Child Labour – A Different Perspective by Girish Sharma

Understanding Child Labour- An Economic Perspective
Girish Sharma

“There is no greater violence than to deny the dreams of our children”- Kailash Satyarthi.

Child labour and trafficking is a serious issue and is in talks from decades. Still, the issue exists and the practice is prevalent in various sectors. The prime reason is that not everybody agrees it is a real problem. For the majority, it is a usual activity because we have normalised it. However, it is getting harder not to notice the problems that are occurring, especially, to the people of middle-income or low-income countries.

Understanding child labour and the reasons for it is difficult due to multiplicity of factor and their complexities. While analysing child labour, we jump straight to the conclusion of poverty as a problem. But the issue is multi-layered and the usual inference, poverty, is just an umbrella concept. Poverty, indeed, is a reason but not the only reason, we have to understand the problems and psyche of people in poverty.
“Analysis of the microeconomics of child labour usually blames poverty, first and foremost, for a family’s decision to put a child to work. Further studies often discuss child labour as a function of family decisions that determine the supply of labour in the economy” (Bachman, 2000)

First, we have to study a family’s decision to put a child to work; therefore, understanding the microeconomic model of functional utility analysis is necessary. In layman’s term, utility analysis explains the resource trade-off done by the consumer to achieve maximum satisfaction. (Bachman, 2000)
Children are considered the economic agents in the family. Consideration of children as economic agents is also the reason for poor-families having many kids. In households, generally, the male adult takes the family’s economic and financial decisions. Therefore, lead adult decision-maker operates the utility function of the family. There are two types of utility perspective: a short-term utility perspective and a long-term utility perspective.

In short term utility perspective, the child works and generate income immediately. For instance, children working in mines, agriculture, manufacturing etcetera on daily wages. In the long term utility perspective, the child goes to school to become future economic agent, generate future income, maximize utility, and support aged parents.
In a poverty-stricken family, mostly, decision-maker has a short-term utility perspective because they need an immediate source of income. Therefore, they do not understand the importance and credibility of having a long-term viewpoint.

The trade-off decided by the adult decision-maker between these two utility perspectives in households determines whether a child will join the labour force or not.
Sometimes, children take the decision. Children often decide to leave home to escape harsh treatment from parents or to live a better life by earning themselves. Most of them end up being trafficked and work in conditions with low wages.
There have been several steps taken by the government to stop child labour and trafficking. The anti-child labour law, in simple terms, states that child cannot work in any hazardous work, but can assist the family in work unless and until it is not hampering child’s education.

Several schools of thoughts have opined over this law but were indeed very controversial. “Some shreds of evidence suggest that children who work and goes to school at the same time perform better than their non-working peers” (Bachman, 2000). It is again a hypothesis based on the fact that physical activity stimulates the brain and enhance its functioning. No evidence has been forward to prove it.

Government has up to an extent failed to provide education to the unscheduled or backward classes in India. The above standard economic study is not exhaustive and fails to adequately, or precisely, describe the reasons for child labour. But it indeed, clearly suggests that one size fits all policies to “cure” child labour by attacking “poverty” will fall short of the needs of family and kids. (Bachman, 2000).

The above utility functional study explains the supply side by trying to model the adult decision-makers psyche of sending the child to work. The child labour is demanded by the enterprises in both urban and rural areas in both the formal and informal sector. The reason being, they can be hired at low wages and are more skilful at work requiring agility, sharp eyesight etc. Children also tend not to form unions and hence are very sensitive and can be exploited by making them overwork.

The number of children employed in formal enterprises is less as compared to informal enterprises. Reason being, the high opportunity cost of breaching anti-child labour laws such as rejection by an end-use consumer of child produced goods.
The child sometimes is not hired by manufacturers out of choice parents, refuse to work unless and until the manufacturer hires the complete family. In the agriculture sector, farmers are approached by whole families looking for the work.
“This sense of social obligation is likely to be stronger in the informal economy, where employers and child labourers know each other through family, religion, social or other connections” (Bachman, 2000).

Understanding child labour is not easy. The prime reason for child labour is lack of income in the family, but the psyche of the decision-maker also plays a role in it. Further study of child labour explains us the demand and supply side of child labour using utility functional perspective. The issue is critical and needs to talk on a priority basis. Otherwise, it will have severe micro and macro effects on the people as well as on the economies of today and tomorrow.

Bachman, S. L. (2000). A New Economics of Child Labor: Searching for Answers Behind the Headlines. Journal of International Affairs Editorial Board.

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