Labour Market Changes and Living Standards: A Study of Homeless Population in Japan and Slums in India Arup Mitra Visiting Research Fellow Institute of Developing Economies JETRO Japan May 2006 Institute of Economic Growth Delhi University Enclave Delhi-110007 India e-mail: [email protected] fax: 91-11-27667410 1 Acknowledgement My sincerest gratitude to Drs Shuji Uchikawa, Hajime Sato, Atsushi Kato and Michiru-san and Yuko Tsujita, for their enormous help and support without which it would not have been possible for an Indian to pursue this study on homeless population in Japan. I have profited immensely from their guidance at every stage of my research including translation of data, literature review, conducting primary survey and holding interviews with government officials and members of NGOs. My IDE-counterpart, Hajime-san and my former post-doctoral student Kato-san allowed me generously to encroach upon their personal freedom and time. Their efforts to make my stay enjoyable are beyond my power of expression. Drs Mayumi Murayama, T. Yamagata, S. Inomata, H. Oda, K. Imai and M. Makino extended intellectual and academic support in a number of ways. I have benefited greatly from discussions with Professors Yujiro Hayami, Konosuke Odaka and Hideki Esho. Besides, I have received encouragement from several researchers in IDE. The administrative and library staff extended help with great warmth and enthusiasm. In particular, I would like to place on record my thanks to Ding-san, Harada-san, Sanada-san and Moriwakai-san. Swami Medhasananda from Nippon Vedanta Kyokai offered insightful suggestions based on his extensive research on an Indian city (Benaras) and his social work for the homeless in Japan. The officials at Tokyo Metropolitan Government office, members of the NGO, Sanyukai and activist Mukai-san from People’s Plan Japonesia contributed immensely to my understanding of homelessness in Japan. I am grateful to all of them. 2 Labour Market Changes and Living Standards: A Study of Homeless Population in Japan and Slums in India by Arup Mitra 1. Introduction The role of industry is important in both developed and developing countries in generating high productivity employment and enhancing the standard of living of the population. In the process of development there takes place a structural shift both in the value added and work force composition away from the primary sector first towards secondary and later towards the tertiary sector. This structural change is accompanied not only by a rise in per capita income but also improvement in many other development indicators. It involves upward mobility of individual occupations and incomes and a shift in rural-urban composition of the population (Kuznets, 1966). The rapid expansion in the services sector is easy to be rationalized in the context of the developed countries because following the rapid progress of industrialization the demand for several services grows faster which in turn reduces the share of the secondary sector in the total product of the economy. But in the case of the developing countries the dominance of the tertiary sector before the secondary sector’s relative size could increase to a reasonably high level did invite concerns at least in the past. However, sub-sectors like transport, communication and banking are seen to contribute significantly to the overall economic growth. Especially the role of information technology (IT) and business process outsourcing services (BPOS) in enhancing the overall economic growth has been evident across countries, (World Bank 2004, Gemmel, 1986). Even after the collapse of the “bubble economy” the number of employees has continued to grow in Japan, particularly in information services, business services, medical and social welfare services, recreation, wholesale and retail trade, hotels and restaurants including supermarkets and convenient stores (The Japan Institute of Labour, 1999). In the process of growth and transfer of population from rural to urban areas the rising pressure on the urban housing and infrastructure, however, can be much in excess of the supply, which in turn may result in escalating land prices and growth of sub-standard living conditions for the relatively weaker sections even in the developed countries. In the context of the developing countries the problem could be more serious as the demand for labour in the high productivity sector can be much below the supplies, leading to a residual absorption of labour in the low productivity informal sector with meager earnings accruing to the workers and compelling them to reside in slums and squatter settlements. Even in the developed countries industrial deceleration can result in adverse labour market outcomes as workers retrenched from this sector may not succeed in locating an alternative profitable avenue for their productive absorption. On the whole, the role of industry as a determinant of growth and standard of living is crucial in the context of both developed and developing countries, and any deceleration in its performance and/or sluggish employment growth in this sector may have serious implications in terms of labour market outcomes and quality of life. The main focus of this study is two-fold: first, to understand the broad labour market changes that both a developed economy like Japan and a developing economy like India 3 are experiencing in the recent years, in the backdrop of their respective industrialization and the overall globalization process to which both the economies are exposed. Second, how the households/individuals at the lower stratum of the economy are performing in relation to the macro economic changes that are taking place in both the countries. In other words, whether such households/individuals are benefiting in the process of globalization or alternately adversities are on the increase, is an important question that the study addresses itself to. The basic objective, therefore, is to bring out the changes that the Japanese and the Indian labour markets have been experiencing in the recent years, and to assess the possible linkages of the labour market changes with the living conditions of the workers. Though it is true that in some of the developed countries like Japan the housing and living conditions are an outcome of other demographic factors like the number of aged population, the labour market links with the living conditions are also of relevance from policy point of view. The work is based on both secondary and primary data. In the case of Japan, we use the following sources of data: Annual Report on National Accounts, 2005 and 2001, (Department of National Accounts, Economic and Social Research Institute), Labour Force Surveys (Ministry of Internal Affairs), Employment Status Surveys,1997 and 2002, (compiled by Statistics Bureau of the Management and Co-ordination Agency - MCA, Ministry of Internal Affairs and Communication), Special Labour Force Surveys 1998, (compiled by the MCA), and the Reports on Worker Dispatch Businesses (Ministry of Labour/Labour, Health and Welfare), and Establishment and Enterprise Census, 1996 1999 and 2001, Annual Report on the Family Income and Expenditure Survey (Statistics Bureau, Ministry of Internal Affairs and Communications) and Housing and Land Survey, 1988, 1993, 1998 and 2003 (Statistics Bureau, Management and Coordination Agency, Ministry of Internal Affairs and Communications). Japan Statistical Yearbook (Statistics Bureau/ Statistical Research and Training Institute, Ministry of Public Management, Home Affairs, Posts and Telecommunications) which compiles data from different sources is an important source of information. On homeless population the sample survey carried out by the Ministry of Health and Labour, 2003, and our personal interviews with members of organizations (including the metropolitan government) which are associated with the homeless population, and a couple of in-depth interviews conducted directly with those who are homeless, are used extensively. Some of the earlier work in this field (Fowler, 1996) forms the stepping stone to our analysis. For India, the labour market changes are discerned on the basis of National Sample Survey and Population Census data. For the low income households residing in slums/squatter settlements, a micro-survey of 200 households in Delhi slums was conducted by us in 2004-05, and the results of this survey we propose to use for the research report. The occupational pattern of the low income households, the role of ‘social capital’ or informal networks, determinants of earnings, prospects for experiencing upward mobility and the overall deprivation (wellbeing) are some of the aspects that are dealt with. The organization of the study is as follows. The next section presents framework for analysis. Sections 3 and 4 delineate the labour market changes in the context of Japan and India respectively. Section 5 draws a profile of the homeless population in Japan. And 4 section 6 focuses on the slum dwellers in the national capital of India. Finally section 7 summarizes the main findings with their policy implications. 2. Framework Japan In spite of the oil shocks of the seventies the Japanese labour market continued with low unemployment rates, possibly because of its flexible wage system and the human resource management practices followed in the export oriented industries (Ito, 1992, Womack, Jones and Roos, 1991 and Ariga, Brunello and Ohkusa, 2000). However, following the collapse of the ‘bubble economy’, the two critical