Labour and the market

By Supriya RoyChowdhury

INDUSTRIAL DISPUTES involving physical violence are largely a thing of the past in India, even in States with traditions of militant labour activism such as West Bengal and Kerala. It is therefore understandable that the recent incident of killings, of two managers and a worker, at the Baranagar Jute Mills in West Bengal over the issue of employee dismissal, attracted little attention. In the wake of globalisation, labour activism, world wide, has suffered setbacks. On the one hand, an increasingly pervasive consumerist culture has taken the edge off working class identities, and, on the other, the labour movement has floundered for a post-socialist paradigm that could combine welfare with profitability. In this broad context, the violence at a jute mill in West Bengal possibly does not signal a resurgence of class war in that area. Such incidents, however, do force us to reexamine the efficacy of existing institutions of social security and welfare in a context of expanding marketisation.

Several years into economic reforms, India's labour laws - widely criticised by private investors and multilateral agencies as detrimental to industrial growth - remain largely unchanged. Market-driven hiring and firing, and free entry and exit of firms - processes that could displace workers - are still not sanctioned by law. There has only been a very limited thrust in such areas as privatisation and disinvestment, which are perceived as threats to workers.

On the other hand, however, the onset on marketisation has forced certain underlying shifts in the state's stance towards labour. Thus in many public sector firms the imperatives of competition and profitability have underlined workforce reduction, retraining and redeployment. Public sector labour, of course, is necessarily protected by the state's compulsory provision of compensation through Voluntary Retirement Schemes.

In the private sector, on the other hand, the impact of industrial restructuring on labour has been much more complex. There are companies which in the process of technological changes and other market adjustments reduce workforce by means of fairly painless strategies, such as golden handshakes. Such companies are usually engaged in introducing more capital-intensive, greater value-added systems of production. On the other hand, in sectors where a large number of firms have declined, the complex process of decay and restructuring has been accompanied by the displacement of large numbers of workers, frequently without severance payments, into the uncertain world of the informal sector.

This process is particularly apparent in sectors such as cotton textile and jute manufacturing, which are two of India's oldest industries and amongst the largest providers of employment. Of the three sectors engaged in cotton manufacturing - mills, powerlooms and handlooms - mills have suffered a dramatic decline in the last three decades. This decline has been manifested in the nationalisation of some mills and closure of others. For example, in Ahmedabad, one of the oldest centres of cotton textile production, the number of mills had come down from 128 in 1960 and 23 in 1994. In principle, the BIFR and the IDBI are supposed to examine cases of ``sick'' mills and recommend closure or restructuring. In practice, the slow and bureaucratic functioning of these agencies prevent quick decisions. As such, there has evolved the widespread practice of owners resorting to illegal closures. In most such cases, the State Government has turned a blind eye to the closures.

Several studies of displaced textile workers in Ahmedabad found that such workers went into self-employment or some kind of casual wage employment. In either case, their daily earnings were less than one-third of what they had earned in textile mills, and additionally, they were of course completely bereft of health or old age insurance.

West Bengal is the single largest centre of jute manufacturing. The decline of the jute industry began around the time of Independence, and continued in the following decades. This decline was most apparent in the number of closed and locked out mills and in the number of workers dismissed. During the Emergency years, around 40,000 jute workers were laid off without compensation. During 1987-90, over 45,000 workers lost their jobs as a result of lockouts in 15 mills. Many were closed down by the proprietors without due payment of provident fund and ESI to erstwhile employees. In an interesting development, some owners offered significantly lower wages to the workforce as a condition for reopening the mills. Faced with the prospect of unemployment, workmen frequently accepted such offers. Thus in 1988, under a tripartite agreement, the minimum wage for jute mill workers was fixed at Rs. 1335. Following the agreement, six jute mills, which reopened after a period of lockout, were paying their employees, on an average, Rs. 850 a month.

The Government of West Bengal, supposedly a pro-labour Government, turned a blind eye to these wage deals. The justification for this was that employment was being restored, although at a lower wage level. But such wage deals signified that not only was the government tacitly supporting mill owners who flouted state-stipulated minimum wages, but was also endorsing the ousting of many thousands of workers from the boundaries of minimum wages and unionised bargaining.

Today few would argue for further state acquisition of loss- making enterprises to preserve jobs. But if a certain pragmatism has replaced the practice of state patronage, an alternative concept of social justice is yet to be spelt out. In the early 1990s the National Renewal Fund (NRF) was widely seen as a social security net which would address the rehabilitation needs of displaced workers. The NRF, however, has been used primarily to fund voluntary retirement schemes in the public sector, private sector workers have been completely excluded from its ambit. The provision of social security - involving severance compensation, reskilling, alternative employment, health and old age insurance - and of a minimum wage are questions that remain largely unaddressed within India's current economic policy framework.

Many contradictions lie at the heart of the state's approach to labour in the current scenario. Thus, despite an increasingly market- oriented economic policy framework, inefficient state enterprises continue to be maintained. This is because the state has lacked the political will to handle the challenges that may be thrown up by any major, broad-based effort to reform the public sector. A set of labour-friendly industrial laws remains intact as a symbol of the state's commitment to workers. On the other hand, the state can now ignore, de facto, large numbers of workers being displaced from the formal sector in private industries.

This situation possibly reflects certain inherent imbalances in the relationship between the market and worker empowerment. In general, given the shrinking of the organised sector of the workforce, as a result of market forces, the trade union movement has been structurally weakened. This may partly explain the state's easy neglect of workers who are being displaced in industries such as cotton textiles and jute. The incipient tensions that such a system will generate are likely to be manifested in incidents such as the recent jute mill killings. The informal sector, given the dispersed nature of the workforce, is obviously at a disadvantage in terms of organisational strength. There is now possibly a need, on the part of both the state and the workers' movement, to redefine labour issues in terms of a broad, rights-based approach focussing on the rapidly expanding informal sector, instead of continuing with differential policies for various sections of the workforce.

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