The Structure of the World Labour Force

Prabhat Patnaik


THE International Labour Organisation (ILO) provides useful data on the world
labour force. The concept of “labour force” includes both the employed and the
unemployed. The employed part of the labour force consists of: wage and salaried
workers (who are called “employees”); the self-employed workers with “employees”
(who are called “employers”); and the self-employed workers without “employees”
(among whom are “own account workers”, unpaid family workers, and members of
producers’ cooperatives). It turns out that the proportion of wage and salaried
workers in the total employment in the world is around 48 percent today.

The ILO also has another classification. It takes “own account workers” and
unpaid family workers together as constituting those who are “vulnerably
employed”; while “employers”, together with wage and salaried workers, are taken
to constitute the “non-vulnerably employed”. The composition of the world labour
force on this classification can be given as follows: the proportion of those
who are unemployed is around 6 percent; the “vulnerably employed” constitute 47
percent (of whom unpaid family workers are 14 percent, and “own account workers”
are 33 percent); and the “non-vulnerably employed” are another 47 percent (of
whom wage and salaried workers are 45 percent and “employers” or self-employed
workers with “employees” are 2 percent).

There is however one major problem with the ILO data, namely that there is
always a segment of the labour force that does not appear either among the
employed or among the unemployed; and this segment is not counted at all in the
ILO statistics, thereby underestimating the magnitude of the actual labour
force. This segment consists of the “discouraged workers”, who are economically
inactive not because they wish to be so, but because they are so completely
without any hope of finding employment that they do not even report themselves
to be searching for work. They are actually unemployed but are not counted among
the unemployed because they do not even report themselves to be looking for
work. It is naturally difficult to estimate their numbers, but if we take the
entire world population in the 25-54 age-group which is economically inactive as
belonging to this category, and hence to the labour force, then we get a breakup
of the total global labour force in 2011 as follows (estimated from
Bellamy-Foster, McChesney and Jonna, Monthly Review, Nov, 2011): unemployed plus
“discouraged workers” 20 percent; “vulnerably employed” 43 percent; and
“non-vulnerably employed” 37 percent. Among the non-vulnerably employed, wage
and salaried workers would be around 35 percent and “employers”, ie,
self-employed workers with “employees” 2 percent.

From these figures it would appear at first sight that 35 percent of the entire
global labour-force is employed under capitalism; but this impression is
erroneous. Among the “employees” there are some who are employed by the
“self-employed” (the “employers” by the ILO definition). For instance, a part of
the 35 percent of the global labour force that consists of wage workers would be
employed by rich peasants. The fact that they employ labourers would, in the
eyes of some, entitle them to the status of being “capitalists”. But such a
categorisation is erroneous; for, on such a categorisation, India can be said to
have had a significant capitalist sector over much of its history, long before
capitalism appeared as a phenomenon in Europe.

Indeed a prolonged debate on whether the fact of employment against wage payment
can alone be said to define capitalism had taken place in India some years ago;
and the general consensus that emerged was that the mere employment of labour
against wage payment in agriculture does not entitle the employer to be called
“capitalist”. It follows therefore that the proportion of the global
labour-force that provides labour-power directly to capitalist employers cannot
be more than a third.

On the other side we have 63 percent of the global labour-force, or almost
two-thirds, consisting of workers who are either unemployed, or constitute
“discouraged workers”, or are “vulnerably employed”. Bellamy-Foster et al
consider this percentage to be the maximal size of the reserve army of labour in
the world economy. But even leaving aside the reserve army aspect, this
proportion by definition constitutes the vulnerable segment of the world
labour-force.



MISLEADING

IMPRESSION

This however gives a misleading impression. To assume that the entire body of
wage and salaried workers are “non-vulnerably employed” is erroneous. We know
that among the wage and salaried workers there are casual workers, part-time
workers, temporary workers, intermittent workers and such like, who are in fact
a highly vulnerable segment of the work-force. To categorise them as
non-vulnerable, as the ILO does, amounts to a gross violation of reality.

In India for instance, only about 4 percent of the total labour-force or less is
not vulnerable to instantaneous dismissal at the employer’s will; the remaining
segment can be fired without any notice if the employer so chooses. Even so,
however, several so-called “researchers” have argued that India’s industrial
growth is held up by the absence of this absolute power on the part of the
employers to fire workers; and that “labour market flexibility”, which means
employers’ absolute power to fire workers at will whenever they wish, must be
introduced forthwith to remove this impediment to India’s industrial growth. The
total magnitude of those who are “vulnerably employed” therefore far exceeds the
two thirds of the global labour force mentioned earlier.

There is a further point of importance that needs to be noted. The various
proportions mentioned above, of the unemployed, the economically inactive
population in the 25-54 age-group, the wage and salaried workers, and the
vulnerably employed, to the global labour-force has hardly undergone any
significant change in the last several years, especially between the years 1997
and 2011 which are covered by Bellamy Foster et al’s empirical figures. The
proportion of the wage and salaried workers to the total global labour-force for
instance, which was 35 percent in 1997 went up barely perceptibly to 37 percent
in 2011.

We do know however that during this very period there has been a massive attack
on petty producers, especially the peasantry, under the aegis of neo-liberalism.
Indeed a veritable process of what Marx had called “primitive accumulation of
capital” has been let loose; and in India itself we have had a drop in the
number of peasant households between the last two censuses, which is indicative
of the fact that displaced petty producers are flocking to cities in search of
jobs. Given the high growth rate of GDP in the economy, one might have expected
a burgeoning demand for labour-power on the part of capital, which should have
increased the share of wage and salaried workers in the Indian economy, and
hence by implication (since a similar experience would have been expected
elsewhere) in the global labour force.



GROWING INEQUALITY IN

WORLD INCOME DISTRIBUTION

The fact that this has not happened, that the ratios of the various categories
to the total global labour force have remained more or less unchanged over time,
suggests that those displaced from the agrarian economy, or from the petty
production economy in general, have again entered the vulnerably employed
segment in the cities. They have in short migrated from one segment of the
“vulnerably employed” to another segment, from the peasant economy to the
service sector in the urban areas.

Put differently, the process of primitive accumulation of capital that is
effected under neo-liberalism, does not lead to an increase in the proportion of
the labour force absorbed by the capitalist sector. This fact at the global
level may appear strange at first sight. Even if India’s rapid growth has not
led to an increase in the proportion of its work-force getting absorbed into the
active army of labour employed by capital, the same could not be true of China
where even the London Economist has been talking about the emergence of a tight
labour market because of rapid industrialisation (on the basis of wage payment).
Nonetheless it appears to be true for the global economy as a whole. The
displaced petty producers in traditional sectors in other words, who have been
facing the full blast of the onslaught of capital, have not been absorbed into
the ranks of wage and salaried workers.

The magnitude of the reserve army can be identified differently under different
criteria. Bellamy Foster et al. see the maximum size of the reserve army as
consisting of the unemployed, the economically inactive population in the 25-54
age group, and the vulnerably employed; the actual reserve army however would be
smaller, consisting of only a fraction of this maximum (since a part of it
comprises peasants and petty producers who are not immediately in the reserve
army). But no matter how we define it, the relative size of the reserve army in
the total global work-force (which includes both the active and the reserve
army) appears to have remained more or less unchanged during the last several
years.

This is important because it explains the growing inequality in world income
distribution. The non-shrinking relative size of the reserve army ensures that
the absolute magnitude of the vector of real wages in the world economy does not
increase even as labour productivity goes up. This entails an increase the
proportion of surplus in world output, ie, in the proportion of income accruing
to capitalists and their “hangers on”, which manifests itself as an increase in
income inequality.

It also refutes theories which suggest that the pace of capital accumulation is
restricted by the growth in the size of the total army (active and reserve) of
labour. Bourgeois economics of course believes that there is always full
employment under capitalism, and that the only unemployed are those who either
choose to be so or are “between jobs”; it therefore holds, necessarily, that the
pace of accumulation is constrained by the growth of the labour force. But even
among writers who reject the view that “full employment” prevails under
capitalism, some would still argue that capital accumulation is constrained by
the growth of the labour force; Otto Bauer, the well-known Austrian Marxist,
whom Rosa Luxemburg had criticised on this score, was one such. The labour force
statistics relating to the world economy do not support this view.


In
PEOPLES DEMOCRACY
http://peoplesdemocracy.in/2015/1025_pd/structure-world-labour-force
25/10/2015