T C A SRINIVASA-RAGHAVAN: Communist Party of India (Petit-Bourgeois)

OKONOMOS

When Marx wrote all that stuff about exploitation of labour in his monumental Das Kapital, he had in mind what ruthless capitalists did to hapless workers. What he didn't have certainly in mind was the granting of permission, in his name, to one set of workers to exploit another.

Yet, as a recent paper by Elena Glinskaya and Michael Lokshin shows, that is exactly what Indian Communists are aiding, abetting and encouraging. I know they will dismiss it as World Bank propaganda but facts are facts, and those are what their paper* provides.

The authors have used employment and unemployment surveys of 1993-94 and 1999-2000 to look at the wage differentials between the public and private sectors. They have also examined workers' decisions to join this or that sector.

Their key result: "on average, the public sector premium ranges between 62 per cent and 102 per cent over the private-formal sector, and between 164 per cent and 259 per cent over the informal-casual sector, depending on the choice of methodology."

Therefore, "India has one of the largest differentials between wages of public workers and workers in the formal private sector" in the world... Differentials as high as India were found only in Ghana and Côte d'Ivoire and in some regions of Brazil."

What's worse, low-skilled workers get paid far more in the public sector than they do in the private sector. So do women, for whom the Communists shed so many tears.

"The estimates indicate unambiguously that these workers enjoy a large and persistent premium merely by being 'lucky' enough to be chosen to work in the public sector."

The differentials are truly astonishing. "In 1999-00, the average real wage in the public sector was about 2.1 times that in the organised private sector. The difference in real wages between the public and private informal sector is even larger at 3.8 times."

But there is also the fact that those who work in the public sector have better educational qualifications. This has to be adjusted for. When the authors do that, the differential comes down but not by much.

The question then becomes: if the workers in the public sector are better qualified, why are they less productive? My answer: because of the Communist Party of India (Bourgeois) emphasises rights and entitlements without laying the same stress on productivity.

Now comes the really screwy part. "There is considerable evidence of an increase in the wage differential between 1993-94 and 1999-00. The public sector wage advantage has increased for rural male and female workers according to all three sets of estimates."

Guess why? Because in 1996 and 1997, the Communists were holding the government to ransom, just as they are now.

But how does all this mean that the public sector workers are exploiting private sector workers? Isn't it private employers who are paying less?

The linkage comes through public sector dis-saving, caused primarily by high wages and low productivity of labour and, therefore, capital as well. The prime minister recently pointed out that at the end of the 1970s, the public sector savings were around 4 per cent of GDP; now they are negative.

The difference is made up by the private sector and foreigners. The foreigners are acquiring greater leverage in the Indian economy; and the Indian private sector has to subsidise the public sector.

This paper is a must-read for everyone who wants to expose how the Communists are really a party of the petty bourgeoisie in India, and not of "peasants and workers" as they claim. In that sense, they are more like the Jana Sangh of old.

Perhaps the prime minister can be persuaded to use the numbers given in this paper to argue his case with the Pope and cardinals of the politburo.

*Wage differentials between the public and private sectors in India, World Bank Policy Research Working Paper 3574, April 2005