected. It is because their interaction is a continuous cycle of a necessary activity to sustenance human life (ibid). According to the entitlement theory of Amartya Sen (1981), a person has a capability in an economy activity by producing and or exchanging something to secure food for him/her self. This entitlement depends on two parameters: endowment set and exchange entitlement. The endowment set is defined as all ownership resources of a person such as land, livestock, knowledge, skill and labour power. With these resources he/she can produce food/cash crop for his own consumption or exchange. In a different way, he/she could sell his/her endowment in the market to earn cash and with this cash he can purchase food. So, the exchange entitlement gives a person set of alternatives with his/her endowment. The failure of exchange entitlement could be occured because of various factors both internal or external which can lead to starvation (impoverishment). The other essensial concept that can be used in understanding about vulnerability to impoverishment is capital accumulation concept. The definition of capital accumulation refer to produce greater profits (surplus) by maximizing productivity (output of labour) and minimize costs of production (wages) (Bernstein, 1988: 64). Marx discovered the inequality tendency because of the capital accumulation; the total wealth of society could be increased with few people become more prosperity while most of the people becoming poorer.

The Using of Concepts in The Socio-Economic Context

Those all concept, entitlement and accumulation can be useful to analyse the relationship between  poverty risk and the prevailing nature of labour regimes in the context of socio-economy development. Labour regimes in the under colonialism era had leaved some historical exploited notes on how different types of colonial labour regimes, from forced labour to proletarianization had created slavery, coerced indenture, debt bondage, hunger and destitution (op.cit.: 32-38). Those tragedy can be explained from perspective that the social relations of production of capitalism creates two basic classes: the class of capital or capitalist class and the class of labour or working class (op.cit.: 64). The first class tends to exploit the second class. The working class is they who lacking means of production with which to buy its own subsistence, has to sell its labour power to those owning means of production in exchange for wages with which to buy its means of subsistence (in the case of slavery, they were coerced to give their labour power for free). Furthermore, there will be explanation about the relation between these two classes relating with the implication labour market for macroeconomics and social protection.

            The enormous implications for formulating macroeconomic policies and for evaluating their welfare impacts with regard to employment, average living standards, and the distribution of the value of output depend on how the labour market is theorised (Heintz, 2008: 11). For classical economists such as Pigou (1968), they argue that expansionary policies would not have no long-run impact on the level of employment (ibid.). This claim is criticised by Keynes(1964) by arguing that labour demand and labour supply will increase in response to expansionary policies, causing to a higher equilibrium level of employment (ibid.). Different with Classical and Keynesian models, Lewis (1954) stated that expansionary macroeconomic policy will only impact output and employment to the extent that it relaxes the binding supply-side constraint (op. cit.: 11-12). So, which one of these three labour market model is the best one? The answer is none of them fits the bill. They often fit only in particular condition in particular time. For example, Keynesian macroeconomics was designed for the typical developed country which its economy was fully monetised and the workers were wage workers with rights of collective bargaining and entitlements to social protection against random risks (Toye, 2008:118).

Child Labour as One Example of Contemporer Labour Regime

For the next, I will use some case of child labour studies in India Subcontinent to more explaining the large extent of prevailing nature of this one example of contemporary labour regime to the poverty risk possibility. According to Fernandes (1994: 278), the best way to analyse this notion is by attributing child labour to the poverty of the family, with also looking at the structural causes. This thing was often missed by the government and other dominant stakeholders so in turn they failed to address the comprehensive views of child labour dimension.

A good overview was given by Vemuri and Shastri (1991) in addressing the problem; they argued that ‘where adult unemployment rates are high or wage rates are low, the wages earned by children are valuable additions to family income’ (Kanbargi, 1991: 31). Giving comment on this, Fernandes (1994: 278) said that this arguement has given ‘a fairly good analysis of the link between poverty, caste, sex, literacy and child labour; between landlessness of the Scheduled Castes and the forces that make parents send their children to work for a wage’.

Srikanthan (1991), refuted the theory that the number of children is linked to child labour and instead links it to traditional values of motherhood, therefore Srikanthan suggested that incentives should be given to families to reduce births and send children to school (Kanbargi, 1991: 40-49). But this has been criticised by Fernades (1994: 278) who said that Srikanthan’s claim was only focus on the family and failed to give an explaining about disincentives to employers.

Another valuable finding related to the child labour study is from Barkat-e-Khuda (1991) who found that in Bangladesh from the data on their contribution to home expenses and to productive work, the  girls were exploited more than boys (Kanbargi, 1991: 49-63). The other interesting thing was coming from the statement of Tim Dyson (1991) that ’children work because people have children, rather than people have children because children work’ (Kanbargi, 1991: 81-101). A good explanation about the relation between child labour and school attendance was given by Kanbargi and Kulkarni (1991), who found the negative correlation between those two variables (Kanbargi, 1991: 125-164).

Conclusion

In conclusion, I completely agree that vulnerability to impoverishment depends to a large extent on the prevailing nature of labour regimes. It is because various theories, concepts and studies have shown that the possibility of being poor were ranging in multiple factors especially in the socio-economy context which is structurally embedded in many forms of labour regimes.

References

Bernstein, H. (1988) ‘Labour Regimes and Social Change Under Colonialism’, pp. 30-49 inB. Crow, M. Thorpe et al. (eds.) Survival and Change in the Third World. Cambridge: Polity Press.

Bernstein, H. (1988) 'Production and Producers. Some Concepts and Issues', pp. 54-66, in B. Crow, M. Thorpe et al. (eds.) Survival and Change in the Third World. Cambridge: Polity Press.

Fernandes, W. (1994) 'Ramesh Kanbargi (Ed.), Child Labour in the Indian Subcontinent: Dimensions and Implications. New Delhi: Sage Publications, 1991. 184 Pages. Rs. 225', Indian Journal of Gender Studies 1(2): 278-280.

Heintz, J. (2008) ‘Revisiting Labour Markets: Implications for Macroeconomics and Social Protection’, pp. 11-17 in IDS Bulletin 39(2), May.

Kanbargi, R. (1991) ‘Child labour in the Indian subcontinent: dimensions and implications / edited by Ramesh Kanbargi’, Sage Publications.

Marc Wuyts (2011) ‘The Working Poor: A macro Perspective’ Valedictory Lecture, 8 December, 2011, ISS, The Hague.

Toye, J. (2008) ‘Macroeconomic Policy, Labour Markets and Growth in Developed and Developing Countries’, pp. 118 in IDS Bulletin 39(2), May.