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#India – Formal industry, informal work

India’s problem is not rigid labour laws but the lack of enforcement of existing protection for workers
The vast majority of jobs created in recent years have been in the informal sector, in the absence of a legal framework for labour protection and social security. Photo: HT
Indian industry continues to chaff at the government’s failure to introduce what it calls labour reforms. I find the term “reform” here disingenuous, because what is sought is not a better deal for labour but rather further weakening of the already infirm framework of labour regulation in our country. In a recent article in The GuardianLeo Panitch notes, “For most of the 20th century, the word ‘reform’ was commonly associated with securing state protection against the chaotic effects of capitalist market competition. Today, it is most commonly used to refer to the undoing of these protections.”
The promise of such labour reforms is that it will accelerate economic growth, which, in turn, will produce wealth and jobs, and all would be better off as a result. However, the reality of what has been accomplished in the years of highest economic growth in India is the unequal expansion of wealth, certainly, but not the expansion, and instead the shrinking of decent work for India’s poor. Coen Kompier, in a harrowing essay to the India Exclusion Report 2013-14 undertaken by the Centre for Equity Studies (to be published), quotes scholars to establish that “very few jobs have been added, mostly of low quality, whereas employment opportunities in public enterprises, the formal private sector, and agriculture actually declined” (my emphasis). In the decade 1999-00 to 2009-10 “while Gross Domestic Product growth accelerated to 7.52% per annum, employment growth during this period was just 1.5%, below the long-term employment growth of 2% per annum, over the four decades since 1972-73. Only 2.7 million jobs were added in the period from 2004-10, compared to over 60 million during the previous five-year period”.
In fact, employment growth in the organized sector has registered a continuous decline between 1972-73 and 2004-05. The National Commission for Enterprises in the Unorganized Sector, found that the vast majority of jobs created in recent years have been in the informal sector, in the absence of a legal framework for labour protection and social security. Out of every 100 workers, the report revealed, 86 work in the informal economy producing half of India’s economic output. This means that of a total workforce of around 475 million, around 400 million workers, “considerably larger than the total population of the USA, are employed with little job security or any formal entitlements to call upon the protection of the labour law regime”.
Scholars Jan Breman and Ravi Shrivastava point to the enormous labour force tied down to bare survival through distress migration. They call these India’s footloose workers: millions of workers circulating from place to place never with the intention to settle down, but to return to their native villages and towns once a job is completed or a working season comes to an end. No official data exists on their numbers, but estimates vary from 10 to 350 million; they suggest that the most reliable numbers are somewhere between 30 and 50 million people. I have tried to track the journey of just a few of these people. More than 100,000 people migrate every year from the hunger belt of Balangir, Odisha, after taking a small consumption advance from local labour contractors. I found that most end up annually in brick kilns on the outskirts of Hyderabad city, which has an insatiable appetite for building materials. The whole family works for sometimes 18 hours a day, housing and child-care and educational services are negligible, arrears of wages are paid only at the end of the year to prevent escape, and any assertion is met with outright violence.
Breman, tracking bonded labour in India for many decades, finds that new forms of hidden debt bondage have appeared, with intermediary labour contractors mediating between large formal industry and impoverished, unprotected, often desperate workers in India’s vast poor rural hinterlands, from which young people are trying to escape in hordes, as we observed in the last section, as though from a doomed and dying civilization.
This cynical wilful subversion of basic labour law protections is commonplace even by global formal industry. T.S. Papola and Partha Sahufind that even in the formal sector, over half the workers are informally employed, in that they do not have a secured tenure of employment, social security and other protections. Further, even more shockingly, the proportion of informal workers in the formal sector has also risen over time, from 42% of total formal sector employment in 1999-2000 to 51% in 2009-10. Such trends, Kompier explains, can be understood by the increasing move towards the use of contract labour within the formal sector, in order to increase profits and avoid adhering to labour laws. Sehba Farooqui, who heads the Delhi unit of All India Democratic Women’s Association, found that Delhi’s slums are full of women who undertake a range of tasks on piecework from major garment, toys and cosmetic companies. They work bent over in the dimly-lit and ill-ventilated crowded shanty rooms for 10 hours each day, roping in their children and aged parents. What they collectively earn is around Rs.30 a day. Every labour law is brazenly violated, for wages, hours and conditions of work and social security, and child labour has returned through the backdoor. But no company is held responsible by a supine state. Kompier concludes that, “For the working poor, the lack of implementation of laws on minimum wages and labour protection standards result in exponentially higher levels of exploitation and high vulnerability to exclusion from decent work.”
The promise that massive inflows of international capital will ensure decent work for millions of our people lies in a shambles, exposed as an elaborate falsehood. What remains amid the ruins of this promise are runaway profits for private industry built on exploitative practices reminiscent of another darker age, enabled by a complicit state.

Harsh Mander is a former member of the National Advisory Council. Comments are welcome at [email protected]

 

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