CHILD LABOR and its Socio-Economic Impact

CHILD LABORand its

Socio-Economic Impact

Devaangi SharmaNiharika Bhatia

ABSTRACT

“The Child is father of the Man” said Wordsworth. Childrenbegin by loving their parents; as they grow older they judge them; sometimes they forgive them. Mahatma Gandhi says, “If we are to teach real peace in this world, and ifwe are to carry on a real war against war, we shall have to begin with the children." With increasing child labor in India, the future of children is moving towards the darker side.

Simultaneously, there have been obvious consequences on the society. The purpose of this paper is to provide a structured picture of what is known and what should be known on the socio-economic consequences of child labor. Also, our aim is to provide the bigger picture in which child labor not only increases, but the various challengesthat have come up due to this problem. Various facts and figures from reliable sources have been presented in certain sections.

INTRODUCTION

“The Child is Father of the Man” said Wordsworth. Jawaharlal Nehru considered children as one of the greatest asset for the nation. Generally, a child is defined using age criterion. A ‘child’ as a social being can however not be defined merely through an age criterion. Childhood has its relevance in terms of persons’ social acceptance as adults; generally by providing a space for participation in social affairs withan autonomous identity.

According to International Labor Organization(ILO,2002 ) “all children under 15 years of age who are economically active excluding those who are under 5 years and those between12-14 years old who spend less than 14 hours in a week open their jobs unless their activities or occupation are hazardous by nature or circumstances, is called “Child Labor”. The International Labor Organization (ILO) defineschild labor as "work situations where children are forced to work on a regular basis to earn a living for themselvesand their families, and as a result they remain backward educationally and socially in a situation which is exploitative and harmful to their health and to their physical and mental development. The children are separated from their families, often deprived of educational and training opportunities and they are forcedto lead prematurely adult lives (ILO)”.

The worst forms of child labor are those situations where children work more than nine hours in a day; earn less

than a minimum wage or no wages at all; work in hazardous conditions for health and safety; have no access to education; and, work outside of their family's home. Children are the future of the nation, they are vulnerabledue to their age and physical power and they cannot make plan for their future and cannot understand the result of any work. So they should be protected from exploitation and should be given opportunities for their physical and mental development. Government of India is also committed to ensuring protection, rights and development of childrenin our country to overcoming this target government has enacted various legislations such as which prohibit children from working in the particularly hazardous and dangerous activities Child Labor prohibition and regulation act 1986.

CAUSES OF CHILD LABOR

Child labor is a socio-economic problem. Parents for thereason of poverty have to send their children in order tosupplement their income derived from child labor, howevermeager are essential to sustain the family. The majorreason that creates the circumstances for a child to workas a child labor includes the following.

Socio-economic backwardness Poverty - Many a time poverty forces parents to send

their children to hazardous jobs. Although they knowit is wrong, they have no other alternative as theyneed the money.

Illiteracy - Illiterate parents do not realize theneed for a proper physical, emotional and cognitivedevelopment of a child. As they are uneducated, theydo not realize the importance of education for theirchildren.

Unemployment of adult labors - Elders often find itdifficult to get jobs. The industrialists and factoryowners find it profitable to employ children. This isso because they can pay less and extract more work.They will also not create union problem.

Over population - Most of the Asian and Africancountries are overpopulated. Due to limited resourcesand more mouths to feed, Children are employed invarious forms of work.

Government apathy. Urbanization - The Industrial Revolution has its own

negative side. Many a time MNC's and export industriesin the developing world employ while workers,particularly in the garment industry.

Orphans - Children born out of wedlock, children withno parents and relatives, often do not find anyone tosupport them. Thus they are forced to work for theirown living.

REAL SITUATION

The ILO estimates that the number of working children in the 5 to 14 age group in the developing countries is 250 million, of whom at least 120 million are working full time. Of these, 61% are in Asia, 32% in Africa and 7% are in Latin America.

According to the 1981 Census, child population (5-14 years) in India was 179.5 million, of which the numberof working children was 13.64 million, indicating that7.6% of the child population were workers.

The 1991 Census indicated that 5.2% of the child population were workers.

Child Labor has decreased from 1.25crores (Census 2001) to 90.75lacs (Census 2011) and recently to 49.6lacs. Child labor is still a major problem in India.

The Hindi belt, including Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh, account for 1.27crores working children in the country, engaged in both hazardous and non-hazardous occupations and processes.

Over 19lakhs child laborers in the 5-14 age group are in Uttar Pradesh. Rajasthan accounts for over 12.6lacsworkers followed by Bihar with over 11lakhs and MadhyaPradesh with 10.6lacs.

ECONOMIC IMPACT OF CHILD LABOR

The economic effects of child labor can be divided intothose which occur at the micro family level, those onmacro variables such as long run growth and foreign directinvestment, and the effects on labor market. In this paperwe keep to thiscategorization and observe the following guidelines.

First, we disentangle the short run and the long runeffects of child labor since the consequences on someeconomic variables may change over time, and we replicatethe analysis for the existence of and a decrease in childlabor because the economic implications of child labor arenot automatically reversed in the case of a successfulreduction in child labor. Second, we unravel the various forms of child labor –hazardous and non-hazardous activities, agricultural andnon-agricultural work, jobs in modern and traditionalindustries, economic and non-economic activities, formaland informal economy occupations, full-time and part-timework, wage earners and unpaid family workers, childrenattending and not attending school, and younger childlaborers. This is important because the economic impactsof different forms of child labor can be – and actuallyare – different not only in size but even in direction.Therefore, focusing on the aggregate number of child

laborers, which is heterogeneous, is potentiallymisleading as regards the study of economic relationships.

Finally, we would like to make clear that growth, beingmerely the rise in per-capita income, should not beconsidered as the final goal of any policy, includingthose aiming at reducing child labor, but rather as anintermediate goal that may help – but is not sufficientfor – reaching social development. In the present workthis implies that some of the discussed economic effectsof child labor (such as income and gender inequality) arerelevant to social development independent of their effecton growth. Vice versa, the effects of child labor ongrowth described below are important just to the extentthat growth can lead to social development.

Child Labor impact at the MICRO family level

-Short run effects on household income

The most obvious economic impact of child labor at thefamily level in the short run is to increase householdincome. All researchers and practitioners agree thatpoverty is the main determinant of child labor supply, andthat child labor significantly increases the income andthe probability of survival of the family. Severalestimates exist of the proportion in which childrencontribute to family income: for instance Usha and Devi(1997) find a figure (on average 20%) for child laborersfrom a village in Tamil Nadu (India); and Swaminathan

(1998) reports that 40% of children in her sample(Gujarat, India) contributed between 10% and 20% to totalhousehold income. This contribution is most of the timecritical since children are sent to work when parents’earnings are insufficient to guarantee the survival of thefamily, or are insecure so that child labor is used as amean of minimizing the impact of possible job loss, failedharvest and other shocks on the family’s income stream. In these circumstances, the survival of the family dependson child labor irrespective of whether it is carried outin hazardous or non-hazardous activities, in formal orinformal economy, or even in paid or unpaid familyactivity. This last point deserves clarification: unpaidfamily workers contribute to the household’s income andsurvival by helping their parents in both paid and self-employment activities. It is common for families to engagein sub-contracting where the family is paid at piecerates, so that the help of children is crucial to increasehousehold productivity and daily income.

If the work of children is needed for meeting theessential needs of the family, any effort to reduce childlabor (both in formal and informal occupations) must takeinto account that the income of families involved will beaffected negatively, often pushed below the survivallevel. Hence social security for poor families withchildren in school become of crucial importance for theeffectiveness of child labor reduction programs.

- Long run effects on household poverty through humancapital

Although parents may act rationally by sending theirchildren to work in order to increase their probability ofsurvival, they may not perceive the long run negativeimplications of child labor for their own family. Sincechild labor competes with school attendance andproficiency, children sent to work do not accumulate (orunder-accumulate)human capital, missing the opportunity toenhance their productivity and future earnings capacity.This lowers the wage of their future families, andincreases the probability of their offspring being sent towork. In this way poverty and child labor is passed onfrom generation to generation.

Child Labor impact on long run growth and development

Having discussed the short and the long run economicimpact of child labor at the family level, in the presentsection we analyze the effects of child labor on long-rungrowth. A review of the theoretical and empiricalliterature on child labor has lead us to theidentification of at least six channels through whichchild labor might have a negative impact on long rungrowth: lower human capital accumulation, higherfertility, worse health, slower investment and technicalchange, higher income and gender inequality. It should bereminded that some of these channels – namely humancapital, health and inequality – are important indicatorsof a country’s level of social development. Child laborcan slow down long run growth and social developmentthrough reduced human capital accumulation. A lower humancapital accumulation also has a direct negative effect onthe level of social development. So child labor not onlyindirectly affects long run growth, but also directlyaffects social development. Moreover, to the extent thathigher per capita incomes contribute to socialdevelopment, child labor can have an indirect effect onsocial development through long run growth.

-Effects through income inequality

Child labor certainly has an impact on income inequality,but the direction of this impact might be ambiguous andcould vary in the short and in the long run. In the short

run, child labor provides poor families with the incomethey need for their survival. From this point of view,therefore, child labor lessens income inequality, byraising the income of those at the bottom of thedistribution. On the other side, it is often argued that child laboradds to the supply of unskilled labor, in this waydepressing the wage rate of unskilled adults.This, of course, makes the distribution of income moreunequal. The net effect on income inequality in the shortrun therefore depends on the size of the unskilled adultswage loss relative to the children wage rate.

A different story works in the long run. As explainedabove, child labor negatively affects the income of theinvolved families and of their descendants throughmutually reinforcing low education and high fertility. Atthe same time, the scarce supply of educated labor keepsthe skilled workers wage rates at high levels. Thereforein the long run there is no doubt that child laborworsens, or at least perpetuates, income inequality.Income inequality, in turn, directly reduces a country’slevel of social development.

Child Labor and Globalization

Child labor emerged as a global issue when many developedcountries started fearing that exports from the developingcountries, owing their competitiveness to low laborstandards, could result in transferring jobs to the ‘ThirdWorld’. The image of multinational corporations closingtheir plants in developed countries to take advantage oflow labor standards, including child labor, in developingcountries has been often depicted. Put in economic terms,the worry arises from the fact that the exploitation ofchildren in many developing countries can artificiallydepress the cost of labor, leading to unfair “competitiveadvantage” in world markets and to a downward pressure onunskilled workers wages and employment in rich countries.

Globalization might give developing countries the opportunity to increase their gross domestic product (GDP)per capita via new trade possibilities and ascending foreign direct investment (FDI) inflows. Yet, the increasein GDP per capita entails an increase in child labor employment. But on the other hand, globalization might enforce developing countries which have less stringent labor market laws and regulations compared with the developed countries to transfer and adopt the stricter standards and regulations of developed countries. Next to those assumptions, it might also be supposed that developed countries transfer their labor intensive industries to the labor abundant developing countries in

order to benefit from lower labor costs. In that sense, developing countries might enjoy the comparative advantageof their child labor abundance.

Child Labor Impact on Adult Unemployment or Wage Rate

The idea that child labor might depress adult wages isstrictly linked to the idea that child labor creates adultunemployment. If children enter the labor market and havea lower reservation wage – the argument reasons – eitherthey displace adults from their jobs, creating adultunemployment, or they lower the adult wage rate. Bothoutcomes are subject to the condition of children beingsubstitutes for adults (and vice versa), whose validityhas been discussed in the previous section.

Here we shall examine in which circumstances we wouldexpect higher adult unemployment to be more likely thanlower adult wages.

First of all it should be clarified that the followinganalysis applies to any two subgroups of workers that canbe considered substitutes for one another and who actuallycompete for the same jobs. Based on the evidence thatchild labor is essentially unskilled, the relevantsubgroups here are children and unskilled adult workers.

Graph 1 represents a hypothetical labor market forunskilled adults, showing their share into the labor forceon the horizontal axis and their wage rate relative to theeconomy’s average wage rate on the vertical axis. For thetime being assume that the average wage rate in theeconomy is constant, and that labor supply and demand have

the standard upward sloping and downward sloping shapesrespectively.

Suppose that an exogenous increase in the relative numberof children in labor force (or an exogenous decrease inchildren’s relative wage rate) takes place, and that thischange reduces the labor demand for unskilled adults atany given relative wage. In graph 1 this is represented bythe labor demand shifting to the left (from D to D’).

So far we have assumed an upward sloping labor supply.However, the impact of child labor on the unskilled adultslabor market actually depends on the slope of the laborsupply. If the supply of unskilled adults is infinitely

elastic (graph 2A) the shift in labor demand will cause afallin the relative employment of unskilled adults leavingtheir relative wage rate unchanged.

Alternatively, if the labor supply of unskilled adults isperfectly inelastic (graph 2B) the shift in labor demandcan produce a fall in unskilled adults relative wage ratewith no change in their relative employment level.

Similarly a reduction in relative child labor supply (incase of an efficient ban on child labor or compulsoryeducation law) or an increase in children relative wagerate (in case of a social protection law) by shiftinglabor demand for unskilled adults upwards, would lead toan increase in the unskilled adults relative wage whileleaving their relative employment unchanged in case offlexible wages (from B to A in graph 2b). On the otherhand, if adult wages are pinned down to a minimum and

there is initial unemployment (as in point C of graph 2B),a reduction in child labor might create adult employmentwithout affecting adult wages (from C to A).

It might be useful to recall that the previous statementsrefer only to child laborers competing with unskilledadults in paid activities48. In the case where childrenand adults are complements rather than substitutes theeffect is the opposite (more child labor inducing moreadult employment and/or higher adult wages). Moreover,children who work unpaid in household enterprises or indomestic services have no effect on adult wages oremployment level. Finally two already mentioned warningsapply: first, banning child labor from certain industrialactivities might just push children into worse forms ofchild labor; and second, increasing the wage rate ofchildren might simply push out of business many pooremployers causing a dead loss of income and employment.

LEGISLATIVE PROVISIONS FOR PROTECTION OF CHILDLABOR

The Factories Act of (1881) was the first law to define child and to prescribe prohibitory regulations for employment of children below 7 years of age.

The Factories Act, (1911) prohibited employment of children in dangerous occupations and working during nighthours.

The first Convention of ILO, compelled amendment of the Act in (1922), to rise the minimum age of child to 15 years. However, children below the age of 12 years where prohibited for employment. The age rose to 13 years in 1935 under the Act.

The Factories Act, (1948), prescribes prohibitory regulations for employment of children below 14 years of age in any factory.

India Mines Act, (1952) prohibits employment of children below 16 years in any underground mines.

Plantation Labor Act, (1951) prohibit the employment less than age of 12 years.

Protection of children from sexual offence Act, 2012, has several features that are child centered.

The Motor Transport Workers Act (1961) absolutely prohibits employment of children in motor transport.

The Shops and Commercial Establishments Acts of different States, also prohibit employment of children in the shops hotels, dhabas, street shops and commercial places.

Those young persons who are employed, these legislations are careful about their health. While restricting the night work, they provides for medical fitness certificatesby the young persons. Also, the parents who satisfy their economic needs lie about the age of their children.

The Child Labor (Prohibition and Regulation) Act was enacted in 1986. The Act prohibited employment of childrenbelow the age of 14 years in certain occupations and processes. These include the transport of passengers, goods and mails and other hazardous work in railways and ports, the process like Beedi making, cement manufacturing, manufacturing of matches and explosives, mica cutting, soap manufacturing, wool cleaning and building and construction industries. The 3rd part of the Act provides for regulations of conditions of work by prescribing minimum working hours, prohibiting work at night, prohibiting overtime work, and weekly holiday. Also, the Act provides measures for health and safety of child workers. It emphasized on maintenance of a register having details of children if employed by any organization. While prohibiting employment in certain occupation and processes, the law legalized employment of children in other cases. Indirect support was extended forsuch an evil practice which should be totally prohibited irrespective of the nature of employment

CONCLUSION

Child labor is a national shame and one of the forgotten issues of our country. Undoubtedly, poverty is one among other on the seed bed for child labor and enhances problemgreatly. It is the socially and economically deprived section of the population who are working. Hence enforcement alone cannot help to solve it. Thrust area is Rehabilitation of these children and on improving the economic conditions of their families. Ample of grounds come to the research but it is usually two in our view; that is one, a concern for the poor households that depends on the earnings of the child workers and secondly,the inability to enforce a ban on child labor in a situation of poverty.

The health conditions that have a deleterious impact on their physical ability and development, multiple remedies need to be adopted. The law must be enforced stringently, with strong mechanism for inspection and prosecution against the daredevils. Rescued children need speed educational intervention to prepare them for regular schools. It should also be made mandatory for all employers to take steps for intellectual, vocational and educational well-being and upliftment of child workers whowere so far engaged by them. The non-government organizations should make a pertinent duty to convince theparents that a promising future awaits for them and for their children if they send their kids to the school instead of work field and no matter in the sea of educatedunemployment their children may get through and can expecta bright future instead of perpetuating their poverty and degradation by not doing so.

Many NGOs like CARE India, CRY, Global March against childlabor, etc have been working to eradicate child labor in India. The child labor can be stopped when knowledge is translated into legislation and action, moving good intentions and ideas into protecting the health of the children. The endurance of young children is higher and they cannot protest against discrimination. Focusing on grass root strategies to mobilize communities against child labor and re-integration of child workers into theirhomes and schools has proven crucial to breaking the cycleof child labor. A multi disciplinary approach involving specialist with medical, psychological, and socio-anthropological level is needed to curb this evil. It is in this context that we have to take a relook at the landmark passing of the Right of Children to Free and Compulsory Education (RTE) Act 2009, which marks a historic moment for the children of India.

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