Trends in Labour Supply and Demand in India Jayan Jose Thomas Structural Transformation in Indian Manufacturing-based Trade during the Post-Reform Period: Implications for Employment Anshika Arora Import Liberalisation in India: Its Impact on Domestic Income and Employment Arun K. Sengupta and Tushar Das High Non-wage Employment in India: Revisiting the 'Paradox' in Capitalist Development Satyaki Roy Challenges to Ensuring Core Labour Standards in Transnational Corporations: The Case of India Indira Gartenberg and Supriya Bandekar Influence of Labour Welfare Facilities on Job Satisfaction: A Study of Pharmaceutical Companies in Goa Christina De Souza and Silvia Noronha Working Life of Street Vendors in Mumbai Debdulal Saha
RESEARCH NOTES Structure of the Rural Labour Market: An Investigation into Two Villages in West Godavari District R. Vijay and Chandayya Makeni Labour, Employment and Social Security Challenges faced by Security Personnel Engaged by Private Agencies Sanjay Upadhyaya
BOOK REVIEWS
O F
LABOUR ECONOMICS
Locked in a Low-Skill Equilibrium?
J O U R N A L
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I N D I A N
The Indian Journal of Labour Economics
ISSN 0971-7927
T H E
Volume 54, Number 2, April-June, 2011
THE INDIAN JOURNAL OF LABOUR ECONOMICS Editor Alakh N. Sharma, Institute for Human Development, New Delhi Associate Editor Preet Rustagi, Institute for Human Development, New Delhi Managing Editor Rajendra P. Mamgain, Institute for Human Development, New Delhi Editorial Advisory Board Bina Agarwal, Institute of Economic Growth, Delhi Sheila Bhalla, Institute for Human Development, New Delhi Debashish Bhattacherjee, Indian Institute of Management Calcutta Jan Breman, Centre for Asian Studies, Amsterdam Navin Chandra, Formerly of V.V. Giri National Labour Institute, NOIDA L.K. Deshpande, Institute for Human Development, New Delhi S. Mahendra Dev, Commission for Agriculture Costs and Prices, New Delhi Jean Dreze, Centre for Development Economics, Delhi School of Economics Indira Hirway, Centre for Development Alternatives, Ahmedabad K.P. Kannan, Centre for Development Studies, Thiruvananthapuram Amitabh Kundu, CSRD, Jawaharlal Nehru University, New Delhi G.K. Lieten, International Institute of Social History, University of Amsterdam Dipak Mazumdar, Munk Centre for International Studies, University of Toronto V.R. Panchamukhi, Formerly Chairman, ICSSR, New Delhi D. Narasimha Reddy, Formerly of Department of Economics, University of Hyderabad Gerry Rodgers, Formerly of International Labour Organisation, Geneva Ashwani Saith, Institute of Social Studies, The Hague Ravi S. Srivastava, CSRD, Jawaharlal Nehru University, New Delhi Guy Standing, University of Bath, U.K. Jeemol Unni, Institute of Rural Management, Anand A. Vaidyanathan, Madras Institute of Development Studies, Chennai Editorial Associate Anupma Mehta, New Delhi
The Indian Journal of Labour Economics
Volume 54 Number 2 April-june, 2011
Contents Articles Pages Locked in a Low-Skill Equilibrium? Trends in Labour Supply and Demand in India Structural Transformation in Indian Manufacturing- based Trade during the Post-Reform Period: Implications for Employment Import Liberalisation in India: Its Impact on Domestic Income and Employment
Jayan Jose Thomas 195
Anshika Arora 219
Arun K. Sengupta 239 and Tushar Das
High Non-wage Employment in India: Revisiting the ‘Paradox’ in Capitalist Development
Satyaki Roy 251
Challenges to Ensuring Core Labour Standards in Transnational Corporations: The Case of India
Indira Gartenberg and 269 Supriya Bandekar
Influence of Labour Welfare Facilities on Job Satisfaction: A Study of Pharmaceutical Companies in Goa Working Life of Street Vendors in Mumbai
Christina De Souza 285 and Silvia Noronha Debdulal Saha 301
Research Notes Structure of the Rural Labour Market: An Investigation into Two Villages in West Godavari District Labour, Employment and Social Security Challenges faced by Security Personnel Engaged by Private Agencies Book Reviews Susan Hayter (ed.), The Role of Collective Bargaining in the Global Economy: Negotiating for Social Justice
R. Vijay and 327 Chandayya Makeni Sanjay Upadhyay 345
359 Satoshi Miyamura
Jan Breman, Outcast Labour in Asia: Circulation and Informalisation of the Workforce at the Bottom of the Economy World Bank, Poverty and Social Exclusion in India Jaspal Singh, Instruments of Social Research Indira Hirway, M.R. Saluja and Bhupesh Yadav, Employment Guarantee Programme and Pro-poor Growth: The Study of a Village in Gujarat
Praveen Jha
Nripendra Kishore Mishra Balwant Singh Mehta Ashok Pankaj
The Indian Journal of Labour Economics, Vol. 54, No. 2, 2011
LOCKED IN A LOW-SKILL EQUILIBRIUM? TRENDS IN LABOUR SUPPLY AND DEMAND IN INDIA Jayan Jose Thomas* Based on an analysis using National Sample Survey data, this paper shows that there has been no significant improvement in the supply of and demand for skilled labour in India since the 1990s despite the country’s rapid economic growth. High-technology sectors such as Information Technology (IT) remain a small island of high wages in terms of their contribution to employment. While 59.5 million new jobs were generated in India between 1999-2000 and 2004-05, the quality of employment suffered a sharp decline. A crisis-ridden agriculture, construction, export-oriented manufacturing, mainly textiles and garments, and low value-adding services, including notably of women employed as domestic workers, provided most of the new jobs. In general, in India during the period 1999-2005, many more employment opportunities were created for persons educated up to the primary school or middle school level than for higher educated persons. Women, especially educated urban women, found it particularly hard to find suitable employment. The number of ‘missing women’ in the Indian economy—women who withdraw from the labour force and attend only to household work—was a staggering 162 million in 2004-05. I. INTRODUCTION The international media as well as academic and policy circles are highly optimistic that India’s future economic growth would benefit from the large size of the young, working-age population in the country or the so-called ‘demographic dividend.1 There is, equally, optimism on the labour demand in India too, which arises from the much-celebrated emergence of the information technology (IT) sector and the outsourcing of business and knowledge services to the country. However, through an analysis of the supply of and demand for labour in India using data from the National Sample Survey (NSS) reports, it is argued in this paper that optimism on both the above counts is highly misplaced. The period covered by this paper, ranging from 1983 to 2004-05, is one during which the Indian economy has gradually liberalised and integrated itself increasingly with the global economy. This has also been a period of relatively fast growth of the Gross Domestic Product (GDP) for the country. There are, however, significant differences between the 1980s and the post-1991 years with respect to the nature of liberalisation and economic * Assistant Professor, Humanities and Social Sciences Department, Indian Institute of Technology, New Delhi. Email: jayanjthomas@gmail.com. This paper has benefited from discussions held at the 52nd Annual Conference of the Indian Society of Labour Economics, Karnatak University, Dharwad, 17-19 December 2010, and at the Winter School of Department of Economics, Delhi School of Economics, 13-15 December 2010. The author is grateful to participants of these conferences, an anonymous referee of this journal, and to Madhura Swaminathan for their valuable comments.
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growth in India. During the 1980s, there was a revival of agricultural growth, a substantial increase in non-agricultural employment opportunities in the rural areas, expansion of public sector jobs, and a general rise in real wages, including agricultural wages, in India (Abhijit Sen, 1996). On the other hand, during the 1990s and the early 2000s, India’s agrarian economy faced an acute crisis and the growth of the real wages of agricultural workers slowed down during this period (Ramachandran and Rawal, 2010; Chavan and Bedamatta, 2006). At the same time, since the 1990s, new economic activities such as IT, business process outsourcing (BPO) and automobile manufacturing have emerged in India in a big way (Thomas, 2010). Several previous studies have analysed various aspects of India’s employment structure. Some of these studies, which have used NSS data, pointed to a drastic fall in employment growth in India between 1993-94 and 1999-2000, which were also the early years of economic liberalisation in the country. The fall in employment growth was particularly sharp in the rural areas. Also, the share of casual workers in India’s labour force increased during this period (Chadha and Sahu, 2002). Employment growth in India revived between 1999-2000 and 2004-05, but the quality of employment suffered a decline. During this period, there was a substantial increase in the proportions of self-employed workers and of regular workers in subsidiary status (Chandrasekhar and Ghosh, 2006a; Unni and Raveendran, 2007). The rates of growth of wages declined and wage inequalities between different segments of the country’s population increased during the post-reform period of 1993-94 to 2004-05, as confirmed by a number of studies (Chandrasekhar and Ghosh, 2006b; Abraham, 2007; Karan and Selvaraj, 2008; Sarkar and Mehta, 2010). Another feature highlighted by scholars is the persistently large size of the ‘working poor’ in India (Papola, 2008; Sengupta, et al., 2008). This paper builds on some of the above findings from previous research. It studies important aspects of workforce participation or labour supply in India. It also analyses the industry-wise absorption of labour or labour demand in India. Further, the paper tries to relate certain aspects of labour supply and demand with the educational achievements of the population. Section II of this paper discusses broad trends in labour supply while Section III is on the industry-wise demand for labour in India. Section IV explores the link between labour supply and demand, on one hand, and education, on the other. Section V deals with the phenomenon of large numbers of women in India reporting their activity status as attending to domestic duties. Section VI concludes the paper. II. ASPECTS OF SUPPLY OF LABOUR IN INDIA The labour participation rate (LPR)—the proportion of the population (aged 15 years and above) that is economically active—is relatively low in India. According to ILO data for 2008, the LPR was only 56 per cent in India as compared to 74 per cent in China and 71 per cent in Brazil. The low LPR in India is mainly on account of a particularly low female LPR. In 2008, the male LPR in India was 81 per cent, which was higher than that of China at 78 per cent. But the female LPRs in India and China during that year were 33 per cent and
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Figure 1 Male and Female LPR, 2008: Economically Active as a Proportion of the Population (aged 15 years and above), in 184 Countries Included in the Ilo Database
Source: International Labour Organisation, available at http://data.worldbank.org/indicator.
68 per cent, respectively (see Figure 1). Among 184 countries for which data are available, India was ranked 42nd in the male LPR, 165th in the female LPR, and 143rd in the overall LPR (ranks in descending order of LPR).2 Trends in WPR and Estimates of the Workforce India’s NSS defines ‘labour force’ as the economically active population, comprising both employed and unemployed persons, while ‘workforce’ refers to employed persons only. Table 1 shows the workforce participation rate or the worker population ratio (WPR) in India, which denotes the workforce as a proportion of the total population, considering both the usual principal and subsidiary economic status of persons. NSS defines usual principal status workers as persons who worked for a relatively longer part of the 365 days preceding the date of the survey. From the rest of the population, NSS identifies usual subsidiary status workers as persons who worked for at least 30 days during the reference period of 365 days preceding the date of the survey. A feature that stands out in Table 1 is that the worker population ratios of males and females in the rural and urban areas of India have not undergone any significant transformation over the three decades between 1972-73 and 2004-05. The WPR of males, and particularly of females, increased between 1972-73 and 1983. There was a further increase in the WPR between 1983 and 1993-94 in all categories of the population except that of rural females.
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However, the WPR of all categories of the population fell sharply between 1993-94 and 1999-2000. Subsequently, between 1999-2000 and 2004-05, the WPR revived for each of these population categories. During all the years under study, the worker population ratios have been much lower among females than among males; these ratios have also been lower in the urban areas than in rural areas during most of the years. The WPR of urban females has been particularly low—it was only 16.6 per cent in 2004-05 as compared to the WPR of 32.7 per cent among rural females in the same year (see Table 1). National Sample Survey reports provide the (per-1000) distribution of population by their activity statuses (such as employed, unemployed, and not in the labour force) in India. This data from NSS is multiplied with population figures from the Census of India to obtain estimates of persons under different activity statuses. Thus, estimates of the workforce in India can be obtained by multiplying the WPR obtained from NSS with the total population obtained from the Census of India.3 Such estimates made for the year 2004-05 indicate that out of India’s total population of 1093 million, 458 million were employed, 11.3 million were unemployed, and 624 million were not in the labour force. Table 1 Worker Population Ratios in India, Usual Principal and Usual Subsidiary Status Worker 1972-73
1977-78
1983
1987-88
1993-94
1999-2000
2004-05
Rural Male
54.5
55.2
54.7
53.9
55.3
53.1
54.6
Rural Female
31.8
33.1
34
32.3
32.8
29.9
32.7
Urban Male
50.1
50.8
51.2
50.6
52.1
51.8
54.9
Urban Female
13.4
15.6
15.1
15.2
15.5
13.9
16.6
–
42.3
42.0
41.2
42.0
39.7
42.0
All persons Source: NSSO (2006), p. 76.
III. INDUSTRY-WISE ABSORPTION OF LABOUR IN INDIA 1. Major Features of GDP and Employment Structures There has been a significant transformation in the structure of India’s GDP over the decades. Between 1982-83/1983 and 2004-05, the combined share of agriculture and related primary sector activities such as hunting, forestry and fishing in India’s GDP fell from 34 per cent to 19 per cent. Correspondingly, during these years, the combined share of services and construction increased from 46 per cent to 61 per cent. Despite their low share in the GDP, agriculture and related primary sector activities together accounted for 259 million of the total 458 million workers (or 57 per cent of the total) in India in 2004-05. This indicates the extremely low level of labour productivity in primary sector activities in India. The lopsidedness in GDP and employment structures is also a consequence of the low degree of diversification of India’s occupational structure. The transformation in India’s output and employment structures has occurred from agriculture and allied activities to largely the services sector (see Table 2). The share
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of manufacturing in the GDP and employment remains relatively small in India: 15 per cent and 12 per cent, respectively, in 2004-05. But in most successfully industrialised countries, manufacturing, and not services, is the sector that grows to prominence with the declining weight of agriculture in the national economy. For instance, the shares of manufacturing value added in GDP were 30.9 per cent in China and 26.8 per cent in South Korea in 2006.4 There is some degree of lopsidedness within the services sector in India. In 2004-05, finance and business services, which include the IT industry, had a 13.5 per cent share in India’s GDP but only a 1.7 per cent share in the country’s total employment. The IT industry has been growing rapidly in India since the 1990s but the direct employment provided by the industry was only 2.2 million in 2008-09 (see Table 2). 2. Estimates of Increase in Employment in India According to estimates made in this paper, India’s total workforce numbered 308 million, 368 million, 401 million and 458 million, respectively, during the years 1983, 1993-94, 1999-2000 and 2004-05.5 This study has used the industry-wise distribution of workers given in the various NSS reports. The classification of industries is according to National Industrial Classification (NIC) 1970 in the 1983 NSS report, according to NIC 1987 in the 1993-94 NSS report, and according to NIC 1998 in the NSS reports for 1999-2000 and 2004-05. Therefore, concordance tables were used to compare the industry-wise estimates of employment during the various years (see Table A1). Our estimates show that the number of jobs generated in India between 1993-94 and 200405 was 83.5 million as compared to 71 million only between 1983 and 1993-94. However, the quality and nature of employment generation since the 1990s raises a number of concerns. Of the net increase in employment of 83.5 million during 1993-2005, an increase of 59.5 million (or 71 per cent) occurred during the last five years of 1999-2005. Employment growth during the period 1999-2000 to 2004-05 as a proportion of employment growth during the period 1993-94 to 2004-05 was particularly high in agriculture and allied activities (96 per cent), manufacturing (74 per cent), and in community, social and personal services (77 per cent). Ironically, in each of the sectors referred to above, the GDP growth clearly slowed down or even stagnated during the period 1999-2005 (see Table 3). Thus, it is clear that the employment growth during the years between 1999-2000 and 2004-05 occurred along with a considerable decline in labour productivity levels (see also Sundaram, 2007; Karan and Selvaraj, 2008) An important aspect of employment growth in India between 1999-2000 and 200405 is that 49 million of the 59.5 million new jobs created during this period were in the self-employed category. Between these years, the number of regular workers increased by 11 million, while the number of casual workers recorded a slight decline. This is different from the nature of employment growth in India between 1993-94 and 19992000, during which period casual workers accounted for the largest chunk of the increase in employment.
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3. Distress-driven Growth of Employment in Agriculture In China and most other fast-growing developing countries, the share and actual numbers of persons employed in agriculture has been declining over the years. Therefore, it seems unprecedented that of the 59.5 million new jobs generated in India during the period 19992005, agriculture and allied activities accounted for 18.5 million or almost one-third of the total increase. More importantly, the GDP growth in agriculture in India was statistically insignificant during the period 1999-2005 (see Table 3). This period was marked by a sharp fall in public investment in agriculture, a gradual withdrawal of rural banking and of the public distribution of food, a rise in the volatility in agricultural prices, and an alarming increase in suicides by farmers in several regions of the country (Ramachandran and Rawal, 2010). Fittingly, some scholars have termed employment growth in rural India during the period 1999-2005 as ‘distress-driven’ (Abraham, 2009). An important feature of this distressdriven employment growth is that 14 million of the 18.5 million new labourers who joined agricultural work during the period 1999-2005 were rural females. 4. Employment Generation in Services Services and construction together accounted for 53 million of the net increase in employment of 83.5 million in India (or 63 per cent of the total) between 1993-94 and 2004-05 (see Table 3). A significant development during the post-1990 years is the increasing importance of services and construction as a source of employment for rural males in India. Between 1983 and 1993-94, the combined share of services and construction in the net increase in employment among rural males was only 34 per cent. But between 1993-94 and 2004-05, this share rose to 71 per cent. Within the services sector, trade, hotels and restaurants, and transport and communications have been the activities that created a large part of new employment in India for urban males, rural males and urban females. Between 1999-2000 and 2004-05, construction activities created 8.4 million new employment opportunities, close to 80 per cent of which was in rural areas. Notably, during these years (1999-2005), construction (6 million) created many more employment opportunities for rural males than did agriculture and allied activities (3.6 million). Another significant generator of employment in India has been community, social and personal services. However, the quality of employment in these activities declined substantially during the period 1999-2005. This is evident from the slowdown in the growth of GDP from community, social and personal services, as well as in the decline (of 1.7 million) in employment in public administration in India during the first half of the 2000s. Of the net increase in employment of 6.7 million in community, social and personal services between 1999-2000 and 2004-05, an increase of 3.1 million occurred in ‘private households with employed persons’ (mainly persons working as domestic help). Urban females accounted for 3 million of this net increase of 6.7 million new jobs in community, social and personal services. In the case of finance and business services, a large proportion of new jobs created during the period 1999-2005 were possibly low value-adding and low paid. The GDP generated by this sector slowed down during the period 1999-2005 (see Table 3).
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Table 2 Sector-wise Distribution of India’s GDP and Employment, in % Share in Share in GDP (%) Employment (%) Â
Employment in millions
1982-83
2004-05
1983
2004-05
2004-05
34.0 14.4 7.0 17.1 8.9 13.0 45.9
18.9 15.3 7.7 24.5 14.7 4.1 13.9 60.9
68.2 10.6 2.3 8.8 0.7 8.1 19.9
56.5 12.2 5.7 14.9 1.7 8.2 30.5
259 56 26 68 8 2.2* 38 140
100
100
100
100
458
1. Agriculture and Allied Activities 2. Manufacturing 3. Construction 4. Trade, Hotel, Transport and Communications 5. Finance and Business Services 5a. IT Sector 6. Community, Social and Personal Services 7. Services and Construction (sum of rows 3, 4, 5 and 6) 8. GDP at Factor Cost/Total Employment
Notes: * Figures for 2008-09; GDP figures are at 2004-05 constant prices.
Information technology sector refers to the IT industry (mainly software production), engineering and research and development services, and IT-enabled services.
Source: NSSO (1987), NSSO (2006), and National Accounts Statistics, published by Central Statistical Organisation (CSO); National Association of Software and Service Companies (NASSCOM) for data on the IT sector.
Table 3 Net Increase in Employment in Million Numbers and Annual Rate of Growth of GDP in %, Sector-wise, 1983 to 2004-05 Net Increase in Annual Rate of Growth Employment, in millions of GDP, in % 1983 to 1993-94 Agriculture, Hunting, Forestry and Fishing Mining and Quarrying Manufacturing
32.4
1993-94 to 19992000 0.8
1999- 1982-3 to 2000 to 1993-94 2004-05 18.5 3.1
0.9
-0.4
0.3
1993-94 to 19992000 3.3
19992000 to 2004-05 1.6*
5.1
7.6
3.4
9.6
Electricity, Gas and Water
-0.2
-0.4
0.2
Services and Construction
31.1
22.1
30.7
6.5
8.1
7.8
5.3
5.4
8.4
5.5
6.3
8.8
12.6
13.4
12.6
5.7
9.0
10.0
Construction Trade, Hotels, Transport and Communication
5.2
6.8
6.1
6.9
Financing, Real Estate and Business 1.6 1.4 2.9 9.1 8.0 6.7 Services Community, Social and Personal Services 11.6 2.0 6.7 5.9 8.0 4.8 Total Employment/GDP 71.1 24.0 59.5 5.2 6.5 5.9 Notes: Annual rate of growth of GDP is calculated by using semi-logarithmic regression. **Not statistically different from zero even at 10 per cent level. Source: NSSO (1987), NSSO (1997), NSSO (2001), NSSO (2006) and National Accounts Statistics, published by CSO.
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In recent years, a small segment of highly skilled professionals in the country, particularly in fields such as IT and finance, have been receiving high salary increases.6 At the same time, the growth of low-paying jobs in sectors such as finance and business services and community, social and personal services has led to growing wage inequalities within these sectors during the period 1999-2005 (Abraham, 2007). This analysis by Abraham, using NSS data for the period 1999-2005, also indicated that while wage inequalities have not increased between different educational groups, wage inequalities have actually increased within the category of highly educated persons in India. 5. Employment Generation in Manufacturing Of the 13 million manufacturing jobs generated in India between 1993-94 and 2004-05, 9.6 million were added during the period 1999-2000 to 2004-05 (see Table 4). Export-oriented industries such as garment manufacturing (2.4 million new jobs) and diamond cutting and polishing (0.76 million new jobs) have been significant generators of employment in India during the period 1999-2005. Also, the textile industry, which lost a considerable number of jobs during the 1980s and even during the 1990s, made a turnaround in terms of employment growth after 1999-2000. Industries linked to construction have been another significant source of employment generation in India between 1999-2000 and 2004-05. These industries include the manufacture of non-metallic mineral products, which consists mainly of bricks and cement (1.1 million new jobs); manufacture of wood and wood products (0.67 million); and manufacture of furniture (0.51 million). In total, export-oriented industries including garments, textiles, leather and diamond cutting, and construction-linked industries together accounted for more than 80 per cent of the new manufacturing job opportunities created in India between 1999-2000 and 2004-05 (based on an analysis at the three-digit level of industrial classification). On the other hand, in the manufacture of food products as well as of beverages and tobacco products—industries that are dependent on mass domestic consumption demand—employment declined by 2.5 million during the period 1999-2000 to 2004-05. In machinery and equipment manufacturing industries, the number of jobs generated in India during the period 1993-2005 (1,20,000) was less than one-fifth of the new jobs added by these industries during the period 1983-1993. Between 1999-2000 and 2004-05, negative growth of employment was recorded in India in the manufacture of special purpose machinery, including machine tools, tractors, electric motors, generators, transformers, and electricity distribution apparatus. At the same time, the rapid growth of the auto and auto ancillary industries in the country in recent years has had some positive influence on employment generation as well. Industries manufacturing chemicals, rubber, plastic and petroleum lost jobs between 1999-2000 and 2004-05. At the same time, these very industries had been major generators of employment in India during the period 1983-1993 and even during 1993-2000 (see Table 4).
TRENDS IN LABOUR SUPPLY AND DEMAND IN INDIA
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Table 4 Net Increase in Employment in Indian Manufacturing, 1983 to 2004-05, Persons in 100,000 (lakh) Numbers Industries
1983 to 1993-94
1993-94 to 2004-05
1999-2000 to 2004-05
Food Products, Beverages, and Tobacco Products (15, 16)
23.2
9.1
-2.5
Textiles, Apparel and Leather Products (17, 18, 19)
-2.8
42.7
52.3
Wood and Paper Products; Printing, Publishing (20, 21, 22)
9.4
26.7
13.4
12.1
5.4
-0.5
Non-metallic Mineral Products (26)
3.0
13.0
9.4
Metals and Metal Products (27, 28)
4.2
11.3
2.5
Machinery and Equipment Other than Transport Equipment (29, 30, 31, 32)
6.6
1.2
1.0
Transport Equipment and Parts (34, 35)
0.2
5.5
6.3
Other Manufacturing Industries (33, 36)
7.9
14.2
13.1
76
129
96
Chemical, Rubber, Plastics; Petroleum, Coal (23, 24, 25)
Total Manufacturing
Notes: Figures given in brackets are the NIC 1998 codes of the corresponding industries. ‘Other manufacturing industries’ include mainly the manufacture of furniture (361) and the manufacture of jewellery, diamond and gem cutting and polishing (369). See Table A2 for correspondence between NIC 1987 and NIC 1998. Source: Estimates based on NSSO (1987), NSSO (1997), NSSO (2001) and NSSO (2006).
6. Slow Diversification of the Occupational Structure: Comparison with China The trends discussed above indicate that despite the fast pace of economic growth, the diversification of the occupational structure away from agriculture has been rather slow in India. A comparison with the Chinese experience will be instructive here. China’s labour market began to be liberalised since 1978, and the process picked up speed from the mid1990s. As part of the reforms since the mid-1990s, lifetime tenures for workers began to be replaced by contracted tenures, large state-owned enterprises began to lay off workers, and workers began to migrate in large numbers from rural to urban areas (Ghose, 2008). Despite such changes, China is distinctly ahead of India in terms of the actual numbers and quality of non-agricultural jobs generated since the 1990s. In China, regular employment refers largely to salaried employment in formal enterprises, whereas irregular employment refers to casual wage employment and self- employment in both non-formal and formal enterprises. We do not have enough information to examine how far regular employment in China is comparable to formal or organised employment in India. Yet, it is notable that in 2004/2005, regular employment in manufacturing in China was 104 million, when Indian manufacturing employed a total of 56 million with only 12 million of them in the organised sector (see Table 5). Ghose (2008) notes that in China, since the mid-1990s, labour incomes from all types of employment increased substantially even though the proportion of employed persons enjoying job security and non-wage benefits declined. On the other hand, as noted earlier, the growth of workers’ wages and labour productivity decelerated in India during the period 1999-2005.
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Table 5 Estimates of Labour Force in China and India, Sector-wise, Numbers in Millions Agriculture Manufacturing
Services and Other Industries
Total Labour Force
China: Regular Employment 1990
341
86
140
653
1999
335
81
206
725
2005
304
104
248
773
India: Total Employment (including organized and unorganized sector employment) 1993-94
240
40
95
374
1999-2000
240
46
112
398
2004-05
259
56
143
458
--
12
29
42
2004-05 (only organised sector employment)
Note: * Other Industries’ include mining and quarrying, and electricity, gas and water supply. Construction is included under services. Source: NSSO (1997), NSSO (2001), and NSSO (2006); Ghose (2008); Sundaram (2008), Table 2 for estimates of organised employment in India, which are based on NSS data for 2004-05.
IV. EDUCATIONAL ACHIEVEMENTS AND LABOUR SUPPLY AND DEMAND IN INDIA India’s fast economic growth raises expectations of a modernising transformation in the country’s employment structure as well. The rapid phases of industrialisation in South Korea and some other East Asian countries were characterised by sharp increases in the supply of and demand for educated labour, and also by the rising wages of these workers (Amsden, 1989). However, the Indian experience is seen to be considerably different from the experiences of East Asian countries and even of China. This section tries to relate certain key aspects of labour supply and demand in India with the educational achievements of the population. It is striking that a very high proportion of India’s population and workforce (aged 15 years and above) even in 2004-05 were illiterates or persons educated up to the primary and middle school levels. In 2004-05, 66 per cent of India’s rural female workers were illiterates. Educational achievements have been the highest among urban males. However, urban male workers who completed at least a secondary level school education accounted for only 45 per cent of the total in 2004-05. The proportions of workers who obtained undergraduate or higher degrees ranged from 0.9 per cent in the case of rural females to 16.9 per cent in the case of urban males (see Table 6). It can also be seen that in India, in general, the educational achievements of the workforce are lower than those of the total population. For instance, in 2004-05, those who completed secondary school education or above constituted 36 per cent of the urban female population but only 31 per cent of the urban female workforce in India (see Table 6). This is because of the relatively low levels of workforce participation rates among the educated population in the country (discussed in detail below).
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Table 6 Distribution (in %) of Total Population and Workforce (Aged 15 Years and Above) in India in 2004-05, by Education Levels Not Primary Secondary Graduate Total Literate and Middle h.s. and dip. and Above Rural Females, Population 58.5 31.2 8.9 1.3 100 Rural Females, Workforce 66.3 27.1 5.5 0.9 100 Urban Females, Population 27.9 36.5 24.1 11.5 100 Urban Females, Workforce 37.4 32.2 15.9 14.7 100 Rural Males, Population 32.0 46.8 17.2 3.8 100 Rural Males, Workforce 33.7 47.4 14.8 3.8 100 Urban Males, Population 12.1 39.6 32.0 16.2 100 Urban Males, Workforce 13.2 42.0 27.8 16.9 100
Total in Millions 249 121 106 24 255 215 117 90 Notes: ‘Secondary, h.s. and dip.’ denote persons who have completed secondary or higher-secondary level education, as well as those who have completed diploma/certificate courses. Source: Estimates based on NSSO (2006).
1. Persons Who are and Who are Not in the Labour Force, 2004-05, by Education Levels It is seen that in India, labour force participation rates (LFPRs) across persons with different education levels largely follow a U-shaped pattern. The LFPR or the proportion of ‘economically active’ persons to the total population (aged 15 years and above) is relatively high among illiterates and the primary school educated population. The LFPR then declines with rising education levels until the higher secondary level. The LFPR is relatively high again among graduates, post-graduates and persons who have completed diploma or certificate courses (see Figure 2). It is to be expected that at lower levels of education, the proportion of students (who are not part of the labour force) in the population tends to be high, and, therefore, the LFPR tends to be low. Figure 3 shows the labour force and students combined as a proportion of the population in India in 2004-05, and there is no longer any evidence of the U-shaped pattern. The proportion of the labour force and students to the population is 90 per cent or more in the case of literate males in India’s urban and rural areas. This proportion is higher among rural males than urban males (see Figure 3). It appears that given the very limited amount of social security benefits provided by the State, India’s male population, especially in rural areas, has to necessarily join the labour force to avoid destitution. On the other hand, the labour force and students combined as a proportion of the population is much lower among women, especially educated urban women. In 2004-05, among women with secondary school education, those who had either joined the labour force or were students pursuing higher education accounted for only 58 per cent in India’s rural areas and 37 per cent in urban areas (see Figure 3). Persons who are not in the labour force include students, rentiers, recipients of pensions or remittances, the disabled, as well as persons who attend to ‘domestic duties’. Figure 4 shows that a substantially large proportion of women in India, who are not in the labour
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Figure 2 Labour Force as a Proportion of the Total Population (Aged 15 Years and Above), by Educational Achievements, India, 2004-05
Figure 3 Labour Force and Students Combined as a Proportion of the Total Population (Aged 15 Years and Above), by Educational Achievements, India, 2004-05
force, report their activity status as ‘attending to domestic duties’ (activity status codes 92 and 93). In 2004-05, among women who had graduate or post-graduate degrees and who had not yet joined the labour force, more than 80 per cent were women attending to domestic duties (see Figure 4).
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In India, unemployment rates are relatively high among educated sections of the population, and this is particularly so in the case of females. In 2004-05, the proportion of the unemployed in the labour force was only 1.1 per cent among rural females with primary school education, but was 28 per cent in the case of rural females with graduate level education (see Figure 5). Figure 4 Students and Persons Attending to Domestic Duties as a Proportion of all Persons (+15 years) Who Are Not in the Labour Force, Rural and Urban Females, by Educational Achievements, India, 2004-05
Figure 5 Unemployed Persons as a Proportion of the Total Labour Force (Aged 15 Years and Above), by Educational Achievements, India, 2004-05
Notes: For Figures 2 to 5: Data relate to usual principal and subsidiary economic status of persons, aged 15 years and above. Source: For Figures 2 to 5: Estimates based on NSSO (2006).
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2. Changes in the Workforce Structure, 1983 to 2004-05, by Education Levels Figure 6 shows the changes in percentage points in the WPRs across persons with different educational achievements. During the two decades from 1983 to 2004-05, the increase in WPR was significant mainly among persons with middle school or primary school level education. During the 1980s (1983 to 1993-94), the change in WPR was positive and substantially large among urban males with middle school level education, rural males with middle school level education, and urban females with primary school or middle school level education. During the 1990s (1993-94 to 2004-05), the WPR increased considerably among rural females with primary school, middle school and secondary school level education. The above-discussed feature of less-educated persons joining India’s workforce in greater proportion was more marked during the 1990s as compared to the 1980s. In fact, during the 1990s, there was a distinct fall in the WPR among many sections of the educated population, including urban females with secondary school level education and urban females with (under)graduate level education.7 The WPR fell among urban males too who completed graduate level education (though for rural males with graduate degrees, the WPR increased). In the case of rural females who completed graduate level education, the WPR rose sharply between 1983 and 1993-94 but fell between 1993-94 and 2004-05. At the same time, during the 1990s, the WPR actually increased in the case of illiterate females in both the rural and urban areas (see Figure 6).
Figure 6 Changes in Worker Population Ratio in Percentage Points, across Persons (age 15 years and above) with Different Education Levels, 1983 to 2004-05
Note: RM, RF, UM and UF refer to rural male, rural female, urban male and urban female, respectively. All data relate to the usual principal and subsidiary economic status of persons. Source: NSSO, 1987, Table 12; NSSO, 2006, p. 82.
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Changes between 1999-2000 and 2004-05 Illiterate persons and less-educated workers accounted for a significant part of those who joined India’s workforce between 1999-2000 and 2004-05. During the period 1999-2005, even as the number of rural female workers increased by 19.3 million, there were only 3.5 million among them who had completed at least secondary school level education. Further, 17.5 million of the 21 million new persons who joined the ranks of rural male workers during this period were educated only till the primary or middle school level (see Table 7). As noted earlier, 49 million of the 59.5 new employment opportunities created in India between 1999-2000 and 2004-05 were in the self-employed category. A large part of this increase in self-employment during the first half of the 2000s occurred among rural females (a category accounting for 19 million of the total increase of 49 million). A substantial number of these rural females who joined the ranks of the self-employed were illiterates (8 million of 19 million) and they were engaged in agriculture and allied activities (see Table 7). In fact, between 1999-2000 and 2004-05, the number of illiterate rural females who reported their activity status as attending to domestic duties fell by 5.7 million. During the same period, the number of illiterate rural females who were self-employed in agriculture increased by 7.5 million. It appears that large numbers of impoverished and illiterate rural females, who had earlier been attending to domestic duties, were compelled to join the ranks of the self-employed in agriculture during the first half of the 2000s. As other studies too have pointed out, this phenomenon is likely to be on account of the distressful conditions prevailing in rural India during this period (see Table 7). The educational achievements of those who joined the ranks of regular workers in India between 1999-2000 and 2004-05 have not been very high either. Table 7 shows that of the total number of 5.1 million urban males who became regular workers in non-agricultural activities during this period, 2.6 million were either illiterates or educated only till the primary or middle school level. This is an indicator of the predominantly poor quality of even regular employment generated in India during the first half of the 2000s. 3. Decline in Quality of Employment Overall, the trends discussed above indicate a decline in the quality of new jobs generated in India particularly during the period 1999-2005. The National Commission for Enterprises in the Unorganised Sector (NCEUS) (2007) had pointed out this aspect of India’s labour market. NCEUS (2007) defines unorganised or informal workers as workers who do not receive any employment/social security benefits from their employers. These workers are employed predominantly in the unorganised/informal sector (which consists of all unincorporated private enterprises with less than ten total workers), and increasingly in the formal sector as well. NCEUS’s (2007, p. 4) estimates using NSS data showed that in 2004-05, out of India’s 458 million workers, 423 million (92.4 per cent) were informal workers: 394 million of them were employed as informal workers in the informal sector, and 29 million were employed as informal workers in the formal sector. Virtually the entire increase of 60.5 million new jobs in India between 1999-2000 and 2004-05 was that of informal workers. This included
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52 million new workers in the informal sector and 8.6 million new informal workers in the formal sector (NCEUS, 2007, p. 4). The shrinking in size of the public sector has possibly contributed to the fall in the overall quality of employment in India. Sen (1996, p. 2463) writes that the government contributed around one-fifth of the increase in total rural employment in India between 197778 and 1987-88. During the 1980s, public administration and defence services generated 2.2 million new jobs. However, 1.7 million jobs were lost in these services during the period 1999-2005. It appears that the shrinking of the public sector since the 1990s has affected employment in other sectors as well because of linkage effects. For instance, the decline in employment in machinery and equipment is likely to be linked to the fall in demand from public sector manufacturing units. 4. The Record in Literacy and Education India’s record in improving the educational achievements of the population during the period 1999-2000 to 2004-05 has not been satisfactory. During this half-decade, as the population of urban females in the country increased by 16 million, there were one million illiterates among this incremental population (see Table 7). In 2004-05, student enrolment ratios in India at the primary education level (or the ratio of students to the total population in the age group of 5-9 years) were less than 100 per cent for all population categories. Student enrolment ratios at the tertiary education level (for population corresponding to the age group of 14-19 years) were much lower. The improvement in tertiary school student enrolment ratios between 1999-2000 and 2004-05 has also been marginal, especially in the case of urban and rural males (see Figure 7). Table 7 Distribution in Millions of Numbers of the Incremental Population (Aged 15 Years and Above) in India between 1999-2000 and 2004-05 by Education Levels and Activity Status Rural Females: Total Incremental Population Activity Status Education Levels Not Literate Primary Secondary, Graduate Total Incre. and Middle h.s & dip. and above Population SE_Agriculture 7.5 6.8 1.5 0.1 16.0 Reg_Agriculture -0.1 0.1 0.0 0.0 -0.2 Cas_Agriculture -3.5 1.5 0.2 0.0 -1.7 SE_Non-agriculture 0.4 1.7 0.6 0.1 3.0 Reg_Non-agriculture 0.4 0.4 0.6 0.3 1.5 Cas_Non-agriculture 0.7 0.3 0.1 0.0 1.1 All_Employed 5.0 10.7 3.0 0.5 19.3 Unemployed 0.1 0.3 0.5 0.2 1.1 Students 0.0 1.3 1.8 0.1 3.0 Attending To Domestic Duties -5.7 4.6 1.6 0.5 0.7 Total Incre. Population -0.8 17.1 6.9 1.2 24.4
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Table 7 Contd.,, Urban Females: Total Incremental Population = 15.9 million Activity Status Education Levels
SE_Agriculture Reg_Agriculture Cas_Agriculture SE_Non-agriculture Reg_Non-agriculture Cas_Non-agriculture All_Employed Unemployed Students Attending to Domestic Duties Total Incre. Population
Not Literate Primary and Secondary, Middle h.s and dip 0.4 0.6 0.1 0.0 0.0 0.0 -0.1 0.2 0.0 0.3 1.0 0.7 0.5 0.9 0.5 -0.1 0.2 0.0 1.2 2.8 1.3 0.0 0.2 0.2 0.0 0.1 1.3 -0.3 3.6 2.1 0.9 7.0 5.0
Rural Males: Total Incremental Population = 23.5 million Activity Status
SE_Agriculture Reg_Agriculture Cas_Agriculture SE_Non-agriculture Reg_Non-agriculture Cas_Non-agriculture All_Employed Unemployed Students Attending. to Domestic Duties Total Incre. Population
Graduate Total Incre. and above Population 0.0 1.1 0.0 0.0 0.0 0.0 0.3 2.2 0.8 2.7 0.0 0.3 1.1 6.3 0.3 0.7 0.1 1.5 1.7 7.1 3.2 15.9
Education Levels
Not Literate Primary and Secondary, Middle h.s and dip -0.3 6.8 2.7 -0.1 -0.2 -0.1 -6.9 2.0 -0.2 0.8 4.5 2.1 0.3 1.1 0.8 1.9 3.2 0.4 -4.3 17.5 5.7 0.0 0.0 0.0 0.0 0.3 2.3 0.1 0.0 0.0 -4.5 17.7 7.7
Graduate Total Incre. and above Population 0.6 10.0 0.0 -0.5 0.0 -4.9 0.9 8.5 0.3 2.5 0.0 5.6 1.9 21.1 0.0 -0.2 0.2 2.9 0.0 -0.1 2.0 23.5
Urban Males: Total Incremental Population = 18.0 million Activity Status Education Levels Not Primary and Secondary, Graduate Total Incre. Literate Middle h.s. and dip and Above Population SE_Agriculture 0.1 0.3 0.4 0.1 0.9 Reg_Agriculture 0.0 0.0 0.0 0.0 -0.1 Cas_Agriculture -0.2 0.0 0.0 0.0 -0.3 SE_Non-agriculture 0.1 3.5 3.2 1.3 8.2 Reg_Non-agriculture 0.1 2.5 1.4 1.2 5.1 Cas_Non-agriculture -0.2 0.9 0.2 0.0 0.9 All_Employed -0.2 7.1 5.2 2.5 14.8 Unemployed 0.0 -0.1 0.0 0.1 0.0 Students 0.1 0.1 1.3 0.3 1.7 Attending to Domestic Duties 0.0 0.0 0.0 0.0 0.0 Total Incre. Population -0.1 7.5 7.0 3.4 18.0 Notes: ‘Secondary, h.s. and dip.’ denote persons who completed secondary or higher-secondary level education, as well as those who completed diploma/certificate courses. ‘SE’, ‘Reg’, and ‘Cas’ denote, respectively, the self-employed, regular workers, and casual workers engaged in activities other than public works. ‘All_agriculture’ denote all workers who are employed in agriculture and allied activities (including casual workers engaged in public works). Similar definitions apply for workers engaged in non-agricultural activities. Source: Estimates based on NSSO (2001) and NSSO (2006).
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Figure 7 Student to Population Ratio in India, by Age Groups: Ratio in 2004-05 (in %) and Change in Ratio between 1999-2000 and 2004-05 (in Percentage Points)
Notes: ‘RF_9yrs’ refers to rural female population, age 5-9 years. Also given are figures for urban females (UF), rural males (RM) and urban males (UM) in the age groups of 9-14 years, 14-19 years and 1924 years Source: Estimates based on NSSO (2001) and NSSO (2006).
On the positive side, there was a substantial improvement in primary and secondary school student enrolment ratios in rural India between 1999-2000 and 2004-05. In the case of rural females, these ratios increased by 14 and 13 percentage points, respectively. It is also noteworthy that the number of illiterates among the population declined in the case of rural males and females during the first half of the 2000s (see Figure 7 and Table 7). V. ‘MISSING WOMEN’ IN THE INDIAN ECONOMY As seen in the previous section, a large proportion of the women, especially educated women, in India report their activity status as attending to domestic duties. Calculations based on these proportions show that the number of women in India who choose to stay out of the labour force and instead attend to work in their own households is extraordinarily large. It is also several times larger than the number of women who are in the labour force but unemployed. In 2004-05, there were 162 million women in India who reported themselves as not being part of the labour force and engaged only in their own household work. During the same year, the number of women who reported that they were unemployed was only 4 million. Of the 162 million women in India who had withdrawn from the labour force for attending to domestic duties, 31 million had completed secondary level school education and 8.1 million had acquired graduate degrees (see Table 8).
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Between 1999-2000 and 2004-05, the urban female population of India increased by 16 million, which included 8 million women with at least secondary school level education and 3 million women with graduate degrees or above. However, 7.1 million (or 44 per cent) of the 16 million new entrants into the country’s urban female population stayed out of the labour force and were engaged in domestic duties. Notably, the proportion of women who attend to only household work in the incremental population (during 1999-2005) is much higher in urban areas than in rural areas. This proportion is also relatively high among those who are better educated. During the period 1999-2000 to 2004-05, as the population of urban women with graduate degrees or more increased by 3.2 million, 1.7 million of them reported their activity status as attending to domestic duties (see Table 7). 1. Is Low Female Work Participation a Consequence of Poor Employment Opportunities for Women? Scholars have pointed out that the range of activities that women perform in their own households, such as caring for the young and old, cooking, cleaning, laundry, and shopping, are unpaid (and are not classified as economic activities or included in national income accounting), but are extremely vital for the economy and society. Therefore, there is a need to review and revise the existing statistical systems in a way that better captures the economic contribution of women’s domestic work (Neetha, 2010). Even while recognising such problems related to the measurement of women’s work, it is still important to understand the reportedly large numbers of women who do not participate in the labour force in India. It is generally understood that in India social factors do play an important part in confining women within their own households. However, as shown above, the proportion of women attending to household duties only is relatively high among urban educated women, even though social discouragement is likely to be low for this category. It appears that the discouragement arising from the relative unavailability of gainful employment opportunities is a more powerful reason for women’s non-participation in labour force in India. As Figure 5 shows, the proportion of unemployed to the labour force is particularly high among urban educated women. Women have accounted for only a small share of new jobs created in the modern and emerging sectors such as financing and business services, and computer and related activities (see Table 9). While the share of females in the net increase of jobs in India rose to 41 per cent during the period 1999-2005, this was largely because of the high proportion of females in incremental employment in agriculture, garment manufacturing, personal services (largely of women working as domestic help), as well as in education (see Table 9). Studies using 2004-05 data indicate that in India, women face discrimination at the workplace in terms of wages (Karan and Selvaraj, 2008; Srivastava and Srivastava, 2010). In this context, it appears that the effects of the fall in public sector jobs since the 1990s have been considerable on women. Desai’s (2010) estimates using a survey in 2004-05 show that female wage earnings are 73 per cent of the male wage earnings in the public sector as compared to only 53 per cent in the private sector. It may be noted that during
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the 1980s, public sector jobs accounted for 10 per cent of all new jobs for urban women in India. The wastage of talent and resources involved in the withdrawal of so many women from the economy has perhaps no other parallel anywhere else in the world. The number of Indian women who work only in their own households (162 million) is comparable to the entire populations of Brazil (186 million) or the Russian Federation (143 million). Of all women in India who attend only to domestic duties, the numbers of those with secondary level school education is as large as Canada’s total population (32 million), while the number of those with graduate degrees constitute more than Switzerland’s total population (7.4 million) (all population figures for 2005). Amartya Sen has written about the issue of ‘missing women’ in India’s population. According to him, the low female–male ratio in the country is a result of the disadvantages facing the female child in access to healthcare and other necessities (Sen, 1999). As the above discussion shows, it is probably appropriate to recognise in policy discussions the important problem of ‘missing women’ in India’s labour force and economy as well. VI. CONCLUSIONS This paper, which is based on an analysis using NSS data, shows that there has been no significant improvement in the supply of and demand for skilled labour in India since the 1990s, despite the country’s rapid economic growth. The optimism about India benefiting from a ‘demographic dividend’ is misplaced, given the low WPRs in India, especially among females. The number of ‘missing women’ in the Indian economy—women who withdraw from the labour force and attend only to household work—was a staggering 162 million (more than the population of the Russian Federation) in 2004-05. This included 31 million (equivalent to Canada’s population) who had completed secondary level school education and 8.1 million (more than Switzerland’s population) who had acquired graduate degrees. The discouragement effect arising from the relative unavailability of gainful employment opportunities could be a powerful reason for such large-scale withdrawal of women from the labour force in India. In India, high-technology sectors such as IT remain a small island of high wages in terms of their contribution to employment. While 59.5 million new jobs were generated in India between 1999-2000 and 2004-05, the quality of employment suffered a sharp decline. A crisis-ridden agriculture, construction, and low value-adding services, including notably of women employed as domestic workers, provided most of the new jobs. The revival in manufacturing employment growth was mainly due to a few industries linked to exports and construction, such as garment and furniture-making. The loss of public sector jobs has contributed to the decline in the quality of employment in India. In general, in India during the period 1999-2005, many more employment opportunities have been created for persons educated up to the primary or middle school level than for those educated up to higher levels. Women received only a small share of jobs created in the emerging sectors such as IT and finance.
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Table 8 Unemployed Persons and Persons Attending to Domestic Duties (Aged 15 Years and Above), by Educational Achievements, in Millions of Numbers, 2004-05 Category Illiterate Primary Secondary, Graduate All and Middle h.s. and dip. and Above Unemployed, Rural Females 0.1 0.6 1.0 0.4 2.2 Unemployed, Urban Females 0.0 0.4 0.6 0.7 1.8 Attending to Domestic Duties, 52.7 36.3 8.7 1.4 99.1 Rural Females Attending to Domestic Duties, 16.5 25.5 13.9 6.7 62.7 Urban Females Unemployed, Rural Males 0.2 1.3 1.3 0.5 3.3 Unemployed, Urban Males 0.1 1.2 1.2 0.9 3.5 Note: The data in this Table refer to usual principal and subsidiary economic status of persons. See also notes under Table 6. Source: Estimates based on NSSO (2006), Tables 23 and 24.
Table 9 Net Increase in Female Workers in India, in 100,000 (lakh) Numbers and as % of Total Increase in Workers, 1983 to 2004-05 Sectors 1983 to 1993-94 1993-94 to 1999-2000 to 1999-2000 2004-05 Number % of Number % of Number % of Total Total Total I. Agriculture and Allied Activities 115 35 -11 -138 143 77 Ii. Non-agricultural Activities
77
1. Manufacturing
20
32
14
103
25
25
33
8
24
37
39
1b. Textiles, Apparel, and Leather Prod.
2
-67
-1
10
24
46
2. Construction
6
11
4
7
8
10
3. Financing and Business Services
3
19
0
0
5
17
1
20
3a. Computer and Related Activities 4. Community, Social and Personal Services 4a. Public Administration and Defence
35
30
4
21
44
66
6
24
-1
-50
-1
6
4b. Education and Research Services
10
56
5
45
21
51
4c. Personal Services; Other Service Activities All Workers
17
35
-7
100
23
64
192
27
20
8
246
41
Sources: NSSO (1987), NSSO (1997), NSSO (2001), NSSO (2006).
This paper highlights the limitations of India’s rapid economic growth led almost entirely by the services sector. Effective State intervention is required for effecting a revival of demand for skilled labour in the country. Building a diversified manufacturing sector will be crucial for such a revival. Equally, the government should revitalise education at all levels to upgrade the skill levels of India’s workforce.
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Notes 1. See, for instance, ‘India’s Surprising Economic Miracle’, Economist, 30 September 2010. 2. Source: Key Indicators of the Labour Market Database, International Labour Organisation. 3. This study has used the estimates of population based on the Census of India and reported in Sundaram (2007, p. 3122). 4. Source: World Development Indicators, World Bank. 5. It may be noted here that Sundaram’s 2007 estimates—using a different methodology—of the size of the workforce in India for the years 1983, 1993-94 and 1999-2000 are 303 million, 374 million and 398 million, respectively. 6. Salary increases for Indian professionals have been one of the highest in the Asia-Pacific region, according to India Salary Guide 2006, Kelly Services India Pvt. Ltd, Gurgaon, India. 7.
In India, graduates are persons who have successfully completed a Bachelor’s degree, which normally takes 3-4 years after higher secondary school education.
References Abraham, Vinoj (2007), “Growth and Inequality of Wages in India: Recent Trends and Patterns”, Indian Journal of Labour Economics, Vol. 50, No.4. —— (2009) “Employment Growth in Rural India: Distress-driven?”, Economic and Political Weekly, Vol. 44, No. 16, pp. 97-104. Amsden, Alice H. (1989), Asia’s Next Giant - South Korea and Late Industrialisation, Oxford University Press, New York. Chadha, G.K. and Sahu, P.P. (2002), “Post-Reform Setbacks in Rural Employment: Issues that Need Further Scrutiny”, Economic and Political Weekly, Vol. 37, No. 21, pp. 1998-2026. Chandrasekhar, C.P. and Ghosh, Jayati (2006a), “Employment Growth: The Latest Trends”, The Hindu Business Line, November 14. —— (2006b), “Working More for Less”, Macroscan: An Alternative Economics Webcentre, November 28, Available at www.macroscan.org, Accessed on 15 September 2010. Chavan, Pallavi and Bedamatta, Rajshree (2006), “Trends in Agricultural Wages in India 1964-65 to 19992000”, Economic and Political Weekly, Vol. 41, No. 38, September 23, pp. 4041-51. Desai, Sonalde (2010), “The Other Half of the Demographic Dividend”, Economic and Political Weekly, Vol. 45, No. 40, pp. 12-14. Ghose, Ajit K. (2008), “The Growth Miracle, Institutional Reforms and Employment in China”, Economic and Political Weekly, Vol. 43, No. 22, May 31, pp. 47-56. Karan, Anup K. and Selvaraj, Sakthivel (2008), “Trends in Wages and Earnings in India: Increasing Wage Differentials in a Segmented Labour Market”, Asia Pacific Working Paper Series, International Labour Organisation, New Delhi, May. Neetha, N. (2010), “Estimating Unpaid Care Work: Methodological Issues in Time Use Surveys”, Economic and Political Weekly, Vol. 45, No. 44, pp. 73-80. NCEUS (2007), Report on Conditions of Work and Promotion of Livelihoods in the Unorganised Sector, National Commission for Enterprises in the Unorganised Sector, Government of India, New Delhi. NSSO (1987), Report on the Third Quinquennial Survey on Employment and Unemployment, 38th Round (January–December 1983), Report No. 341, National Sample Survey Organisation, Department of Statistics, Government of India, New Delhi. —— (1997), Employment and Unemployment in India, 1993-94, 50th Round (July 1993–June 1994), Report No. 409, National Sample Survey Organisation, Department of Statistics, Government of India, New Delhi.
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—— (2001), Employment and Unemployment Situation in India 1999-2000, Parts I and II, 55th Round (July 1999–June 2000), Report No. 458, National Sample Survey Organisation, Ministry of Statistics and Programme Implementation, Government of India, New Delhi. —— (2006), Employment and Unemployment Situation in India 2004-05, Parts I and II, 61st Round (July 2004– June 2005), Report No. 515, National Sample Survey Organisation, Ministry of Statistics and Programme Implementation, Government of India, New Delhi. Papola, T.S (2008), “Employment Challenge and Strategies in India”, Asia Pacific Working Paper Series, International Labour Organisation, New Delhi, January. Ramachandran, V.K. and Rawal, Vikas (2010), “The Impact of Liberalisation and Globalisation on India’s Agrarian Economy”, Global Labour Journal, Vol. 1, No. 1, pp. 56-91. Sarkar, Sandip and Mehta, Balwant Singh (2010), “Income Inequality in India: Pre- and Post-Reform Periods”, Economic and Political Weekly, Vol. 45, No. 37, pp. 45-55. Sen, Abhijit (1996), “Economic Reforms, Employment and Poverty: Trends and Options”, Economic and Political Weekly, Vol. 31, Nos. 35/37, pp. 2459-77. Sen, Amartya (1999), Development as Freedom, Oxford University Press, New Delhi. Sengupta, Arjun; Kannan, K.P. and Raveendran, G. (2008), “India’s Common People: Who Are They, How Many Are They and How Do They Live?”, Economic and Political Weekly, Vol. 43, No. 11, March 15, pp. 49 -63. Srivastava, Nisha and Srivastava, Ravi (2010), “Women, Work and Employment Outcomes in Rural India”, Economic and Political Weekly, Vol. 45, No. 28, pp. 49-63. Sundaram, K. (2007), “Employment and Poverty in India, 2000-05”, Economic and Political Weekly, Vol. 42, No. 30, July 28, pp. 3121-31. —— (2008) “Employment, Wages and Poverty in the Non-agricultural Sector: All India, 2000-2005”, Economic and Political Weekly, Vol. 43, No. 22, May 31, pp. 91-99. Thomas, Jayan Jose (2010), “An Uneasy Co-existence: The New and the Old in Indian Industry and Services”, in Anthony D’Costa (ed.) A New India: Critical Reflections in the Long Twentieth Century, Anthem Press, London. Unni, Jeemol and Raveendran, G. (2007), ‘Growth of Employment (1993-94 to 2004-05): Illusion of Inclusiveness?”, Economic and Political Weekly, Vol. 42, No. 3, January 20, pp. 196-99.
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APPENDIX Table A1 Concordance between National Industrial Classifications NIC 1987 and NIC 1998 NIC 1998
Corresponding NIC 1987 Industry Sections, Groups or Divisions
NIC 1998
Corresponding NIC 1987 Industry Sections, Groups or Divisions
Categories A + B
Section 0
50+52
65+66+67+68+ 84+97+398
Category C
Section 1
51
60+61+62+63+64
15 + 16
20+ 21+22
Category H
69
171
(23 + 24 + 25)-230
60
70
172 + 173 + 181
26+964
61
71
182+19
29+311
62
72
20
27-(276+277)
63
73+74
21+22
28
64
75
23+25
31-311
65+67
80
24
30+208
66
81
26
32
70
82
27
33
71+72+74
83+85+89+963-897
28
34+352-342
75
90
29+30+31+32
(35-352)+36 + (39398)+388
73+80
92
33+36
38+276+277+342
85+91
93+94
34 + 35
37
90
91
Category E
Section 4
92
95+897
Category F
Section 5
93+95
(96-964-963)+99
The Indian Journal of Labour Economics, Vol. 54, No. 2, 2011
STRUCTURAL TRANSFORMATION IN INDIAN MANUFACTURING—BASED TRADE DURING THE POST-REFORM PERIOD: IMPLICATIONS FOR EMPLOYMENT Anshika Arora* This paper studies the structure of Indian manufacturing-based trade during the post-reform period. Apart from examining the composition and direction of trade, it also explores the patterns of trade specialisation and its evolution over time. The findings reveal that the structure of manufacturing-based trade has neither remained unchanged nor changed radically. However, a slight shift in favour of technology-intensive industries and against low technology industries seems to have taken place in terms of both trade composition and specialisation patterns. Many of these shifts in structure have occurred during the post-2000 trade expansion years. The paper ends by highlighting some implications of the changing patterns on the employment-generating potential of manufacturing-based trade. I. INTRODUCTION Widespread changes were made in India’s trade policy after 1991. The simple average tariff that was as high as 129 per cent in 1990 was brought down through a series of reductions to 35 per cent in 1998. After a brief halt, a new round of reductions that began after 2003, brought it down to as low as 12 per cent in 2007. In 1990, 90 per cent of manufacturing value added was under quantitative restrictions (QRs). This was reduced dramatically to 36 per cent in 1995. However, a large part of these declines were for the intermediate and capital goods. Consumer goods continued to enjoy protection until 2001. With the phasing out of QRs on the last set of tariff lines in 2001, the QRs lost relevance as a protective instrument. In 2007, only 0.5 per cent of manufacturing value added was under QRs. Moreover, constraints on the entry of foreign investment were eased dramatically. All these changes can be said to have made India one of the least protected countries in the world (Pursell, 2007). In the wake of the radical trade reforms, the exposure of the Indian economy to international trade was expected to increase dramatically. Contrary to expectations, the pace of growth of trade flows did not turn out to be distinctly high during the larger part of the post-reform period. This, however, changed during the most recent boom period from 2002 to 2007 (Veeramani, 2007). During this period, import and export growth accelerated at rates more dramatic than at any time in the past, causing the share of manufacturing-based trade in GDP, that hovered between 17 per cent to 20 per cent in the 1990s, to increase phenomenally to about 32 per cent in 2007. * The author is currently a probationer with the Indian Economic Service, Department of Economic Affairs, Ministry of Finance. However, the views presented in the paper are personal. Email: anshika.arora@gmail.com.
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Thus, trade has emerged as a potent force during the recent period. While domestic market conditions continue to wield a determining impact on the production and employment structure, the role of trade forces cannot be ruled out any more. The empirical examination of the evolution of its structure has assumed importance. As per the Heckscher-Ohlin theory, with the opening of an economy to trade, a country is likely to specialise in and export the good that intensively uses its most abundant factor and to import the good that intensively uses its scarce factor. Thus, trade liberalisation in a labour-abundant country, is likely to expand the low-technology labour-intensive goods sectors and contract the technology-intensive goods sectors, thereby enhancing employment. While the direction of trade-induced specialisation can be predictable in the extreme cases of highly developed and very poor countries, in the case of India, which has developed some technological and human capital base and enjoys a relatively low wage advantage, predicting the same may be difficult (Parameswaran, 2006). Some of the noted and recent studies on structural transformation in trade have differing conclusions. The study by Parameswaran (2006), which covers the period from 1985 to 1998, concluded that trade had an expansionary effect on the labour-intensive sectors and a contractionary effect on the technology-intensive sectors during this period. The study by Sharma and Dietrich (2007), using data on 143 three-digit export industries for the period between 1980 and 2000, found that the opening of the economy resulted in de-specialisation across all categories, that is, the low-, medium- and high-technology industries. Another study by Alessandrini, et al. (2007) examined specialisation patterns for the period between 1985 and 2000-01, and came to the conclusion that while on an average, the structure of trade remained more or less the same, a slight upgradation to technology-intensive goods could be witnessed starting from the second half of the 1990s. There is lack of a comprehensive study that captures the evolution in the trade structure and specialisation patterns during the post-2000 trade expansion years. Moreover, most studies are based on classifications that are not comparable with the classifications at which the employment data in India is available. The current study is an attempt to bridge these gaps. The study analyses the trade structure comprehensively at a disaggregated level for the period till 2007 by using comparable classification. The structure of the paper is as follows. Section II examines if there has been any structural transformation in manufacturing-based trade during the post-reform period. This entails studying the composition and direction of trade and its evolution over time. The section also examines the patterns of trade specialisation by using one of the indices of the revealed comparative advantage called the Lafay Index. Section III tries to bring out implications of the evolving trade patterns on employment. Section IV draws some conclusions. II. STRUCTURAL TRANSFORMATION OF MANUFACTURING-BASED TRADE In this section, an analysis of the trade structure has been done at three time points, viz. 1990, 1998 and 20071 at the level of: a) Two-digit ISIC Rev.3; b) Four-digit ISIC Rev.3;
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and c) Product groups based on technology content.2 Three-year averages around these points have been taken into account for yearly fluctuations in trade flows. For the purpose of the study, trade data based on HS 1988/92 Classification has been obtained from Commodity Trade Statistics Database (COMTRADE), UN Statistics Division. It has been reclassified into ISIC Rev. 3 on the basis of the concordance table between ISIC Rev. 3 and HS 1988/92 using the software, World Integrated Trade Solution (WITS). 1. Composition of Trade (i) Composition of Manufacturing Exports by Industry Groups As is evident from Figure 1, the share of almost all low-technology industries like Food Products, Textiles, Wearing Apparel, Leather, and Furniture and Others, declined sharply during the period 1998 to 2007. During the first period, while some amongst the notable low-technology sectors like Food Products and Textiles experienced discernible increases, others like Leather and Wearing Apparel experienced discernible declines. The share of technology-intensive industries like Refined Petroleum Products, Chemicals, Engineering Goods3 and Basic Metals, increased sharply during the more recent period. Most technology-intensive industries saw some surges during the first period as well. In sum, it can be said that while no radical shifts were witnessed during the first period, significant changes in favour of technology-intensive industries and against low-technology industries seem to have taken place during the more recent period. Figure 1 Share of Total Manufacturing Exports by Industry Groups (per cent)
Source: Computed by using COMTRADE.
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(ii) Composition of Manufacturing Imports by Industry Groups The composition of manufacturing imports changed, but not as dramatically as that of manufacturing exports. As is evident from Table 1, technology-intensive industries seem to have maintained their dominance. The shares of most industries either increased or remained the same. Exceptions like Refined Petroleum and Chemicals, which can be said to be dominant in terms of a share in manufacturing exports amongst technology-intensive industries, saw a decline throughout. In general, no clear trends were witnessed for low-technology industries. However, notable movements were seen in the case of two industries, namely, Food Products and Furniture and Others. Food Products, the most dominant in terms of a share in manufacturing imports amongst low-technology industries, witnessed significant surges during the first period and significant declines thereafter. Furniture and Others, which started with negligible shares, witnessed significant surges throughout, allowing the industry to overtake Food Products and become the most dominant in terms of a share in manufacturing imports amongst the low-technology industries. Table 1 Share of Total Manufacturing Imports by Industry Groups (Per cent) Industry Group 1990 1998 Food Products and Beverages 3.22 6.91 Tobacco and Related Products 0.01 0.01 Textile Products 1.74 1.72 Wearing Apparel 0.01 0.04 Leather and Related Products 0.53 0.43 Wood and Wood Products 0.11 0.14 Paper and Paper Products 2.68 2.08 Publishing, Printing and Related Activities 0.52 1.22 Refined Petroleum Products, Coke and Nuclear Fuel Chemical and Chemical Products Rubber and Plastic Products Non- Metallic Mineral Products Basic Metals Engineering Goods Furniture and Other Manufacturing n.e.c Total
16.66 26.20 0.91 0.84 13.38 32.88 0.32 100
12.93 21.87 1.00 0.63 21.43 28.17 1.42 100
2007 2.41 0.01 1.52 0.07 0.39 0.13 1.25 1.02 9.16 17.62 1.19 0.84 20.75 40.55 3.06 100
Source: Computed by using COMTRADE.
After the composition of trade by broad industry groups, we will next study the composition of trade by technology content. (iii) Composition of Manufacturing Exports by Technology Content As can be seen in Figure 2, the patterns remained more or less unchanged for all technology levels during the first period. The share of low-technology industries witnessed a sharp decline during the more recent period. The share of medium-technology industries, on the other hand, witnessed a sharp increase during the more recent period. High-technology industries patterns remained more or less the same across time.
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Figure 2 Share of Total Manufacturing Exports by Technology Content (per cent)
Source: Computed by using COMTRADE.
(iv) Composition of Manufacturing Imports by Technology Content The changes in the patterns of shares of imports, as seen in Figure 3, are not as clear as in the case of exports. The share of low-technology industries witnessed a surge during the first period but a decline thereafter. Despite the decline during the second period, the levels in 2007 can be said to be marginally higher than those in 1990. The share of mediumtechnology industries witnessed marginal declines throughout. The share of high-technology industries witnessed a marginal decline during the first period and an increase during the more recent period. In sum, it can be observed that the composition of manufacturing exports decidedly shifted in favour of medium-technology industries and against low-technology industries. While the trends are not as clear for manufacturing imports, the share of medium-technology industries Figure 3 Share of Total Manufacturing Imports by Technology Content (per cent)
Source: Computed by using COMTRADE.
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seems to have declined slightly. These shifts are likely to have important implications for employment. 2. Direction of Trade (i) Direction of Manufacturing Exports A major change has been witnessed in the direction of India’s manufactured exports during the post-reform period. The developing markets have emerged as important markets for Indian goods while the developed markets have lost some of the importance that they enjoyed earlier. While the share of manufactured exports bound for developing nations and regions like Africa, Latin America and developing Asia increased throughout, the share of the developed countries like the US and the European Union (EU) declined during the second period. The shift in the direction of manufactured exports away from the developed world reflects a major loss of markets for India’s labour-intensive goods. A major factor responsible for this loss could be the role played by China. The nature of the composition and direction of trade in both India and China is the same. India competes with China in the export of labour-intensive goods like textiles, leather and leather products, gems and jewellery, and light machinery, among others. The increase in China’s exports to the developed world could be having an adverse impact on India’s exports to the same regions (Dua, 2004). The dynamic growth in China and other Asian countries is generating a rapid demand for raw materials and intermediates. Much of the growth in India’s exports to these countries has come from iron and steel, and chemical products. These goods are produced in the country’s relatively modern industries that have low employment intensity, and such a growth is thus Figure 4 Composition of Manufacturing Exports by Principal Regions (per cent)
Source: Computed by using COMTRADE.
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not likely to make any major dent on the problem of unemployment (Chandrasekhar and Ghosh, 2006). The diversification into new markets is likely to bring stability to India’s export performance, which was earlier heavily dependent on the level of demand generated in select markets. However, too much should not be made out of India’s fast-increasing integration into the production chains of Asia and the stability that that kind of diversification brings about, since these chains are themselves inextricably linked with the level of demand from the US (Chandrasekhar and Ghosh, 2006). However, the shift in the direction of exports is likely to have adverse consequences for employment generation. This is expected precisely because labour-intensive goods have a greater weight in India’s manufactured exports to the developed world than in exports to the developing world (Goldar, 2009). (ii) Direction of Manufacturing Imports A major change has taken place in the direction of India’s manufactured imports during the post-reform period. Figure 5 reveals that while the share of manufactured imports from developing Asia increased significantly, the share of the developed world including the US and EU declined. China has played an important role in the phenomenal increase in the share of developing Asia. China has been successful in making dramatic inroads into Indian markets with its share in total manufactured imports increasing from about 0.2 per cent to 15.7 per cent between 1990 and 2007. The influx of cheap labour-intensive final manufactured goods from China is making it almost impossible for Indian firms, especially the small-scale and unorganised firms specialising in these goods, to survive. Figure 5 Composition of Manufacturing Imports by Principal Regions (per cent)
Source: Computed by using COMTRADE.
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The goods coming from developing regions are relatively more labour-intensive than those coming from the developed regions. The shift in the direction of imports in favour of the developing and against the developed regions, as has been witnessed in India, is likely to adversely impact employment (Goldar, 2009). 3. Trade Specialisation Trade specialisation can be measured by using different measures. In this study, the Lafay Index proposed by Lafay (1992) has been used for this purpose.
where xj and mj denote the country’s exports and imports of good j with the rest of the world. N is the total number of goods traded. The Lafay Index defines a country’s trade specialisation with regard to a specific good as the difference between the trade balance of that good and the country’s overall trade balance, weighted by the good’s share of total trade. Given that the index measures each group’s contribution to the overall normalised trade balance, the relation, ∑ LFIj = 0, holds. The positive values of LFI indicate the existence of a comparative advantage. The higher the value, the greater is the degree of specialisation. Negative values indicate de-specialisation. The Lafay Index is preferred to traditional measures of revealed comparative advantage or trade specialisation like the Balassa Index, as it takes into account both export and import flows. This makes it more apt in the current context of fast-increasing inter-industry trade. In this section, we first examine the specialisation pattern at two-digit and four-digit ISIC Rev.3 classification at different time points during the post-reform period. We then study if the patterns have changed over time. (i) Patterns of Trade Specialisation Table 2 exhibits India’s specialisation patterns by broad industry groups. It reveals that almost all low-technology industries like Food Products, Textiles, Wearing Apparel, Leather, and Furniture and Others witnessed a decline in their degree of specialisation. The increase in the degree of specialisation of technology-intensive industries is seen to be limited mainly to Refined Petroleum Products and Chemicals, and to some extent, to Motor Vehicles. Most others either saw a slight worsening or improvement or no clear patterns. Thus, while the losses in the degree of specialisation of low-technology industries seem to be true for a large number of sectors, the gains made by technology-intensive industries seem to be limited to a few specific sectors. Tables 3 to 8 exhibit India’s specialisation patterns by industry groups at a more disaggregated, four-digit level of classification. It is observed that India’s revealed comparative advantage lies predominantly in low-technology manufactures, which make up virtually all the top-ranking sectors. In contrast, the country’s trade pattern reveals a clear disadvantage in its trade in medium- and high-technology industries, which dominate the bottom ranks
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Table 2 Lafay Index at Two-digit ISIC Rev. 3 Classification by Industry Groups NIC Industry Group
1990
1998
2007
15
3.62
2.50
2.31
Food Products and Beverages
16
Tobacco and Related Products
0.09
0.07
0.04
17
Textiles Products
7.02
7.87
3.44
18
Wearing Apparel, Dressing and Dyeing of Fur
7.71
6.82
3.07
19
Leather and Related Products
3.34
1.87
0.92
20
Wood and Wood Products
-0.01
-0.02
-0.01
21
Paper and Paper Products
-1.29
-0.90
-0.47
22
Publishing, Printing and Related Activities
-0.12
-0.19
-0.30
23
Coke, Petroleum Products and Nuclear Fuel
-6.76
-6.18
4.55
24
Chemicals and Chemical Products
-8.29
-5.35
-2.26
25
Rubber and Plastic Products
0.20
0.45
0.33
26
Non-metallic Mineral Products
-0.09
0.34
0.23
27
Basic Metals
-4.96
-8.66
-5.55
28
Fabricated Metal Products
29
Machinery and Equipment n.e.c
0.61
0.79
0.55
-4.92
-4.15
-4.07
30
Office, Accounting and Computing Machinery
-0.48
-1.20
-1.35
31
Electrical Machinery and Apparatus, n.e.c
-0.99
-0.65
-0.59
32
Radio, Television and Communication Equipments
-1.58
-1.38
-3.03
33
Medical, Precision and Optical Instruments
-1.69
-1.25
-1.07
34
Motor Vehicles, Trailers and Semi-trailers
-0.02
0.09
0.63
35
Other Transport Equipments
-1.50
-0.57
-2.84
36
Furniture and Other Manufacturing n.e.c
10.06
9.69
5.48
Source: Computed by using COMTRADE.
of the LFI list. Changes in the rankings appear to have taken place in 1998 and 2007. Both the 1998 and 2007 LFI lists show evidence of some upgradation among the top comparative advantage positions. Notable amongst those movements were that of 2320 (Refined Petroleum) that moved up from the worst performing positions in 1990 and 1998 to becoming the second best performer in 2007. Likewise, 2710 (Basic Iron and Steel) moved up from the list of the bottom 15 in 1990 to that of the top 15 in 2007. Similarly, 2423 (Pharmaceuticals) consistently rose in rank from the 15th position in 1990 to the 5th in 2007. Spearman’s rank correlation coefficient was found to be smaller for the period between 1998 and 2007 than the earlier period, implying that the changes in rankings during this period were more pronounced.
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Table 3 Lafay at Four-digit ISIC Rev.3, 1990 S. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Top 15 3691- Jewellery and Related Articles 1810- Wearing Apparel, except Fur Apparel 1711- Textile Fibres; Weaving of Textiles 1512- Fish and Fish Products 1722- Carpets and Rugs 1920- Footwear 1911-Tanning and Dressing of Leather 1721- Made-up Textile Articles, except Apparel 1514- Vegetable and Animal Oils and Fats 1912- Luggage, Handbags and the Like, Saddlery and Harness 1730- Knitted and Crocheted Fabrics and Articles 1549- Other Food Products n.e.c. 1531- Grain Mill Products 2424- Soap and Detergents, Cleaning and Polishing, etc. 2423- Pharmaceuticals, Medicinal Chemicals and Botanical Bottom 15 1 2926- Machinery for Textile, Apparel and Leather Production 2 2429- Other Chemical Products n.e.c. 3 2929- Other Special Purpose Machinery 4 2922- Machine Tools 5 2913- Bearings, Gears, Gearing and Driving Elements 6 3210- Electronic Valves and Tubes and Other Electronic Components 7 3312- Instruments and Appliances for Measuring, Checking, etc. 8 3530- Aircraft and Spacecraft 9 2101- Pulp, Paper and Paperboard 10 2720- Basic Precious and Non-ferrous Metals 11 2413- Plastics in Primary Forms and of Synthetic Rubber 12 2412- Fertilisers and Nitrogen Compounds 13 2710- Basic Iron and Steel 14 2411- Basic Chemicals, except Fertilisers and Nitrogen Compounds 15 2320- Refined Petroleum Products Source: Computed by using COMTRADE.
LFI 9.93 7.71 3.71 1.61 1.60 1.52 1.14 1.07 0.73 0.67 0.64 0.60 0.56 0.54 0.51
Technology Low Low Low Low Low Low Low Low Low Low Low Low Low Medium High
-0.61 -0.68 -0.68 -0.68 -0.80 -0.99 -1.07 -1.22 -1.24 -1.66 -2.39 -2.91 -3.30 -3.38 -6.65
Medium Medium Medium Medium Medium High High High Low Medium Medium Medium Medium Medium Medium
Table 4 Profile of Degree of Specialisation, 1990, Number of Industries  LFI > 0 (Specialisation)
Low-tech
Medium-tech
High-tech
All
34
22
1
57
LFI < 0 (De-specialisation)
15
37
10
62
Total
49
59
11
119
Source: Computed by using COMTRADE.
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Table 5 Lafay at Four-digit ISIC Rev.3, 1998 S. No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Source:
Top 15 3691- Jewellery and Related Articles 1810- Wearing Apparel, except Fur Apparel 1711- Textile Fibres; Weaving of Textiles 1512- Fish and Fish Products 1531- Grain Mill Products 1721- Made-up Textile Articles, Except Apparel 1722- Carpets and Rugs 2423- Pharmaceuticals, Medicinal Chemicals and Botanical 1920- Footwear 1730- Knitted and Crocheted Fabrics and Articles 1912- Luggage, Handbags and the Like, Saddlery and Harness 2899- Other Fabricated Metal Products n.e.c. 1549- Other Food Products n.e.c. 3410- Motor Vehicles 2696-Cutting, Shaping and Finishing of Stone Bottom 15 2912- Pumps, Compressors, Taps and Valves 2922- Machine Tools 2429- Other Chemical Products n.e.c. 2926- Machinery for Textile, Apparel and Leather Production 3312- Instruments and Appliances for Measuring, Checking, etc. 3210- Electronic Valves and Tubes and Other Electronic Components 2929- Other Special Purpose Machinery 2101- Pulp, Paper and Paperboard 2413- Plastics in Primary Forms and of Synthetic Rubber 3000- Office, Accounting and Computing Machinery 1514- Vegetable and Animal Oils and Fats 2412- Fertilisers and Nitrogen Compounds 2411- Basic Chemicals, except Fertilisers and Nitrogen Compounds 2320- Refined Petroleum Products 2720- Basic Precious and Non-ferrous Metals Computed by using COMTRADE.
LFI 9.46 6.82 4.63 1.71 1.67 1.36 1.03 0.90 0.89 0.88 0.71 0.68 0.48 0.42 0.34
Technology Low Low Low Low Low Low Low High Low Low Low Medium Low Medium Medium
-0.50 -0.55 -0.57 -0.65 -0.68 -0.69 -0.75 -0.87 -1.05 -1.20 -1.32 -1.85 -3.00 -5.88 -8.32
Medium Medium Medium Medium High High Medium Low Medium High Low Medium Medium Medium Medium
Table 6 Profile of Degree of Specialisation, 1998, Number of Industries Low-tech Medium-tech High-tech LFI > 0 (Specialisation) 29 20 1 LFI < 0 (De-Specialisation) 20 39 10 Total 49 59 11 Source: Computed by using COMTRADE.
All 50 69 119
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Table 7 Lafay at Four-digit ISIC Rev.3, 2007 S. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. Â 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. Source:
Top 15 3691- Jewellery and Related Articles 2320- Refined Petroleum Products 1810- Wearing Apparel, except Fur Apparel 1711- Textile Fibres; Weaving of Textiles 2423- Pharmaceuticals, Medicinal Chemicals and Botanical 1721- Made-up Textile Articles, except Apparel 1531- Grain Mill Products 1730- Knitted and Crocheted Fabrics and Articles 3410- Motor Vehicles 1512- Fish and Fish Products 2899- Other Fabricated Metal Products n.e.c. 1920- Footwear 2710- Basic Iron and Steel 1722- Carpets and Rugs 1542- Sugar Bottom 15 2411- Basic Chemicals, except Fertilizers and Nitrogen Compounds 2101- Pulp, Paper and Paperboard 3230- Television and Radio Receivers, Sound or Video Recording etc. 2413- Plastics in Primary Forms and of Synthetic Rubber 3312- Instruments and Appliances for Measuring, Checking, etc. 2924- Machinery for Mining, Quarrying and Construction 2929- Other Special Purpose Machinery 2926- Machinery for Textile, Apparel and Leather Production 3511-Building and Repairing of Ships 2922- Machine Tools 3000- Office, Accounting and Computing Machinery 3220- Television and Radio Transmitters and Apparatus for Telephony 3530- Aircraft and Spacecraft 2412- Fertilizers and Nitrogen Compounds 2720- Basic Precious and Non-ferrous Metals Computed by using COMTRADE.
-0.47 -0.47 -0.53 -0.57 -0.60 -0.60 -0.63 -0.67 -0.68 -0.70 -1.35 -2.17 -2.27 -2.45 -6.02
Technology Low Medium Low Low High Low Low Low Medium Low Medium Low Medium Low Low  Medium Low High Medium High Medium Medium Medium Medium Medium High High High Medium Medium
Table 8 Profile of Degree of Specialisation, 2007, Number of Industries Low-tech Medium-tech High-tech LFI > 0 (Specialisation) 31 21 1
All 53
LFI < 0 (De-Specialisation) Total
Source: Computed by using COMTRADE.
18 49
38 59
LFI 5.34 4.91 3.07 1.51 1.15 0.89 0.85 0.68 0.59 0.55 0.54 0.47 0.47 0.43 0.39
10 11
66 119
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(ii) Changes in the Pattern of Trade Specialisation In order to examine if the pattern of specialisation changed between two time periods, a simple cross-section OLS regression of the following form4 has been run:
Lafay Indexjt2 = a + b Lafay Indexjt1 + e
where Lafay Indexjt2 and Lafay Indexjt1 denote the sectoral distribution of the Lafay Index during the final and initial periods, respectively. Since the distributions of the Lafay Index during both the years have a zero mean value, the estimate of a should also have a zero value, whereas the value of b would capture the changes over time in the pattern of specialisation. The interpretation of b coefficient is as follows: a b = 1 means specialisation pattern of the country has remained unchanged, a b >1 shows that the country has become more (less) specialised in sectors in which it already had a competitive advantage (disadvantage) and 0 < b < 1 means that on an average, the specialisation pattern has remained the same but the index has improved in sectors with initial low values and worsened in sectors with initial high values.5 Table 9 reveals that the estimated b coefficient is 0.29 and highly significant. The b is significantly different from both 0 and 1 (at 1per cent level of significance), allowing us to reject the hypothesis of both random pattern and average structural stability. From the coefficient, we can say that on an average, the specialisation pattern has remained the same but the index has improved in sectors with initial low values and worsened in sectors with initial high values. The following scatter diagram (Figure 6) shows which industries have improved and which have worsened. Industry groups like 2320 (Refined Petroleum) and 2710 (Basic Metals) showed improvements. Industry groups like 3691 (Jewellery and Related Articles), 1711 (Textile Fibres), 1810 (Wearing Apparel, except Fur Apparel), and 2720 (Basic Precious Metals), amongst others, showed a worsening. The scatter diagram shows the existence of outliers that could be affecting the regression results. While the b coefficient rises in value, the fitted line still lies above the 45-degree line, allowing us to maintain the conclusion that we reached on the basis of the earlier results. Table 10 reveals that a higher number of low-technology industries experienced worsening than those experiencing an improvement. While a higher number of medium-technology industries experienced improvement than a worsening, these numbers cannot be said to be drastically different. Table 9 OLS Regression-Lafay Indexj2007 = a + b Lafay Indexj1990 All Observations a 0.0003 (0.0863) b 0.2963 (0.0564) No. of Observations 119 Ho: b = 0 Rejected Ho: b = 1 Rejected Source: Estimated equation by using data from COMTRADE.
+e Without Outliers -0.0224 (0.0387) 0.4551(0.0275) 117 Rejected Rejected
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Figure 6 Lafay Index, 2007 against 1990
Source: Drawn in STATA by using data from COMTRADE.
Industries All
Low-tech Medium-tech High-tech
Table 10 Comparison of Specialisation Patterns: 2007 and 1990 No. of Industries LFI2007 > LFI1990 119 55 49 18 59 32
11
LFI2007 < LFI1990 64 31 27
5
6
Source: Computed by using data from COMTRADE.
Table 11 shows that the hypothesis of average structural stability, that is, b = 1, is not rejected at a 1 per cent level of significance. The fitted regression line is very close to the 45-degree line. Thus, it can be said that the specialisation patterns remained unchanged during the period between 1990 and 1998. The following scatter diagram (Figure 7) shows the existence of one outlier. In order to make our estimation more robust, the equation is estimated again after dropping the outlier. The earlier conclusion still holds. The hypothesis of average structural stability stands not rejected. Table 11 OLS Regression-Lafay Indexj1998 = a + b Lafay Indexj1990 Â All Observations a 0.0002 (0.0691) b 0.9083 (0.0452) No. of Observations 119 Ho: b = 0 Rejected Ho: b = 1 Not Rejected Source: Estimated equation by using data from COMTRADE.
+e Without Outliers 0.0585 (0.0375) 0.8701 (0.0245) 118 Rejected Not Rejected
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Figure 7 Lafay Index, 1998 against 1990
Source: Drawn in STATA by using data from COMTRADE.
From the b coefficient exhibited in Table 12, it can be concluded that during the period between 1998 and 2007, as during the overall period, on an average, the specialisation pattern remained the same but the index improved in sectors with initial low values and worsened in sectors with initial high values. The changes witnessed during the overall period can be said to have actually materialised during the recent period between 1998 and 2007. Table 12 OLS Regression- Lafay Indexj2007 = a + b Lafay Indexj1998 + e Â
All Observations
a
0.0002 (0.0754)
-.0699 (0.0364)
b
0.4071 (0.0477)
0.5728 (0.0245)
119
118
Ho: b = 0
Rejected
Rejected
Ho: b = 1
Rejected
Rejected
No. of Observations
Without Outliers
Source: Estimated equation by using data from COMTRADE.
While summing up the above discussion on the changing patterns of specialisation, one can say that the structure of manufacturing-based trade has neither remained unchanged nor changed radically. However, in terms of both trade composition and specialisation patterns, there seems to be a shift in favour of medium-technology industries and against low-technology industries. These shifts mostly seem to have taken place during the recent trade expansion phase. The gains made by medium-technology industries have been contributed by a few specific industries. A large number of low-technology industries seem to have made losses.
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Since the second half of the 1990s and especially during the more recent trade expansion phase of 2002 to 2007, the world demand for medium-technology goods has been buoyant and fast-moving. These are precisely the sectors in which India has gained a slight advantage. A specialisation model can be labelled as â&#x20AC;&#x2DC;efficientâ&#x20AC;&#x2122; when the country gains comparative specialisation in product groups for which the global demand has grown the fastest (Zaghini, 2003). Thus, on the basis of this parameter, such shifts can be said to be favourable in terms of the long-run growth potential of Indian manufacturing trade. However, one should not lose sight of the implications that such growth patterns are likely to have on employment. The shifts away from a whole range of low-technology sectors like Food Products, Textiles, Leather, Wearing Apparel, and Furniture and Others, which are heavily labour-intensive, is likely to have a devastating impact on the employmentgenerating potential of manufacturing-based trade. The negative impact that such shifts are likely to have on employment could have been compensated to some extent through broadbased growth of the technology-intensive industries. On the contrary, the gains made by the technology-intensive industries have been on account of impressive performances by a few specific sectors like Refined Petroleum, Basic Iron and Steel, and Pharmaceuticals. These industries have very low employment intensity. For the trade flows to make any dent on employment despite the shift away from low-technology labour-intensive industries, the gains made by technology-intensive industries need to cover a broader range of relatively more employment-intensive industries amongst them. The following section employs an empirical, albeit crude measure, to bring home the point about the dwindling potential of trade flows during the post-reform period. III. IMPLICATIONS FOR EMPLOYMENT Employment Coefficient of Exports and Imports6 In order to find out the employment coefficient of exports and imports, the employment coefficients of production for each two-digit industry for the total manufacturing sector7 are weighted by the share of exports and imports, respectively, of each industry. The consistent decline throughout the period under study in the employment coefficient of exports is mainly because of the similar pattern exhibited by the employment coefficient and partly because of the fall in the share of traditional exports seen especially after the mid-1990s. The rise in the share of traditional exports during the first period could not offset the impact of dramatically falling employment coefficients. The employment coefficient of imports seems to have remained stagnant during the first period despite a rapid reduction in the employment coefficient of production. This could be explained partly by the slight increase in the share of labour-intensive goods and a slight decline in the share of most technology-intensive goods in total manufactured imports during this period. The decline seen thereafter is both because of the decline in the employment coefficient of production and the increase in the share of a large number of technology-intensive goods. The employment coefficient of both exports and imports has declined over time. The difference between them seems to have narrowed. This implies that the impact of a unit increase in exports and imports is likely to have a smaller impact on employment than earlier.
STRUCTURAL TRANSFORMATION IN INDIAN MANUFACTURING
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Figure 8 Employment Coefficient of Exports and Imports, Total Manufacturing Industry8
Source: Computed by using the NSSO, ASI and COMTRADE database.
IV. CONCLUSION From the current study, it can be concluded that while on an average, the structure of manufacturing-based trade has remained the same, a shift against low-technology industries and in favour of specific technology-intensive industries cannot be ruled out. Most of these shifts can be said to have taken place during the recent trade expansion phase of 2002 to 2007. Considering that low-technology industries are characterised by a high employment intensity, a shift away from these industries does not bode well for the employment-generating capacity of trade. Most of the low-technology industries in India have a high degree of presence in the unorganised sector. These vulnerable segments have lost too much of the protection that they hitherto enjoyed, too fast, making them unable to meet foreign competition both at home and abroad. The Government thus needs to take steps to make these industries cost-competitive in order to allow them to compete with the foreign players both at home and abroad. The Government also needs to take steps to ensure that the gains made by technology-intensive sectors are not cornered entirely by specific industries like chemicals and refined petroleum that have very low employment intensity. Instead, the gains must be made more broadbased across a range of technology intensive goods that have relatively higher employment intensity than these specific industries. Policies should be designed in a way that allows more broad-based growth, which is more employment-friendly instead of the current trend of the growth in the manufacturing sector being driven mainly by the performance of a narrow range of technology-intensive industries. The existing policies thus need to be re-oriented to make the traditional labourintensive segments viable in a globalised setting and also to allow all segments to develop a synergistic relationship.
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Notes 1. The periods have been chosen such for two reasons. By 1998, the new five-year Exim Policy had been enacted so as to consolidate the trade liberalisation measures further. By the end of the 1990s, the policy shift was decidedly more pronounced than in the past. In addition, much of the period after 2000 was characterised by trade expansion that was more dramatic than at any time in the past. 2. The taxonomy of technological content for sectors follows the OECD classification, provided in “OECD Science, Technology and Industry Scoreboard 2001—Towards a Knowledge-based Economy”, Annex A, (2001), which classified industries as low, medium-high, medium-low and high technology. However, for the purpose of this study, medium-high and medium-low technology categories have been clubbed to represent medium technology industries. 3. Engineering goods is defined to include Fabricated Metal Products, Machinery and Equipment n.e.c, Office, Accounting and Computing Machinery, Electrical Machinery and Apparatus, Radio, TV, Communication Equipment, Medical, Precision and Optical Instruments, Motor Vehicles, and Other Transport Equipment. 4. This approach was used by Andrea Zaghini (2003), and Abhijit Sharma and Michael Dietrich (2007) 5. For this interpretation, refer to Zaghini (2003). 6. This exercise was undertaken in Sen (2009) for the period 1978-79 to 2000-01. 7. The Appendix contains the table with the employment coefficient of the total manufacturing sector production for each two-digit industry group. The employment coefficient is calculated as the number of workers per constant million rupee of the Real Gross Output. 8. The current study pertains to the total manufacturing sector. While yearly data on the organised sector is available from ASI, the periodisation has been decided so as to correspond with the years for which the five-yearly NSSO surveys on the unorganized manufacturing sector are available.
References Alessandrini, Michele; Fattouh, Bassam and Scaramozzino, Pasquale (2007), “The Changing Pattern of Foreign Trade Specialization in Indian Manufacturing”, Oxford Review of Economic Policy, Vol. 23, No. 2, pp. 270-91. Chandrasekhar, C.P. and Ghosh, Jayati (2006), “The Export Growth Story”, Macroscan, New Delhi, February 7. Dua, P. (2004), “China’s Accession to WTO—Implications for India”, Presentation for Project LINK Spring Meeting, UN, New York. Goldar, B. (2009), “Impact of Trade on Employment Generation in Manufacturing in India”, Working Paper No. E/297/2009, Institute of Economic Growth, New Delhi. Lafay, G. (1992), “The Measurement of Revealed Comparative Advantage”, in M.G. Dagenais and P.A Muet (eds.) International Trade Modelling, Chapman and Hall, London, pp. 209-34. Organisation for Economic Cooperation and Development (2001), “OECD Science, Technology and Industry Scoreboard: Towards a Knowledge-based Economy”, OECD, Paris. Parameswaran, M. (2006), “Trade-induced Structural Change and Its Implications for Technological Progress and Employment: Evidence from Indian Manufacturing Industry”, Mimeo, Centre for Development Studies (CDS), Thiruvananthapuram. Pursell, Garry; Kishor, Nalin and Gupta, Kanupriya (2007), “Manufacturing Protection in India since Independence”, Working Paper Series No 2007/07, Australia South Asia Research Centre, Australian National University, Australia. Sen, Kunal (200), “Did International Trade Destroy or Create Jobs in Indian Manufacturing?”, Paper submitted for the British Northern Universities India Forum (BNUIF) Conference on “India: The Haves and the Have-nots” held in collaboration with Centre for Development Studies, Thiruvananthapuram, March 23-25.
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Sharma, Abhijit and Dietrich, Michael (2007), “The Structure and Composition of India’s Exports and Industrial Transformation (1980-2004)”, International Economic Journal, Vol. 21, No. 2, pp. 207-31. Veeramani, C. (2007), “Sources of India’s Export Growth in the Pre- and Post- Reform Period”, Economic and Political Weekly, Vol. 42, No. 25, June 23. Zaghini, Andrea (2003), “Trade Advantages and Specialisation Dynamics in Acceding Countries”, Working Paper No. 249, European Central Bank Working Paper Series, Frankfurt am Main, Germany .
APPENDIX
NIC 1998
Table A1 Employment Coefficient of the Total Manufacturing Sector Industry Division Employment Coefficient
15
Food Products and Beverages
198990 10.51
199495 8.79
200001 6.00
200506 4.51
16
Tobacco Products
64.05
40.33
45.36
58.81
17
Textiles
19.12
14.00
7.78
6.21
19
Leather and Related Products
14.30
8.77
6.27
5.69
20
Wood and Related Products
55.64
68.33
72.53
49.27
21
Paper and Paper Products
4.66
3.41
2.89
2.78
22
Publishing, Printing, etc.
10.84
10.79
7.92
4.91
23
Coke, Refined Petroleum Products, Nuclear Fuel
0.30
0.26
0.19
0.10
24
Chemical and Chemical Products
2.20
1.41
1.12
1.08
25
Rubber and Plastic Products
3.56
2.74
1.98
1.20
26
Other Non-metallic Mineral Products
22.49
16.07
10.11
6.58
27
Basic Metals
1.50
1.10
0.81
0.51
28
Fabricated Metal Products
9.42
7.69
7.00
1.36
29
Machinery and Equipment n.e.c
5.23
4.51
2.24
1.59
30
Office, Accounting and Computing Machinery
1.07
0.48
0.23
0.21
31
Electrical Machinery and Apparatus
2.21
1.50
0.92
0.92
32
Radio, TV, Communication Equipment
2.04
1.15
0.47
0.23
33
4.77
3.11
1.74
1.26
34
Medical, Precision and Optical Instruments, Watches and Clocks Motor Vehicles
1.63
1.08
0.98
0.48
35
Other Transport Equipment
3.45
2.44
1.21
0.81
36
Furniture and Other Manufacturing
47.78
32.34
16.62
5.52
All Industries
10.69
7.66
5.17
3.06
JOURNAL OF EDUCATIONAL PLANNING AND ADMINISTRATION Editor: Jandhyala B.G. Tilak Number 2
Volume XXIV
April 2010
Articles ARABINDA ACHARYA and S.K. MOHANTY: Youth Unemployment in India: A Situational Analysis SUBHASHINI MUTHUKRISHNAN: Education, Training and Earnings: Evidence from Manufacturing Sector in Bangalore City B.K. PUNIA and RENU SIWACH: Performance Appraisal of University Faculty in India
115 135 149
Research Note JAYANT PARIDA: Mid-Day Meal Scheme and Growth of Primary Education: A Case Study of a District in Orissa
169
R. SRINIVASAN, VINISH KATHURlA and RAJA SETHU DURAI: On Opening New Colleges in Tamil Nadu: Is College Population Index Justified?
179
Book Reviews JACOB AIKARA: Literacy for All: Making a Difference (A. Lind); R.P.SINGH: Policy Perspectives in Teacher Education (NCTE); SUDHANSHU SHEKHAR PATRA: Community Participation in the Universalisation of Primary Education (P.M. Nayak); P.C. BANSAL: Indian Higher Education (P. Agarwal); EULALIA TEMBA: Escaping Stigma and Neglect - People with Disabilities in Sierra Leone (M. Ovadiya & G. Zampaglione); ADESOJI A. ONI: Opportunities for Change - Education Innovation and Reforms During and After Conflict (S. Nicolai); NEELAM SOOD: Africa's Future, Africa's Challenge - Early Childhood Care and Education in Sub-Saharan Africa (G. Marito, P. Alan & E. L. Judith); JANDHYALA B.G. TILAK: Profile of Engineering Education in India: Status, Concern and Recommendations (G. Biswas, et al) & Governance of Technical Education in India: (A. Blom & J. Cheong (eds.)
183
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The Indian Journal of Labour Economics, Vol. 54, No. 2, 2011â&#x20AC;&#x2030;
IMPORT LIBERALISATION IN INDIA: ITS IMPACT ON DOMESTIC INCOME AND EMPLOYMENT Arun K. Sengupta and Tushar Das* The wide-ranging economic liberalisation initiated by the Indian Government in 1991 was largely reflected in the liberalised import policies of the Government. The obvious objective of these policies was to promote freer trade by allowing the substitution of imported inputs for domestic ones when needed in order to achieve more competitive exports via more efficient production and thereby enable Indian exports to gain a greater share of the world market. However, we notice stimulating debates in the empirical literature questioning the possibility of the success of Indian exports. Nambiar, et al. (1994, 1999) have tried to project the view that instead of promoting income and employment through accelerated export growth by facilitating more efficient production and the easier use of imported inputs, trade has, in fact, led to a shrinking of income and employment growth. This paper uses a slightly improved methodological framework and database [by substituting the domestic inputâ&#x20AC;&#x201C;output matrix for the total (domestic + import) matrix] for the projection of income and employment, which helps us arrive at the conclusion that liberalised trade has promoted rather than squeezed income and employment. Further, an alternative scenario, assuming a situation in which the import of crude petroleum has been reduced by 50 per cent, has been examined to separate out the impact of a huge crude petroleum import on domestic income and employment in the liberalised trade situation in India. I. INTRODUCTION Economic theory suggests that free trade promotes economic activity, leading to increased production, income and employment. Policy-makers in India initiated massive economic reform in the year 1991-92 to tide over the critical balance of payment crisis and to overcome certain structural constraints. The major component of this reform package has been liberalized import, wherein import duty has been reduced sizably on a large number of commodities. Non-tariff restrictions on import have also been noticeably withdrawn. Thus, it is now possibly high time to ask the following question: though the liberalisation of import is intended primarily to resolve the balance of payment problem, what is its macro-economic repercussion, namely, the effect on domestic employment and income or in other words the question is: how far has it succeeded in promoting income and employment growth in India. * Arun Sengupta is a former Professor in the Economic Research Unit, Indian Statistical Institute, Kolkata. Email: arun_gupta44@yahoo.com and Tushar Das is Research Scholar at Netaji Subhas Open University, Kolkata. Email: Tushar_das8@yahoo.com. The authors are grateful to the editor for the referee's comments, and take responsibility for the views expressed and any error remaining in the paper.
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Nambiar and Tadas (1994) and Nambiar, et al. (1999) have examined the issue quite competently and in depth, and have observed that trade has shrunk Indiaâ&#x20AC;&#x2122;s manufacturing base in terms of both income and employment. Nambiar, et al. (1999) have further observed that freer trade in India has shrunk the intermediate and capital goods industries relatively more. However, we feel that the study by Nambiar, et al. suffers from certain limitations apart from the fact that it also does not ensure updating of the database. The calculation of domestic output and hence the import requirement for any vector of final demand has been done through the projection by the Leontief inverse of the technical coefficient matrix (in the absence of the availability of any domestic input coefficient matrix) (see Nambiar and Tadas, 1994; Nambiar, et al., 1999). Obviously, the above is erroneous to the extent that domestic input coefficients may differ from the corresponding technical coefficients. Again it has been observed that in the Indian economy, the output composition has been changing in favour of industries with an intensity of high imported inputs. Imports under crude petroleum constitute the single largest item in the import bill. In 1993-94, the import crude petroleum constituted 21 per cent of total import of the economy. Although it fell to 16 per cent in 1998-99, it increased again to 25 per cent and 31 per cent in 2003-04 and 2007-08, respectively. Here, it is of particular interest to us to assess the impact of trade on domestic income and employment in a hypothetical situation, whereby we have somehow managed to implement a situation in which crude petroleum import has been reduced by 50 per cent. The purpose of this paper is thus three-fold. First, it aims to utilise the domestic input output matrices for India for the years 1993-94, 1998-99 and 2003-04, which have been made available by the Central Statistical Organisation (CSO) for ensuring a more correct projection of the domestic output requirement, and hence of the import requirement. This has resulted in some income and employment, consequent to a certain export vector, and also the loss of employment and income caused by competitive import being a component of the final demand. Therefore, we may expect some improvement in the quality of projection in the present exercise, wherein the consequences of liberalisation of import have been compared to the projections obtained in the exercises undertaken by others. Second, as the database of our study incorporates information related to more recent periods, it has been possible to capture the impact of liberalisation in the truer sense, as it is expected that as more and more time passes, the consequences of the relaxation of controls would be manifested in greater and greater degrees. In this respect, the results of our study possibly appear to be more robust. Third, we notice that similar to the trend prevailing during the pre-liberalised period, the post-liberalisaton period is also marked by the value of export falling sizably and persistently short of the import value. In this paper, we have carried out the same set of exercises again to obtain the impact of import liberalisation on income and employment in a â&#x20AC;&#x2DC;balanced tradeâ&#x20AC;&#x2122; situation wherein the crude petroleum import has been reduced by 50 per cent. The paper has been organised as follows. While Section I highlights the purpose of the paper, Section II discusses the methodological framework used for the projection of the impact on the generation of income and employment of liberalised trade. Section III
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241
presents the database of the study. Section IV highlights the results of our projection (and decomposition), and the major observations on the results. Section V summarizes the major observations of the study and presents some concluding remarks for policy implications. II. THE METHODOLOGICAL FRAMEWORK The Leontief open input–output model obviously seems to be a useful analytical tool and is widely used for the analysis of the economy-wide impact consequent to any sort of final demand. The total output from each industry equals the total inter-industrial demand plus the final demand. Thus, the standard balance relation is as follows:
m Xi = ∑Xij + Fi j=i
(1)
where Xi = Output in the ith sector (in value terms), Fi = Final Demand in the ith sector (in value terms) and Xij = input flow from ith sector to jth sector Assuming a production function with fixed coefficients,
Xij = aij.Xj
(2)
where, aij = Xij/Xj By substituting (2) in (1), the gross output or sales of sector i can be expressed as follows:
m Xi = ∑aij.Xj + Fi j=i
(3)
Therefore, X = AX + F where X= (Xi), A = (aij) and F = (Fi) Or, F = X – AX = IX – AX = (I – A)X Or, X = (I-A)-1.F……………..(4) In equation (4), if F is prescribed from outside, the required gross output levels X’s get determined. For our present purpose, what is relevant is not the entire final demand but the export part of the final demand.. Let Xij(m) = Imported input of ith sector to jth sector, if Xij(t) = total supply of input of the ith sector to the jth sector and Xij(d) = domestically produced input of the ith sector to the jth sector, then we may write Xij(d) = Xij(t) - Xij(m). Now, we consider Q= f(Fd + E – M) ….. (5) where Q = Production of goods, Fd = Domestic Final Demand, E = Exports and M = Imports. It follows from –(1) that any change in production can be decomposed into: i) a change due to domestic use; and ii) a change due to foreign trade. In order to estimate the impact of a change in domestic demand, exports or imports or trade on production, the induced effect of that change must also be taken into account. A complete accounting of the impact of trade and domestic demand has to take into consideration both the direct and induced effects.
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We first obtain the sector-wise labour and value added coefficients (the labour and value added requirement per rupee worth of output). Then the direct and indirect labour and value added requirements for domestic final demand, exports, imports and trade are separately derived as follows:
FdL = L*(I-Ad)-1*Fd
(6)
Total labour requirement due to final domestic demand (direct plus induced)
EL = L*(I-Ad)-1* E
(7)
Total labour requirement due to export (direct plus induced)
ML = L*(I-Ad)-1*M
(8)
Total labour requirement for import replacement (direct plus induced)
Fdv = V*(I-Ad)-1*Fd
(9)
Total value added generation due to final domestic demand (direct plus induced)
Ev = V*(I-Ad)-1* E
(10)
Total value added generation due to export (direct plus induced)
Mv = V*(I-Ad)-1*M
(11)
Total value added generation for import replacement (direct plus induced) where, L and V are the vectors of labour and value added coefficients respectively; (I-1 Ad) is the Leontief inverse of the domestic input matrix; E is the column vector of exports; M is the column vector of imports; Fd is the column vector of domestic final demand; FdL and Fdv are the total (direct and indirect) labour and value added requirement respectively for domestic use; EL and Ev are the total (direct and indirect) employment and value added respectively associated with exports; and ML and Mv are the total(direct and indirect) employment and value added displaced respectively by the competitive imports. III. DATABASE OF THE EMPIRICAL STUDY For our empirical study relating to the impact of liberalisation on income and employment, the I-O tables (total inter-industry transaction matrix), which have been prepared and circulated by the CSO for the years 1993-94, 1998-99 and 2003-04, are the major data sources that meet our requirement. The import matrices for the said years have also been prepared by the CSO, but these are not circulated by the latter. We have collected the import matrices (not published or circulated) from the CSOâ&#x20AC;&#x2122;s desk informally. The matrices (transaction and import), as obtained from the CSO for the years 1993-94 and 1998-99, are of the order 115*115, wherein those for the year 2003-04 are of the order 130*130. All these matrices are aggregated into 50*50 matrices by clubbing together the sectors similar in respect of the pattern of input requirements or use pattern. The employment data for the non-manufacturing sectors have been taken from the Economic Survey 2002-03 published by the Government of India. Annual Survey of Industries (ASI) Reports published by the CSO, which provide information in respect of the number of employees for the manufacturing sector. The grouping of the manufacturing sectors covered
IMPORT LIBERALISATION, DOMESTIC INCOME AND EMPLOYMENT
243
in our study is based on the two-digit commodity classification of NIC (National Industrial Classification) for the years 1987 and 1988. IV. RESULTS AND INTERPRETATIONS Table 1 shows the estimates of employment and value added for the Indian economy as a whole, for the years 1993-94, 1998-99 and 2003-04. In 1993-94, the employment generated directly and indirectly from exports was 7.04 per cent (24.2 million) of the overall employment in the Indian economy while the production of imported goods at home would have raised employment by 6.82 per cent (23.5 million). On the whole, the net effect of trade on employment was a net gain in employment of 0.22 per cent (.7 million). By 1998-99, the net employment generation due to trade seems to have Table 1 Employment (number in million) and Value Added (Rs. in million) in the Indian Economy due to Domestic Use and Foreign Trade Items
1993-94
1998-99
2003-04
Value added (Rs. in million) Domestic Use
72,93,389.8
1,44,44,383.0
2,16,35,970.5
Exports
7,42,845.1
16,63,135.0
32,21,509.0
Imports
(-)7,56,340.7
(-) 18,98,557.8
(-)32,04,978.8
-13,495.6
-2,35,422.8
16,530.2
72,79,894.2
1,42,08,960.2
216,52,500.7
Trade Total
Employment (Number in million) Domestic Use
343.8
320.2
340.0
Exports
24.2
29.1
35.8
Imports
(-) 23.5
(-) 31.0
(-) 30.3
Trade
0.7
-1.9
5.5
Total
344.5
318.3
345.5
Addenda: % due to Domestic Use Value Added
100.19
101.66
99.92
Employment
99.78
100.58
98.41
10.20
11.70
14.88
7.04
9.16
0.38
% due to Exports Value Added Employment
% due to Imports Value Added
(-) 10.39
(-) 13.36
(-) 14.80
Employment
(-) 6.82
(-) 9.74
(-) 8.79
% due to Foreign Trade Value Added
-0.19
-1.66
0.08
Employment
0.22
-0.58
1.59
Source: Value added generation and employment requirements are computed by using Equations 9-11 and 6-8, respectively.
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declined. Employment generated through exports was 9.16 per cent (29.1 million) of the overall employment of Indian economy, while the employment loss due to import was (-) 9.74 per cent (-31.0 million). Thus in 1998-99, trade contributed to loss in net employment roughly by (-) 0.58 per cent (-1.9 million). Again, the situation seems to have improved a lot in 2003-04. Exports accounted for a direct and indirect employment gain of 10.38 per cent (35.8 million), while employment loss due to import was (-) 8.79 per cent (-30.3 million), implying that trade in 2003-04 resulted in a net employment gain of 1.59 per cent (5.5 million). Value added has suffered during the era of liberalised trade, particularly in 1993-94 and 1998-99, as revealed in Table 1. The value added due to exports in 1993-94 was 10.20 per cent (Rs. 7,42,845.1 million) of the overall value added of the economy whereas the loss of income due to imports was (-) 10.39 per cent (-Rs. 7,56,340.7 million). The net effect of trade was to squeeze value added by (-) 0.19 per cent (-Rs.13 495.6 million). The same trend was also noticed in 1998-99. During the year 1998-99, the value added associated with exports was 11.70 per cent (Rs. 16,63,135 million) whereas the loss of income due to imports was (-) 13.36 per cent (-Rs. 18,98,557.8 million) resulting in a net loss of income of (-) 1.66 per cent (Rs. 2,35,422.8 million). In 2003-04, value added related to exports was 14.88 per cent (Rs. 32,21,509 million), whereas the loss of income due to imports was (-) 14.80 per cent (-Rs. 32,04,978.8 million), resulting in a net income gain of 0.08 per cent (Rs. 16,530.2 million). Table 2 presents the relative contribution of domestic use and trade to the net change in employment and value added over the period 1993-94 to 2003-04. As shown in Table 2, the net gain in employment was 0.28 per cent (0.9 million). Decomposing this change into: 1) that attributable to domestic use, and 2) that due to trade, we find that -1.10 per cent (-3.7 million) was due to domestic use and 1.38 per cent (4.7 million) was due to trade. The net increase in value added was 197.43 per cent (Rs.143,72,606 million). After decomposition, it has been found that the change attributable to domestic use is 197.02 per cent (Rs.143,42,580 million) while that attributable to trade is 0.41 per cent (Rs. 3034 million). Thus far, the implication of unbalanced trade itself has simply been ignored in determining the net income and employment effect of domestic demand and trade. It thus seems important to consider alternative scenarios possessing the basic common feature of zero trade balance. Table 3 shows the Employment and Value Added in the Indian economy due to ‘Domestic Use’ and ‘Trade’ in a trade scenario wherein the import of crude petroleum has been reduced by 50 per cent. Table 2 Percent Change in Employment and Value Added in the Indian Economy Resulting from Domestic Use and Trade over the Period 1993-94 to 2003-04 Change in Employment
Change in Value Added
Total
Due to Domestic Use
Due to Foreign Trade
Total
Due to Domestic Use
Due to Foreign Trade
0.28
-1.10
1.38
197.43
197.02
0.41
Source: Table 1.
IMPORT LIBERALISATION, DOMESTIC INCOME AND EMPLOYMENT
245
Table 3 Employment (number in million) and Value Added (Rs. in million) Induced by ‘Domestic Use’ and ‘Trade’ in a Trade Scenario by Reducing 50 per cent of the Crude Petroleum Import 1993-94
1998-99
2003-04
Value Added (Rs. in million) Domestic Use
72,93,389.8
144,44,383.0
216,35,970.5
Exports
7,42,845.1
16,63,135.0
32,21,509.0
Imports
(-) 6,87,661.8
(-) 17,57,372.2
(-) 27,57,449.7
55,183.3
-94,237.1
4,64,059.2
73,48,573.1
143,50,145.8
221,00,029.8
Trade Total
Employment (number in million) 343.8
320.2
340.0
Exports
Domestic Use
24.2
29.1
35.8
Imports
(-) 22.2
(-) 29.9
(-) 28.2
2.0
-0.7
7.6
245.8
319.4
347.7
Trade Total
Addenda:% due to Domestic Use Value Added
99.25
100.66
97.90
Employment
99.42
100.24
97.81
10.11
11.59
14.58
7.01
9.13
10.32
% due to Exports Value Added Employment
% due to Imports Value Added
(-) 9.36
(-) 12.25
(-) 12.48
Employment
(-) 6.43
(-) 9.36
(-) 8.13
% due to Foreign Trade Value Added
0.75
-0.66
2.10
Employment
0.58
-0.24
2.19
Source: Value added generation and employment requirements by domestic use and exports are computed as in Table 1 but the value added generation and labour requirements by imports and trade are calculated by substituting M vectors in Equations (8) and (11) by M1 where M1 is the import basket with ‘Crude Petro’ reduced by 50 per cent and other constituents remaining unchanged.
As reflected in Table 3, in 1993-94, the employment generated directly and indirectly from exports was 7.01 per cent (24.2 million) of the overall employment in the Indian economy while the production of imported goods at home would have raised employment by 6.43 per cent (22.2 million). On the whole, the net effect of trade on employment was a net gain in employment of 0.58 per cent (2 million). By 1998-99, the net employment generation due to trade seems to have declined. Employment generated through exports was 9.13 per cent (29.1 million) of the overall employment of the Indian economy, while the employment loss due to import was 9.3 per cent (29.9 million). Thus, in 1998-99, trade contributed to loss in net employment roughly by 0.24 per cent (0.7 million). Again, the
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situation seems to have improved a lot in 2003-04. Exports accounted for direct and indirect employment gain of 10.32 per cent (35.8 million) while employment loss due to import was 8.13 per cent (28.2 million), implying that trade in 2003-04 resulted in a net employment gain of 2.19 per cent (7.6 million). Again from Table 3, we find that the value added related to exports in 1993-94 was 10.11 per cent (Rs. 7,42,845.1 million) of the overall value added of the economy whereas the loss of income due to imports was (-) 9.36 per cent (-Rs. 6,87,661.8 million). The net effect of trade was a gain in value added by 0.75 per cent (Rs. 55,183.3 million). During the year 1998-99, the value added associated with exports was 11.59 per cent (Rs. 16,63,135.0 million), whereas the loss of income due to imports was (-) 12.25 per cent (-Rs.17,57,372.2 million) resulting in a net loss of income of (-) 0.66 per cent (-Rs. 94,237.1 million). In 200304, the value added associated with exports was 14.58 per cent (Rs. 32,21,509.0 million), whereas the loss of income due to imports was (-) 12.48 per cent (-Rs. 27,57,449.7 million), resulting in a net gain in income of 2.10 per cent (Rs. 4,64,059.2 million). Tables 4 and 5 show the impact of trade on employment and income, respectively, due to crude petroleum imports. It has been found in Table 4 that under the scenario of reduction in crude petroleum imports, the net effect of trade on employment was a net gain in employment of 0.58 per cent (2.0 million) during the year 1993-94. But in the actual situation of a negative trade balance, the net effect of trade on employment was a net gain in employment of 0.21 per cent (0.7 million) for the same year. Thus, we find that a reduction in crude petroleum import could increase the net employment by 0.37 per cent (1.2 million) of that of the actual negative trade balance situation in 1993-94. During the year 1998-99, the employment loss related to trade was â&#x20AC;&#x201C;0.24 per cent (-0.7 million). In the negative trade balance situation, the loss of employment due to trade was â&#x20AC;&#x201C;0.59 per cent (-1.8 million) in 1998-99. Therefore, a reduction in crude petroleum import could lead to an increase in employment of 0.35 per cent (1.1 million) in 1998-99. The net effect of trade on employment was a net gain in employment of 2.19 per cent (7.6 million) during the year 2003-04. But in the actual situation of a negative trade balance, the net effect of trade on employment was a net gain in employment of 1.59 per cent (5.4 million) during the same year. As a result, we see that the employment gain due to a reduction in crude petroleum import was 0.6 per cent (2.1 million) higher in 2003-04 than that in the actual negative trade balance situation. Table 4 Impact of Trade on Employment (in %) due to Negative Trade Balance and Crude Petroleum Import Reduction Year
1993-94
Crude Petroleum Import Reduction
Actual Situation (Negative Trade Balance)
Employment gain Exclusively because of Crude Petroleum Import Reduction
(+) 0.58
(+) 0.21
(+) 0.37
1998-99
(-) 0.24
(-) 0.59
(+) 0.35
2003-04
(+) 2.19
(+) 1.59
(+) 0.60
Source: Tables 1 and 3.
IMPORT LIBERALISATION, DOMESTIC INCOME AND EMPLOYMENT
247
From Table 5, we can observe that under the scenario of a reduction in crude petroleum import, the net effect of trade on value added was a net gain in income of 0.75 per cent (Rs. 55,183.3 million) during the year 1993-94. But in the actual negative trade balance situation, the net effect of trade on value added was a net loss in income of (-) 0.19 per cent (-Rs. 13,495.6 million) for the same year. Therefore, the income gain due to a reduction in crude petroleum import was 0.94 per cent (Rs. 68,678.9 million) in 1993-94. During the year 1998-99, the loss in value added related to trade was (â&#x20AC;&#x201C;) 0.66 per cent (-Rs. 94,237.1 million) under the scenario just mentioned. In a negative trade balance situation, the loss of income because of trade was (-) 1.66 per cent (-Rs. 2,35,422.8 million) in 1998-99. Therefore, the income gain due to a reduction in crude petroleum import was 1.00 per cent (Rs. 1,41,185.7 million) in 1998-99. Under the scenario of reduction in crude petroleum import, the net effect of trade on value added was a net gain in income of 2.10 per cent (Rs. 4,64,059.2 million) during the year 2003-04. However, in the actual negative trade balance situation, the net effect of trade on value added was a net gain in income of 0.08 per cent (Rs. 16,530.2 million) for the same year. As a result, the income gain due to a reduction in crude petroleum import was 2.02 per cent (Rs. 4,47,529 million) in 2003-04. Table 6 decomposes the percentage change in employment and value added under the scenario of reduction in crude petroleum import into domestic use and trade. Over the period 1993-94 to 2003-04, the total change in employment was 0.52 per cent (1.8 million). Of this net change, -1.10 per cent (-3.7 million) was due to domestic use while 1.62 per cent (5.6 million) was due to trade. Table 6 also highlights the fact that the net increase in value added over the period 1993-94 to 2003-04 was 200.74 per cent (Rs. 147,51,456.7 million), of which 195.18 per cent (Rs. 14,342,580.7 million) was attributable to domestic use while 5.56 per cent (Rs. 4,08,875.9 million) was accountable for trade.
Year
Table 5 Impact of Trade on Value Added (in %) Due to Negative Trade Balance and Reduction in Crude Petroleum Import Crude Petroleum Actual Situation Value Added Gain Exclusively Import Reduction (Negative Trade Due to Crude Petroleum Balance) Import Reduction (+) 0.75 (-) 0.19 (+) 0.94 (-) 0.66 (-) 1.66 (+) 1.00 (+) 2.10 (+) 0.08 (+) 2.02
1993-94 1998-99 2003-04 Source: Tables 1 and 3.
Table 6 Percent Change in Employment and Value Added Resulting from Domestic Use and Trade over the Period 1993-94 to 2003-04 under the Scenario of Reduction in Crude Petroleum Import Change in Employment Change in Value Added Total Due to Domestic Due to Foreign Total Due to Domestic Due to Foreign Use Trade Use Trade 0.52 -1.10 1.62 200.74 195.18 5.56 Source: Table 3.
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V. CONCLUSION We have analysed the impact of liberalisation on employment and income over the period 1993-94to 2003-04. Some of the broad implications and outcomes of the study are as follows: 1. It is evident from the study that the relaxation of controls is significantly and increasingly manifested with the passage of time. 2. Over the period 1993-94 to 1998-99, liberalised trade contributed to a loss in employment, but it is interesting to note that over the period 1998-99 to 2003-04, trade contributed to a growth in net employment. 3. The liberalised trade contributed to the loss of value added over the period 1993-94 to 1998-99, but it must be noted here that over the period 1998-99 to 2003-04, trade contributed to a gain in net income. 4. It has been observed that as far as employment generation is concerned, the induced effects of domestic use and trade occur in opposite directions, but the interesting fact is that trade contributed to a positive employment growth of the economy. As far as value added is concerned, both domestic demand and trade stimulated positive net income growth of the economy. 5. As could be expected, a reduction in the import of crude petroleum by 50 per cent can lead to a significant gain in employment and value added. Thus, the persistent negative trade balance itself is, to a large extent, responsible for the low growth rates of employment and value added (or sometimes of negative employment and income growth being induced by trade). It must be remembered that import liberalisation and huge trade deficit should not occur simultaneously and a large negative trade balance need not be considered as an essential by-product of economic liberalisation. 6. It can be noticed (from the Appendix Table) that for some category of industries like food products, textiles, leather products, rubber products, chemicals, and iron and steel industries, both trade and domestic demand have contributed to a gain in employment and value added during the reform era. This may have been made possible by the fact that these categories have certain types of product mixes. Possibly, these sectors are composed of products whose performance on both the domestic front as well as the export front has had a significantly positive impact on employment and income generation. References Annual Survey of Industries (ASI)-1993-94,1998-99 and 2003-04, Government of India, New Delhi. Government of India (2003), Economic Survey 2002-03, Table No. 10.9, p. 218. Central Statistical Organisation (CSO) Input–Output Tables, 1993–94 (publication year 2000), 1998–99 (publication year 2005), and 2003–04 (publication year 2007), Government of India, New Delhi. Nambiar, R.G. and Tadas, G.A. (1994), “Is Trade De-industrialising India?”, Economic and Political Weekly, Vol. 29, No. 42, October 15, pp. 2741-46. Nambiar, R.G.; Mungekar, B.L. and Tadas, G.A. (1999), “Is Import Liberalisation Hurting Domestic Industry and Employment”, Economic and Political Weekly, Vol. 34, No. 7, February 13-19, pp. 417-24.
IMPORT LIBERALISATION, DOMESTIC INCOME AND EMPLOYMENT
249
Appendix Table Percentage Change in Value Added and Employment resulting from Trade and Domestic Use over the Period 1993-94 to â&#x20AC;&#x201C;2003-04 Sectors
Change in Value Added
Change in Employment
Total
Due to Domestic Use
Due to Trade
Total
Due to Domestic Use
Due to Trade
1. Agriculture
119
115
4
-2
-3
1
2. Crude Petro
-1282
442
-1725
-420
-143
-277
3. Iron Ore
441
135
306
-14
-18
4
4. Other Minerals
121
-127
247
-41
-1
-40
5. Food Products
-46
-41
-5
-15
-3
-13
6. Misc. Food Prods.
232
211
21
12
9
3
1090
1084
6
117
117
0
8. Tobacco Prods.
110
109
1
-14
-13
-1
9. Cotton Textile
37
18
19
78
55
24
7. Beverages
10. Wool, Silk Textiles
22
9
13
436
360
76
11. Jute Textiles
240
241
-1
791
741
50
12. Textiles Prods
470
277
193
602
350
252
13. Wood, Furniture
119
141
-22
-33
-26
-7
14. Paper, Printing
47
61
-14
-6
-10
4
15. Leather Prods.
130
91
38
8
19
-11
16. Rubber Prods.
126
96
30
47
31
16
17. Plastic Prods.
176
195
-19
13
23
-10
18. Petro Prods.
322
323
-1
-59
-141
82
19. Heavy Chem.
-912
-1092
179
244
156
88
20. Fertilisers
97
93
5
24
5
19
21. Pesticides
261
211
49
11
3
8
22. Paints, Varnishes
278
280
-2
64
72
-7
23. Drugs, Medicines
371
302
69
13
2
11
24. Other Chemicals
178
209
-31
2
6
-5
25. Cement
219
213
6
-91
-88
-3
26. Non-metallic Minerals
391
450
-59
-88
-33
-55
27. Iron Steel Ferrous Alloys
173
161
12
36
11
26
28. Iron Steel Casting
754
730
24
103
69
34
29. Iron Steel Found
77
71
6
30
24
6
-1481
1415
-2896
-230
-7
-222
31. Handtools
30. Non-ferrous Metal
520
516
4
48
45
3
32. Misc. Metal Prods
114
115
-1
331
333
-2
250 Sectors
The Indian Journal of Labour Economics
Change in Value Added Total
Due to Domestic Use
33. Agri. Machinery
140
34. Indus. Machinery
149
Change in Employment
Due to Trade
Total
Due to Domestic Use
Due to Trade
129
11
-52
-57
5
187
-38
-55
-101
46
35. Other Indus. Mach.
-880
-990
110
-220
162
-382
36. Machine Tools
2158
2388
-230
-22
-68
46
37. Comp. Mach.
8150
8226
-76
-97
-105
8
38. Electrical
1540
1689
-149
-72
-86
15
39. Other Non-electrical
358
381
-23
-91
-158
67
40. Electronics
-38
40
-78
-95
-94
-1
41. Ship, Boat
-579
52
-631
-111
-124
14
49
53
-4
-97
-94
-3
42. Rail Equip. 43. Other Trans. Equip.
182
135
48
-41
-102
60
-341
143
-484
-169
-37
-132
45. Construction
308
309
-1
41
41
0
46. Power, Gas
-82
-85
3
-93
-97
4
47. Trade, Hotels
44. Misc Manufacture
649
577
72
22
13
9
48. Transport Service
77
70
7
33
32
1
49. Finance Insurance
663
682
-19
28
30
-2
50. Comm. Service
469
466
3
-9
-10
1
Source: Computed by using Equations (6) to (11).
The Indian Journal of Labour Economics, Vol. 54, No. 2, 2011
HIGH NON-WAGE EMPLOYMENT IN INDIA: REVISITING THE ‘PARADOX’ IN CAPITALIST DEVELOPMENT Satyaki Roy∗ High non-wage employment persisting with high growth appears to be a paradox in capitalist development because commoditisation of labour power assuming the form of wage labour is specific to capitalism and the sole source of surplus value. This paper, drawing from various strands of Marxian literature, argues that capitalism never existed in isolation in ‘pure’ and pristine form, and the fundamental class process of surplus production is constituted by subsumed class processes and non-class processes that involve non-capital in several moments. Although the interaction of capital with the non-capitalist space signifies a confluence of separate processes, it overdetermines the existence and stability of capitalism by a complex dialectics of force and persuasion involving economic, political and ideological determinations. I. INTRODUCTION One of the most startling features of capitalist development in India seems to be the fact that more than half of the working population is engaged in non-wage employment. Although one can attribute this fact to the high share of employment in agricultural activities that largely bear the marks of pre-capitalist production relations, yet self-employment and other precarious forms of non-wage employment assume a large share even in the non-agriculture sector. This is quite peculiar in the sense that capitalism is largely characterised by an economic space in which not only are the produces turned into commodities but even labour power itself assumes the commodity form in the way of wage labour. The worker works under the control of the capitalist, who owns the labour, and the product of labour is appropriated by the capitalist net of wages. The issue is further complicated because wage employment, in the Marxian sense, is the only source of surplus value that the labourer creates by way of earning his/her living, thereby precisely creating value beyond the necessary labour time. The persistence of a high share of non-wage employment in India and in other developing countries as well as a non-declining floor, if not a rising trend, even in developed capitalism is a source of worry at the conceptual level as well. Sometimes, this is attributed to cyclical fluctuations, that is, self-employment mushrooms during periods of economic downturn when the employability in the economy declines and the non-wage segment swells as a microlevel counter-cyclical response. However, this explanation is only partial because studies focus on a historical trend of the declining influence of unemployment on self-employment. * The author is Assistant Professor at the Institute for Studies in Industrial Development, New Delhi. The author would like to thank the anonymous referee for the comments on the earlier draft of the paper. The usual disclaimer applies. E-mail: satyaki.sat@gmail.com.
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THE INDIAN JOURNAL OF LABOUR ECONOMICS
Hence, the non-wage segment does not seem to be some kind of ‘impurity’ that capitalism would eventually do away with, nor is it a temporary phenomenon that withers away during an upswing. At another level, the question arises that if non-wage employment, and in a broader sense, non-capitalist production relations persist, then how do they interact with capitalism and what could be the reasons for the reproduction of such relations? This draws attention to the discourse on the mode of production that refers to the ‘transition debate’ in the early phase, and later to the formal–abstract level of complex understanding of engagements between different ‘pure’ modes of production. The interpretation of empirical evidence of the co-existence of multiple systems in most cases relies on various teleological assumptions. Presumptions of linearity in evolution in that context fail to acknowledge the non-wage segment as constitutive to capitalist determinations, and view non-wage employment as some obstacle to the fullest development of capitalist relations. In some other analyses, rising self-employment is viewed as something that signals some significant changes in the technological determinations of the production processes that favour greater autonomy. It is also sometimes represented as employment of the last resort for people flushed out from capitalist industries due to the rising organic composition of capital. Although these arguments might have some semblance to the truth, yet limiting the explanation to technological dimensions would not help us in understanding the interactions between the non-wage segment and the capitalist sector. Entering into the complex web of relations between self-employment, wage-employment and unpaid household labour, this paper aims to capture the dynamics of self-employment in the capitalist totality of surplus production. The apparent unity of the producer and the means of production visible in self-employment could be contrasted with the alienation of labour from its object of labour observed in capitalist wage employment. It can, therefore, be inferred that self-employment in that sense signifies a rise in the autonomy of the labour and higher control in the work process or is a result of flourishing ‘entrepreneurship’ that the neo-liberal dispensation might have offered. Otherwise, if we view capitalism as an exclusive terrain of wage labour, then the rise in self-employment could be seen as the failure of capitalism in conquering alien spaces or at least a discord in the dominant mode of surplus production and appropriation. This paper at the outset aims to situate the debate in a proper context and brings to the fore the relevant themes from discourses in Marxian tradition to build up an understanding of the plurality of relationships that exist between various modes of production. Expansion, on the one hand, and contraction, on the other, and creation and decay explain the lifeprocess of every living organism, while the resulting inclusions and exclusions in the case of capitalist dynamics provide a broad framework to analyse the interface between wage and non-wage labour. Section II highlights the nature and scope of self-employment, primarily in the Indian context; Section III identifies the ontology of self-employment within various facets of the debate on the mode of production; Section IV, adopting a political economy perspective, focuses on the mutual determination of capitalist and non-capitalist relations in the process of accumulation. The paper ends with a few concluding remarks.
HIGH NON-WAGE EMPLOYMENT IN INDIA
253
II. NON-WAGE EMPLOYMENT IN INDIA The stylised fact of high non-wage employment in India calls for a closer look into the empirical evidence obtained from various sources. Non-wage work assumes two different forms, viz. self-employment and unpaid family work. A self-employed person might be defined as one who earns an income through her/his own labour but does not sell labour power to anyone else in return for wages. A self-employed person is neither a wage earner selling labour to others nor a rentier who could earn an income without expending any labour. The self-employed person can employ other people in his/her enterprise in return for wages or salaries, or might run an own account enterprise (OAE) without hiring any labour. Unpaid family labour is recognised in official accounting only when that labour helps in producing commodities, otherwise the household labour that contributes in the production and reproduction of labour power is left out in any value calculation. Household labour is needed for transforming wage goods into a subsistence basket, but since it creates only use values and is not meant for exchange, such labour is not even recognised and is instead banished from the ‘paid-unpaid’ determinations of the labour process. Table 1 Percentage Distribution of Self-employed by Usual Status of Employment by Gender and Sector Rural
Urban
Rural + Urban
Male
Female
Persons
Male
Female
Persons
Male
Female
Persons
1993-94
57.7
58.6
58.0
41.7
44.8
42.3
53.7
56.8
54.7
1999-2000
55.0
57.3
55.8
41.5
45.3
42.2
51.5
55.8
52.8
2004-05
58.1
63.7
60.2
44.8
47.7
45.4
54.7
61.4
56.9
2007-2008
55.4
58.3
56.3
42.7
42.3
42.6
52.0
56.0
53.2
Source: NSS report on ‘Employment and Unemployment Situation in India’, 64th Round.
Table 1 shows the share of the self-employed in the labour force over the years. First, in 2007-08, the share of self-employed persons in rural and urban areas was 56.3 per cent, and 42.6 per cent, respectively, and considering total employment, it had been consistently higher than half of the labour force. Second, self-employment in the female labour force had always been higher than the share of the self-employed in the male labour force. Third, the share of self-employment in the labour force had been consistently higher in the rural labour force as compared to the labour force in urban areas. Table 2 shows the share of the self-employed by gender within the labour force during the period 1983 to 2008. Over a span of more than two decades, the Indian economy has undergone major policy changes, though the share of the self-employed for both the male and female labour force was higher than half of the labour force in the respective segments (see Figure 1). There are three distinct phases as regards the share of self-employment within the male and female labour force: the period prior to 1991-92, when the share of self-employment within the female labour force was higher than that in the male labour force; between 1991-92 to 1998-99, when the share of self-employment within the male labour force was
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THE INDIAN JOURNAL OF LABOUR ECONOMICS
Figure 1 Share of Self-employed by Usually Employed Status over the Years by Gender
Source: Same as for Table 1.
comparatively higher; and the period 1998-2008, when the trend again reversed, that is, the share of self employment within the female labour force outstripped the share within male. One cursory comment on this pattern would be that with the second period being the period of major adjustments for reforms, a part of the male labour force would have slipped from the wage segment to non-wage self-employment as a survival strategy, otherwise the share of the self-employed was generally higher in the case of the female work force, which precisely reflects the gender discrimination prevailing in the labour market in most developing countries. However, given the scope of this paper, the point that needs to be underlined is that the share of the self-employed remained high at above the 50 per cent mark across a fairly long period. In any case, this non-wage segment has been left out from the capitalist labour process; it survives at the margin and is hardly affected by any policy reforms. Tables 2 and 3 show the distribution of enterprises and employment by size categories of firms in the unorganised manufacturing segment. It can be seen from the tables that in 2005-06, 91.6 per cent of the rural enterprises and 71 per cent of the urban enterprises were own account enterprises (OAEs). These enterprises provided employment to 76.5 per cent and 43.5 per cent, respectively, of the rural and urban workers employed in the unorganised manufacturing sector. It can also be seen that the share of OAEs, that is, enterprises not employing any hired labour, had increased during the period 1994-95 to 2005-06 in the case of both the rural and urban unorganised manufacturing space. The NCEUS report on â&#x20AC;&#x2DC;The Challenge of Employment in Indiaâ&#x20AC;&#x2122; also reveals that in 2004-05, within the rural self-employed workforce, 32.55 per cent are OAEs and employers, while 27.89 per cent are unpaid family workers. Furthermore, the share of unpaid family workers within the self-employed segment increased from 23.29 per cent in 1983 to 27.89 per cent in 2004-05. In the urban segment for the year 2004-05, OAEs and employers account for 33.67 per cent while 11.49 per cent of the self-employed are unpaid family workers. In the urban segment, the share of unpaid family workers within the self-employed increased from 9.94 per cent in 1983 to 11.49 per cent in 2004-05.
HIGH NON-WAGE EMPLOYMENT IN INDIA
1994-95 2000-01 2005-06 1994-95 2000-01 2005-06
255
Table 2 Share of Unorganised Manufacturing Enterprises by Size of Employment OAE 2-5 6-9 Rural 91.0 6.5 1.4 92.3 5.6 1.3 91.6 6.1 1.3 Urban 65.1 23.6 8.2 70.5 21.4 5.9 71.0 20.1 6.2 Total 84.8 10.6 3.0 85.8 10.3 2.7 85.6 10.2 2.7
1994-95 2000-01 2005-06 Source: NCEUS (2009).
1994-95 2000-01 2005-06 1994-95 2000-01 2005-06
Table 3 Percentage Share in Employment in Unorganised Manufacturing OAE 2-5 Rural 78.7 8.8 79.2 8.5 76.5 9.7 Urban 40.3 26.2 44.6 27.6 43.5 24.9 Total 67.0 14.1 67.0 15.2 64.7 15.1
1994-95 2000-01 2005-06 Source: Same as for Table 2.
Enterprises 6-9
Total 98.9 99.2 99.0 96.9 97.9 97.3 98.4 98.8 98.5
Total
4.6 4.5 4.8
92.1 92.2 90.9
19.1 16.3 16.6
85.6 88.5 84.9
9.0 8.7 9.0
90.1 90.9 88.8
Table 4 shows the distribution of enterprise and employment by size categories in the unorganised service sector. In 2006-07, 90.14 per cent of the rural enterprises and 76.95 per cent of the urban enterprises were OAEs, accounting for 80.25 per cent and 45.48 per cent of employment in the rural and urban segments, respectively, in the services sector. Further, the share of OAEs in providing employment in services in 2006-07 was much higher than the contribution of OAEs in employment in unorganised manufacturing. This, however, reflects the generally held notion that it is easier to start up a new venture in the services sector, as this requires relatively less physical capital as compared to that required in manufacturing. The expansion of the share of services in overall employment could be another reason for the high share of self-employment in the total labour force. Many studies related to the informal sector argue that the dynamics of self-employment is related to the cyclical fluctuations in the economy in the sense that self-employment increases during a downturn and its share declines during periods of high growth (Mead, 1994; Mead
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THE INDIAN JOURNAL OF LABOUR ECONOMICS
and Liedholm, 1998). The stability in the share of self-employment in India, however, does not provide much empirical evidence to such a hypothesis. And this is primarily because of the following reasons: a) the underlying assumption in the above proposition is a positive relationship between growth and employment, that is, during periods of an upswing, more labour is pulled into wage employment from the ‘reserve army’ in the waiting, but this hardly captures the current scenario of high growth accompanied by rising unemployment; b) the argument ignores the fact that because of a downturn, while some people might be thrown out of jobs and consequently shifted from wage employment to self-employment, the other possibility could be that many of the existing self-employing enterprises would simply be shut down due to the lack of demand. And the higher the share of self-employment in the labour force, the greater is the probability of the first trend being outweighed by the second in balance; c) a process of self-exploitative fragmentation could also be under way, resulting in higher self-employment. This could be because of the limited scope of vertical mobility for wage workers in small enterprises in the context of a contested exchange between traders and producers, which might not necessarily be linked to macroeconomic fluctuations (Roy, 2007). Table 4 Percentage Distribution in Employment and Enterprises by Size Categories in Unorganised Service Rural OAE
Urban Establishment
OAE
Establishment
Share in Enterprises 2001-02
87.7
12.3
77.4
22.6
2006-07
90.14
9.85
76.95
23.05
2001-02
70.45
29.54
47.43
52.57
2006-07
80.25
19.75
45.48
54.52
Share in Employment
Source: NSS Reports on ‘Unorganised Service Sector in India’, 57th and 63rd Rounds.
One strand of literature, primarily assessing the changing technologies and related production organisation, takes note of the following two facts that favour autonomy: a) the higher the knowledge component in production, the greater would be the autonomy of the person who possesses that knowledge, which perhaps explains why it favours selfemployment in high-end service activities related to information technology and so on (Drucker, 1993); b) the second body of literature talks about ‘flexible specialisation’ as the post-Fordist paradigm of industrial production, which creates a larger space for smaller firms in a world of customised demand. The need for functional flexibility in the work process entails modularisation and out-contracting, which might favour a synergy between large and small enterprises (Piore and Sabel, 1984). These trends undoubtedly explain the growth of self-employment related to knowledge-intensive activities but they also account for a miniscule part of the larger story, which is that a majority of the self-employed in India are self-employed not out of any choice but because they are deprived of wage employment.
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This denial of wage employment and fomenting of a large non-capitalist segment needs to be problematised since it is something inimical to capitalist growth. In the next section, we try to locate this self-employed segment in the context of capitalist development, and examine how different modes of production constitute each other, reproducing the interaction instead of vanquishing of one by the other. III. REVISITING THE ‘MODE OF PRODUCTION’ DEBATE In the Marxian scheme, every society is characterised by a dialectical interplay of the forces of production and relations of production, with the former signifying human intervention in nature and the latter capturing the relations between human beings engaged in productive activity. However, the concept of ‘productive force’, though assuming causal primacy in social change in Marxian literature, is not defined unambiguously. In some texts, it has a technical connotation, while in others, it encompasses broader aspects of social consciousness or class consciousness. Holton (1981) argues that such conceptual divergences led to differences in the interpretation of social change that finally crept into the seminal ‘mode of production debate’. Capitalist ‘transition’ was conceived in two separate strands of literature: a) one arguing that the advent of capitalism was a fallout of the universalisation of the division of labour and the spread of exchange relations; and b) the other discussed the property relations perspective and class struggle that finally led to the demise of feudal relations in Europe (Tomich, 2004). However, this debate throws some light on the ‘pre-capitalist’ production relations that emerged in Western Europe during the period of transition. Dobb (1946) pointed out that the rise in capitalist relations did not occur simultaneously with the decline in feudalism, rather there was a phase of ‘petty-commodity production’. The commoditisation of production assumed the initial form of simple commodity production, wherein the producer would sell his produce in order to procure other commodities for use. However, the commercialisation of production that is transforming goods into commodities could not be a route towards capitalist production in itself because capitalism signifies not only the production of commodities but also a peculiar phase wherein labour power is itself turned into commodity. In the historical process of transition, the segment of petty-commodity production underwent a social stratification, thereby creating property-less labour, on the one hand, and a ‘kulak’ yeomanry on the other, which hired the labour of others. Furthermore, creating a vast pool of property-less labour necessitated a forced separation of the mass of producers from their own means of production, which Marx characterised as the ‘primitive accumulation of capital’ (Marx, 1958; Capital I, Part VIII). Hence ‘petty-commodity production’ was conceived as a transitory phase in Marxian literature that could never withstand capitalist development (Moser, 1978). It is argued that there is an inherent expansionary tendency in capitalism that ‘batters down all Chinese walls’ in order to build a world in its own image. The destruction of non-capitalist relations takes place either in forms of dramatic social change or it may happen gradually by way of erosion of the economic viability of the earlier system. The second reason for the capitalist sway over ‘pre-capitalist’ relations accounts for the intrinsic
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trend of concentration and centralisation of production. Capitalism favours concentration in order to reap the benefits of increasing returns to scale and, therefore, smaller structures find it difficult to survive in the face of capitalist competition. Irrespective of whatever be the reason, in the above debate, petty-commodity-production is a transient category that is supposed to wither away as capitalism develops. As against this linear evolutionist perspective, we come across a different reading of Marx flowing from Althusser that signifies the later phase of the mode of production debate. The concept of mode of production in Althusser and Balibar (1970) is a ‘complexly articulated’ social totality conceived entirely in the formal abstract level. The related question is as to how the elements that constitute the complex totality articulate with one another and what the necessary conditions for the reproduction of such relations could be. This process is primarily aimed at examining the dynamics of the internally differentiated complexly determined totality. In Althusser, the concept of mode of production signifies an extended meaning. It is not only a specific combination of the forces of production and relations of production but also the determinate and specific relations of the former with economic moments as well as with other social mediations, political and ideological. The articulation of various elements in the mode of production is captured by the notion of ‘overdetermination’—a notion that signifies a complex causality founded upon the respective mechanisms of condensation and displacement. The concept of ‘overdetermination’ was originally used by Sigmund Freud to describe the representation of dream thoughts in images constituted by their condensation of a number of thoughts in a single image. In this scheme of analysis, none of the elements in the complex totality enjoys causal primacy over others, rather they overdetermine each other and get overdetermined in the same process. The elements of the mode of production exist in history in a ‘floating state’ and prior to their combination each being the product of its own history and none being the teleological product of the others or their history. Resnick and Wolff (1987) identified the ontology of the class and non-class processes that constitute the social totality. The class process is defined as an amalgam of processes involved in the production, appropriation and distribution of the surplus, and it is always a combination of class and non-class processes that constitute the totality. The fundamental class process involves the production and appropriation of the surplus product and the subsumed class processes include activities that create conditions for the reproduction of the fundamental class process. These class processes are also conditioned by a range of non-class processes. Each process is both the cause and effect of other processes, that is, there is no causal primacy of one over the other, rather they exist in relations of interdependence called overdetermination. In this scheme, each process of accumulation involves a particular but determinate combination of class and non-class processes, and acknowledges the theoretical possibility of the structural co-existence of multiple modes of production. As a corollary, what follows there is no unique or optimal combination of elements or sub-systems and institutions within capitalism that would necessarily triumph over other combinations. The advantage and specifics of one type of capitalism over another are typically dependent on the concrete historical path of their emergence and evolution.
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While the above thesis views the capitalist mode of production as a radical departure from pre-existing modes, the determination of the new is a confluence of overdetermined processes. Therefore, there is absolutely no ontological reason to think of ‘pure’ systems and at the same time, neither is there any reason to believe that the co-existence of multiple systems is instructive of a failure in the process of evolving into some matured/pure capitalism. Rather the whole discourse stimulates a discussion on the plurality of possibilities instead of some simplistic linear understanding of history. The mode of articulation between constitutive elements in its specific forms is the real point of investigation and the study of articulation need not be viewed in the light of some pre-determined outcome. In other words, there seems to be no reason to believe that ‘pre-capitalist’ production relations are nothing but a passing phase and would eventually collapse into ‘matured’ capitalism consisting of only wage labour. Such teleological assumptions, in fact, aim to capture all contingencies in terms of necessities and believe that such necessities get fulfilled in the process of articulation. Althusser views the capitalist mode of production as the unintended and overdetermined effect of the ‘aleatory’ and contingent ‘encounter’ of the various historical processes. There is no need as such for capitalism to emerge from the constituent elements floating in history, rather it is a point of ‘radical indeterminacy’ that characterises the existence and reproduction of a social system. Hence, what follows is that the existence of non-capitalist production relations might not necessarily have a causal determination, that is, they may not necessarily be linked with capitalism for some purpose originating from the capitalist space but may exist as independent processes, having interactions with capitalism at various moments while both overdetermining and being overdetermined in the same process. Apparently, this argument seems to allow ‘subjectivity’ and ‘pluralism’ that make political economic analysis too general, but it actually entails an analysis that is more complex and differentiated, and necessitates an analysis of how relations of intrinsic capacities are actualised differently in different situations. In this context, one important aspect of articulation between capital and non-capital is, of course, the asymmetric relation between the two. The non-capitalist site of production is not something auxiliary to the capitalist labour process, clinging as an appendage to the latter; rather, it constitutes the wage though the latter is not recognised in value calculations. To the non-capitalist segment, an articulation with the capitalist space may not be binding in itself and even if it interacts, it may not serve some pre-determined purpose either; instead this articulation can signify an intersection of two separate processes that have their own logic of existence. Therefore, the more important point, of course, is that the non-capital has to express itself in terms of exchange relations in order to engage with the capitalist space, while it is also difficult for capital to intrude into all sorts of non-capitalist production processes. Household labour is a classic example of such a site of the non-class process that hardly gets represented in value calculations internal to the capitalist space. The conceptual act of assuming the ‘subsistence basket’ to be something synonymous to wage goods that are required as inputs to produce that subsistence basket is akin to a silent process whereby the household labour that transforms wage goods into the subsistence basket is ignored (Quick,
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2004). The value of the labour power, which is defined by the socially necessary labour required to produce the wage goods, is constituted by a separate process of production in the household, which is a non-capitalist site and never enters into the value calculations in the capitalist system. The non-capitalist site exists, gets reproduced and plays a constitutive role to the capitalist labour process, but this does not imply that the site and the process exist only to serve a specific purpose in capitalism. Non-capitalist sites may exist for reasons that are altogether different from the cause of interacting with capitalism, but capital ties them up in exchange relations, though it does not allow them to be represented in value equations. The interface between capital and non-capital characterised by exchanges hardly occurs on the basis of equivalence and suppressions are consciously ignored in capitalist discourse. The next section focuses on the interaction between the capitalist and non-capitalist space, and on various dimensions of their engagements, both in terms of systemic articulation as well as in the realm of exchange captured in value-theoretic terms. IV. LOCATING NON-WAGE EMPLOYMENT IN CAPITALISM In the context of the mode of production, non-wage employment had traditionally been equated with petty commodity production wherein the small producer with his/her own means of production produces goods, and exchanges them with money in order to procure goods for use. Hence, petty commodity production was conceived as a production process that produces no surplus and engages with capitalism only after finishing the act of production. Sanyal (2007) argues that self-employment in the informal sector today cannot simply be equated with the concept of petty commodity production, and instead characterises it as the ‘need’ economy. In the latter case, the producer usually starts the circuit with money, purchases inputs, produces commodities and then sells them against money. In this case, the producer engages with capitalism before completing the production process, and the circuit assumes the form M-C-C’-M’-C-C’-M’, where M’, in successive rounds, is greater than the initial money advanced but the difference between M and M’ is spent on consumption. It is argued that though in this case, the production is not primarily organised for accumulation, as happens to be the case in capitalist production, nevertheless, it cannot also be equated with subsistence economy which precludes any surplus. In any case, irrespective of whether it is defined as petty –commodity production or the need economy, the question that obviously draws attention is: What relevance does this non-wage segment, an economy that is primarily destined for consumption, have in reference to capitalism? In other words, how is a capitalist fundamental class process of production and appropriation of surplus value overdetermined by an array of subsumed class and non-class processes that involve non-capital at different moments? Various arguments are advanced saying that the non-wage segments largely constitute the ‘reserve army of labour’ and that they sustain themselves through self-employment till they are recruited in formal sector jobs. The other implication is that the informal segment helps in reducing the reproduction cost of labour power, as goods and services produced in this informal segment mainly enter into the subsistence basket. Although partially true, these arguments do not acknowledge the following facts: a) It is not always empirically true that
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a larger portion of the consumption basket of an average industrial labourer originates in the informal sector and the purpose of reducing the value of the subsistence basket could be fulfilled even by producing wage goods through mass production (Schmitz, 1982); b) the reserve army of labour is relevant in capitalism for containing the rise in wages in the capitalist segment, but that does not explain the existence of such a vast segment of non-wage employed persons, who would hardly be called for wage work in the capitalist sector. Rosa Luxemburg (1951) was among the first to theorise the need for non-capitalist markets and argued that in the case of expanded reproduction, a ‘closed’ capitalist system can never get rid of the realisation crisis without a non-capitalist ‘external market’ that is used to absorb part of the surplus. While acknowledging the requirement of external stimuli, Kalecki (1971) averred that in a balanced trade between the capitalist and non-capitalist segments, that is, if the value of net exports is zero, then the non-capitalist segment plays no role in absorbing the unrealised surplus. This argument was also advanced by Sweezy (1942) in his critique of Luxemburg’s thesis. However, Patnaik (1997) refuted the need for an export surplus to stimulate investment in the capitalist sector. This is precisely because the expansion of exports and contraction of import-competing activities have asymmetrical effects upon domestic investment and the positive effects of the former would be larger than the negative effects of the latter. Second, balanced trade between two economies might imply the transfer of export surpluses from the capitalist to the pre-capitalist sector if the imports from under-developed economies are used to replace domestic pre-capitalist producers within the developed capitalist economy. Kalecki’s principal point, however, was that in the absence of specific exogenous stimuli, a capitalist economy would settle down in a state of simple reproduction and that innovations do play the role of such stimuli by introducing a positive trend into the system. Although Patnaik’s theorising of engagement with the pre-capitalist sector bears a resemblance with Luxemburg’s argument of the theoretical impossibility of capitalism existing in isolation, but it is different in the sense that the necessity of engagement does not arise in order to realise the entire unconsumed surplus of the core as argued by the former, rather it provides a ‘reserve market’ that stimulates investment. The central argument runs as follows: being a demand-constrained system, capitalism has a tendency to move away further from the central position, and there is obviously no spontaneous mechanism that ensures the functioning of the system within the upper bounds of the inflationary barrier and the lower bounds of activity related to the minimum acceptable rate of profit for the capitalists. The coherence and the viability of capitalism can only be explained when the capitalist sector is ensconced with a pre-capitalist setting, when the distant reserve army consisting of a vast pauperising mass created within the pre-capitalist sector and geographically separated from the reserve army at the core, plays the role not only of containing real wages but also of stabilising the wage unit and hence the value of money (Patnaik, 2008). The basic difference between Kalecki’s analysis and that of Patnaik lies in the fact that Kalecki implicitly assumes that a capitalist economy is viable at any rate of profit, while in Patnaik’s scheme of things, there is a minimum pertaining to the rate of profit and hence to the level of activity, slipping below which would make the
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system unviable. However, what is common to all the above analyses is the necessity of creating a hegemony over the existing non-capitalist segment because only then would the capitalists be induced to make the required level of investment. The political and economic dimensions of continuously creating the ‘other’, non-capitalist sectors is further captured in Harvey’s notion of accumulation through dispossession (see Harvey, 2003; Sharryn and Carbonella, 2008). The interaction between the capitalist and the non-capitalist segments, especially in the neo-liberal era, is explained in terms of the inside/outside dialectics that come into play depending on the cyclic search for new sources of capital. The neo-liberal era signifies the restoration of the power of capital over labour after two decades of working class empowerment attained through labour and urban social movements. At the same time, it is also the period that signifies the attempt made by capitalists to appropriate, co-opt, confront and supersede the manifold achievements of the working class. Hence, the inclusion/exclusion dynamics in economic relations is mediated by the dialectic of force and persuasion in the realm of politics. However, the mode of accumulation during the neo-liberal period represents a major departure from the expanded reproduction of the post-war Keynesian epoch. At that time, the realisation of excess capital was facilitated by mass consumption and large expenditures of the welfare state on account of public utilities and infrastructure. During the neo-liberal era, on the contrary, dispossession assumes various forms of loss of entitlements. In the advanced countries, the workers lost their pensions, welfare, national healthcare and jobs; elsewhere, in the indigenous and peasant communities, people lost their natural rights on land, water, forests and plants, and many of the public utilities were privatised. In a sense, the intrusion of capital into the non-capitalist segment creates new avenues for accumulation through dispossession. The above analysis is deeply related to the non-temporal interpretation of Marx’s paradigmatic formulation of the ‘primitive accumulation of capital’. The idea of separation of producers from their means of production applies to both capitalist accumulation and the primitive accumulation of capital. It flows from the alienation of labour from the object of production, and accumulation in capitalism reproduces this separation at an ever-increasing scale. However, the difference between the two is as follows: in the process of capitalist accumulation, the separation takes place through the silent compulsion of economic relations while in the primitive accumulation of capital, the separation is imposed primarily through an extra-economic force. And this use of an extra-economic force did not subside with the establishment of capitalist relations, rather it was called forth each time that the capitalist class and the state perceived a threat to the stability of the system, that is, when the silent economic forces could not ensure the required minimum rate of profit. In this context, one may note that the expansion of the non-capitalist segment in India and in many other developing economies includes, to a large extent, activities related to the services sector. In most of the cases, these activities lie outside the realm of the fundamental class process and hence, the essentialist interpretation of the capitalist mode of production would fail to acknowledge their role in constituting the capitalist class process. In other words, the question simply is whether these activities do, in any case, play a role in the
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augmentation of surplus value or not. The underlying issue is, of course, pegged with the conceptual boundaries between productive and non-productive labour. Productive labour is labour which creates a surplus value while unproductive labour is that which is exchanged with money not in the form of capital but of revenue. Many of the activities related to commerce and finance are unproductive, according to this definition. Marx, however, used the term ‘indirectly productive’ while referring to activities related to the sphere of circulation. This is because the speed of circulation determines the turnover of capital, which, in turn, further influences the mass of surplus value created. Hence, though the activities in the sphere of circulation do not create value in themselves, they play a significant role in realising the values already created in the sphere of production. As regards the question of services in general, Marx argued that commodity is a social mode of existence of a good that possesses some use value. The form in which labour materialised itself in the ‘commodity’ is absolutely irrelevant for this relation (Marginson, 1998). Hence, according to this argument, commodities do not have to assume a tangible or durable form. On the other hand, for instance, though the merchant or the trader does not add any new value to the produced commodities, nevertheless s/he plays the role of productive capital in its own right by imposing outlays of capital on the employment of labour, and hence creating surplus value. Thus, the expansion of the services sector does not necessarily imply a deduction from the pool of surplus value but could also imply an addition to the latter. Therefore, the current trend in the rise of non-wage employment in the services sector is neither alien to the Marxian scheme of analysis nor is it incompatible with the broader framework that we use to capture the articulation between the capitalist and non-capitalist segments. Besides the broader politico-economic reasoning that addresses issues related to interaction between the capitalist sector and the non-wage segment, viz. self-employment, one also needs to focus on the interface between the two segments that takes place through the act of exchange. One of the major differences between a wage worker and a self-employed worker is that in the case of the former, wages are supposed to be paid independent of the act of sale of the produced goods, while the self-employed person can realise the return of his/her labour only after being able to sell the produce. The asymmetry between wage income and non-wage income actually reflects the inherent asymmetry between capital and non-capital, whereby in the non-capitalist segment, the self-employed worker is more vulnerable to cyclical fluctuations as compared to the wage worker. The asymmetry in exchange could further be captured at the conceptual level. In capitalism, labour assumes a dual character: one concrete, which signifies the particular dimension and specifics of labour that produces commodities as use values and the other abstract, which is universal, social and general in producing exchange values of commodities. Differences of nationality, linguistic identity, gender, sexuality, and so on are relevant only in the domain of concrete labour, they are actualised in producing the differing use values but through the abstractions of social labour and labour time, heterogeneity is forcefully demolished into a system of structural coherence through the act of exchange. The law of value maintains the social division of labour in a commodity-producing society and commodities exchange on the
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basis of equivalence of simple labour time only when all labour could be put to equivalence by the notion of ‘abstract labour’. The reduction of the varied concrete forms of labour to abstract labour requires a forcible act of making everything being represented in terms of labour measured in terms of ‘average/normal’ intensity. The concept of ‘abstract labour’ is interior to capitalism, which requires the mobility of both capital and labour. While selling their commodities, the capitalists of the various spheres of production realise the value of the capital consumed in their production. However, while analysing the general rate of profit in Capital III, Marx argued that capitalists do not secure the surplus and related amount of profit created in their own sphere. “What they secure is only as much surplus value and hence profit, as falls, when uniformly distributed, to the share of every aliquot part of the total social capital from the total social surplus value, or profit, produced in a given time by the social capital in all spheres of production.” (Marx, 1959; Capital III, Ch. IX). Furthermore, the cost of production in each sphere is specific but the profit added to them is independent of the particular sphere of production. The general rate of profit is determined by the following two factors: a) the organic composition of capital in different spheres of production and the related rates of profit in the individual spheres of production; and b) the distribution of the social capital in these different spheres. Hence, if the organic composition of capital in a specific sphere of production is less than the average social capital, then the price of the product in that sphere of production would be less than the value of the product. If we assume for the time being that the self-employed producer engages with the capitalist sector to realise her returns on the basis of some equivalence, it is likely that the shadow rate of profit that s/he could realise would not be enough to secure the value of the product because in most of the cases, the organic composition of capital would be less than the social average. Secondly, the general rate of profit in the capitalist sector is constituted by an equal rate of exploitation, which is ensured through the competition of labour that works through labour mobility. In the sphere of self-employment, there is no reason to believe that this uniform rate of exploitation would be established in the act of exchange between the capitalist and non-capitalist segments. The terms of trade between the capitalist sector and the self-employed producer are completely arbitrary and accidental, as it is impossible to establish a relation of equivalence in value-theoretic terms. The capital advanced in selfemployment is not ‘capital’ in the general sense, as it is hardly transferable to alternative sites of investments. It has to be applied in a way that helps valorise the family labour. In these situations, the markets for capital and labour are not separate and independent. They are both segmented markets, as the family labour cannot always have recourse to alternative occupations. However, the return to labour in self-employment, once it enters into an exchange with the capitalist segment, should be at least not more than the wage in the capitalist sector, which requires only the existence of a ‘reserve army of labour’, that is, a supply of sufficient number of people looking for subsistence income. Hence, the return in self-employment and wages in the capitalist sector are mutually constitutive, with one conditioning the other, though, of course, not on the same footing but on the basis of the asymmetry what Choudhury, et al. (2000) termed as the ‘mimicry of overdetermination’.
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However, the general tendencies, in any case, do not preclude the possibilities and instances of earning relatively more in self-employment than wage employment in a specific sector, depending on the organic composition capital of the self-employed enterprise and the degree of availability and mobility of the labour force in the specific segment, just as there is no need to believe that the worker’s wage in capitalism always has to be equal to the minimum subsistence level. The final outcome is constituted by elements of political and historical specificities that act and interact upon the underlying economic tendencies. Finally, if we assume a situation wherein ‘Department I’ producing capital goods and ‘Department II’ producing consumer goods support each other in appropriate proportions such that there are no possibilities of crisis because of the existence of under-consumption, then also there would be an interaction between the capitalist and non-capitalist sectors, precisely because of non-economic reasons. The ‘reserve army of labour’, as it is conceived, implies a relative over-supply of labour power created primarily by increasing the organic composition of capital. This reserve has further increased because of the dismantling of trade barriers between states. As Rodrik (1997) argued, increased trade resulted in a rise in international competition that translated into greater elasticity of the domestic demand for the labour. This means that a worker is now competing with a much larger labour supply, which reduces its bargaining position and the first-order effect of trade appears to have been a redistribution of the enterprise surplus toward employers rather than the enlargement of the surplus itself. But beyond this ‘reserve army’, there is a simultaneous process of creating the ‘wasteland’ (a term used by Bhaduri, 2008), in the sense that those dispossessed were separated from the means of production but were hardly absorbed in the rank of the capitalist labour force. This segment comprises those unfortunate ones who are permanently denied of the ‘privilege’ of being exploited in the capitalist sector as wage labour. Sanyal (2007) contends that this is different from the conventional notion of the ‘reserve army of labour’. The patronage of the capitalist state by occasionally providing subsidised credits and inputs to this segment is not at all prompted by the economic necessity of maintaining a relative excess supply of labour that helps in pushing down wages in the capitalist sector, but is only driven by the political purpose of legitimising the hegemony of the ruling class. Given the fact of the devastating nature of the present state of expanded reproduction, together with the erosion of the welfare state, even if we ignore the possibilities of a realisation crisis and assume capital to be self-subsistent, then also it necessitates the institution of a surrogate safety net that takes care of the dispossessed by making provisions for the minimum level of subsistence. In other words, the engagement of capital with the non-capital in this context might be because of reasons that do not directly account for the necessities related to surplus production or appropriation, rather it constitutes a subsumed class process serving only a political purpose. V. CONCLUSION Capitalism never existed in isolation in ‘pure’ and pristine form, and has been overdetermined by all other elements of social life that include separate processes of non-capitalist production relations. This does not, however, preclude the attempts to theoretically specify the essential
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characteristics of capitalism. But at the same time, the non-essentialist framework refuses to limit the analysis on the basis of a linear progression of history, which finds non-capital to be a subsidiary class process. On the contrary, capitalism engages with its exterior in the domains of politics, economics and ideology, and in the process, both the segments get overdetermined by each other. No centrality needs to be attached to the capitalist fundamental class process and therefore, non-capitalist class processes also need to be conceived as being constitutive to the capital system. Therefore, the co-existence of a large non-wage segment with wage employment should not be viewed as a paradox in capitalist development. The relation between capitalist and non-capitalist segment is a complex process and such an interaction cannot be captured by any simplistic one-dimensional causality. The non-capitalist segment exists primarily with its own causal historical determinations, and not necessarily to serve some purpose for capitalism. And the engagement does not necessarily originate from an a priori systemic necessity, but at the same time, it does not signify an intersection between isolated systems. The engagement in this case is a process of mutual determination though based on asymmetric relations. The interaction might be because of the following economic reasons: the recurrent need for recruiting labour in the active labour force; and pushing down the cost of production of the subsistence basket and using the compressible wage segment to attain stability in the capitalist system; or it might flow from the political purpose of establishing a hegemony over the non-capitalist segment, though this may not necessarily be followed by trade between the two segments. In sum, the intrusion of capital in the non-capitalist space refers to situations wherein the silent compulsions of capitalist laws have not been able to take care of the minimum rate of profit required for the existence and stability of capitalism. However, otherwise also, the interaction might be multidimensional, involving non-class processes that directly contribute to the act of producing or appropriating a surplus as well as those related to subsumed class processes, which ensures the political stability of the capitalist fundamental class process. Therefore, the articulation entails a complex dialectics of force and persuasion that determines the interactive space mutually constituted by economic, political and ideological determinations. References Althusser, L. and Balibar, E. (1970), Reading Capital, New Left Books, London. Bhaduri, Amit (2008), ‘Growth of a Wasteland’, Available at: http://sanhati.com/articles/651, Accessed on 9 March 2009. Choudhury, Ajit; Das, Dipankar and Chakraborty, Anjan (2000), Margin of Margin: Profile of an Unrepentant Post-colonial Collaborator, Anustup Prokashani, Calcutta. Dobb M. (1946), Studies in the Development of Capitalism, Routledge and Kegan Paul, London. Drucker, P.F. (1993), Post-Capitalist Society, Harper Business, New York. Harvey, David (2003), The New Imperialism, Oxford University Press, Oxford. Holton, J. Robert (1981), “Marxist Theories of Social Change and the Transition from Feudalism to Capitalism”, Theory and Society, Vol. 10, No. 6, November, pp. 833-67. Kalecki, M. (1971), Selected Essays on the Dynamics of the Capitalist Economy, Cambridge University Press, Cambridge.
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Kasmir, Sharryn and Carbonella, August, (2008), “Dispossession and the Anthropology of Labor”, Critique of Anthropology, Vol. 28, No.1, pp. 5-25. Luxemburg, Rosa (1951), The Accumulation of Capital, Routledge and Kegan Paul, London. Marginson, Simon (1998), “Value Creation in the Production of Services: A Note on Marx”, Cambridge Journal of Economics, Vol. 22, No. 5, pp. 573-85. Marx, K. (1958), Capital, Vol. I, Foreign Languages Publishing House, Moscow. —— (1959), Capital, Vol. III, Foreign Languages Publishing House, Moscow. Mead, C. Donald (1994), “The Contribution of Small Enterprises to Employment Growth in Southern and Eastern Africa”, World Development, Vol. 22, No. 12, pp. 1881-94. Mead, C. Donald and Liedholm, Carl (1998), “The Dynamics of Micro and Small Enterprises in Developing Countries”, World Development, Vol. 26, No. 1, pp. 61-74. Moser, C. (1978), “Informal Sector or Petty Commodity Production: Dualism or Dependence on Urban Development”, World Development, Vol. 6, Nos. 9/10, pp. 1041-64. NCEUS (2009), The Challenge of Employment in India: An Informal Economy Perspective, National Commission for Enterprises in the Unorganised Sector, Vol. I, New Delhi. NSSO (Various years), Reports on “Employment and Unemployment Situation in India”; Report No. 531, Department of Statistics, Government of India, New Delhi. —— (Various years), Reports on “Service Sector in India’, 57th and 63rd Rounds, Report Nos. 483 and 529, Department of Statistics, Government of India, New Delhi. Patnaik, Prabhat (1997), Accumulation and Stability under Capitalism, Clarendon Press, Oxford. —— (2008), The Value of Money, Tulika Books, New Delhi. Piore, M. and C. Sabel (1984), The Second Industrial Divide: Possibilities for Prosperity, Basic Books, New York. Quick, Paddy (2004), “Subsistence Wages and Household Production: Clearing the Way for an Analysis of Class and Gender”, Review of Radical Political Economics, Vol. 36, No. 1, Winter, pp. 20-36. Resnick, A. Stephen and Wolff, Richard D. (1987), Knowledge and Class, University of Chicago Press, Chicago and London. Rodrik, Dani (1997), Has Globalisation Gone Too Far?, Institute for International Economics, Washington DC. Roy, Satyaki (2007), “Do Minimum Wages Reduce Employment in the Small Enterprise Clusters?”, Indian Journal of Labour Economics, Vol. 49, No. 4, pp. 709-19. Sanyal, Kalyan (2007), Rethinking Capitalist Development, Routledge, Taylor and Francis Group, London, New York and New Delhi. Schmitz, Hubert (1982), “Growth Constraints on Small-scale Manufacturing in Developing Countries: A Critical Review”, World Development, Vol. 10, No. 6, pp. 429-50. Sharryn, Kasmir and Carbonella, August (2008), “Dispossession and the Anthropology of Labour”, Critique of Anthropology, Vol. 28, No.1, pp. 5-25. Sweezy, Paul M. (1942), The Theory of Capitalist Development, Monthly Review Press, New York. Tomich, Dale W. (2004), Through the Prism of Slavery: Labour, Capital and World Economy, Rowman and Littlefield Publishers Inc., Oxford, UK.
JOURNAL OF INDIAN ASSOCIATION OF SOCIAL SCIENCE INSTITUTIONS (IASSI) IASSI QUARTERLY: Contributions to Indian Social Science Vol. 29
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Rural Non-Farm Sector in India: Role and Prospects to a Globalising Economy T.S.Papola Development of Non-Farming Activities, Globalisation and Employment Guarantee Scheme S.C.Jain Microenterprise Development in India: Experiences and Possibilities Nisha Bharti Globalisation,Gujarat State and Welfare for Poor Ghanshyam Shah and Kiran Desai State and Cities in Rajasthan: Pali between the 17th and 19th centuries Sunita Zaidi Indian in Trinidad: A Study of Sandwich Culture Surendra K. Gupta BOOK REVIEWS
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The Indian Journal of Labour Economics, Vol. 54, No. 2, 2011
CHALLENGES TO ENSURING CORE LABOUR STANDARDS IN TRANSNATIONAL CORPORATIONS: THE CASE OF INDIA1 Indira Gartenberg and Supriya Bandekar∗ During the last decade, the International Framework Agreement (IFA) has emerged as a new tool for corporate governance, given the internationalisation and increasing mobility of capital by transnational corporations (TNCs). This paper intends to examine the implementation of the IFA in the Indian subsidiaries of two European automotive companies. The issue of fragmentation in India has emerged as a fundamental impediment in the implementation process. Geographically dispersed production processes with increasing non-permanent employment and other factors such as factionalised trade unions, inefficient communication and the apathy of the State towards labour issues have contributed to an unusually vulnerable situation in this sector. This paper also attempts to reflect on where the IFA could be used to build capacities of trade unions to facilitate dialogue and action at various levels of management, trade unions, global unions and the State. I. INTRODUCTION International Framework Agreements (IFAs) are contractual agreements signed between large transnational corporations (TNCs) and global union federations (GUFs). These agreements take a holistic view of global production networks to include subsidiaries and suppliers. They provide a ‘framework’ within which the TNCs and their supply chain could undertake their operations worldwide, with a particular focus on adherence to the core labour standards2 (CLS) of the International Labour Organisation (Shaheed, 2008). Further, IFAs are characterised by a non-binding mutual understanding between TNCs and GUFs, with an inbuilt conflict resolution mechanism. Lastly, and most importantly, IFAs function as a tool for managements and trade unions of companies to be part of a joint decision-making process, in order to influence issues concerning the TNC’s productivity and labour standards as well as concerns related to trade and industrial relations (IR). Thus far, around 73 IFAs have been signed by GUFs and TNCs, mainly out of Europe. This paper intends to examine IFA implementation in the metal sector in India, more specifically, with regard to two European companies in the automotive segment of this sector—Metalcorp1 and Metalcorp2. Metalcorp1 makes luxury cars, trucks and buses, while Metalcorp2 is an auto component company involved in automotive, information technology (IT), engineering, consumer goods and industrial technology. The former has two production * Indira Gartenberg is a Research Officer at the Tata Institute of Social Sciences (TISS), Mumbai. Email: reva18@ gmail.com and Supriya Bandekar is an independent researcher based in Mumbai. Email: supriyab@gmail.com.
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units in India, while the latter has fourteen manufacturing units and three development centres. Within the GUF, this sector is represented by the International Metalworkers Federation (IMF). This paper attempts to explore the linkage between labour standards, fragmentation in the Indian case— both in the production process as well as in the labour movement— and wider issues of corporate governance and business ethics. In the first section, the findings from each of the two companies have been presented and emerging issues have been highlighted. This is followed by a discussion on the ways in which fragmentation affects the nature of work and routine interactions. The next section deals with hurdles facing unions in India today both in terms of resources and information. The paper then moves towards a detailed examination of the issue of lack of information as a combined result of the existence of weak channels of communication and power dynamics. Lastly, it talks about issues with the IFA document and the challenges presented by fragmentation in the Indian case. It also attempts to tie up the debate by highlighting the potential areas wherein the document could be used for changing the current situation. II. COMPANY FINDINGS 1. Metalcorp1 The Metalcorp1 factory at Chakan is a small ‘boutique factory’, in the words of the former Human Resources (HR) director of the company. It employs 121 permanent workers and about 150 temporary workers. The latter are recruited through an employment exchange on a contract basis for six months, usually renewed for another six months, and renewed again for one year. At the end of this process, there is no guarantee of a permanent job and they have to leave the company. Earlier, their salary was Rs. 8500 per month; it has since been reduced by Rs. 1000, without consulting or informing the union. Metalcorp1 is also excessively dependent on trainees who come through the state-run apprentice programme called the Maharashtra Employment Promotion Programme3 (MEPP). This programme exempts employers from three of the existing labour laws, viz. the Minimum Wages Act, 1948, the Employees’ State Insurance Act, 1948, and the Employees’ Provident Fund Act, 1952. The state provides the company a nominal reimbursement of stipends meant for the trainees. It is important to stress that these stipends comprise a meagre amount and the company stipends are worth at least ten times this amount, even though the company stipend itself is low (for a Grade X-passed ITI trainee, the state pays the company Rs. 300, and Metalcorp1 pays the trainee Rs. 3000 per month). The trainees perform all the tasks that their permanent/ contract counterparts undertake, only for a lot less in terms of remuneration. The salary of a permanent shopfloor worker in Metalcorp1 is approximately Rs. 35,000 in addition to benefits. Contract workers, however, earn in the range of Rs. 18,000–20,000. The contract workers and trainees are not members of the union. Discrepancies have arisen between the versions of the union and the management with regard to the production and labour situation. For instance, the company shifted their plant from Chinchwad to Chakan a few years ago. When asked about the workers’ demand for shifting allowance, the HR officers stated that no such demands were made, even though the
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management gave the workers an extra amount of its own accord, not specifically referring to it as a shifting allowance. The trade union members, however, stated that the management used the old agreement signed in the previous location to clarify that the union was not supposed to make any additional demands other than those stated in the agreement. These were the grounds for refusing to provide a shifting allowance. When the next agreement was signed at the new location, the management increased their salaries by 10-20 per cent, and called it ‘shifting allowance’. According to the trade unionists, the salary should have increased regardless; and this increase was made to look like a shifting allowance. In addition, the workers’ commuting time increased, which meant that they could spend even lesser time with their families. The workload too, increased due to the higher production capacity of the new plant. All these factors contributed to the creation of a stressful situation, which continues to be the case. In terms of health standards too, there was a mismatch in the information provided by the workers and the HR. The latter talked of the high quality standards of the food prepared in their canteen as per a nutritionist’s regular advice, in clean and hygienic conditions. The workers, however, talked of a jaundice outbreak caused due to the consumption of canteen food, affecting 120 employees in the past. According to the trade unionists, the management denied these allegations, explaining that the employees had, in fact, eaten street food and contracted the disease. The trade unionists admitted that the canteen facility had improved since, but in the course of improvement of the facilities and services, the workers were not included in the decision-making process. The HR stated that since they know the company provides better amenities than any other production facility in the entire auto cluster of Chakan, there is, in fact, no need to solicit the workers’ views. This has created disillusionment among the workers, especially those who have been working in the company for over 15 years. This issue is a crucial one. Numerous studies have shown that the workers’ participation in management (WPM) reduces alienation, and promotes a sense of ownership among workers, thereby increasing overall productivity. Metalcorp1, however, had a top-down approach to decision-making with no indication of the workers’ participation in it. Workers repeatedly talked of constant ‘mental harassment’ in addition to the heavy workload, which caused them physical strain. It was reported that the workers were asked to register ‘sick leave’ as ‘privilege/casual leave’. Their requests for lighter work during illness were mostly not considered and rubbished as lies. Punishments would follow. One way of punishing sick workers, as mentioned by the trade union members, was to make them stand outside the HR office all day long. The only break from the punishment was during lunch and tea-time. This was also true for workers who did not comply with instructions. Workers found these punishments humiliating. Further, the trade union also talked of instances wherein workers were transferred to departments requiring more strenuous work than their original departments, if they were found to voice their grievances. Workers reiterated instances of punishments pointing to the HR officers’ controlling behaviour. One of the strategies used by the management to reduce the strength of the union was to promote two or three trade union members from each union committee (except from one)
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to the position of junior officers, with the condition that they would give up their union membership. According to former trade union office bearers and some members of the Metalcorp1 union, the current union is a ‘yellow union’4 because the office-bearers are those preferred by the management. Both the management and trade union prefer an independent internal union.5 Innovative measures for corporate governance were taken by way of anonymous telephone-calling facility to compliance officers in Germany—in case workers found someone was not complying, for example, with the safety standards of the company. The telephone numbers and email addresses were put up on the notice board in both English and the local language Marathi. The former HR director of the company claimed that this initiative was a success as it facilitated dialogue. Senior workers and former trade union members interviewed for this study did not have a clue about such a facility. Metalcorp1 boasts of almost a zero per cent attrition rate, due to the fact that it offers competitive salaries and benefits. According to the company’s HR, the salaries are perhaps the best in the field, and their labour standards and social security benefits are much better than those of the other auto companies in the cluster. Interaction between HR and workers is, however, severely lacking. Communication from HR at Metalcorp1 headquarters (HQ) to the Indian subsidiary too has perhaps been selective. Metalcorp1 HR in Chakan clarified that no information about the IFA had been passed by the German headquarters to the management of the Indian subsidiary. This points to discrepancies in information-sharing, prioritising, outreach, and brand building on the part of Metalcorp1 HQ. The IFA was signed by Metalcorp1 in 2002, the HR in Germany is well-informed, and the union, works council and IG-Metall have taken concrete steps to use the document for furthering the scope and purpose of the IFA. In fact, they have reached the stage of implementation wherein the document itself has gone into a phase of re-negotiation to include even more detailed content revisions. However, the company’s Indian management counterpart has not even been informed of such an agreement. This is, however, an uncomfortable submission, as has been clearly mentioned by both the former and current HR directors of Metalcorp1. If the process transfer for assembling the Completely Knocked Down (CKD)6 kits and making the car can happen flawlessly, why can the flow of information regarding such an important international document not follow suit? Secondly, the issues faced by workers within the company’s plant with regard to wage differentials, the use of contract labour, and excessive use and under-payment of trainees and harassment have been highlighted. In its nascent years, Metalcorp1 made German employees shift base to India to take charge of the plant. No compromises were made and it was ensured that the employees and their families would be comfortable while staying in India. However, Metalcorp1 failed to uphold the same labour standards for its local employees in Chakan. Not only is Metalcorp1 taking advantage of the current situation like every other company in the auto cluster, but it has also taken concrete steps to silence the union and subvert workers’ issues and grievances, as stated above. The management claims to be doing a lot
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in the direction of implementing employee-driven policies, but the workers do not reiterate this sentiment. The workers and the management both expressed their eagerness to use the IFA to at least facilitate discussions. It is in this light that IFA could be used by both the HR and trade unions in Metalcorp1. 2. Metalcorp2 This study focused on Metalcorp2â&#x20AC;&#x2122;s automotive chassis business, which makes components for hydraulic braking systems and wheel brakes. Of the chassis plants, the Jalgaon plant and Chakan plant were examined. The Jalgaon plant is the only integrated plant with all three divisions of production: foundry, machining and assembly. The Chakan plant manufactures boosters, tandem master cylinders, calipers, rotors and valves. The section manufacturing two-wheeler brakes in Chakan has been transferred next door and is being run by an Italian company. The trade unions listed the strength of the workforce in various Metalcorp2 plants as below: l Jalgaon: approximately 1194 (194 permanent + 400 staff + 600 trainees) l
Manesar: approximately 250 (27 permanent)
l
Sitarganj: approximately 100 (numbers for permanent workers not known)
l
Chakan: approximately 600 (184 permanent + 400 contract workers and trainees).
Some representatives from both the Manesar and Sitarganj plants belong to the Jalgaon union. However, the Jalgaon trade unionâ&#x20AC;&#x2122;s office-bearers clarified that they did not know much about these two plants because their meetings with the representatives from there were infrequent. Both the Jalgaon and Chakan plants have independent internal unions7. The trade union at Jalgaon has office bearers who are over 45 years of age, whereas the Chakan union is youth-led and has a predominantly youth membership with an average age of 32 years. The Jalgaon plant has an office space dedicated for union activities, whereas as regards the Chakan plant, even though it has an office, the members preferred to meet the researchers involved in this study outside the plant premises. (i) Metalcorp2 Jalgaon Plant The average age of permanent workers in Metalcorp2â&#x20AC;&#x2122;s Jalgaon plant is 45-50 years. No new recruitment has occurred in this category, while several hundred young trainees and contract workers have been hired during the past few years. The contract workers and trainees in the plant get Rs. 182 per day. Trainees get stipends of up to Rs. 4000 per month, in addition to free use of canteen facility and uniforms. It is important to note that there are no female employees in the Jalgaon plant, either as workers or as staff members. The trade unionists mentioned that their company cares about employees. This, they claimed, was evident from the canteen serving food in accordance with their religious food habits (fasting days) and the availability of a medical doctor/compounder on the plant premises most days of the week.
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The visit to the Jalgaon plant was made on a typical day, when a tour of the manufacturing unit was not anticipated. It was, therefore, clear that the method of production was routine. Workers in most parts of the foundry, machining and assembly area of the plant did not use any protective gear like gloves, masks, eye-protection, broiler suits, or even proper shoes. In addition, they were performing most of the tasks standing throughout their shifts to complete their targets. Depending on their tasks, they would have to stand next to hot furnaces, walk on top of the floor that contained underground furnaces, move around machines or stand at the assembly section. Most of the workers in all these divisions seemed young8 (the median age is 25 as per the HR head of the plant), and were either trainees or contract labourers. It was found that trainees and contract workers were disproportionately exposed to toxic chemicals, fire, heavy machines, and loud noise. The union membership and negotiation, as mentioned earlier, does not include these workers, who therefore, have no voice collectively representing their concerns. While the permanent workers realise the issues facing the contract workers and trainees, no specific attempts have been made to bring them into the folds of the companyâ&#x20AC;&#x2122;s union. Although these workers may be engaged in performing the same or more risky tasks, their wages are much lower as compared to those of their permanent counterparts. The Jalgaon union leaders were not aware of the IFA and wondered if the document would be useful in trying to secure an increase in the bonus amount (from Rs. 2500 to Rs. 3500), and in the amendment of Provident Fund (PF) schemes, pension schemes, and so on. Since many of the permanent workers will soon enter the retirement age, issues like pension, PF, and gratuity are more important than demanding a safe workplace. (ii) Metalcorp2 Chakan Plant The Metalcorp2 union at Chakan used to have 230 members, but after promotions to the level of junior officers (JOs), retirements and resignations, it is left with 184 members. The issue of promotions to JOs as in the case of Metalcorp is an important one, especially so, because when one is promoted to this category, one can no longer be a union member and is henceforth counted as a staff member. Further, in 2007, there were 20-25 women workers, but now there are just four (including three in the assembly line department, one in the store department) and the company is not hiring any more women. Although these women employees have requested the management to impart them training that would give them a desk job, yet their requests have not been accepted. All four women (aged 30-35 years) are among the oldest workers and union members, yet they have never been office bearers of the union. The Chakan plant level union was registered in January 2007, and the first agreement demanding a wage raise was signed in November 2007. The companyâ&#x20AC;&#x2122;s two-wheeler division was subsequently carved out and some workers were shifted to this unit, which is being run by an Italian company. The union demanded that these workers be recognised as Metalcorp2 union members and the wage raise be made applicable to them as well. Further, the union added that in case the plant was shifted outside Pune or was shut down, its workers should be
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absorbed back into Metalcorp2. There was pressure from the managements of both companies to ensure that they would not have a common union. But the union refused to accept this condition as the shifted workers wanted to continue being part of the Metalcorp2 union. As time passed, salaries at Metalcorp2 increased while those at the two-wheeler company remained the same. Among others, this was one of the major issues that later culminated in an 85-day long non-violent strike starting on 18 October 2009. The strike was an unusual example of solidarity among permanent workers, contract workers and trainees of both Metalcorp2 and the Italian company. The employees of both companies got a chance to interact with each other daily and to discuss common issues. The IMF HQ, Metalcorp2 HQ unions, and the Italian company HQ unions showed solidarity in joining hands to participate in this strike. Their demands were: equal pay for equal work; continued legal process of abolishing the contract labour system; immediate resolution of lack of implementation of the collective agreement at the two-wheeler unit; mutual discussions to resolve the lack of implementation of collective bargaining at Metalcorp2; and finally, assurance of fair enquiry, without any prejudice against the suspended general secretary and five union members. The managements of both companies made several attempts to break this joint struggle. In September 2009, both the managements proposed a settlement on the condition that none of the contract workers and trainees would be taken back. These conditions were not acceptable to the trade unionists and the strike continued. Finally, on 9 October 2009, the management and the union came to an agreement before the Labour Commissioner. The strike was called off the next day, with both sides agreeing to the continued legal process of abolishing contract labour and an assurance for a fair enquiry against the suspended workers. The wage raise was made applicable to all trade union members of Metalcorp2 and the Italian company, and the trade unionists also agreed to the managementsâ&#x20AC;&#x2122; proposal of taking back the contract workers/trainees in batches. The general secretary of the union reported back at work in August 2010. Not much is known of what eventually happened with the workers who were to be taken back in stages. The IMF country head said, â&#x20AC;&#x153;This strike was very significant in the region. For the first time we saw regular workers and contract labour fighting in unity. Unfortunately the union had to take a decision to return to work leaving the fate of the contract workers up to the courts (Gardner, 2009).9 After the 85-day strike at the Chakan plant, the union decided to conduct all its meetings outside the plant premises after the stipulated working hours. They thus use their homes to conduct small meetings. In case they plan meetings with all workers of the plants, a wedding hall or garden is rented out for the day. Productivity targets are fixed for each worker, regardless of their union membership. Meeting these weekly targets makes it difficult to engage in trade union activities during office hours. This fact stands in stark contradiction to the agreement signed by the union and management, which states that the union must have 64 hours per month for union activities. It is also important to stress that the only time the trade unionists get to meet each other is in between shifts, which is often a 15-minute hurried interaction, or during lunch hours and/or a tea break. Union leaders expressed their
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concern over not having enough time, resources and the necessary support for monitoring implementation of the agreed demands. (iii) Internal Dynamics of Metalcorp2 Unions The Jalgaon and Chakan unions rarely interact with each other. This was particularly marked during the Metalcorp2 strike in Chakan. The Jalgaon union felt that their involvement in the strike was not sought from the early stages. The Chakan union also reported receiving no assistance or guidance in its initial years from the Jalgaon union. The former expressed their disappointment by saying that their counterparts in other Metalcorp2 units in the same state were older plants consisting of experienced trade unionists, which did not readily offer support while they were starting out. The Chakan union, therefore, had no source of information and guidance other than the management itself. The only available external source of information is a labour consultant’s office in the area, which stresses on trade unions’ involvement in human resources management (HRM). The unions in Chakan and Jalgaon also differ on the issue of involving contract workers and trainees in the union. While the former expressed a desire to include them and the staff (especially the erstwhile union members who were now junior officers), the latter did not have any such plans. The Chakan union leaders also mentioned that a union may negotiate on different levels, across pay scales, but that its strength essentially lay in numbers. With the union membership declining over the past 3-4 years, this has become a prime cause of concern. Chakan trade unionists also mentioned that no worker was supposed to engage in more than 25 hours of overtime work per month, but this policy has been implemented only for the past two years ever since the union insisted that the company do so. The Jalgaon union (through its Manesar production facility) also refused to be a part of the cluster-wide strike of auto workers in Gurgaon, as they felt that they were not fully aware of the issues being raised. This is in consonance with the comment made by the International Metalworkers Federation (IMF) India head, “Unions with all the benefits rarely speak for their weaker counterparts’, which is also reflected in the non-inclusion of contract workers in the union. III. FRAGMENTATION The numerous instances and reasons for fragmentation have been classified in the following categories: geographical dispersion of the companies’ plants; internal dynamics among unions of the same company; political affiliation of trade unions; discrimination based on gender, caste and status of employment (permanent, contract and migrant); and so on. Both the TNCs under consideration had more than one production and sales locations within India. Several factors contribute towards restricting effective solidarity among internal unions of a single company’s geographically dispersed units. As mentioned above, Metalcorp1 faced some difficulties due to shifting. The Metalcorp1 trade union seems to be disgruntled not so much by the shifting of the factory premises, but by the manner in which it was done. If workers and the union had been consulted regarding the move, they would
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perhaps not have been so dissatisfied. In fact, they could have come up with solutions to minimise the inconvenience. The IFA could be used as a tool to empower the trade unions as well as the HR to engage in such a dialogue and in joint decision-making processes so that workers’ participation becomes a norm rather than an exception. The existence of internal power dynamics among these unions on the basis of region, gender, caste, language and seniority is a prominent reason for the fragmentation, as is evident from the case of Metalcorp2 unions in Jalgaon and Chakan. 1. Discrimination: Gender and Caste Caste-based discrimination was not reported, but the management and staff categories in almost all TNCs came from the upper castes, whereas the blue collar workforce was inevitably from the middle and lower caste groups. The absence of women in most of the TNCs, trade unions and global unions in this study spoke volumes about level of integration and mainstreaming of women in the formal workforce. Numerous reasons are cited for the absence of women from the workforce, ranging from women preferring not to do factory work, to their inability to work in the evening or night shifts. Metalcorp1 had female employees in the staff category but none were members of the trade union. The Metalcorp2 Chakan union seemed to engage with the issue of participation of women in the workforce. Although all the office bearers in the union were male, there was some female participation in the union. There is an intersection of issues faced by women in these factories. In addition to the tasks in the factory, they also perform domestic chores. The stress created by this is compounded by the absence of crèche/day care centre facilities at the workplace. The Chakan trade unionists marked this as a cause of concern, pointing out, “A lot of the women have quit, and no women are being hired because women prefer to work only in the morning shift.”10 The four women who are still working there complain of fatigue and have reportedly been requesting that they be given desk jobs. They would like to develop their skills in areas like auditing. 2. Contract Workers and Trainees: Young and Unrepresented Both companies seem to be using trainees and contract workers to deal with increased demands. It is common to see trainees leave the company in the face of numerous uncertainties. Even if they move up the ladder and obtain a contract employment status, there is no guarantee that after years of being contract workers, they will be confirmed as permanent workers in the future. The average age of the permanent workers in both companies was found to be in the range of 35-50 years. The trade union is representative of the concerns of permanent workers, while ignoring or overlooking the numerous issues affecting all workers, especially the younger ones in the contract and trainee categories. Not only is it important to involve these workers to ensure that their voices are heard, but this move also has a direct impact on the union strength. As the numerical strength of the union increases, so does its bargaining power. However, due to the reasons mentioned above, this is hardly taking place. A Metalcorp2 trade unionist summed up the situation of the trainees aptly when he said, “Earlier we had
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only a handful of trainees, now we have trainees who far outnumber the workers. Now skilled work is also done by the trainees, but even if they perform the same tasks as those done by the permanent workers, they do not get the same benefits”.11 IV. HURDLES FACED BY UNIONS The fragmentation of unions in India at large and the lack of finances within internal unions are not the only issues plaguing the unions. Even though the trade union movement in India has a history of over 85 years almost all of them cover formal sector workers, but one (SEWA) which is engaged in mobilising informal sector women workers (Bhowmik, 2009). This is a matter of concern as an overwhelming majority of the Indian working class is not represented in the tens of thousands of unions or the central trade union organisations, and therefore has no voice. Fragmentation in the labour market, informalisation and social security are the major challenges facing the Indian labour movement today. The Metalcorp1 union, which boasts of some of the highest salaries for its shopfloor workers, faces peculiar problems. “We (the union) don’t even have an office, an email id or a phone number,” says a union member.12 While none of the trade unionists expected the management to step in to bring together different unions of their own company, or to provide a link/access point to IMF, Metalcorp1 workers felt that the company did not allow them to have any official interaction with IMF, which is crucial for facilitating communication from and to workers. In order for the workers to realise the importance of unity to their struggles, they need to be aware of issues that are faced not just by them, but by other workers too. In the auto cluster where both Metalcorp1 and Metalcorp2 are located, there are various other Indian and multinational auto companies as well as suppliers. However, there is hardly any interaction among them or any clarity on their association with the IMF. An industry expert from the area pointed out, “There is lack of awareness about the IMF. Only four to five unions are affiliated to it and even they may not be too clear about the implications of this affiliation or its significance”.13 Most young union members have articulated a need for training programmes that would equip them to be better union members/office bearers. A Metalcorp1 union member said, “We do not know what ‘union work’ is all about; we need to be formally taught what one should do as a trade union member and leader”.14 However, it must be remembered that there are costs involved in providing such trainings and initiating awareness campaigns. Evans notes that “effective tools for transnational contestation are being developed, but it is even clearer that the organisational resources of all types, that are being devoted to the global campaigns would need to expand exponentially if labour is to succeed at the global level” (2010, p. 365). V. PROBLEMS OF COMMUNICATION Communication is the first step towards implementation. It was, is, and remains one of the core concerns in the labour movement as well as in corporations in India today. One of the crucial challenges to the implementation of the IFA is the communication gap across trade
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unions and management. Numerous factors could be responsible for the lapses in the exchange of information. Although in theory, there are plenty of avenues for communication— numerous meetings, workshops and seminars at various levels—our findings indicate that there are major gaps in the information of the actors. For the purpose of this paper, we will confine the discussion to the awareness of IFAs. Firstly, the HQs of the corporations have been lacking in their efforts to disseminate information about the IFA to their Indian subsidiaries and plants. One of the respondents, a former HR director of Metalcorp1, summed this up by saying, “No dissemination of IFA has taken place from the HQ level to us. We met several times on different occasions; they could have easily informed me. But that did not happen. I can say this because I do not work in the company any longer.”15 As discussed earlier, India has 12 central trade union federations (formed along political party lines) constituting some 66,000 unions, in addition to informal sector unions and independent internal unions of companies. The TNCs almost always have non-politicallyaffiliated internal independent unions. It has been found that each TNC considered in this study had one internal independent union per plant. It is difficult and cumbersome to try to reach out to each and every single one of these unions. Established networks of communication exist within the central/national union federations. There may be cases wherein the union is independent and the office bearer may have individual political affiliations of his/her own accord, but that does not imply that the union has any political affiliation. However, the individual leader’s affiliations may influence the networks tapped for the benefit of the union. For instance, a union leader may belong to HMS but his/her union may be an internal independent one. S/he may be in the know of the new initiatives planned by HMS, and may try to provide support through his/her independent union. Further, in cases where the leader may be asked to give a reference for, say a labour lawyer, in all likelihood, this reference may be from within the HMS or may come through his/her HMS networks. When companies and trade unions insist that their plants have non-political independent unions, the workers are unable to access these existing networks. One of the HR respondents from Metalcorp1 HR, while voicing the views of all HRs in the auto cluster, stated, “We need to avoid political unions”.16 The issue of communication gap has emerged as one of the most pressing problems of the Indian trade union movement. The time has come for Indian unions to devise strategies of effective communication within them. Quan (2004, p. 5) states the importance of inter and intra-union communication, “unions need to begin to talk with each other. The challenge will be to base these relationships upon a firm commitment to democracy and respect for human rights while at the same time respecting and reaffirming the right of national labour movements to have varying models, styles, and practices”. There are also complications at the level of horizontal communication at the grassroots. Internal rivalry based on seniority and gender (among other factors), and lack of coordination among unions of the same company due to geographical dispersion further serve to insulate them from issues confronting workers in different plants. Almost all the respondents interviewed for this study cited rivalry and lack of coordination among unions as the biggest drawbacks of the Indian labour movement.
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VI. CHALLENGES OF FRAGMENTATION Fragmentation exists in India owing to factors such as age (seniority), religion, region, language, caste, and gender. These constitute the basis for internal rivalry and for a lack of coordination among all kinds of trade unions— whether they are the 12 large central trade union federations or the smaller internal independent unions of TNCs. Some trade unionists believe that it is important for unions to be actively involved in politics so as to be able to use political power to their advantage. Others believe that keeping away from any kind of political affiliation means avoiding corruption, violence, and other such eventualities associated with politics. Trade unionists, HRs, the GUF and industry experts may have indicated the importance of solidarity, but it has been found that on the ground, most of them—products of the existing stratification in the country— find it difficult to move out of their comfort zones by giving up their personal interest groups, ideological standpoints and their positions. Lack of communication and action are the oft-quoted results of such a situation. In such a background, the IFA could, in fact, be used in various ways to increase solidarity among diverse groups of workers, by helping all workers across categories. Interestingly, buyer pressure to comply with standards seems to be far more effective, probably because it translates directly into a financial loss if the buyers stop buying products. Nathan and Posthuma (2009) also highlight that the buyers’ insistence on meeting certain standards has led to a wide proliferation of various auditing bodies that ensure the compliance of the company. However, these auditing bodies can only carry out ‘snapshot checks’, that is, check for visible factors like safety conditions and violations of child labour. Social audits by themselves have certain drawbacks; not only do they fail to capture the invisible issues that are not easily measurable, but they also leave out certain categories of workers, like migrant, contract workers. “While snapshot social auditing has been fairly successful at identifying visual issues such as health and safety, it is failing to pick up more embedded issues such as discrimination and freedom of association which are central to workers’ rights. Casual, migrant and contract workers are often overlooked in audits” (Barrientos, et al., 2010, p. 8). From the case studies of both companies, it is evident that sooner rather than later, the unions might turn redundant and weak if they continue to be exclusive. Perhaps the only way in which the unions can ensure that this does not happen is by involving the contract workers and trainees in their membership and bargaining activities. During one of the interviews, the Chakan trade union office bearers enquired curiously if the IFA’s provision of freedom of association could be used by the union and these employees—not just the former union members, but also new members—to their advantage, regardless of the category of employment. Their question raises the possibility of the IFA document being used in the future to assert one’s fundamental right to freedom of association, which has been granted not only by the Indian Constitution, but also by the company’s signed framework agreement. If the trade unions were to be aware of the IFA, their leveraging power would have been higher, especially while bargaining for contract workers and trainees, but this was neither mentioned nor used in a single instance.
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The IFA attempts to ensure the implementation of core labour standards universally but contradictions lie in the very concept. We are aware that transfer of practices is by no means a straightforward linear process. Becker-Ritterspach’s (2006, p. 384) analysis proves that there could be misfits from both the sides, “just as foreign templates and demands in subsidiaries can come under recontextualisation pressures in distant and misfitting local/host context, so can local/host templates used in subsidiaries come under recontextualisation pressure, if too distant from or misfitting with the foreign parent demands and context conditions”. Although Becker-Ritterspach’s analysis concerns the transfer of practices solely for products, it can also be extended to understand the transfer of labour practices. For instance, for an auto manufacturing company originating in Europe, an annual health check-up and health insurance may be the most basic benefit provided for its worker, spouse and children. The Indian subsidiary may be doing better in this respect by way of extending the health insurance cover to include the worker’s parents in addition to his/her spouse and children. When exploitative local practices or laws are given precedence over global commitments such as those agreed upon in the IFA, it can be problematic. The IFA is a non-binding agreement, making it a low priority at all levels of management. The dilemma arises when the law of the land serves to protect the privileged few whereas the IFA suggests an inclusive framework for all kinds of workers. This is one of the pressing challenges in the implementation of the IFA. For instance, the HQ requires the company’s subsidiary to employ a certain number of women. However, we found that the Indian subsidiary of Metalcorp1 had no women workers. The HR of the subsidiary pointed out that employing women was a cumbersome process due to the legal issues of women working in evening or night shifts, and that in order to avoid the complications associated with this law17, they found it easy to refrain from hiring female employees. The provisions of joint decision-making and conflict resolution within the IFA make it an appealing document. However, one of the most crucial challenges it faces in India is fragmentation at different levels. Various actors have mentioned a number of reasons for the non-implementation of IFA, and the challenges in the path of its future implementation. Our findings indicate major gaps in the information that the various actors and stakeholders had about IFA. The communication to HR ranges from being weak to non-existent in almost all cases. Due to the multiplicity of unions, internal rivalry based on seniority and lack of coordination among unions, it is also difficult for the GUF to reach out to each and every single union. Therefore, dissemination of information has been found to be an issue from both sides—the HR and trade unions. Listening to the employees and their concerns too is highly underrated, as most communication in the companies is top-down and one-way. Further, there is the issue of taking the responsibility for IFA implementation. The Metalcorp1 HR claimed that there was no need for special implementation of the IFA since their standards were already so high. As for the few respondents who knew about the IFA, they too had differing ideas about the individuals or agencies that were responsible for its implementation. The GUF thought that it was the Indian subsidiary’s trade union responsibility; most trade unionists felt that the responsibility of disseminating the agreement was that of
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the GUF through the central trade union federations. The trade union, for its part, passed the buck on to the company management for funding the dissemination and implementation. Lastly, the HR stated that it was the responsibility of their HQ sustainability and compliance officers to implement the IFA. The HQ, for its part, shirked its responsibility by saying that the local managers are responsible for implementation, and that as the HQ, they do not have much say in the everyday functioning of the company. The success of the IFA strategy depends largely on its usefulness in fostering the building of local trade union representation capacity and collective bargaining. The ownership of the IFA is therefore crucial to its usage by both management and trade unions. The IFAs need to include more specific provisions regarding management and processes of implementation pertaining to trade unions. Initiation, negotiation, proactive implementation and monitoring are thus the mutually dependent phases of the whole process. Notes 1. This paper is a shorter version of the one presented at a conference on ‘Ethical Governance: Myths and Realities in Organizations today’ at the Bangalore Management Academy during 10-11 December 2010. It was titled ‘Challenges to Ensuring Labour Standards in Transnational Corporations: The Case of India’. The findings have been drawn from a research study that was a cross-country examination of the IFA implementation in India, Brazil, Turkey, Germany and USA, and was conducted during the period October 2009 to March 2011. The study was headquartered in the Freie Universität, Berlin and was directed by Dr. Michael Fichter, Dr. Jörg Sydow and Dr. Markus Helfen. The authors were part of a research project which focused on two companies each in three sectors, namely, chemicals, construction and metal. This paper focuses only on the case of the metal sector in India with regards to the IFA implementation. 2. Freedom from child labour (Conventions 138 and 182), Freedom from forced labour (Conventions 29 and 105), Freedom from all forms of discrimination (Conventions 100 and 111), Freedom to form associations and the right to collective bargaining (Conventions 87 and 98). 3. See http://ese.mah.nic.in/~ese/employer/EmpEppFirst.php and http://ese.mah.nic.in/~ese/employer/ EmpEpp.php 4. The pejorative Spanish term traditionally used to refer to union organisations set up and supported by the employer or by the management to hinder the representation and defence of employees’ interests or to prevent the presence of more combative or demanding trade unions in the enterprise or workplace.
See http://www.eurofound.europa.eu/emire/SPAIN/COMPANYUNIONYELLOWUNION-ES.htm
5. Independent unions are those that are limited to the particular plant (therefore, ‘internal’ to that particular plant), and are characterised by no affiliation to any central/national trade union federation or a political party. 6. Completely Knocked Down (CKD) kits come to the Indian plant of Metalcorp1 from Germany. The Indian plant is, therefore, a 100 per cent assembly plant. 7. Independent internal unions are those that are not affiliated to any political party or national trade union federation. 8. According to the trade union representatives, the basic minimum qualification for a foundry worker was class XII (18 years of age) and that of a shopfloor worker (machining and assembly) was class X (16 years of age) plus a diploma from ITI. 9. This reference, a few Internet references and some newspaper references cannot be cited as the research study has a policy of keeping the names of the companies anonymous. 10. Focus group discussion with Metalcorp2 (younger union) TU, 2 August 2010.
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11. Focus group discussion with Metalcorp2 (younger union) TU, 2 August 2010. 12. Focus group discussion with Metalcorp1 TU, 2 August 2010. 13. Interview with Industrial Relations Consultant, 8 March 2010. 14. Focus group discussion with Metalcorp1 TU, 2 August 2010. 15. Interview with former HR Director of Metalcorp1, 30 August 2010. 16. Interview with the current HR Director of Metalcorp1, 28 October 2010. 17. Section 66 of the Factories Act, 1948, prohibits employment of women in factories between 7.00 pm and 6.00 am. This section was incorporated in the Act after India’s ratification of the International Labour Organisation (ILO) Convention No. 89. Certain industries fall outside the purview of the Factories Act like the Information Technology (IT) and Business Process Outsourcing (BPO) industries. However, in recent years, some state governments have exercised their authority to prevent women from working in night shifts in these industries too.
(See http://www.citehr.com/42387-sec-66-factories-act.html and http://www.ibnlive.com/news/india/05_2007/ new-move-in-banning-women-at-night-shift-40180.html.)
References Barrientos, S.; Mathur, K. and Sood, A. (2010), “Decent Work in Global Production Networks: Challenges for Vulnerable Workers in the Indian Garments Sector”, in Anna Posthuma and Dev Nathan (eds.), Labour in Global Production Networks in India, Oxford University Press, New Delhi, pp. 127-45. Becker-Ritterspach, F. (2006), The Hybridization of Local MNE Production Systems: The Case of Subsidiaries in India, Labyrinth Publications, Ridderkerk. Bhowmik, S. (2009), “Understanding Labour Dynamics in India”, South African Review of Sociology, Vol. 40, No. 1, June–August, pp. 18-32. Evans, P. (2010), “Is it Labour’s Turn to Globalise? Twenty-first Century Opportunities and Strategic Responses”, Global Labour Journal, Vol. 1, No. 3, pp. 352-79. Nathan, D. and Posthuma, A. (2009), “Implications of Global Production for Indian Firms and Labour: An Introduction”, Indian Journal of Labour Economics, Vol. 52, No. 4, pp. 557-64. Quan, K. (2004), “Unions Need to Talk”, Journal of the International Centre for Trade Union Rights, Vol. 11, No. 4. Shaheed, Zafar (2008), “Core Labour Standards and F undamental Principles and Rights at Work”, International Labour Office, Geneva, Available at: http://www.ilo.org/wcmsp5/groups/public/---ed_norm/---declaration/ documents/statement/wcms_099976.pdf, Accessed on 26 October 2011.
THE INDIAN JOURNAL OF HUMAN DEVELOPMENT The Indian Journal of Human Development (IJHD) is a peer-reviewed multi disciplinary journal, published bi-annually by the Institute for Human Development, New Delhi. It provides an open platform for promoting debate and discussions from a human development perspective and also promotes critical engagement with human development discourse. IJHD publishes articles, reviews, perspectives, research notes/commentaries, statistics relating to human development and book reviews on India and developing world. The Journal welcomes expressions of all shades and opinions.
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INFLUENCE OF LABOUR WELFARE FACILITIES ON JOB SATISFACTION: A STUDY OF PHARMACEUTICAL COMPANIES IN GOA Christina De Souza and Silvia Noronha* This paper highlights the influence of labour welfare facilities on the job satisfaction of employees in Indian and multinational pharmaceutical companies in Goa. A stratified proportionate sample of 201 employees was administered the Labour Welfare Inventory by S.K. Srivastava, (2002) and the Job Satisfaction Scale by Dr. Rita Shresthya and H.C. Ganguli, (1994). The eight dimensions of labour welfare (including education/training, housing, subsidised loans, recreation, safety, canteen, medical facilities, and others) were found to be positively and significantly correlated with the job satisfaction of employees in these companies. Regression analysis specified the dimensions of education/training and others, as indicative of influencing the job satisfaction of employees in these pharmaceutical companies. The results also showed that the statutory labour welfare facilities constitute a better predictor of job satisfaction than the non-statutory labour welfare facilities in these companies. Employees in the multinational pharmaceutical companies in Goa reported better provision of labour welfare facilities and were found to experience a higher level of job satisfaction than their fellow mates in Indian pharmaceutical companies. I. INTRODUCTION The major growth in the pharmaceutical sector in Goa started in late 1990s. The pharmaceutical industry has emerged as a major component in the industrial development of the state (Kare, 2004). The five-year tax holiday for Goa announced in the Union Budget in the year 1993, which was further extended to the period up to 31 March 2004, as per Section 80-IB (4) of the Income Tax Act, and the conducive socio-economic environment gave further impetus to the development of the pharmaceutical sector in Goa. From 1995 onwards, an all-round development took place and today pharmaceutical industries in the state have over 120 registered units employing approximately 20,000 people directly, in addition to the 2000 to 3000 personnel employed in the marketing of pharmaceutical products (Salgaocar, 1992). Goa has, in fact, emerged as a hub for pharmaceutical companies. Indeed, pharmaceuticals constitute the sunrise industry of the state. Goa was able to attract large Indian and multinational pharmaceutical companies during the decade 1993-2003 (Salgaocar, 1992). These included big players like Glenmark, Zydus Cadila Health Care Limited, Unichem, Lupin, Ratio Pharma, * Christina De Souza is an Associate Professor at Government College of Arts, Science and Commerce, KhandolaMarcela, Goa. Email: christinade5@yahoo.co.in. and Silvia Noronha is an Associate Professor in the Department of Economics, Goa University. Email: silvia29470@yahoo.co.in.
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Watson, Ranbaxy, Aventis, Cipla, and Abbott India Pharmaceuticals Limited. Most of the pharmaceutical units in Goa manufacture basically pharmaceutical formulations. In a globalised and highly competitive world, pharmaceutical companies are engaged in stiff competition with each other. They need to encourage their workers to perform better, improve their efficiency, and retain good employees. For this purpose, providing adequate labour welfare facilities and promoting job satisfaction assumes importance. The progress of an industry and the development of the nation depend, to a large extent, on the welfare of the workers and their attitude towards work. Against this background, for the purpose of the study, the researchers selected Indian and multinational pharmaceutical companies situated in industrial estates in Goa, and attempted to highlight the labour welfare facilities—both statutory and non-statutory—that influence the job satisfaction of employees in these companies. II. CONCEPTUAL FRAMEWORK Job satisfaction is derived from the Latin words satis and facere, meaning ‘enough’ and ‘to do’, respectively. Job satisfaction denotes a process of gaining desired things at the desired level on the job (Chelliah, 1998). The term ‘job satisfaction’ implies a positive attitude towards one’s work, which is global in nature and which results from many specific jobrelated experiences (Sharma and Bhaskar, 1991). According to Manickavasagam and Sumathi (2000), job satisfaction represents an attitude rather than behaviour, and is hence the outcome of the difference between the actual and expected receipts of rewards from a job. Ganguli (1994) defines job satisfaction as an attitude that results from a balancing and summation of many specific likes and dislikes experienced in connection with the job. It signifies the employees’ judgment of how well the job on the whole is satisfying his various needs. The concept of ‘labour welfare’ has received inspiration from the concepts of democracy and the welfare state. The term ‘labour welfare’ is very comprehensive and includes various types of activities undertaken for the economic, social, intellectual and moral benefit of the labour community (Kumar, 1994). Labour welfare implies the setting up of minimum desirable standards and the provision of facilities like healthcare, food, clothing, housing, medical assistance, education, insurance, job security, and recreation, among others, for the benefit of workers. Such facilities enable a worker and his family to lead a good work life, family life and social life (Sarma, 1996). Report II of the ILO Asian Regional Conference (1947) defined labour welfare as a term which is understood to include such services, facilities and amenities as may be established in or outside the vicinity of undertakings to enable the persons employed in the latter to perform their work in healthy, congenial surroundings, and to provide them with amenities that are conducive to their good health and high morale. In the broader sense, labour welfare is a convenient term covering all those aspects of industrial life that contribute to the well-being of the workers. Labour welfare refers to any agency either statutory or voluntary, which aims at the betterment of workers’ conditions (ILO Resolution, 1947). Labour welfare helps in the development of better workers, which, in turn, helps in the development of a better community and society. The labour welfare measures provided in
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an organisation affect the attitudes of employees towards work. Labour welfare facilities satisfy the needs of the employees, which can lead to an improvement in their working life, family life and overall welfare. III. REVIEW OF LITERATURE Employee satisfaction is one of the most researched topics of organizational behaviour in India and abroad (Hoppock, 1935; Herzberg, et al., 1957; Ganguli, 1964; Sinha, 1981; Khandwalla, 1988; Sinha and Singh, 1995; Chelliah, 1998). Hoppock (1935) was the first industrial psychologist to introduce the concept of job satisfaction in his classic work, Job Satisfaction. According to Hoppock, job satisfaction is any combination of psychological, physiological and environmental circumstances, that cause a person to say, “I am satisfied with the job”. He proposed the following six major components of job satisfaction: individual reactions to unpleasant situations; facility of adjusting with other individuals; standing in the socio-economic group with which one has identified; relationship between the demands of the job and the worker’s abilities; interest and training; and security and loyalty. Hoppock determined that job satisfaction is a combination of psychological, physiological and environmental conditions emanating from his/her job that induce a sense of satisfaction in the person. According to Herzberg, et al. (1957), it is necessary to identify the needs of the employee. The organisation for which he works must recognise his needs and ensure that they are satisfied. As such, job satisfaction is positively related to the degree to which one’s personal needs are fulfilled in the job situation. Studies have shown that an increase in job satisfaction is related not only to the satisfaction associated with the important components of a job but also to the satisfaction of the increasing number of job facets, irrespective of their importance (Warnous and Lawler, 1972; Khaleque and Rehman, 1987). Various studies have also determined the influence of labour welfare facilities provided by industries and their influence on the job satisfaction enjoyed by employees. One such study was undertaken by Goyal (1995) for six cotton textile industries in the private, public, and co-operative sectors in Punjab, based on a random sample of 350 textile workers. The results of the study revealed that the provision of various statutory labour welfare facilities lead to the job satisfaction of workers. The study suggested that an increase in labour welfare facilities would increase the level of job satisfaction, which, in turn, may help in increasing productivity of textile workers in Punjab. Srivastava (2004) studied the impact of labour welfare on employees’ attitudes and job satisfaction. The sample for this comparative study included 100 workers each from the private and public sectors of Kanpur city. The results of the study determined that better labour welfare facilities have a deep impact on workers’ psyche. Workers who benefited from better welfare activities were observed to experience a higher degree of job satisfaction as compared to those who were the recipients of poor welfare facilities in both the private as well as public sectors. Thus better welfare facilities decidedly influence job satisfaction. In a study on labour welfare and job satisfaction, Agnihotri (2002), found that job satisfaction
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was significantly related to different dimensions of welfare facilities. This review of literature thus shows that only a few researchers have shown interest in analysing labour welfare facilities and their influence on job satisfaction. IV. OBJECTIVES OF THE STUDY The aims of this study are: (i) To investigate the dimensions of labour welfare that influence the job satisfaction of employees in Indian pharmaceutical companies and multinational pharmaceutical companies in Goa; and (ii) To determine the relative importance of the statutory and non-statutory labour welfare facilities as a predictor of job satisfaction in Indian and multinational pharmaceutical companies in Goa. V. HYPOTHESES OF THE STUDY Ho1: The dimensions in the Labour Welfare Inventory do not influence the job satisfaction of employees in Indian and multinational pharmaceutical companies in Goa. Ho2: The statutory labour welfare facilities are not better predictors of job satisfaction than non-statutory labour welfare facilities in pharmaceutical companies in Goa. VI. METHODOLOGY OF THE STUDY 1. Sample of the Study The population of the study comprised 841 employees working in the ten selected pharmaceutical companies in Goa (including five Indian and five multinational pharmaceutical companies). Workers and managers were selected from these Indian and multinational pharmaceutical companies in Goa on the basis of proportionate stratified sampling. The sample represents 20 per cent of the managers and workers in each of the selected pharmaceutical companies in Goa. The total sample of the study included 201 respondents, which comprises 24 per cent of the population of the study. In Indian pharmaceutical companies (IPCs), the sample comprised 115 respondents, while that in multinational pharmaceutical companies (MPCs) included 86 respondents. 2. Instruments used for Data Collection The Labour Welfare Inventory, constructed and standardised by S.K. Srivastava (2002) and the standardised scale constructed by Dr. Rita Shresthya and H.C. Ganguli (1994) on Job Satisfaction, were administered to the sample studied. The items in these scales were assessed by using Likert’s five-point rating scale ranging from ‘strongly disagree’ (1 point) to ‘strongly agree’ (5 points) for positive items and the reverse for negative items in the scales administered to the respondents. The Job Satisfaction Scale by Dr. Rita Shresthya and H.C. Ganguli (1994) included seven dimensions, namely, work itself; pay and other financial benefits; promotional and training opportunities; job security; supervision; colleagues/co-workers; and company practices.
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These seven dimensions of job satisfaction were covered by 26 items, in which three were negative statements while the others were positive statements. The reliability of the scale using the test–retest method was: r=0.90. The odd–even reliability after using Spearman–Brown’s correlation was: r=0.81. The validity of the scale was checked through the internal consistency method, that is, item analysis showing low correlations between items and high correlations between item score and total test score. The Labour Welfare Inventory constructed and standardized by S. K. Srivastava (2002) consisted of eight dimensions, namely, education/training; recreation; medical; subsidised loans; canteen; housing; safety and others (related to the general well being of workers, including uniforms, drinking water, toilets, leave facilities, workman’s compensation, retirement benefits, rest rooms, and bonus). These eight dimensions were covered under 47 items, all of which were positive statements. The reliability coefficient of the Inventory using the test–retest method was: r=0.76 and the index of reliability was 0.84, indicating that the Labour Welfare Inventory is highly reliable and valid. The split-half reliability coefficient was 0.83 and the index of reliability was 0.89, which makes the Inventory reliable and valid. 3. Method of Data Collection Data was collected from both primary and secondary sources for the purpose of the research. Primary data was collected through field surveys using interview schedules and questionnaire method. Secondary data was collected from books, journals, monographs, and unpublished thesis. A total of 500 scales were administered to the respondents, out of which 350 were received. Of these, the number of fully completed scales was 201 (N=201), while in the others some items were left incomplete. Thus, only the completed scales (N=201) were selected for the analysis of data, in the research. The 201 usable responses represented a 40.2 per cent response rate. 4. Statistical Techniques Used The data collected was analysed by using Pearson’s coefficient of correlation and multiple regression analysis. VII. DATA ANALYSIS Ho1: The dimensions of the Labour Welfare Inventory do not influence the job satisfaction of employees in Indian and multinational pharmaceutical companies in Goa. In order to test the null hypotheses, a correlation matrix between job satisfaction and labour welfare dimensions, and within the labour welfare dimensions was constructed as shown in Appendix Table A1. This was followed by a running of the multiple regression analysis. The findings in the correlation matrix would explain those dimensions in the Labour Welfare Inventory that are significantly correlated with the job satisfaction of employees in the pharmaceutical companies in Goa. The multiple regression analysis would identify the labour welfare dimensions that influence job satisfaction.
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It can be observed from Appendix Table A1 that all the eight labour welfare dimensions are positively and significantly correlated with job satisfaction at the 0.01 level. This implies that an increase in any of the labour welfare dimensions is likely to significantly increase the job satisfaction of employees (N=201) in the pharmaceutical companies in Goa. For instance, an increase in education/training will significantly increase the job satisfaction of the employees. Similarly, any increase in recreation facilities, medical facilities, subsidised loans, canteen, safety, housing, and others would have a significant influence on the job satisfaction of employees (N=201) in these companies in Goa. Thus, any effort made by the management of pharmaceutical companies in Goa to increase any labour welfare measure would significantly increase the job satisfaction of their employees. Although these eight labour welfare dimensions are significantly correlated with job satisfaction, it does not mean that all of them are independent of each other. This can be observed from the correlation matrix, wherein the eight dimensions of labour welfare are highly correlated with each other. For example, education/training is significantly correlated with the other seven labour welfare dimensions at the 0.01 level. Likewise, recreation has a significant correlation with the rest of the dimensions of labour welfare. Thus, it can be said that all the labour welfare dimensions are highly correlated to each other at the 0.01 level of significance. This is but natural because each of these eight dimensions is indeed a composite labour welfare measure. These are the labour welfare facilities that employers provide and that employees expect to receive. An employee who receives good education/training would also like to acquire better recreation facilities, medical facilities, more subsidised loans, improved canteen facilities, housing, safety measures and others. This applies to each of the other labour welfare dimensions as well, which reveals that each of the labour welfare dimensions is significantly correlated with one another. These are very strongly correlated and so they are not independent variables by themselves. This means that the so-called independent variables are not really independent. This is an indication of a multi-collinearity problem, which could make the findings of the study unreliable and lead to large standard errors of the estimators. The problem of multi-collinearity was further realised when a multiple regression was run with job satisfaction as the dependent variable and the dimensions of labour welfare as the independent variables, the results of which are revealed in Table 1. A glance at the Table confirms that there is a multi-collinearity problem, since the value of the R² is very high (R² = 0.67) but quite a few of the coefficients of labour welfare are not statistically significant at the 0.05 level (including medical facilities, subsidised loans, canteen, housing, and safety). The rule of thumb is that if the correlation between the regressors is significant, and if the R² is high but quite a few of the coefficients are not statistically significant, it is a sign of the multi-collinearity problem (Gujarati, 2004). In order to alleviate this problem of multi-collinearity, the researcher tried many specifications with different combinations of the labour welfare dimensions. This finally led to selection of education/training, and others (uniform, water facilities, toilets, retirement benefits, compensation, rest-rooms, bonus, travelling allowance, crèche and leave facilities) as the labour welfare dimensions, since their coefficients were highly significant at the 0.01 level and are thus indicative of their influencing job satisfaction. Other independent variables
INFLUENCE OF LABOUR WELFARE FACILITIES ON JOB SATISFACTION
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Table 1 Multiple Regression Analysis for Multi-collinearity Model Summary Model R R square Adjusted R square Std. error of the estimate 1 .823a .678 .656 10.308 a. Predictors: (Constant), Staff MPCs, Gender, Age, Staff, MPCs, Recreation, Subsidised loans, Safety, Canteen, Others, Medical, Housing, Education/Training ANOVAb Sum of Squares
Df
Mean Square
F
Sig.
1 Regression
Model
41822.148
13
3217.088
30.278
.000a
Residual
19868.847
187
106.251
Total
61690.995
200
a. Predictors: (Constant), StaffMNC, Gender, Age, Staff, MPCs, Recreation, Subsidised Loans, Safety, Canteen, Others, Medical, Housing, Education/Training b. Dependent variable: Job satisfaction Model
Coefficientsa Unstandardised Coefficients
B (Constant) 30.766 Staff 14.559 Gender 2.561 Age .271 Education/training 1.300 Recreation -.789 Medical .325 Subsidised loans .131 Canteen .272 Housing .211 Safety -.016 Others .374 MPCs 11.650 Staff MPCs -7.468 Dependent variable: Job satisfaction total. Source: Primary data. 1
Std. Error 6.476 2.283 1.575 .102 .341 .299 .312 .215 .257 .225 .322 .151 2.433 3.213
Standardised Coefficients Beta .408 .072 .127 .407 -.284 .069 .038 .068 .067 -.003 .158 .329 -.179
t
Sig.
4.751 6.376 1.626 2.649 3.808 -2.639 1.043 .612 1.061 .938 -.049 2.475 4.789 -2.324
.000 .000 .106 .009 .000 .009 .298 .542 .290 .349 .961 .014 .000 .021
such as the dummy variables, multinational pharmaceutical companiesâ&#x20AC;&#x201D;MPCs (D1), gender (D2), staff (D3) and age, were also selected because of their high significant coefficients (0.01 level), which are suggestive that they too influence job satisfaction. These independent variables together would probably be able to explain the maximum variance in job satisfaction. The other independent variables (recreation, medical, subsidised loans, canteen, housing, safety) were dropped because their coefficients were not found to be significant in influencing job satisfaction or were found to be highly correlated with education/training and others. After having selected the independent variables that were indicative of influencing job satisfaction, the researcher once again used the multiple regression analysis to test the null hypothesis Ho1, the results of which unfold in Table 2.
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Table 2 Influence of Labour Welfare Dimensions on Job Satisfaction of Employees in Indian and Multinational Pharmaceutical Companies in Goa Model Summary Model R R square Adjusted R square Std. Error of the Estimate I .807a .652 .641 10.524 a. Predictors: (Constant), MPCs, Age, Gender, Staff, Others, Education/Training
ANOVAb Model Sum of Squares Df Mean Square F I Regression 40203.393 6 6700.566 60.496 Residual 21487.602 194 110.761 Total 61690.995 200 a. Predictors: (Constant), MPCs, Age, Gender, Staff, Others, Education /Training b. Dependent variable: Job satisfaction Model
I
(Constant) Education/Training Others Age MPCs Gender Staff Dependent variable: Job satisfaction
Coefficientsa Unstandardised Coefficients B Std. Error 37.530 4.636 .862 .177 .392 .130 .321 .101 10.530 1.708 3.008 1.575 11.316 1.674
Standardised Coefficients Beta .270 .165 .150 .297 .084 .317
t
Sig.
8.095 4.872 3.008 3.191 6.165 1.910 6.761
.000 .000 .003 .002 .000 .058 .000
The following multiple regression model emerges on the basis of Table 2: where, Y a b1 b2.. b6 X1 X2 X1 X 2 X 3 D1 D2 D3 e
Y= Îą+ b1 X 1 + b2 X 2 + b3 X 3+ b4 D1+ b5 D2+ b 6 D3 + e = Dependent variable (job satisfaction) = Constant term = Regression coefficient = Dimensions of labour welfare = Education / training = Others = Age = 1 for MPCs 0 for IPCs = 1 for Female 0 for Male = 1 for Manager 0 for Worker = Error term
Sig. .000a
INFLUENCE OF LABOUR WELFARE FACILITIES ON JOB SATISFACTION
293
The regression equation is:
Y= 37.5 + .86 X 1 + .39 X 2 + .32 X 3+ 10.5 D1+ 3 D2+ 11.3 D3
(1)
Adjusted R² = 0.64 N=201 For MPCs, the regression equation is:
Y (Dı = 1) = 48 + .86 X 1 + .39 X 2 + .32 X 3+ 3 D2+ 11.3 D3
(2)
For IPCs, the regression equation is:
Y (Dı= 0) = 37.5 + .86 X 1 + .39 X 2 + .32 X 3+ 3 D2+ 11.3 D3
(3)
Table 2 and Equation (1) emphasise that the coefficients education/training (X1) and others (X2) influence job satisfaction. The findings show that a one-unit increase in education/ training is likely to increase the level of job satisfaction of respondents in IPCs and MPCs by 0.86 units, while a one-unit increase in others is most likely to increase the level of job satisfaction in these companies by 0.39 units. Moreover, the standardised coefficient of ‘education/training’ (0.27) is higher than that of ‘others’ (0.16). This signifies that ‘education/ training’ has a higher influence on job satisfaction than others. Furthermore, the coefficients of education/training (X1) and others (X2) are statistically significant at the 0.01 level, as can be observed from their respective t-values. Thus, the null hypothesis, Ho1, which states that the dimensions in the Labour Welfare Inventory do not influence the job satisfaction of employees in Indian pharmaceutical companies and multinational pharmaceutical companies in Goa is not accepted. Given that the labour welfare dimensions of ‘education/training’ and ‘others’ influence the job satisfaction of respondents in the pharmaceutical companies in Goa, a glimpse at regression Equations (2) and (3) indicates that there is a difference in the level of job satisfaction in IPCs and MPCs in Goa. The intercept of MPCs is much higher than that of IPCs, signifying that the respondents in MPCs enjoy a higher level of job satisfaction than their counterparts in IPCs in Goa. Moreover, the adjusted R² is 0.64. This indicates that 64 per cent of the variance in the perceived level of job satisfaction is explained by the independent variables. This makes the model a good fit. It can be concluded from the above discussion that there is a difference in the dimensions of the labour welfare inventory—education/training and others—that influence the job satisfaction of employees in Indian pharmaceutical companies and multinational pharmaceutical companies in Goa. The labour welfare dimension of education/training has more influence on job satisfaction than others. Ho2: The statutory labour welfare facilities are not better predictors of job satisfaction than non-statutory labour welfare facilities in pharmaceutical companies in Goa. As mentioned earlier, the eight dimensions in the Labour Welfare Inventory include education/training, recreation, medical, subsidised loans, canteen, housing, safety, and others (comprising uniforms, water facilities, toilets, retirement benefits, workman’s compensation, rest rooms, bonus, travelling allowance, leave facilities, and crèche). These labour welfare
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Table 3 Statutory and Non-statutory Labour Welfare Facilities as Predictors of Job Satisfaction of Employees in Pharmaceutical Companies in Goa Model Summary Model R R square Adjusted R square Std. error of the estimate I .802a .644 .633 10.646 a. Predictors: (Constant), Age, MPCs, Gender, Staff, Non-Statutory labour welfare facilities, Statutory labour welfare facilities. ANOVAb Model Sum of Squares df Mean Square F Sig. I Regression 39703.542 6 6617.257 58.385 .000a Residual 113.337 21987.453 194 Total
200 61690.995 a. Predictors: (Constant), Age, MPCs, Gender, Staff, Non-Statutory labour welfare facilities, Statutory labour welfare facilities b. Dependent variable: Job satisfaction
Coefficientsa Model Unstandardised Standardised Coefficients Coefficients B Std. error Beta I (Constant) 33.296 5.794 Non-Statutory .143 .067 .158 Statutory .276 .084 .251 Age .335 .101 .157 MPCs 9.853 1.781 .278 Gender 2.893 1.605 .081 Staff 11.225 1.699 .315 a. Dependent Variable: Job satisfaction total
T
Sig.
5.746 2.131 3.293 3.320 5.533 1.802 6.607
.000 .034 .001 .001 .000 .073 .000
Source: Primary data.
dimensions were categorised into statutory and nonâ&#x20AC;&#x201C;statutory labour welfare facilities. The statutory labour welfare facilities (SLWFs) include medical facilities, canteen, safety, and others, while the non-statutory labour welfare facilities (NSLWFs) incorporate education/ training, recreation, subsidised loans, and housing. An attempt is made here to examine whether the SWLFs or the NSWLFs are predictors of job satisfaction in the pharmaceutical industry in Goa. In order to test this hypothesis, a regression analysis is run that would specify whether the SLWFs or the NSLWFs are predictors of job satisfaction in these companies. The results of this analysis are revealed in Table 3. The following multiple regression model emerges on the basis of Table 3.
Y= a+ b1 X 1 + b2 X 2 + b3 X 3+ b4 D1+ b5 D2+ b 6 D3 + e
where, Y = Dependent variable (job satisfaction) a = Constant term b1 b2 â&#x20AC;Ś.. b6 = Regression coefficient
INFLUENCE OF LABOUR WELFARE FACILITIES ON JOB SATISFACTION
X 1 X 2 X 3 D1 D2 D3 e
295
= Non-statutory labour welfare facilities = Statutory labour welfare facilities = Age = 1 for MPCs 0 for IPCs = 1 for Female 0 for Male = 1 for Manager 0 for Worker = Error term
The regression equation is
Y= 33.2 + .14 X 1 + .27 X 2 + .33 X 3 + 9.8 D1 + 2.8 D2 + 11.2 D3
(4)
Adjusted R² = 0.63 N=201 For MPCs, the regression equation stands as:
Y (D1= 1) = 43 + .14 X 1 + .27 X 2 + .33 X 3 + 2.8 D2 + 11.2 D3
(5)
For IPCs, the regression equation is:
Y (D1= 0) = 33.2 + .14 X 1 + .27 X 2 + .33 X 3 + 2.8 D2 + 11.2 D3
(6)
From Table 3 and regression Equation (4), it is obvious that the SLWFs (X 2) are better predictors of job satisfaction than the NSLWFs (X1) in the pharmaceutical companies in Goa. This is because a one-unit increase in the SLWFs is likely to increase the job satisfaction of the respondents in the pharmaceutical companies by 0.27 units, while a one-unit increase in the NSLWFs is likely to increase the job satisfaction of the respondents in these companies by 0.14 units. Moreover, in the pharmaceutical companies, the SLWFs have a better influence on job satisfaction than the NSLWFs, as the standard coefficient of SLWFs (0.25) is greater than the standard coefficients of NSLWFs (0.15). This signifies that the SLWFs have a larger influence on job satisfaction than the NSLWFs in the pharmaceutical companies in Goa. Since the SLWFs constitute a better predictor of job satisfaction than NSWLFs in pharmaceutical companies in Goa, the null hypothesis Ho2 is not accepted. While comparing the IPCs and MPCs in Goa, the regression Equations (5) and (6) specify that the MPCs in Goa experience a higher level of job satisfaction than the IPCs, given that the SLWFs are better predictor of job satisfaction than the NSLWFs. This can be noticed from the intercepts of the MPCs, which are higher than those of IPCs. Moreover, the adjusted R² is 0.63, which makes the regression a good fit, since 63 per cent of the variance in the perceived level of job satisfaction is explained by the independent variables. It can thus be said that the SLWFs are better predictors of job satisfaction than NSLWFs in pharmaceutical companies in Goa. Thus, if the employers of pharmaceutical companies want to increase the job satisfaction level of their employees, then they need to pay special attention to the SLWFs, which have emerged as better predictors of the job satisfaction of employees than NSLWFs.
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VIII. CONCLUSIONS The conclusions can be drawn on the basis of the above findings are delineated below. The eight dimensions of labour welfare were positively and significantly correlated with job satisfaction. An increase in any of the labour welfare dimensions and improvement in labour welfare facilities would significantly increase the job satisfaction of employees in pharmaceutical companies in Goa. If the pharmaceutical companies improve the welfare facilities for their employees then the job satisfaction of their employees would greatly increase. Two labour welfare dimensions, namely ‘education/training’ and ‘others’ were found to be indicative of influencing job satisfaction. Education/training were more influential in influencing the job satisfaction of employees than the dimension ‘others’ in the IPCs and MPCs in Goa. The SLWFs emerged as better predictors of job satisfaction than NSLWFs in pharmaceutical companies in Goa. This was because the SLWFs influenced the job satisfaction of employees to a greater extent than NSLWFs in these companies. The employees in MPCs were found to experience a higher level of job satisfaction than their counterparts in IPCs, given the labour welfare facilities, including the SLWFs and NSLWFs. The IPCs, therefore, need to work towards increasing the job satisfaction of their employees. References Agnihotri, M. (2002), “Labour Welfare Activities and Its Impact on Labourer Behaviour”, PhD. Thesis, University of Guru Nanak, Amritsar. Chelliah, C. (1998), “Job Satisfaction in Fertilizers Limited—A Study”, The Journal of Institute of Public Enterprises, Vol. 21, Nos. 1 and 2, pp. 71-82. Ganguli, H.C. (1964), in A.S. Lather and S. Gain (2005), “Motivation and Job Satisfaction”, Delhi Business Review, Vol. 6, No. 1, pp. 77-83. —— (1994), Job Satisfaction Scales of Effective Management: Manual for Managers and Social Scientists, Concept Publishing Company, New Delhi, pp. 1-35. Goyal, P. (1995), Labour Welfare and Job Satisfaction, Deep and Deep Publications, New Delhi, pp. 1-45. Gujarati, D. (2004), Basic Econometrics, Fourth edition, Tata McGraw Hill, New Delhi, pp. 47-57. Herzberg, F.; Mausner, B.; Peterson, R.O. and Capwell, D.F. (1957), Job Attitudes: Review of Research and Opinions, Pittsburgh Psychological Services, Pittsburgh. Hoppock, R. (1935), Job Satisfaction, Harper, New York, pp. 1-25. ILO Resolution (1947), in C.B. Mamoria and S. Mamoria (1983), Dynamics of Industrial Relations, Himalaya Publishing House, Bombay, pp. 368. Kare, R. (2004), in Economic Survey 2003-04, Directorate of Planning, Statistics and Evaluation, Government of Goa. Khaleque and Rehman (1987), in A.N. Nazir (1998), “Perceived Importance of Job Facets and Overall Job Satisfaction of Bank Employees”, The Indian Journal of Industrial Relations, Vol. 33, No. 4, pp. 479-89. Khandwalla (1988), in A.N. Nazir (1998), “Perceived Importance of Job Facets and Overall Job Satisfaction of Bank Employees”, The Indian Journal of Industrial Relations, Vol. 33, No. 4, pp. 479-89. Kumar, A. (1994), in A.M. Sarma (1996), Aspects of Labour Welfare and Social Security, Himalaya Publishing House, Bombay, pp. 22-59.
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Manickavasagam, V. and Sumathi, S. (2000), “A Study of Job Satisfaction among the Employees of Dalmia Magnesite Corporation, Salem”, Manpower Journal, Vol. 36, No. 3, pp. 95-99. Salgaocar, D.R. (1992), Pharmaceutical Industry: 30 Years of Economic Development in Goa 1961-1991, in Goa Chamber of Commerce and Industry, Volume O.L. da Lapa-Soares, Goa Chamber of Commerce and Industry, Panaji. Sarma, A.M. (1996), Aspects of Labour Welfare and Social Security, Himalaya Publishing House, Bombay, pp. 22-59. Sharma, B.R. and Bhasker, S. (1991), “Motivation of Public Sector Managers: A Comparative Study”, The Indian Journal of Industrial Relations, Vol. 26, No, 4, pp. 319-25. Sinha, (1981), in A.N. Nazir (1998), “Perceived Importance of Job Facets and Overall Job Satisfaction of Bank Employees”, The Indian Journal of Industrial Relations, Vol. 33, No. 4, pp. 479-89. Sinha, J.B.P. and Singh, S. (1995), “Employees Satisfaction and Its Organizational Predictors”, The Indian Journal of Industrial Relations, Vol. 31, No. 2, pp. 135-47. Srivastava, S.K. (2002), Manual for Labour Welfare Inventory, Parikchan Sansthan, Uttar Pradesh. —— (2004), “Impact of Labour Welfare on Employee Attitudes and Job Satisfaction”, Management and Labour Studies, Vol. 29, No. 1, pp. 31-40. Warnous and Lawler, (1972), in A.N. Nazir (1998), “Perceived Importance Of Job Facets and Overall Job Satisfaction of Bank Employees”, The Indian Journal of Industrial Relations, Vol. 33, No. 4, pp. 479-89.
MNC
Others
Safety
Housing
Canteen
Subsidised Loans
Medical
Recreation
Education and Training
JS Total
.509** .000 201 .571** .000 201 .541** .000 201
Pearson Correlation Sig. (2-tailed) N Pearson Correlation Sig. (2-tailed)
N Pearson Correlation Sig. (2-tailed) N
Pearson Correlation Sig. (2-tailed) N Pearson Correlation Sig. (2-tailed) N Pearson Correlation Sig. (2-tailed) N Pearson Correlation Sig. (2-tailed) N Pearson Correlation Sig. (2-tailed) N Pearson Correlation Sig. (2-tailed) N Pearson Correlation Sig. (2-tailed) N
201 .423** .000 201
.679** .000 201 .593** .000 201 .351** .000 201
.612** .000 201 .608** .000 201 .387** .000 201
.644** .000 201 .583** .000
201 .418** .000 201
.357** .000 201 .486** .000
201 .547** .000 201
.425** .000 201 .582** .000
201 201 .390** .316** .000 .000 201 201
.504** 1 .000 201 201 .565** .626** .000 .000
201 .354** .000 201
.626** .000 201 1
Age
.556** .345** .000 .000 201 201 .263** .179* .000 .011 201 201 .215** .157* .002 .026 201 201 .200** .158* .004 .025 201 201 .234** .214** .001 .002 201 201 .265** .138 .000 .051 201 201 .220** .072 .002 .312 201 201
Staff .041 .566 201 .064 .367 201 .078 .272 201 .030 .670 201 .061 .393 201 .077 .279 201 .117 .099 201
201 201 1 .223** .001 201 201
201 201 .051 -.095 .471 .178 201 201
201 .093 .190 201
.066 .355 201 .195** .006
.263** .000 201 .069 .331 201 .031 .662 201 .058 .417 201 .164* .020 201 .081 .252 201 -.039 .582 201
Sex Experience
.316** .325** .160* -.035 .000 .000 .023 .619 201 201 201 201 .354** .313** .272** -.009 .000 .000 .000 .903
Education Recreation Medical Subsidised Canteen Housing Safety Others MNC and Training Loans 1 .610** .512** .506** .462** .571** .510** .509** .571** .541** .000 .000 .000 .000 .000 .000 .000 .000 .000 201 201 201 201 201 201 201 201 201 201 .610** 1 .886** .652** .420** .583** .716** .679** .593** .423** .000 .000 .000 .000 .000 .000 .000 .000 .000 201 201 201 201 201 201 201 201 201 201 .512** .886** 1 .697** .548** .598** .757** .612** .608** .351** .000 .000 .000 .000 .000 .000 .000 .000 .000 201 201 201 201 201 201 201 201 201 201 .506** .652** .697** 1 .540** .555** .620** .644** .583** .387** .000 .000 .000 .000 .000 .000 .000 .000 .000 201 201 201 201 201 201 201 201 201 201 .462** .420** .548** .540** 1 .580** .575** .357** .486** .418** .000 .000 .000 .000 .000 .000 .000 .000 .000 201 201 201 201 201 201 201 201 201 201 .571** .583** .598** .555** .580** 1 .583** .425** .582** .547** .000 .000 .000 .000 .000 .000 .000 .000 .000 201 201 201 201 201 201 201 201 201 201 .510** .716** .757** .620** .575** .583** 1 .504** .565** .390** .000 .000 .000 .000 .000 .000 .000 .000 .000 201 201 201 201 201 201 201 201 201 201
JS Total
Appendix Table Correlation Matrix of Job Satisfaction and Labour Welfare Dimensions
298 THE INDIAN JOURNAL OF LABOUR ECONOMICS
.556** .000 201 .345** .000 201 .041 .566 201 .263** .000 201
.263** .000 201 .179* .011 201 .064 .367 201 .069 .331 201
.215** .002 201 .157* .026 201 .078 .272 201 .031 .662 201
** Correlation is significant at the 0.01 level (2-tailed).
Note: * Correlation is significant at the 0.05 level (2-tailed).
Pearson Correlation Sig. (2-tailed) N Age Pearson Correlation Sig. (2-tailed) N Sex Pearson Correlation Sig. (2-tailed) N Experience Pearson Correlation Sig. (2-tailed) N
Staff
.200** .004 201 .158* .025 201 .030 .670 201 .058 .417 201
.234** .001 201 .214** .002 201 .061 .393 201 .164* .020 201
.265** .000 201 .138 .051 201 .077 .279 201 .081 .252 201
.220** .325** .002 .000 201 201 .072 .160* .312 .023 201 201 .117 -.035 .099 .619 201 201 -.039 .066 .582 .355 201 201
.313** .000 201 .272** .000 201 -.009 .903 201 .195** .006 201
.223** 1 .326** .000 .001 .000 .990 201 201 201 201 .051 .326** 1 -.204** .471 .000 .004 201 201 201 201 -.095 .000 -.204** 1 .178 .990 .004 201 201 201 201 .093 .275** .894** -.303** .190 .000 .000 .000 201 201 201 201 201
.275** .000 201 .894** .000 201 -.303** .000 201 1
INFLUENCE OF LABOUR WELFARE FACILITIES ON JOB SATISFACTION
299
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The Indian Journal of Labour Economics, Vol. 54, No. 2, 2011
WORKING LIFE OF STREET VENDORS IN MUMBAI Debdulal Saha∗ Street vendors in Mumbai are among the most deprived sections of the selfemployed workers. This paper tries to portray the ‘working life’ of street vendors in Mumbai. The working life of vendors is explained in terms of their financial conditions and the extent of indebtedness, the amount of bribes they have to pay in order to sustain themselves in the market, their working hours, the issues of public space utilisation, and the legal aspect of their activity. It has been seen from the study that their entire existence and nature of activities are extremely informal and are trust-based. The study is exploratory in nature and their situations have been explained with the help of both quantitative and qualitative paradigms. The study shows that the street vendors borrow from moneylenders not merely for their economic activity but also for social security purposes at an exorbitant rate of interest, which, in turn, leads them to fall into a debt-trap situation. It has been further found that that they have extremely long working hours, which have been continuously increasing over the years. Further, they enjoy neither safety nor security at the work place as they face constant harassment from the local authorities. Hence, the current working hours of the vendors and the safety and security conditions in their workplace, together with extensive rent-seeking by local authorities, contribute to a deteriorating working environment as well as economic deprivation for street vendors. I. INTRODUCTION Street vendors are identified as self-employed workers in the informal sector who offer their labour to sell goods and services on the street without having any permanent built-up structure (National Policy on Urban Street Vendors [NPUSV], 2006, p. 11). Various studies have already confirmed the fact that street vendors comprise one of the most marginalised sections of the urban poor. Notwithstanding the fact that they play a very dynamic role in the urban economy, providing necessary items, which are largely both durable and cost-effective, to average income-earning households at cheap and affordable rates. In addition, they help many small-scale industries to flourish by marketing the products that they manufacture (Bhowmik, 2001; Tiwari, 2000). Thus, they help to sustain the urban economy to a great extent in terms of generation of employment and income, and provision of services to others. It has been estimated that around 30 per cent of the Mumbai workforce buys at least * The author is a doctoral student of Tata Institute of Social Science (TISS) Mumbai. He expresses his sincere thanks to Prof. Sharit Bhowmik, Dean, Scbool of Management and Labour Studies, TISS, Mumbai for his valuable suggestions and comments. Email: debdulals@gmail.com
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one meal a day from vendors (Bhowmik, 2001). Therefore, street vendors can be said to signify a viable solution to some of the problems of the poverty-stricken urban dwellers. It is computed from the Mumbai Human Development Report (MHDR) in 2009 that the total employment in Mumbai is 5.3 million (MHDR, 2009). It is also calculated that the total employment in the informal sector is 4.3 million (ibid.). The self-employed workers engaged in Mumbai number about 2 million, which accounts for 37 per cent of the total employment (ibid.). According to the Government of India, there are around 10 million vendors in India, of whom around 250,000 are in Mumbai (NPUSV, 2006). Thus, 12.5 per cent of the total self-employed population in the city is dependent for livelihood on street vending. The important goals for the urban poor in the Eleventh Five Year Plan in India are to provide them with affordable shelter and “decent living and working conditions”; to make adequate provision of land for the poor; to help in developing “self-employment enterprises” and creating jobs for wage earners; and to protect the economic interests and safety of women and other vulnerable sections of our society (Planning Commission, 2008, p. 406). Hence, this study attempts to reveal the working life of both men and women street vendors on the road. In addition, it would also be an interesting exercise to assess the changes that have taken place in the profession of street vending as a whole in Mumbai after the study conducted on them by Bhowmik in 2001. During the ten years since the conduction of that study, the phenomena of globalisation, liberalisation, and privatisation have definitely led to an enormous change in street vending. It is thus important to explore the current working life of street vendors in terms of their income levels, access to finance, working hours, safety at the workplace, the bribes they are compelled to pay, and leisure time and other important aspects. In view of these discussions, the objectives of the present study are as follows: 1. To understand the working life of the street vendors (men and women) in terms of level of income, accessibility of finance and working hours; 2. To explore the issues concerning their working conditions and their rights at work; and 3. To understand the role of collective bargaining in formulating and realising their demands for basic rights at the workplace. The present paper is organised as follows. The background of the study and the research objectives have been discussed in this introductory section. The methodology of the study is explained in Section II. This study is mainly based on a primary survey, and therefore, the socio-demographic and economic profiles of 400 individual street vendors are discussed. Their financial accessibility is also explored. The indebtedness of the street vendors is then analysed, and their working conditions in terms of safety and security at the workplace are discussed. Social network has an important role to play in street vending, which has been explained thereafter. The summary and concluding remarks are discussed in the last section. II. METHODOLOGY The unit of analysis of the present study is the individual street vendor in Mumbai. Static vendors, who have a specific space for their activity (though the space is not officially
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recognised by the government) are participants in the present research. The city of Mumbai was selected because of its diversity in terms of ethnicity and economic activities. A survey for the study was conducted from May 2008 to February 2010. Mixed methods (Creswell, 2009) were used to draw a sample from the population and to analyse the data. In addition to a large-scale survey, some of the individual cases were developed on the basis of in-depth interviews and observations by using a qualitative paradigm. A semi-structured questionnaire, based on the objectives of the study, was used (Bryman, 2009). Both closed and open-ended questions were included in the questionnaire. Since the study was exploratory in nature, open-ended questions were used to assist in exploring the current situation (ibid.). Personal interviews with 400 individual street vendors and group interviews were also conducted (ibid.). One group session was conducted with five to seven vendors in each study area. These sessions helped in achieving an understanding of the common issues. In-depth interviews were conducted with ten individual street vendors in order to understand and explore their current situation. Detailed interviews were also organised with five key respondents, who were involved in membership-based organisations, and they provided information on the role of these organisations with regard to collective action by street vendors in Mumbai. Such organisations are also in a position to make decisions for street vendors and represent them before higher authorities. 1. Sampling For the purposes of the present study, four places (clusters), namely, Chembur, Dadar, Kandivali, and Vile Parle were chosen in Mumbai on the basis of the volume of street vendors from the records of the various trade unions. Since the total population of the each of the clusters was unknown, a â&#x20AC;&#x2DC;quotaâ&#x20AC;&#x2122; was fixed in order to draw a sample. During this stage, the quota of size had been fixed in each cluster (area) based upon the volume of trade in each area. There was a fixed sample of 125 respondents in Dadar. The areas of Chembur and Vile Parle had 100 sample respondents each, whereas 75 sample respondents were allocated in Kandivali. The number of street vendors in Dadar is larger, as compared to the other two selected places, due to a significantly larger population size in Dadar. Therefore, 400 sample respondents were drawn purposively from the aforementioned four areas. The study only dealt with seven types of vendors, including those selling cooked food, vegetables, garments, electronics goods, household utensils and leather made items. These seven types were chosen because they are the most visible in this retail market and account for a large share of the total vending process. 2. Data Analysis Descriptive analysis was used to analyse the primary data obtained from the 400 individual samples. Eight individual cases based on responses from individual vendors were developed in order to explore the current situation. In addition, three individual cases developed from five key respondents were also sourced from membership-based organisations in order to gain an understanding of the role of membership-based organisations with regard to the
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street vendors in the study. These eleven cases were developed on the basis of in-depth interviews and field observations. III. SOCIO-DEMOGRAPHIC AND ECONOMIC PROFILE OF THE STREET VENDORS The following sections show the possible outcomes of the present study and the corresponding percentages for these outcomes, which are represented by values within parentheses. In the present section, the socio-demographic and economic profiles of the vendors based on primary data are explained. 1. Demographic and Social Profile This study shows that street vending is a male-dominated occupation, but the proportion of the women vendors has been significantly increasing over the years (Bhowmik, 2001; Saha, 2010). The present study demonstrates that around 59 per cent of the vendors are men, while 41 per cent are women. In terms of religion, about 75 per cent of the total vendors are Hindus, 23 per cent are Muslims, and around 1 per cent are Christians (Table 1). In terms of caste composition, in this present study, about 61 per cent of the total vendors belong to the general castes, 30 per cent belong to the Scheduled Caste (SC) category, and around 1 per cent and 8 per cent belong to the categories of Scheduled Tribes (STs) and Other Backward Castes (OBCs), respectively (Table 1). 2. Educational Profile The educational level among street vendors is generally low, as indicated in Table 1. Out of the total, around 20 per cent of vendors are illiterate, approximately 25 per cent can only sign their names, and about 22 per cent have acquired only primary level education. Of the total number of vendors, about 1 per cent comprise those who are graduates and above. They had come to Mumbai from rural areas in search of better-paid jobs in the formal sector, but opted for street vending because it is not only one of the easiest means of earning a living but also requires only a small financial input. Hence, these graduates have become street vendors. It has been observed that a greater number of women vendors are illiterate and less educated than their male counterparts (see Table 1). They are also older than the male vendors, with around 31 per cent of the female vendors having being widowed. These women vendors carry out this occupation in order to support their families, and some of them are the sole income earners of their respective families. Table 1 shows that 37 per cent of the women vendors are aged above 59 years whereas 32 per cent of the male vendors are above 59 years. One of the women vendors stated that she has no option other than vending, as it requires less education and relatively marginal capital as compared to other occupations. This study also demonstrates that around 66 per cent of the vendors are migrants from different parts of India. Women vendors mainly migrate after their marriages and then try to help their husbands who are pursuing this profession. One of the women vendors candidly expressed the main reasons for the women joining their husbands in this profession, when she pointed
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Table 1 Socio-demographic Profile Indicators Religion
Hindu Muslim Christian Total Age Distribution (in years) 15-35 35-59 59-70 70-80dd Total Marital Status Unmarried Married Widowed Total Illiterate Can Sign Only Primary Upper Primary Education Level Secondary Higher Secondary Graduate Above Graduate Total General SCs Caste Composition STs OBCs Total Not Migrated Migration Migrated N=400 Total Source: Based on Primary Survey.
Female (%) 139 (84.76) 22 (13.41) 3 (1.83) 164 (100) 27 (16) 77 (47) 54 (33) 6 (4) 164 (100) 11 (6.70) 103 (62.8) 50 (30.5) 164 (100) 46 (28.05) 42 (25.61) 40 (24.39) 24 (14.63) 10 (6.10) 2 (1.22) 0 (0) 0 (0) 164 (100) 96 (58.54) 48 (29.27) 1 (0.6) 19 (11.59) 164 (100) 73 (44.51) 91 (55.49) 164 (100)
Gender Male (%) 163 (69.07) 71 (30.08) 2 (0.85) 236 (100) 63 (27) 105 (44) 66 (28) 2 (4) 236 (100) 28 (11.90) 203 (86.0) 5 (2.10) 236 (100) 35 (14.83) 56 (23.73) 47 (19.92) 60 (25.42) 28 (11.86) 8 (3.39) 1 (0.4) 1 (0.4) 236 (100) 148 (62.71) 73 (30.93) 2 (0.85) 13 (5.51) 236 (100) 65 (27.54) 171 (72.46) 236 (100)
Total %) 302 (75.50) 93 (23.25) 5 (1.25) 400 (100) 90 (23) 182 (45) 120 (30) 8 (2) 400 (100) 39 (9.80) 306 (76.7) 55 (13.8) 400 (100) 81 (20.25) 98 (24.50) 87 (21.75) 84 (21.00) 38 (9.50) 10 (2.50) 1 (0.2) 1 (0.2) 400 (100) 244 (61.00) 121 (30.25) 3 (0.75) 32 (8.00) 400 (100) 138 (34.50) 262 (65.50) 400 (100)
out, â&#x20AC;&#x153;Sometimes we are forced to do vending. It is very difficult to sustain with the single earner because Mumbai is very expensive city.â&#x20AC;? 3. Income Level The data on the daily income status of the respondents reveals some very essential details regarding their standard of living and the amount and daily expenditures that they can possibly make. Only 37 individuals (accounting for around 9.25 per cent of the respondents) had a meagre daily income ranging from Rs. 60 to Rs. 125. The daily income of a considerable portion of the sample respondents (43.50 per cent) was found to be Rs. 125-250. The total number of respondents in the next income trajectory (Rs. 250-500) amounted to 37 per cent. Only 9 per cent of the respondents had an income ranging between Rs. 500 and Rs. 1000.
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Only 2 per cent of the respondents had the highest daily income, viz. Rs. 1000-1600. A comparison of the maleâ&#x20AC;&#x201C;female share of the income status showed that out of a total number of 164 females, 30 (that is, 18 per cent of the total sample) fell within the income range of Rs. 60-125. Similarly, it can be seen that the number of females in the aforementioned income categories of Rs. 125-250, Rs. 250-500, and Rs. 500-1000 stood at 79 (48 per cent), 46 (28 per cent), and 9 (5 per cent), respectively. It is clearly evident that a majority of the female vendors belong to the category with an income range of Rs. 125 to Rs. 250, followed by those whose income is in the Rs. 250-500 range. There were, however, no female respondents in the highest income group (Rs. 1000-1600). An examination of the share of the male respondents indicates that out of 236 males, only around 3 per cent fell in the lowest income group of Rs. 60-125. Around 40 per cent had an income ranging between Rs. 125 and Rs. 250. The highest number of males (44 per cent) had an income ranging between Rs. 250 and Rs. 500. Eleven per cent of the respondents fell in the income category of Rs. 500-1000. Only 2 per cent had an income in the range of Rs. 1000-1600.0 Table 2 Daily Income Gender-wise Daily Income (in Rs.)
Gender Female (%)
Male (%)
Total (%)
60-125
30 (18.29)
7 (2.97)
37 (9.25)
125-250
79 (48.17)
95 (40.25)
174 (43.50)
250-500
46 (28.05)
105 (44.49)
151 (37.75)
9 (5.49)
27 (11.44)
36 (9.0)
500-1000 1000-1600 Total
0 (0)
2 (0.85)
2 (2.0)
164 (41.00)
236 (59.00)
400 (100)
N=400 Source: Based on Primary Survey.
Table 3 Product- and Gender-wise Distribution Products Â
Gender Female (%)
Male (%)
Total (%)
31 (18.9)
29 (12.0)
60 (15.0)
Vegetables and Flowers
55 (33.54)
35 (15.0)
90 (23.0)
Fruits
20 (12.20)
35 (15.0)
55 (14.0)
0 (0)
31 (13.0)
31 (8.0)
33 (20.00)
43 (18.0)
76 (19.0)
25 (15.0)
32 (14.0)
57 (14.0)
0 (0)
31 (13.0)
31 (8.0)
164 (100)
236 (100)
400
Cooked Food
Electronics Household Utensils Garments Leather items Total N=400 Source: Based on Primary Survey.
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A comparison of the male–female share of incomes reveals that a smaller percentage of male vendors belong to the lowest income category when compared to that of female vendors. Also a higher number of males have an income of Rs. 250-500, an indication that male vendors have a slight advantage with regard to income status. The income of street vendors depends on the products they sell, and it varies from product to product, from location to location, and also in terms of the volume and terms of trade. The daily income of the street vendors is given in Table 2 in rupees. Table 2 shows that a few vendors earn quite a high income, reflecting the type of business, the age of the business, the location, and the products they sell. Interestingly, the data shows that the incomes of vendors selling garments, fruits, and electronics items differ from those of vegetable vendors and small enterprises. Most of the women vendors are vegetable vendors because this occupation requires very low investment as compared to other activities. It is also calculated (not shown) that the profit margin from vegetables, fruits, and cooked food is high compared to that from other products, not taking into account the implicit labour costs (Table 3). On the other hand, the working conditions in terms of work hours and work pressure are miserable for those who sell vegetables, fruits and cooked food. Not even a single woman vendor sells electronic or leather items as these occupations require more capital. Only a few women vendors (about 15 per cent) sell garments, and their investment is significantly less than that of the male garment vendors. Raw material vendors earn a profit of about 50 to 60 per cent on their daily sales. Despite the hard and useful work that the vendors do, street vending is an illegal activity, and vendors are seen with disdain. As a result, they face constant harassment from the local police and municipal authorities at their workplace. They are forced to pay bribes. It is calculated that each street vendor pays 15 to 20 per cent of his/her daily income in bribes to the local police and the Brihanmumbai Municipal Corporation (BMC). Table 2 shows that 211 street vendors (comprising about 53 per cent of the total number of respondents) earn Rs. 60 to Rs. 250 per day. It seems that this amount is adequate for the survival of an individual vendor, but considering the number of family members dependent on each vendor, the amount is abysmally low for supporting the vendor’s family. It is estimated from the primary data, while taking into account the number of dependents of each vendor, that the per day per capita income of these households is less than Rs. 20 (less than half a dollar a day). The poverty line as given by the World Bank for developing countries, including India, is one US dollar per day per person. Hence, 53 per cent of the total sample population in this study can be classified as ‘extremely poor’, which is a matter of serious concern. IV. ACCESS TO FINANCE The access to finance for street vendors depends on the volume of trade and types of the product they sell. Street vending, as a profession, is heterogeneous in nature. The street vendors’ access to finance depends on the volume of their trade and the types of products they sell. All vendors access capital since vending is based on daily turnover. In the present study, out of the total sample (N=400), we see that 236 vendors (comprising 59 per cent
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of total vendors) borrow money from different sources for different purposes, namely, for their economic activity, for house building, for paying house rent, and for social security purposes. 1. Financial Sources of the Vendors The source of the capital plays an important role with regard to the financial accessibility enjoyed by the street vendors. It depends on the types of suppliers and the volumes of their trade. Access to capital is an economic linkage that ties street trade to the economy which affects the vendorsâ&#x20AC;&#x2122; economic activities, profits, and potential business growth. Capital is needed for initiating the business and, later, for running and expanding it. Six types of capital sources have been identified for vendors, including: (i) relatives, (ii) friends, (iii) local vendors or traders, (iv) moneylenders, (v) wholesalers, and (vi) banks or co-operatives. The first two sources are primarily used for getting a business started, while the all the rest are used for keeping it running or for expanding the business activity. Since street vending is considered as an illegal profession, the street vendors do not have access to institutional credit, but an interesting observation is that around 61 per cent of the vendors reported that they started their business with their personal savings and they save in different reputed banks, namely, Corporation Bank, IDBI, State Bank of India, Bank of Maharashtra, Punjab National Bank, Bank of Baroda, Union Bank of India, United Bank of India, and so on. In order to run their daily business, vendors mainly depend on moneylenders and wholesalers, as compared to other sources of capital. Table 4 shows that about 57 per cent and 26 per cent of the vendors depend upon moneylenders and wholesalers, respectively, for sourcing funds. From Table 4, it can be seen that women vendors depend on moneylenders and wholesalers more than men vendors. About 64 per cent of the women vendors and 53 per cent of the male vendors depend on moneylenders, while about 29 per cent of the women vendors and around 25 per cent of the male vendors depend on wholesalers. There is a short-term loan system in the market, which is completely informal and unrecognised. This is maintained by the primate and local moneylender, and this has been Table 4 Gender-wise Sources of Capital Sources of Capital
Gender
Total (%)
Female (%)
Male (%)
1 (1.11)
5 (3.42)
6 (2.54)
Friends
0 (0)
10 (6.85)
10 (4.34)
Local Vendors
0 (0)
1 (0.68)
1 (0.42)
Moneylenders
58 (64.44)
77 (52.74)
135 (57.20)
Wholesalers
26 (28.89)
36 (24.66)
62 (26.27)
Co-operatives/Banks
5 (5.56)
17 (11.64)
22 (9.32)
Total
90 (100)
146 (100)
236 (100)
Relatives
N=236. Source: Based on Primary Survey.
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309
detected in all the study areas. The amount of this short-term loan depends on the street vendors and their respective capacities. It has also been noticed that this system is very active and more popular among female vendors in the area as compared to the male vendors. This is because moneylenders trust female vendors more than their male counterparts as women repay the amount on time. There are many moneylending schemes for street vendors, with most of them being based on the duration of the loans. Among these, the ‘33-day Loan Scheme’ is illustrated here in order to portray one of the situations of accessing credit. It concerns the case of a 55-year old woman engaged in selling vegetables in Chembur. She borrows Rs. 10,000 for 33 days. She gets an amount of Rs. 9500 on the first day and the moneylender cuts Rs. 500 for the processing charges and formalities. The period of the loan is 33 days. If the loanable amount is Rs. 10,000, the individual has to take the ‘Rs. 300 per day’ scheme. Thus, she needs to pay Rs. 9900 (Rs. 300 x 33 days), and at the end, she has to pay an extra amount of Rs. 100. According to the short-term loan scheme, the loan amount is Rs. 10,000 and she has to pay back the same, but she gets an amount of Rs. 9500 as the actual loan. Hence, in such cases, the rate of interest lies between 5 per cent and 10 per cent per month. However, if the loan amount is less, an individual vendor needs to pay more in terms of interest. V. INDEBTEDNESS OF STREET VENDORS Street vendors are often seen to fall into a debt trap due to the high level of their indebtedness. They need to obtain credit for their economic activities, but since they are part of the informal sector, they have no access to credit from formal financial institutions (Bhowmik, 2001, 2007; Jhabvala, 2000). In order to survive, they borrow money from various other sources. Around 54.24 per cent of the vendors (128 out of 236) borrow money for social protection purposes to meet the costs entailed for healthcare, medications, maternity expenses, accidents, children’s education, and so on, whereas about 34.32 per cent of them borrow money for their economic activities. About 11.44 per cent of the vendors borrow money to pay a deposit on house rent (see Table 5). It was found during the course of the present study that the social security purposes served by borrowing of funds for the healthcare and medications for the family, maternity expenses, children’s education, daughter’s marriage, accidents, and purchase of insurance. In terms of education purposes, most of the vendors borrow money for school fees and to purchase computers for their children, because they prefer to send their children to Englishmedium schools. They encourage their children to continue with their education. One of the vendors stated: “I don’t want my children to become street vendors. This job has no dignity, no respect, and it is full of uncertainty. I started because I had no option, to survive. If my children want to continue with higher education, I would support them; I would even borrow money for them.”
The sources of borrowing are relatives, friends, moneylenders and wholesalers. Relatives and friends are preferred because they basically do not charge any interest, and even if they
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do, the rate of interest is very marginal if they charge. Others mainly borrow either from moneylenders or from wholesalers. Some of the street vendors are very happy to borrow from the wholesalers since they do not charge regular monthly regular interest rate. But it has been calculated in the present study that the vendors unknowingly pay around 25-35 per cent more than the cost of their products of Rs. 100 to the wholesalers. From Table 5, it can be observed that both the vendors (men and women) borrow small amounts for their economic activities and large amounts for social security purposes. For instance, around 22 per cent of the women vendors borrow between Rs. 1,00,000 and Rs. 5,00,000 for their social security purposes while only 7 per cent of the women vendors borrow the same amount for their economic activities. On the other hand, around 20 per cent of the men vendors borrow money for social security purposes and about 11 per cent of the men vendors borrow for the business activity. This explanation also shows that women borrow larger amounts for social security purposes than men. Women mainly borrow money for their childrenâ&#x20AC;&#x2122;s education and for medication purposes for their husbands and children. Table 6 illustrates the total interest paid as a multiple of the principal amount of the borrowing and gender-wise cross tabulation. On the basis of Table 6, it can be said that Table 5 Amount and Purposes of Borrowing Gender-wise Gender
Amount of the Borrowing (in Rs.) 1000-15,000
Female
Housing and Deposit (%)
Social Security (%)
Total (%)
3 (10.71)
3 (27.27)
2 (3.92)
8 (8.89)
15,000-30,000
12 (42.86)
5 (45.45)
12 (23.53)
29 (32.22)
30,000-45,000
4 (14.28)
3 (27.27)
10 (19.61)
17 (18.89)
45,000-60,000
6 (21.43)
0 (0)
8 (15.69)
14 (15.56)
60,000-75,000
0 (0)
0 (0)
1 (1.96)
1 (1.11)
75,000-1,00,000
1 (3.57)
0 (0)
7 (13.73)
8 (8.89)
1,00,000-2,50,000
1 (3.57)
0 (0)
6 (11.76)
7 (7.78)
2,50,000-5,00,000
1 (3.57)
0 (0)
5 (9.80)
6 (6.67)
Total
Male
Purposes of Borrowing Business (%)
28 (100)
11 (100)
51 (100)
90 (100)
1000-15000
15 (28.30)
5 (31.25)
15 (19.48)
35 (23.97)
15,000-30,000
12 (22.64)
2 (12.50)
15 (19.48)
29 (19.86)
30,000-45,000
4 (7.55)
4 (25.00)
9 (11.69)
17 (11.64)
45,000-60,000
14 (26.41)
1 (6.25)
12 (15.58)
27 (18.49)
60,000-75,000
0 (0)
1 (6.25)
3 (3.90)
4 (2.74)
75,000-1,00,000
3 (5.66)
0 (0)
8 (10.39)
11 (7.53)
1,00,000-2,50,000
3 (5.66)
1 (6.25)
7 (9.09)
11 (7.53)
2,50,000-5,00,000
2 (3.77)
2 (12.50)
8 (10.39)
12 (8.22)
Total
53 (100)
16 (100)
77 (100)
146 (100)
N=236. Source: Based on Primary Survey.
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Table 6 Total Interest Paid Gender-wise Multiple of the Principal
Gender
Total (%)
Female (%)
Male (%)
No interest paid
17 (18.89)
47 (32.19)
64 (27.1)
1-time
48 (53.33)
79 (54.11)
127 (53.8)
2-times
16 (17.78)
14 (9.60)
30 (12.7)
3-times
4 (4.44)
2 (1.37)
6 (2.5)
4-times
1 (1.11)
1 (0.68)
2 (0.8)
5-times
4 (4.44)
3 (2.05)
5 (2.1)
6-times
1 (1.11)
1 (0.68)
2 (0.8)
Total
90 (100)
146 (100)
236 (100)
N=236. Source: Based on Primary Survey.
around 81 per cent of the women vendors and about 68 per cent of the men vendors have already paid interest for what they have borrowed. Table 6 shows that around 54 per cent of the vendors have already paid interest for the amount they borrowed. Others have paid interest worth two, three, or more times of the amount they borrowed. In this context, women vendors have paid more than men vendors in terms of interest on their total borrowing. For instance, one of the men vendors in the study borrowed Rs. 10,000 for buying medicine ten years ago, and he has been paying interest at the rate of 5 per cent ever since. Thus, it is estimated that he has paid interest worth around six times of the total amount that he had borrowed. In this way, both the men and women vendors fall into the vicious circle of a debt trap due to the high interest rates and in some of the cases, this trap is chronic. One of the vendors revealed, “My father had taken money for this (vending) activity. After his death, I am still paying the rate of interest.” VI. ACCESS TO PUBLIC SPACE AND THE ISSUES OF LEGALITY The discussion and debate on illegality of the street vendors and their existence in the city is over urban space utilisation. We need to understand the meaning and the role of urban space for the street vendors. Brown (2006, p. 10) has used the phrase ‘urban public space’, which means all the physical space and social relations that determine the use of the space within the non-private realm of the cities. Thus, urban public space refers to the areas that are used for public activities, which include pavements, parks, beaches, sport grounds, and so on. In developing countries like India, urban public space is a valuable resource for the urban working poor for their livelihood as well as their living (Bhowmik, 2010, p. 8). Hence, the urban public space is an essential element of the physical capital used by the urban poor to extract their livelihood (Brown, 2006, p. 179). Street vendors who form an integral part of the self-employed workers of the urban workforce face a peculiar market for the products, popularly known as natural markets. They have no permanent shops and no identified market area. Rather, they exist in areas
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that are otherwise popular congregations of the general public. The examples include parks, sea-beaches, bus terminuses, railway stations, areas outside schools and colleges, hospitals, and the alike (Bhowmik 2010). Interestingly, in a number of cases, they work as alternative shopping destinations where there are no permanent and notified marketplaces. Street vendors have the natural propensity to assemble at these places because the customers find it convenient to purchase from them and here they find a ‘natural market’ for their commodities. The main problem in such cases is that more often than not, the local authorities, namely, the police and municipal authorities, try to prevent street vendors from using such places for their trade. Their market is often perceived in terms of ‘encroachments upon public space’ leading to overcrowding, traffic jams and road accidents. The entire concept of public space utilisation depends on the identification of natural markets. Street vendors occupy the urban space for their livelihood and the eviction and nuisance start because they are considered as illegal encroachers upon public space. Bhowmik (2010, p. 9) stated an interesting point that control over public space by “the State and/or the civic authorities is seen as control over the people, especially the working poor”. The vending takes place in popular public locations such as parks and beaches besides schools and colleges, where a natural market exists for them. Hence, if these places are allotted to the vendors along with proper regulations in the form of space demarcations and so forth, the vending will not become a much problem. Bhowmik (2010) has given an example of housing societies of the middle and uppermiddle classes that encroach on public space around their residences. In addition, shops and restaurants also encroach upon public space by extending to the pavements. In the present study, it is also seen that shopkeepers use the adjacent space for advertisement purposes (especially in Dadar and Chembur). Some of the small restaurants keep chairs for public/customers to be used as a waiting space. It was observed during the survey that in such cases, they are not evicted. Here, the public space is being encroached upon by private individuals. It is, however, the poor vendors who are evicted, though vending is the source of their livelihood. However, street vendors are thriving successfully in the city and their numbers are also growing rapidly, as their services are widely demanded by the public. There are many cases wherein vendors are evicted in the name of beautification of the city. One such case can be highlighted which was encountered during the fieldwork in Kandivali (East) wherein eviction took place in the name of building a shopping mall. The place was predominantly occupied by around 60-70 street vendors. The previous landowner sold off the entire land. However, some of the street vendors kept coming there to pursue their daily business as they had no other alternative. The present occupants (the builders) often used high-handedness to evict them mercilessly. In this case, the police intervened, arrested the vendors and charged an amount of Rs. 1250 per vendor for using public space illegally. According to a vendor of that area, incidences of these kinds occur almost every month.
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VII.
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WORKING CONDITIONS
1. Gender Discrimination at Work Female vendors are found to sell smaller quantities of goods than those sold by men and are found to earn less than them (Bhowmik, 2010). The reason for their low sales and low incomes is typically low investment. The smaller quantity of goods sold by them is reflected in the smaller amounts of the sales they achieve and the daily incomes they earn. All these facts are confirmed in our study as well. In the sample of the present study, it has been found that the number of females achieving daily sales of above Rs. 1000 is less than that of men. It has already been seen earlier that the investment of female vendors is typically less than that of males and the daily income pattern also shows that the female vendors earn typically less than their male counterparts. As regards the type of products sold by males and females, the females typically sell those items which require a low capital investment, rather only the working capital. The study also showed the prevalence of some gender bias toward goods like leather items and electronic products, which generally require a substantial investment that can be made only by men. Vendors who sell raw material, namely vegetable vendors, fruit vendors, and food vendors have good profit margins. At the same time, the working conditions of these vendors, especially vegetable vendors, are miserable. It shows that most of the vegetable vendors are women, as this item requires a very low level of investment in comparison to the other types. The activity for such vendors begins as early as 4.30 am and ends as late as midnight, and they work every day in the year. A recent survey of 400 street vendors in Mumbai indicates that traders work on an average for 8 to 11 hours a day, while in certain areas like Dadar, the hours are even longer. As women are the home-makers and have to fulfil the customary duty of feeding their families, their day starts early in the morning with household work and is then followed by their struggle to earn a livelihood, and this challenge is magnified by the fact that they belong to a socially subjugated gender and have to deal with a male-dominated word at the workplace. It has been noticed that the attitude of police officials is slightly softer towards women vendors than towards their male counterparts, especially towards women who are not able to sell much and live in penury, from whom the police officials even refrain from taking a bribe. However, the women vendors still have to fight for their rights at every place, and are often treated with disdain even by BMC officials, who accord more respect to the male vendors. Besides, in trying to fulfil their responsibility of being caretakers for their children, the women vendors also usually bring the latter along to the vending place, as a result of which their attention is diverted and sales are adversely affected, which, in turn, translates into less income. They thus continue to be trapped in a morass of low income, poverty and denial of opportunities to improve their lot in life. 2. Competitiveness of the Market With the number of street vendors rising, competition among them has also risen proportionately. The vendors have been forced to evolve better and newer methods to face
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this competitiveness in the market, which forces market traders to seek economies of scale in order to maximise profits. In an effort to optimise profits, some vendors are motivated to join hands with each other along ethnic or local lines to form joint enterprises. The existence of large-scale enterprises in the market has also prompted these vendors to unite their enterprises in order to lower the average cost and consequently increase their profit margins. The economy of scale is thus achieved through the integration of two or more vendors, whose owners share the same ethnic or local identity. Albeit, a relatively old and experienced market trader, who is self-employed often takes the initiative to expand the scale of his/her operation individually. However, in most cases, the vendors put together their working capital, establish a marketing network and increase their number of spaces. Some of the vendors even provide their products to the local marginal vendors. 3. Payment of Bribes: An Alternative Way to Sustain the Business in the Market Street vendors somehow manage to conduct their businesses by negotiating with the police and the BMC. This understanding is, however, solely based upon the payment of bribes or a certain portion of their daily incomes as ‘rents’ to the authorities. This has, in fact, become the norm for these vendors, without which the police would evict them summarily from their marketplaces. Studies have revealed that those who do not pay rents are disturbed and harassed regularly. This interferes with their ‘right to work with dignity’. They are treated as criminals instead of hard-working self-employed people. In the course of the present study, it was found that vendors are required to pay bribes to two main groups of civic authorities, the police, and the BMC. The bribe paid to the BMC is greater than that paid to the police. While most vendors were found to be paying Rs.100-300 as bribes to the police per month, bribes paid to the BMC amount to around Rs.300-500 per month. The available data shows that in the case of most vendors, nearly 5-10 per cent of their daily incomes are usurped by the police and BMC. Section 34 of the Police Act empowers the police to remove any obstruction on the streets, and the street vendors have to pay them bribes mainly to avoid eviction under this section. While the bribes to the police are paid on a daily basis, bribes are paid to the BMC officials when the eviction of the vendors starts and their goods are confiscated. (i) Nature of Bribes Paid Bribes to the police, BMC and the total daily amount of bribes: The monthly amount of bribes paid to BMC officials and the corresponding percentage of vendors paying them are shown in Table 7. Nearly 34 per cent of the total respondents, however, claim that they do not pay any bribes. They either run away on spotting the police and BMC officials or as in the case of come of the old age vendors, they just stand their ground and refuse to pay. The highest proportion of vendors (about 43 per cent) pay bribes in the range of Rs.100300 daily. This amount is paid by 40 per cent of the female and 45 per cent of the male vendors. Nearly 10 per cent of the total vendors pay bribes to the police in the range of Rs. 300-400. The bribes paid to BMC officials are higher than those paid to the police (see Tables
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Table 7 Monthly Bribes to the BMC Bribes to BMC (in Rs.)
Gender
Total
Female
Male
82 (50.0)
53 (22.5)
135 (33.8)
1 (0.6)
1 (0.4)
2 (0.5)
100-300
17 (10.4)
32 (13.6)
49 (12.3)
300-500
48 (29.3)
86 (36.4)
134 (33.5)
500-1000
10 (6.1)
41 (17.4)
51 (12.8)
1000-1500
4 (2.4)
15 (6.4)
19 (4.8)
1500-3000
2 (1.2)
6 (2.5)
8 (2.0)
3000-6300
0 (0)
2 (0.8)
2 (0.5)
164 (100)
236 (100)
400 (100)
No Bribes 60-100
Total N= 400 Source: Based on Primary Survey.
Bribes to Police (in Rs.) No Bribes 20-100 100-300 300-500 500-1000 1000-1500 1500-2050 Total N= 400 Source: Based on Primary Survey.
Table 8 Monthly Bribes to the Police Gender
Total (%)
Female (%)
Male (%)
76 (46.3) 1 (0.6) 66 (40.2) 12 (7.3) 7 (4.3) 2 (1.2) 0 (0) 164 (100)
63 (26.7) 3 (1.3) 107 (45.3) 31 (13.1) 27 (11.4) 1 (0.4) 4 (1.7) 236 (100)
139 (34.8) 4 (1.0) 173 (43.3) 43 (10.8) 34 (8.5) 3 (0.8) 4 (1.0) 400 (100)
Table 9 Daily Bribes in Total Daily Bribes
Gender
Total (%)
Female (%)
Male (%)
9 (5.5)
14 (5.9)
23 (5.8)
10.00-20.00
34 (20.7)
43 (18.2)
77 (19.3)
20.00-50.00
49 (29.9)
116 (49.2)
165 (41.3)
50.00-70.00
3 (1.8)
13 (5.5)
16 (4.0)
70.00- 100.00
3 (1.8)
6 (2.5)
9 (2.3)
6.50-10.00
100.00-276.00 Total N= 293. Source: Based on Primary Survey.
0 (0)
3 (1.3)
3 (0.8)
98 (100)
195 (100)
293 (100)
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7 and 8). On an average, bribes are paid to the BMC officials 4-5 times a year. The highest percentage of vendors (33 per cent) pay bribes in the range of Rs. 300-500 per month. This amount is paid by 29 per cent of the female and 36 per cent of the male vendors. Around 12 per cent of the total vendors pay Rs.500-1000 monthly as bribes to BMC officials. Nearly 41 per cent of the vendors pay total daily bribes (including bribes to the BMC and the Police) in the range of Rs. 20-50. These daily bribes are paid by 29 per cent of the female and 49 per cent of the male respondents among the vendors. The second highest percentage of vendors pay Rs.10-20 daily as bribes. Almost 26 per cent of the vendors, however, do not pay any bribe whatsoever (see Table 9). (ii) Proportion of Bribes Paid to the Total Daily Income The proportion of daily bribes to the daily incomes of the vendors has been delineated in Table 10. It has been found that nearly 39 per cent of the vendors pay 5-10 per cent of their monthly incomes as bribes. Around 21 per cent of the total vendors pay 10-25 per cent of their incomes as bribes. Among the vendors who pay 5-10 per cent of their incomes on bribes, 34 per cent are females and 41 per cent are males. The street vendors are thus found to be paying as high as 30-45 of their incomes on bribes every day. Table 10 Proportion of Daily Bribes to the Daily Income Percentage of Daily Bribes to Total Daily Income
Gender
Total (%)
Female (%)
Male (%)
0 (0)
3 (1.3)
3 (0.8)
1.00-2.00
0 (0)
4 (1.7)
4 (1.0)
2.00-3.00
1 (0.6)
2 (0.8)
3 (0.8)
3.00-5.00
12 (7.3)
26 (11.0)
38 (9.5)
5.00-10.00
57 (34.8)
99 (41.9)
156 (39.0)
10.00-25.00
27 (16.5)
59 (25.0)
86 (21.5)
25.00-30.00
0 (0)
1 (0.4)
1 (0.3)
0.50-1.00
30.00-45.00 Total
1 (0.6)
1 (0.4)
2 (0.5)
98 (100)
195 (100)
293 (100)
N= 293. Source: Based on Primary Survey.
4. Hours of Work The average number of hours of work per day for the vendors varies from eight to twelve hours. Nearly 54 per cent of the vendors, including 58 per cent of the female and 51 per cent of the male vendors work for such prolonged durations. The next most significant proportion of vendors (nearly 23 per cent), including 18 per cent of the female and 25 per cent of the male vendors have been are found to be putting in 12-15 hours of work per day. A significantly smaller percentage of vendors (14 per cent) spend 5-8 hours in vending their products. Thus, the vendors have mostly been found to be working for prolonged durations
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Table 11 Working Hours per Day No. of Working Hours per Day
Gender Female (%)
Total (%) Male (%)
2-5
4 (2.4)
3 (1.3)
7 (1.8)
5-8
28 (17.1)
29 (12.3)
57 (14.3)
8-12
96 (58.5)
122 (51.7)
218 (54.5)
12-15
31 (18.9)
61 (25.8)
92 (23.0)
15-18
5 (3.0)
20 (8.5)
25 (6.3)
18-20
0 (0)
1 (0.4)
1 (0.3)
Total
164 (100)
236 (100)
400 (100)
N= 400 Source: Based on Primary Survey.
in hostile surroundings which adversely affect their health. Working conditions are reflected through many things and one of the most important indicators is the hour of work. It is seen that vendors mostly work for more than 8-12 hours per day (see table 11) but compared to that, their daily income level is extremely low Rs. 250-500 on an average. The present working conditions of the vendors are characterised by the daily struggle they invariably face in their lives, the massive overcrowding in their profession due to the incapacity of the formal sector to provide jobs, the exorbitant bribes that they are forced to pay, and the harassments that they face at their workplaces, among other things. These working conditions can clearly be illustrated with the help of the following case study and excerpts from one of the women vendors’ interviews: “... in an expensive city like Mumbai, it becomes mandatory for me, being the sole earning member of my family, to work very hard for long hours to sustain myself and my family...the recent hike in the prices of essential items including food and medicines have led to a massive increase in my household expenditure, whereas my income has not risen proportionately. I suffer a lot due to the uncertainties of the profession in terms of low and erratic income, obligations towards the family and the society, etc.”
A majority of the urban informal sector workers live in poor areas, lack access to basic healthcare and welfare services, and social protection, and work in unhealthy and unsafe working environments. This study also shows that they stay in the slums in Mumbai and do not have adequate space for living. Their undesirable working conditions also cause vulnerability to diseases and poor health, besides compelling them to put in excessively long hors of work. It has been discussed in the previous sections that vendors who sell raw material, namely, vegetable, fruit, and food vendors earn good profit margins. At the same time, however, the working conditions in which they operate are quite dismal. Most of the vegetable vendors are women, since vending of vegetables requires a very low level of investment as compared to other products. The life of a street vendor is thus fraught with hardships. As mentioned earlier, a street vendor’s day often begins as early as 4.30 am and ends as late as midnight, and on an average, s/he works for 8 to 11 hours a day, every day
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of the year, which is well beyond the Government’s regulation pertaining to the maximum number of working hours per day. The following description by a woman vendor of her working day exemplifies the conditions under which street vendors have to work: “I wake up around 4 o’clock in the morning and then I go to the wholesale market to collect the vegetables. I clean the vegetables for two to three hours and I keep the vegetables in the market where I sit. I come back home and cook for my children and then I go again to the market and start the activity. When I come back home, it is already midnight. I work for the whole year. If I don’t work for one day, my children will sleep without meals, since I am the only breadwinner in my family.”
5. Safety and Security at Work The existence of street vendors is not only about a section of poor people trying to earn a livelihood in the informal sector, but also about the provision of valuable services to the urban population. Thus, it is the duty of the State to protect the right of this segment of the population to earn their livelihood since Article 39 (a) of the Indian Constitution states that “any citizens, men and women, have equal right to an adequate means of livelihood” (NPUSV, 2006, p. 10). However, the ground reality is that they are largely considered as unlawful entities and eyesores, and are consequently subject to constant harassment by the local police as well as the municipal authorities. This is usually seen to result in a concomitant financial burden of bribes to smoothen the path of their daily vending beat. The absence of legalisation is the main problem of this occupation and this study finds that all the vendors are operating without licences. Hence, their job becomes uncertain and insecure. In addition to work and income security, the street vendors face other forms of vulnerability at workplaces. Anjaria (2006) mentions that vending is full of insecurity and uncertainty, since vendors work at the roadside and accidents may occur at any time. Even in this study, it was found that the street vendors work for very long hours (averaging 8-10 hours daily) under extremes of climate, amidst high levels of air and noise pollution, which result in several forms of ailments like hypertension, hyperacidity, or even diseases related to the heart and kidney. Often, many of these diseases are related to stress due to uncertainty of income (Bhowmik, 2010). Female vendors are often observed to be the worst sufferers. In the survey, it was found that the workplaces of these vendors being public spaces, there is often no provisioning of toilet facilities, which result in several form of diseases. Hence, it is seen that this vending activity lacks any security and safety conditions that result in increased vulnerability among the vendors. VIII. SOCIAL NETWORK: A KEY FACTOR IN THE STREET VENDORS’ OVERALL ACTIVITIES Informal relationships among the vendors are identified as among the most basic components of their social activity in Mumbai. The other aspects of their social network include trust among particular sub-groups, habitual exchanges of favours, and mutual support among the vendors and their friends.
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In the theoretical frame, we can consider the concept of ‘structural economic sociology’ developed by Granovetter and Swebderg in 2001. It is based on the following three common principles: (i) economic action is a form of social action; (ii) economic action is socially embedded; and (iii) economic institutions are social constructions. Granovetter (1985) specified that economic sociology emphasises the search for approval, status, sociability and power, which cannot be separated from economic actions. Economic action is ‘embedded’ in the ongoing networks of personal relationships rather than being carried out by atomised actors. He avers that a network is a set of contacts or social connections among individuals or groups, since individuals are never isolated from the society (Granovetter, 1985). Moreover, Granovetter explained in the context of ‘a social embeddedness approach’ that economic transactions become embedded in social relations that affect the allocation and valuation of resources and financial markets differentially. Therefore, social embeddedness is defined as the degree to which commercial transactions take place through social relations and networks of relations that use exchange protocols associated with social, non-commercial attachments to manage business dealings (Granovetter, 1985; Uzzi, 1997). 1. Trust at the Workplace Trust plays a key role in the vendors’ day-to-day business. The exchange of favours is a widespread mechanism used by vendors in their day-to-day life and helps them flourish despite intense competition and lack of general trust over money. This mutual trust and exchange of favours among the vendors and within their social network rests on the expectation of trustworthy behaviour from each other and reciprocal favours. This study shows that mutual trust also helps the vendors procure money from informal sources. Thus, access to finance for the vendors completely depends on the level of trust and relationships between the borrowers and lenders. In this backdrop, women are seen to form more circumscribed informal relationships than men. For instance, it has been observed that lenders trust women more than men as women are more likely to repay money on time even if they have to go hungry themselves. The following statement by a vendor proves the importance of trust in mutual relationships in this profession: “Trust plays a key role in our day-to-day business. It is not easy to make good rapport with the moneylenders. It takes time even if we borrow money at high rates of interest. Sometimes, the commonality of our language and community promotes the building up of good relationships with lenders. A highly informal relationship with the lenders makes the availability of loans much easier for purposes other than those which are directly or indirectly related to our business activities.”
2. Informal Relationships at the Marketplace The first important and necessary condition for establishing informal relationships in the market is that of making friends. Making friends in the new marketplace is a priority for newcomers, a fact that was affirmed by an overwhelming majority of the latter. They also highlighted the strong need for social contact, which is the principal reason for vendors
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seeking friendship with others from their community. Soon after their arrival into the city, most respondents deliberately set out to enlarge their circle of friends among other vendors, for a range of motives, which are clearly understood and expressed. Vendors also claimed that they were in search of friendships in the marketplace primarily as a source of moral support and consolation, and also because forging strong relationships helps them to better understand the basic rules, regulations and obligations at play in the marketplace. IX. ROLE OF MEMBERSHIP-BASED ORGANISATIONS Membership-based organisations can be defined as “those in which the members elect their leaders and which operate on democratic principles that hold the elected officers accountable to the general membership” (Chen, et al., 2007, p. 4). Trade unions, cooperatives, workers’ committees, savings and credit groups such as self-help groups (SHGs), producer groups, and so on, are categorised as membership-based organisations (Chen, et al., 2007). This section of the article is based on in-depth interviews with five individuals who are actively involved in membership-based organisations and in a position to make decisions for the vendors. Although they are doing administrative work in their organisations, they have also been vendors. The key respondents, who were initially working as small vendors, have become small enterprise owners over a period of time and have appointed a number of wage workers for administrative work and other responsibilities in their respective organisations. According to them, it is very easy to work for the vendors as insiders. One of the key respondents stated, “Our friends [the vendors] rely on and trust us because they think that we can understand the situation and represent their voice properly.” Due to harassment by the municipal authorities, some street vendors in Mumbai have organised themselves into unions or local associations that enable them to pursue their economic activities. These unions are mainly localised bodies and are membershipbased. However, there are as yet very few such organisations in existence, whether in Mumbai or elsewhere in India. The organisations act as intermediaries between individual street traders and local authorities. Since the street vendors have no legal basis for their existence, the main role of the organisations is to negotiate with local authorities such as municipal corporation employees and local police forces for the right to occupy public space so that the vendors can carry on their trade. The organisations face many problems when they start negotiating with the authorities about public space. One of the key respondents noted, “We are struggling for the rights for them [the vendors] and for their space on the road. We protest [against the authorities’] continuous harassment. Many times, we have gone to jail with the vendors to protest [against non-fulfilment of their demands].” The organisations have also helped in setting up a welfare board with the help of the Labour Commission to enhance the vendors’ social security, besides forming cooperatives to provide them access to credit for their economic activities as well as personal and educational loans.
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1. Organising Social Security Active membership-based organisations press for social security schemes that provide multiple benefits for those who are unionised. For instance, the social security scheme called ‘Janashree Bima Yojana’, provided by the Life Insurance Corporation of India (LIC), is a very successful scheme. The scheme includes insurance coverage for health issues, house and property, accidental and natural death, and permanent and partial disability. It is a group insurance scheme for a minimum of 25 members. The members pay an annual premium. The annual premium for an individual vendor is Rs. 50, which is very affordable, even for the poorest vendor. Under this scheme, each vendor can receive Rs. 15,000 to Rs. 75,000 in the case of an accident, and the vendor’s family would receive Rs. 75,000 in the event of his/her death. Moreover, this scheme also covers scholarships for the education of the vendor’s children. A maximum of two children of the vendor can benefit, and each child would be entitled to receive Rs. 1200 per year as a scholarship. 2. Towards Credit Access A cooperative credit society has been registered under the state government to provide the vendors loans such as personal loans, educational loans, and loans for economic activity. The cooperative receives the money from the state government and gives loans to the membership-based organisations. A cooperative cannot provide a direct loan for an individual vendor. Hence, membership-based organisations act as intermediaries between the street vendors and the cooperative. Vendors must be members of an organisation to benefit from the cooperative. According to the rules and norms, a vendor can acquire a maximum of Rs. 30,000 from the cooperative in times of need. Each vendor in the organisation gives money to the organisation according to the vendor’s volume of trade (at a minimum of Rs. 10 per day) and the organisation thus accumulates money that is used as ‘working capital’. Thereafter, the vendor can take a loan from the ‘working capital’ in the organisation at a nominal rate of interest. According to the five key respondents from membership-based organisations, this cooperative has proved to be very successful. However, the main problem is that overall very few street vendors are unionised in Mumbai. Only around 2,500 vendors are involved in cooperatives and social security schemes in Mumbai, whereas as per the records of most unions, Mumbai has a total of 2,50,000 street vendors. According to each of the key respondents, all the street vendors try to evade the necessary rules and regulations. They do not want to pay even the nominal minimum membership fees. Therefore, very few of the street vendors are registered members of the unions. One of the key respondents stated, “Most of the vendors try to avoid all the rules and norms and hence they prefer [to borrow from] private moneylenders who charge a high rate of interest”. X. SUMMARY AND CONCLUSION The term ‘street vendors’ has become an indispensable organ of urban culture, and is synonymous with the psyche represented by this culture. A lot of work has hitherto been done to analyse and define the informal sector. However, we are still a long way away from
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really understanding this phenomenon, which is of such major economic, political, and social importance in all countries, both developed as well as underdeveloped. The basic problem faced by street vendors is that of their right to exist in the urban informal sector, because their occupation is illegal. Hence, they cannot enjoy either the dignity or the right to work. The government should thus provide the vendors with legal space for their activities besides also simplifying the rules and regulations that prevent them from carrying on their occupation with dignity and freedom. The key respondents clearly stated that most of the vendors try to avoid following formal rules and regulations, which is difficult for those with little education, and it has already been noted that most of the vendors have very low literacy levels. The present study shows that street vendors can play a very important role in the urban informal economy by generating employment and by supporting both the urban poor as well as the rich. It was found during the course of this study that the per capita income of 53 per cent of the street vendors in Mumbai is Rs. 20 per day. The NCEUS report (2007) categorises people with this daily income as “poor and vulnerable.” Bhowmik’s study of 2001 showed that the daily income of male vendors was Rs. 70 and that of the women vendors was Rs. 40. In the present study, it was found that over 62 per cent of the population has a per capita income of Rs. 20 to 35. Therefore, the income levels of the vendors have not improved over the last ten years. One of the factors responsible for the vendors’ low income is their compulsion to pay regular bribes. A vendor points out that “harassment, eviction, and the collection of bribes have been increasing in the last three to four years”. Another important finding of the study is that street vendors depend on moneylenders and wholesalers for access to credit for their business as well as for social security purposes. The study also shows that vendors are often forced to pay exorbitant rates of interest for the money borrowed by them. The main reasons for this borrowing are social security and for investment in business activity, as a result of which they often fall into a debt trap, which is a matter of grave concern. This study also reveals that all vendors, irrespective of their income status, need some means of ensuring social security. They thus survive on their savings or through borrowing at high interest rates. The government should thus step in to mitigate the financial problems of street vendors by fulfilling its duty of paying them social security. Group insurance could prove to be a viable solution to the financial problems of the vendors, as it entails fewer formalities. The respondents also expressed their interest in taking insurance as a means of ensuring social security. Therefore, the government or any other stakeholder, especially trade unions, should come forward to facilitate this. The study further reveals poor working conditions of the vendors in terms of excessively long working hours in a day, in addition to unhealthy and unsafe conditions in the workplace. The occupation of street vending is spreading dramatically. In order to combat this rapidly rising competition and to survive in the local market, vendors have to increase the number of hours of their work. It was found during the course of this study that the number of working hours have increased by four to five hours a day since the study was carried out in
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2001. Long-time street vendors have also admitted that their working hours have increased. A 72-year-old vendor stated: “I have been pursuing this activity since I was a 12-year-old boy. I have spent 60 years in this area. We were only 10 on this road and now we are more than 1,000. Our total space is the same. Only our personal space has been reduced. I have noticed that the profit margin has decreased as compared to earlier. Competition has increased over the period. I used to spend 5 hours in a day earlier but now I spend 9-10 hours to be able to survive.”
The Ministry of Urban Development and Poverty Alleviation laid down national policy goals and made many recommendations in 2006 (NPUSV, 2006). The main objective of the policy is to “provide and promote a supportive environment for earning livelihoods to the vast mass of urban street vendors while ensuring that such activity does not lead to overcrowding and unsanitary conditions in public spaces and streets” (NPUSV, 2006, p. 11). The specific objectives of the national policy are: to provide legal status by formulating appropriate laws and providing legitimate hawking zones in urban development; to provide facilities for the appropriate use of identified space, including the creation of hawking zones in the urban development plans; to do away with numerical limits on access to public spaces of discretionary licences and instead move to nominal fee-based regulation of access; to ensure that street vendors are made a special component of the urban development plan by treating them as an integral and legitimate part of the urban distribution system; to promote facilitative organisations for street vendors such as unions, cooperatives or associations and other forms of organisation to facilitate their empowerment; to provide comprehensive social security to buffer ruinous health expenditure for general ailments, reproductive and child health and geriatric ailments; to promote access to such services as credit, housing and upgradation of their skills through the promotion of Self-help Groups (SHGs), co-operatives, and micro-finance institutions (NPUSV, 2006). The national policy on urban street vendors was revised again by the Ministry of Housing and Urban Poverty Alleviation, Government of India, in 2009 (NPUSV, 2009), though the new policy is much the same as the old one. As regards the provisions for the two years, 2006 and 2009, the Government has already highlighted the important problems and provided very specific recommendations for street vendors, but the problem is that these recommendations still remain on paper only and have not been implemented in Mumbai so far. Therefore, it is incumbent on the state governments to take the initiative to fully implement the national policy, especially in Maharashtra, since the number of street vendors has been growing significantly in Mumbai. According to the local authorities, street vendors occupy public space illegally. The national policy (2006) suggested that Town Vending Committees (TVCs) should be made responsible for the allocation of space to street vendors. The functions of the TVCs recommended by the national policy are as follows: registering the street vendor and ensuring the issuance of an identity card to the vendor after it has been prepared by the municipal authority; monitoring the facilities to be provided to the street vendors by the municipal authority; identifying areas for vending with no restriction, areas with restrictions with regard to dates, days, and times,
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and areas that would be marked as no-vending zones; setting the terms and conditions for hawking; taking corrective action against defaulters; and collecting revenue. However, the fees charged by the TVCs should be nominal or at least affordable for all street vendors. The committees may decide the amount that the street vendors will be charged, considering the local conditions. Considering the functions of the TVCs recommended by the national policy, it can be said that TVCs would constitute a better solution in terms of organising the vendors at the local level. Street vendors would prefer to pay the fees legally to the government instead of paying bribes to the local police and the municipal corporation. One of the vendors, in fact, pointed out, “We would like to pay the amount as taxes instead of bribes for our . . . space. We would even love to pay double the amount that we are paying now.” The findings of the present study also indicate that vendors are forced to borrow money at exorbitant rates of interest (amounting to 5-10 per cent per month), which, in turn, pushes them into a debt-trap situation. The study shows that the excessively long working hours of the vendors, poor safety and security conditions at their workplaces, together with the illegal compensations they have to pay the local authorities, are contributing towards a deterioration in their working environment as well as acute deprivation among these workers. This shows the existence of a ‘shadow economy’, as the street vendors are being exploited by those very persons from whom they seek and obtain credit as well as other forms of financial support. This entire process is self-perpetuating because of the lack of formal recognition of the economic activities of the vendors. They thus need to be imparted certain proper rights: to utilise the public space; to access the institutional credit; and to participate actively in union activities, all of which would help them achieve decent work and enjoy an adequate means of livelihood. References Anjaria, S.J. (2006), “Street Hawkers and Public Space in Mumbai”, Economic and Political Weekly, Vol. 41, No. 21, pp. 2140-46. Bhowmik, S.K. (2001), ‘Hawkers in the Urban Informal Sector: A Study of Street Vendors in Seven Cities’, Available at: http://www.karmayog.com/hawkers/hawkersnasvi.htm, Accessed in March 2010.. —— (2007), “Street Vendors in Urban India: The Struggle for Recognition”, in A. Morales and J. Cross (eds.), Street Entrepreneurs: People, Place and Politics, Routledge, New York, pp. 92–107. —— (2010) (eds.), Street Vendors in the Global Urban Economy, Routledge, New Delhi. Bryman, A. (2009), (Third edition), Social Research Methods, Oxford University Press, Oxford. Chen, M.; Jhabvala, R.; Kanbur, R. and Richards, C. (2007), “Membership-based Organizations of the Poor”, in M. Chen, R. Jhabvala, R. Kanbur and C. Richards (eds.), Membership-Based Organizations of the Poor, Routledge, New York, pp. 3-20. Creswell, J.W. (2009) (Third edition), Research Design: Qualitative, Quantitative, and Mixed Methods Approaches. Sage, Thousand Oaks, CA. Granovetter, M. (1985), “Economic Action and Social Structure: The Problem of Embeddedness”, The American Journal of Sociology, Vol. 91, No. 3, pp. 481-510. Granovetter, M. and Swebderg, R. (eds.) (2001), The Sociology of Economic Life, (Second edition), Westview Press, Oxford.
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Jhabvala, R. (2000), The Role of Street Vendors in the Growing Urban Economies, Self-Employed Women’s Association (SEWA), Ahmedabad. Mumbai Human Development Report (MHDR) (2009), Available at: http://hdr.undp.org/en/reports/nationalreports/ asiathepacific/india/Mumbai_2009_NHDR_EN.pdf, Accessed in September 2011. National Commission for Enterprises in the Unorganised Sector (NCEUS) (2007), “Report on Comprehensive Legislation for Minimum Conditions of Work and Social Security for Unorganised Workers”, Available at: http://nceus.gov.in/Report_Bill_July_2007.htm, Accessed in March 2010. National Policy on Urban Street Vendors (NPUSV) (2006), Available at: http://nceuis.nic.in/Street%20 Vendors%20policy.pdf, Accessed in March 2010. —— (2009), Available at: http://mhupa.gov.in/w_new/StreetPolicy09.pdf, Accessed in March 2010. Planning Commission (2008), “Eleventh Five Year Plan 2007–2012: Urban Infrastructure, Housing, Basic Services and Poverty Alleviation”, Available at: http://planningcommission.nic.in/plans/planrel/ fiveyr/11th/11_v3/11v3_ch11.pdf, Accessed in February 2010. Saha, D. (2010), “Decent Work for the Street Vendors in Mumbai, India—A distant vision!”, Journal of Workplace Rights, Vol. 14, No. 2, pp. 229–250. Tiwari, G. (2000), “Encroachers or Services Providers?”, Seminar, Vol. 491, June, pp. 26-31. Uzzi, B. (1997), “Social Structure and Competition in Inter-firm Networks: The Paradox of Embeddedness”, Administrative Science Quarterly, Vol. 42, No. 1, pp. 35-67.
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The Indian Journal of Labour Economics, Vol. 54, No. 2, 2011â&#x20AC;&#x2030;
RESEARCH NOTES STRUCTURE OF THE RURAL LABOUR MARKET: AN INVESTIGATION INTO TWO VILLAGES IN WEST GODAVARI DISTRICT, ANDHRA PRADESH R. Vijay and Chandayya Makeni* The present article starts with a normative assumption that a well-formed labour market is a necessary condition for the development of a less developed economy. A well-formed labour market implies the separation of agricultural households into labour-demanding and labour-supplying households. This separation facilitates self-correction of the labour market through adjustment in wages. In the context of incompletely formed labour markets, the self-corrective mechanism in the labour market is also realised through non-labour market institutions like the land lease market. These resource adjustment mechanisms are illustrated through the study of choices available and actual alternatives realised by labour-supplying and labour-demanding households in two villages of West Godavari district in Andhra Pradesh. Although these two villages have different structures, non-labour market institutions play an important role in resource adjustment here. I. INTRODUCTION The state of Andhra Pradesh is generally identified as a middle-income state with a prosperous agricultural sector. If one classifies the different districts in the state in terms of the level of income, the delta zone comprising the East and West Godavari districts, and the Krishna and Guntur districts is generally identified as the zone with the highest income. The Godavari districts are collectively identified as the granary of the state. These districts have witnessed a significant intervention by the state to change the property right regime (the introduction of ryotwari settlements), and intervention to reduce nature-based uncertainty (the provision of canal water for irrigation), productivity- enhancing changes (the Green Revolution) as well as active intervention by the industry to change the cropping pattern (as in the case of ITC, the sugar industry, etc.). While these multiple interventions have generated growth in these districts, the question being addressed here is as to whether interventions and the resultant growth in output have generated a well- formed labour market, that is, a market visualised as one wherein the households are differentiated into labour-supplying and labour-demanding households. In the Marxian framework, a well-formed market is one where there is a differentiation of the peasantry and which is identified as a completely formed labour market. A well-formed labour market directly influences the wage rate and indirectly influences the level of capital * R. Vijay is Reader in the Department of Economics, University of Hyderabad, Hyderabad. Email:rvss@uohyd.ernet.in. Chandayya Makeni is Research Scholar in the Department of Economics, University of Hyderabad, Hyderabad. Email: makenichandu@gmail.com. The authors are grateful to Prof. D. Narasimha Reddy for his comments on an earlier draft of the paper. The usual disclaimers follow.
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accumulation among cultivators using hired labour (Bhalla, 1992). If the labour market is not well-formed, the economy can have short-run growth with the infusion of technology but the growth may not be self-sustaining as the incompletely formed primary markets may restrict the re-allocation of resources. One proposition on the need for a completely formed labour market could be that a sustained growth in output needs well-developed land and labour markets in the rural areas or that well-developed markets for inputs signify a necessary condition for generating growth in the economy (North and Thomas, 1971). Another proposition could be that a growth in output would induce the formation of land and labour markets by increasing the real wages and inducing resource re-allocation in the village economy. There are a number of studies on changes in real wages over a period of time (Krishnaji, 1971; Herdt and Baker, 1972; Parthasarathy and Adiseshu, 1982; Jose, 1988; Acharya, 1989; Parthasarathy, 1996; Unni, 1997; Reddy, 1998; Narayanamoorthy and Deshpande, 2003; Himanshu, 2005; Srivastava and Singh, 2005; 2006; and Chavan and Bedamatta, 2006. In addition, there are also studies on the impact of growth on real wages (Deaton and Dreze, 2002; Mishra and Govinda Rao, 2003; Bhalla and Hazell, 2003; Sundaram, 2007; Abraham, 2009; and Eswaran, et al., 2009). However, there are only a few micro studies on the nature of formation of the labour market. This paper attempts to address this lacuna by studying the nature of the labour process in two villages in West Godavari district with an emphasis on understanding whether the labour processes are tending towards the formation of the labour markets. A complete (or formed) labour market implies the separation of households in the farm sector into labour-demanding and labour-supplying households. This would imply a case wherein labour-supplying households have only their labour power to sell and the labour-demanding households have the other primary means of production, namely land. An incompletely formed market is visualised as one wherein this separation is not complete or the labour-supplying households also own/operate some land. One of the indicators for identifying non-separated households is the sizable presence of small and marginal farmers: these households are potentially suppliers of labour but actually internalise the demand for labour within their production unit (Bhaduri, 1984; Bharadwaj, 1994; Unni, 1997)). Another indicator could be when labour-supplying households can also lease in land and convert themselves into land operators. In both these processes, potentially labour-supplying households do not actually get converted into labour-supplying households. Both the indicators on incompletely formed labour markets are from the supply side in the labour market. However, the sustenance of the supply side constraints to the labour market also needs a specification of the demand side in the labour market. The nature of demand for labour can be identified in terms of the distribution of land with different classes/groups and their options to cultivate the land. In this paper, the constraints with regard to the formation of the labour market are seen in terms of structures in the rural economy. The structure of the village economy is identified in terms of the classification of rural households into labour-demanding and labour-supplying households based on their labour exchanges. This paper investigates the labour market in two villages in the West Godavari district of Andhra Pradesh. The selection of the villages was deliberate in the sense that one of them
STRUCTURE OF THE RURAL LABOUR MARKET
329
was selected in the canal-irrigated region and the other in a dry area. These villages might not be representative of the villages in the areas but this article assumes that one can find some trends regarding the changes in the labour market which might lead to some generalisations. A second limitation is that though households are classified into classes/groups in terms of single-year data, there could be year-to-year fluctuations in labour exchanges, as a result of which the criteria for classification may be the same but the composition in each class/ group may change. A third limitation is that one is trying to derive dynamic consequences based on one-year data. II. METHODOLOGY OF CLASSIFICATION OF RURAL HOUSEHOLDS Rural households are classified into groups/classes based either on the extent of the land owned/operated by households (Vyas, 2003), or labour criteria (Patnaik, 2000; Rao and Bharathi, 2010; Ramachandran, et al., 2010) or access to credit (Eswaran and Kotwal, 1989). The classification is based on two assumptions. One, there is a homogeneity in the behavioural pattern within a group/class and heterogeneity over groups/classes in terms of economic exchanges. Two, the resource that is used for the classification of households is incompletely formed or the resource introduces rigidity in the adjustment process. The rigidity in the resource adjustment process makes the resource a central constraining resource, with the other resources adjusting to this rigidity. The land-based classification assumes rigidity in the land market and the fact that adjustment takes places either in the lease or the labour market (Vyas, 2003). The credit-based classification assumes an active land and labour market but introduces rigidity in the credit market leading to credit-based classification of rural households (Eswaran and Kotwal, 1989). The labour-based classification assumes that the labour market is not well-formed (Bharadwaj 1994; Bhaduri, 1984). This might imply either that the rural households are not separated into labour-supplying and labour-demanding households or that in a Marxian framework, the peasantry is not differentiated. This paper uses labour exchanges to classify households in the rural sector. A census type survey was conducted from August to November 2010 with a household being identified as the basic unit of analysis. In the survey, detailed information on the households was collected on the basis of three variables: one, the characteristics of the households like caste, sex composition, educational attainment of their members, and occupations; two, the resource position of the households like the extent of land owned and operated, tenancy relations, and instruments owned; and three, the nature of labour exchanges entered into by the households in the village economy. The first stage of classification of households is to identify labour-supplying and labour-demanding households based on whether the household is supplying or demanding labour on the basis of the primary occupation. In the second stage, the labour-supplying households are, in turn, classified into two groups. The first group includes households that only supply labour for agricultural operations and do not operate any land. These households are identified as pure labour-supplying households. They earn an income by selling their labour time in the labour market and do not have any other source of income. These households are classified as C1 type households (pure labour-supplying households).
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THE INDIAN JOURNAL OF LABOUR ECONOMICS
The second group includes households that supply labour for agricultural operations but more importantly also operate land. These households do not demand land but use their own family labour. They have two sources of income: income from selling labour time in the labour market and income from the organisation of production. These households are classified as C2 type households (mixed labour-supplying households). Labour demanding households, in turn, consist of two groups. The first of these groups includes households that operate land and demands labour in the market but do not supply labour in the market. These households are classified as C4 type of households (pure labour-demanding households). A second source of demand for labour is one wherein households own land but may not operate land (provide land on lease) or do not take part in the production process but are only supervisors. These households are classified as C5 type of households (mixed labourdemanding households). In addition to labour-demanding and labour-supplying households in the rural areas, there are also households earning income in the non-farm sector. These households are classified as C3 type of households (diversified households). The criteria of classification of various types of households are depicted in Table 1. The classification used here has some similarities to other labour-based classification of households. The C1 and C2 types of households are similar to the agricultural labour households and poor peasantry, while the C3 types of households are generally not presented when one is studying the agrarian economy. The major difference with regard to the labour-based classification comes in with regard to the C4 type of households in which the classification is that of a labour-demanding household but which might have different groups/classes like the middle peasantry, rich peasantry etc. The C5 type of households is again is similar to those of the landlords or non-cultivating peasantry. III. SOCIO-ECONOMIC CHARACTERSTICS OF THE TWO VILLAGES 1. Location Badarala is one of the surveyed villages in the Lingapalem mandal of West Godavari district in the state of Andhra Pradesh. It is situated at a distance of 10 km from the Lingapalem mandal headquarters, while the district headquarters Eluru is located 26.33 km away from Table 1 Classification of Households Group/Class
Criteria of Classification
C1
Di = 0, Si ≥0, land is not operated by the household, some member of the household engaged in the non-farm sector
C2
Di = 0, Si ≥0, land is operated by the household and some member is engaged in the non-farm sector
C3
Di = 0, Si ≥0, employed in the non-farm sector
C4
Di ≥ 0, Si =0, land is operated by the households
C5
Di ≥ 0, Si =0, land is owned but partly or wholly not operated by the households
Note: Di refers to the ith individual in a household demanding labour for agricultural operations, while by, Si is the ith household supplying labour for agricultural operations
RESEARCH NOTE
331
this village. This village was carved out as a separate village from the Mudicharla village in 1995. In the household survey, the total number of households is 172 with a total population of 730. The total operated land is 720.44 acres while the landâ&#x20AC;&#x201C;man ratio is 0.98 acres per individual. This is a dry village with borewells being the main source of cultivation. The village has two schools, including a primary school and an anganwadi school. The village also has a veterinary hospital. Velagapalli village forms part of the Ganapavaram mandal in the West Godavari district. This village is situated at a distance of 4 km northwest of Ganapavaram town. The district headquarters Eluru is located to the west of the village at a distance of 78 km. As per the household survey, the total number of households in this village is 135 and the population is 581. The total land operated is 148.77 acres and the landâ&#x20AC;&#x201C;man ratio is 0.26. The village gets water for cultivation from government canals and this water is used for the cultivation of two crops. This village has two schools, including a primary school and an anganwadi school. The village has two rice mills, and there is a thermocol and an ice factory located near this village, which provides employment to people staying in the village. 2. Population According to the Census Survey, 2001, the number of households and population of Badarala village was 199 and 819, respectively; with the average size of the household being 4.12 (see Table 2). In the field survey, only 172 households were enumerated and the population of village was 730. In Velagapalli village also, one finds a significant difference between the number of households and the population enumerated in the field survey and the Census operations. In the village, the Census operation reports 161 households while in the survey, there are only 135 reported households. The population also decreases from 617 (as per the Census) to 581 (as per the field survey). There could be two possible explanations for these differences. One reason could be the emigration from the village between 2001 and 2009. The second possible explanation could be differences in the identification of households in the village by Census operations and by the present researchers. Both the villages are multi-caste villages with not only a numerical dominance of the Other Castes (OCs) but also a major share of the land being held by these caste groups. In Badarala village, the share of the OC and Backward Caste (BC) households in the total number of households is equal, which is 45.93 per cent, whereas the share of the Scheduled Caste (SC) households is 8.14 per cent. However, the land owned by the OC households is Table 2 Number of Households and Average Household Size in the Two Study Villages Description Badarala Velagapalli Number of Total Average Number of Total Average Households Population Household Households Population Household Size Size Field Survey 172 730 4.24 135 581 4.30 Census of India 2001 199 819 4.12 161 617 3.83 Source: Field Survey, 2010, and Census of India, 2001.
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Caste OC BC SC
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Table 3 Distribution of Households over Caste and Land Owned in the Two Study Villages (Land in Acres) Badarala Velagapalli No. of Households Land Owned No. of Households Land Owned 79 509.24 53 114.32 (45.93) (85.77) (39.26) (93.64) 79 80 47 2.4 (45.93) (13.47) (34.82) (1.97) 14 4.5 35 5.37 (8.14) (0.76) (25.92) (4.40) 172 593.74 135 122.09 (100) (100) (100) (100)
Total Note: Figures in brackets are percentages to the total. Other Caste (OC): Brahmin, Kamma, Kamma, Kapu, Velama, Rajulu and Komiti. Backward Caste (BC): Thurpukapu, Koppu Velama, Gouda, Rajaka, Golla, Mangali, Vadrangi, and Muslim. Scheduled Caste (SC): Mala and Madiga. Source: Field Survey, 2010.
around 85 per cent, with the BC households accounting for marginal landholdings and the SC households owning insignificant land. In contrast, Velagapalli village has the highest percentage of OC households (around 39.26 per cent), followed by BC households (34.82 per cent) and SC households (25.92 per cent). The OC households hold nearly 93 per cent of the land with both the BC and SC households owning a marginal extent of land (see Table 3). 3. Land Distribution, Cropping Pattern and Instruments Table 4 provides information on the distribution of land according to different land size groups. The reported amount of land owned in the Badarala and Velagapalli villages is less than the reported amount of land operated. The difference in the case of Badarala village is significant at 127 acres while the difference in the case of Velagapalli village is only 26 acres. One possible explanation for this could be the under-reporting of the land owned but actual reporting or over-reporting of the land operated. One possible explanation for under-reporting of the land owned is the land reforms legislations. Another possible explanation could be the reflection of the methodology of the survey. Here, the Census data was collected for all households residing in the village and households owning land in the village but households staying outside the village did not become part of the survey. If there are households that stay outside but lease out their land to households in the village, then there would obviously be a difference between the land owned and land operated. Both the villages have significant extents of land leased out but in the case of Badarala village, the difference between the extent of land leased out and that leased in is significant, while this is not true for Velagapalli. In the case of Badarala, the extent of leased-in land is around 73 acres while the extent of land leased out is 28 acres, thereby creating the possibility of land being owned by households residing in the village but land being leasing out to the residents of this village. In the case of Velagapalli, the extent of land leased out is 46 acres while the extent of land leased in
STRUCTURE OF THE RURAL LABOUR MARKET
333
is 54 acres. Thus, in this village, the extent of land owned by the outsiders leasing out to resident households in the village is less than in the case of Badarala. The two villages show stark differences in the land owned and operated over size groups. Both the villages show a significant proportion of landless labour households. In Badarala village, the share of the landless labour households is 34 per cent, while the corresponding figure in Velagapalli village is 78 per cent. The high proportion of landless labour arises due to the inclusion of households that are landless but have employment in the non-farm sector. In the case of Badarala village, the proportion of households depending only on the non-farm sector for employment is 20, while in the case of Velagapalli village, there are nearly 70 such households. Thus, the effective proportion of landless labour households is 23 per cent in Badarala and 26 per cent in Velagapalli. However, if one identifies landlessness in terms of the operation of land, the proportion reduces to 20 per cent for Badarala and 9 per cent for Velagapalli. The significant decline in the proportion of landless labour households in Velagapalli implies that landless households are entering the tenancy market and accessing land. In other words, tenancy is a significant option for labour-supplying households to earn an income in Velagapalli. There is a decrease in the land owned by marginal landholders in Badarala village, and an increase in the land owned by this category of households in Velagapalli village. These sections of the households may, therefore, be leasing out land in Badarala village but leasing-in land in Velagapalli village. In the case of small farmers, there Table 4 Distribution of Households across Different Land Based Class and Their Ownership and Operational Landholding in the Two Study Villages (Land In Acres) Size of Landholding
Badarala Owned Land
Velagapalli
Operated Land
Owned Land
Operated Land
No. of HHs
Area
No. of HHs
Area
No. of HHs
Area
No. of HHs
Area
Landless
60 (34.88)
0
56 (32.55)
0
106 (78.51)
0
83 (61.48)
0
Marginal
52 (30.23)
72.44 (12.20)
29 (16.86)
38.94 (5.40)
16 (11.85)
16.57 (13.57)
26 (19.25)
30.27 (20.34)
Small
30 (17.44)
118.5 (19.95)
40 (23.25)
144 (19.98)
7 (5.18)
25.07 (20.53)
19 (14.07)
67.97 (45.64)
16 (9.30)
128 (21.55)
30 (17.44)
237 (32.89)
4 (2.96)
31.5 (25.80)
6 (4.44)
39.1 (26.28)
9 (5.2)
140.8 (23.71)
13 (7.55)
190.5 (26.44)
1 (0.74)
11.5 (9.41)
1 (0.74)
11.5 (7.73)
Large
5 (2.96)
134 (22.56)
4 (2.32)
110 (15.26)
1 (0.74)
37.45 (30.67)
0 (0.00)
0
Total
172 (100)
593.74 (100)
172 (100)
720.44 (100)
135 (100)
122.09 (100)
135 (100)
148.77 (100)
Semi-Medium Medium
Note: No. of HHs implies the number of households, and the figures in brackets are percentages to the total. Source: Field Survey, 2010.
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THE INDIAN JOURNAL OF LABOUR ECONOMICS
is no difference between leasing in and out in Badarala village, but in the case of Velagapalli village, there is a significant increase in the land operated, implying that the small farmers could be a major source of leasing in of land in Velagapalli village. The semi-medium farmers have increased their land under operation in Badarala village but not in Velagapalli village. The large farmers, on the other hand, have witnessed a significant decline in their share of land operated in the two villages. The main gainers of land in Badarala village are the semimedium farmers, while in Velagapalli village, there is a significant decline in the number of landless labour households and an increase in the number of small farmers (see Table 4). Badarala village is a multi-crop village cultivating food crops (paddy) and market-oriented crops like banana, sunflower, cane, tobacco, coconut, cocoa and palm oil. The major crop cultivated is coconut, which is a mixed crop with cocoa and forms nearly 30 per cent of the cultivable land. Both these crops are long gestation crops. The second important crop cultivated in this village is paddy, which accounts for nearly 23 per cent of the cultivable land. The third main crop is palm oil, which again accounts for nearly 10 per cent of the cultivable land in the village. Velagapalli village is a mono-crop village with paddy being cultivated here during both the kharif and rabi seasons (see Table 5).
Crops
Paddy Maize Banana
Table 5 Cropping Pattern in the Two Study Villages (Land in Acres) Badarala Velagapalli Kharif No. of Area HHs 56 158 (23.88) 0 0 2
Rabi No. of HHs 0 103
Area 0 395.4 (44.43) 0
Kharif No. of Area HHs 52 148.8 (100) 0 0
Rabi No. of Area HHs 52 148.8 (100) 0 0
3 0 0 0 0 0 (0.45) Sunflower 1 2 0 0 0 0 0 0 (0.30) Sugarcane* 5 10.5 5 10.5 0 0 0 0 (1.58) (1.18) Tobacco 1 6 0 0 0 0 0 0 (0.90) Coconut** 25 212 25 212 0 0 0 0 (32.04) (23.88) Cocoa ** 25 198 25 198 0 0 0 0 (29.93) (22.29) Palm Oil* 12 72 12 72 0 0 0 0 (10.88) (8.11) Total 127 661.5 170 887.9 52 148.8 52 148.8 (100) (100) (100) (100) Note: *refers to long duration crops, ** refers to mixed crops, and the figures in brackets are percentages to the total. Source: Field Survey, 2010.
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335
IV. STRUCTURE OF TWO VILLAGES The structure of the village economy can be visualised to be made up of two parts based on the nature of labour allocations: the first pertaining to households involved in the farm sector, and the second to households in the non-farm sector. Individuals in the farm sector organise agricultural production while the individuals in the non-farm sector facilitate either production or the distribution of products produced by the farm sector, and from and to the external economy. This consists of artisan households or transporters of the produce or the providers of services for organising production. The farm sector, in turn, can be conceptualised to have two parts: households that are organising production and would potentially be demanding labour, and households that are the suppliers of labour. Two different structures of the farm sector can be identified on the basis of labour allocations. The first of these is based on the initial allocation of resources (labour and land) at the start of the production period, while the second is based on the allocation of land and labour resources post the re-allocation of resources. The first is identified as the initial structure while the second is the evolving structure. The parts of the farm sector in the initial structure are in terms of distribution of owned land over households with the households being separated into landed households (owned) and landless households. One part consists of the households that own land and can potentially organise production and form the demand side in the labour market. The second part consists of the landless labour households that form the supply side in the labour market. Given an initial allocation of land and labour resources, households might enter into re-allocation of land resources changing the initial structure. One of the dominant forms of re-allocation of land resources comprises tenancy arrangements. This changes the internal composition of the initial farm sector. There might be some households that own land but lease out all the land and become labour-supplying households, or there might be some households that are labour-supplying households which lease in land and become organisers of production. If there is a decrease in the number of households operating land as compared to the number of households owning land, it would imply an increase in the size of the land being operated, implying that some households may want to reap scale advantages or reflecting the presence of the rich peasantry. This would imply a potential increase in the demand for labour. On the other hand, if there is an increase in the number of households operating land as compared to the number of households owning land, it would imply an increase in the number of pure tenants or the C2 peasantry in the economy. This might lead to a decrease in the demand for labour as the labour-supplying households would be converting themselves into part producers and internalising labour demand. Under a completely formed labour market, the households would be separated into the C1 and C4 classes. Under conditions when the market is not well-formed, there would be a dominant presence of the C2 and C5 households. An increasing presence of C2 household would imply that labour-supplying households are internalising their demand for labour, if not completely, at least partly. A higher presence of households in the C2 category implies that a larger number of households are operating land. The operation of land by households implies that the households either own land and/or are leasing in land. If the households are leasing in land, one would expect the presence of C5 households in the village.
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As regards the initial structure in Badarala village, 88.37 per cent of all rural households are in the farm sector while 11.63 per cent are in the non-farm sector. While in Velagapalli village, the farm sector has a smaller share and accounts for 48.14 per cent of the households, the non-farm sector is dominant, comprising 51.85 per cent of the households. As regards the farm sector in Badarala village, the landed households form 73.68 per cent of all farm households while landless labour households form 26.31 per cent of the farm households. In the case of Velagapalli village, on the other hand, the landed households form 44.61 per cent of the farm households and the landless households form 55.38 per cent of the total farm households. The initial allocation of households in the two villages in terms of the farm and non-farm sectors shows significant differences. The wet village has a higher share of non-farm sector households as compared to the dry village. In addition, the landed households in Badarala village form a higher share of farm households as compared to Velagapalli village (see Table 6). If one looks at the evolving rural structure, Badarala village witnessed a marginal increase in the proportion of land-operating households (an increase by four households) while Velagapalli village witnessed a significant increase in the proportion of land-operating households, from 29 to 52 households. In Badarala village, there was decrease in the number of landless labour households by four households and a simultaneous decline by four households and an increase of four households that are operating land. However, in Velagapalli village, there was a significant decrease in the number of households in the farm sector but not operating land, from 36 to 13. While the internal composition of the farm sector did not witness a major change after re-allocation in Badarala village, that in Velagapalli village did exhibit a major change, with an increase in the proportion of cultivators in the economy (see Table 6). The two villages have different structures in terms of households in the farm and non-farm sector as also the distribution of households in the farm sector. The proportion of pure labour-supplying households (C1) is different in the two villages. Badarala village has 16.86 per cent of pure labour-supplying households while the corresponding figure in Velagapalli village is 6.66 per cent. The number of households that supply labour and organise production (C2) is 29.65 per cent in Badarala and 22.96 per cent in Velagapalli. These households own nearly 14.22 per cent of the land and operate 21.16 per cent of the land in Badarala, while they own only 4.93 per cent of the land but operate 40.55 per cent of the land in Velagapalli. The main labour-demanding households are those that demand labour and do not supply labour but may use their family labour (C4 type of households). These households comprise 34.88 per cent of the total number of households and own 58.36 per cent of the total land in Badarala. These households have increased the extent of land under cultivation to 61.63 per cent. In Velagapalli, these households form only 13.33 per cent of the total number of households and own 42.22 per cent of the total land. These households have increased their landholdings to 47.02 per cent. Another class/group of labour-demanding households include those which land but either do not cultivate it themselves or cultivate it but only in a supervisory role (C5 type of households). In Badarala
STRUCTURE OF THE RURAL LABOUR MARKET
337
Table 6 Classification of Households in the Farm and Non-farm Sectors in the Two Villages Description
Badarala
Velagapalli
(A) Farm Sector (Owned Land)
No.
No.
Landed Households
112
29
Landless Households
40
36
Non-farm Sector Households
20
70
172
135
116
52
Landless Households
36
13
Non-farm Sector Households
20
70
172
135
Total (B) Farm Sector (Operated Land) Cultivators
Total
Source: Field survey, 2010.
village, such households account for 6.97 per cent of the total number of households and own 27.42 per cent of the land. However, the land operated by this group has decreased to 17.21 per cent over time. Velagapalli village has also witnessed the same trend, with the proportion of land being operated by this group decreasing to 12.44 per cent from 52.84 per cent (see Table 7). Table 7 Distribution of Households over Classes and Land Owned and Operated in the Surveyed Villages (Land in Acres) Badarala Classification
Velagapalli
No. of Households Owned Land
Operated Land
No. of Households Owned Land
Operated Land
C1
29 (16.86)
0
0
9 (6.66)
0
0
C2
51 (29.65)
84.44 (14.22)
152.44 (21.16)
31 (22.96)
6.02 (4.93)
60.32 (40.55)
C3
20 (11.62)
0
0
70 (51.85)
0
0
C4
60 (34.88)
346.5 (58.36)
444 (61.63)
18 (13.33)
51.55 (42.22)
69.95 (47.02)
C5
12 (6.97)
162.8 (27.42)
124 (17.21)
7 (5.18)
64.52 (52.85)
18.5 (12.44)
172 (100)
593.74 (100)
720.44 (100)
135 (100)
122.09 (100)
148.77 (100)
Total
Note: Figures in brackets are percentages to the total. Source: Field Survey, 2010.
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V. OPTIONS AVAILABLE AND CHOICE EXERCISED BY LABOURSUPPLYING AND LABOUR-DEMANDING HOUSEHOLDS 1. Labour Supplying Households A labour-supplying household can be conceived to have five options to ensure its subsistence. One option could be to enter the labour market or what is also called the casual labour market and to sell their labour services to the labour-demanding households. In a market-oriented economy, the predominant option available to the individuals is to enter the causal labour market. A second option could be for the labour-supplying households to enter into a long-term labour contract with those demanding the use of the land. The long-term contract could be an attached labour contract or a contract for a permanent farm servant. The third option for labour-supplying households is to switch from labour supply to labour demand by leasing in land. Here, the labour demand could also be for family labour. A fourth option could entail the migration of labour outside the village economy. These migrations may be temporary, triggered as a response to differences in the demand and supply conditions in different villages. A last option for the labour-supplying households may be to enter the rural non-farm sector. The choices that exist for a laboursupplying household to meet its livelihood needs are provided by the institutional context in which the individual operates. The actual option that the individual takes to meet the livelihood needs of his household depends on the resource position of the households and the constraints faced by the individuals. Thus, at the individual level, the option taken by the individual may not be a voluntary choice but may be distress-induced, whereas at the economy level, the impression is that labour-supplying households enjoy a voluntary choice. A well-developed labour market is one wherein the labour-supplying households enter into the casual labour market if it provides a higher income than the other options or if in terms of choice, the dominant choice entails the entry of households into the casual labour market. There are 80 households in the farm sector that are potential suppliers of labour and can enter the casual labour market to sell labour in Badarala village. These households are categorised in the class group of C1 (29 households) and C2 (51 households). In these households, only 29 households have entered the labour market, including 21 households in the C1 group and eight households in the C2 group. In the C1 group, there are eight households that have a long-term contract with the labour-demanding households in the village, while in the C2 group, the household have no long-term contracts. The village has not witnessed any temporary migration of labour-supplying households. Labour-supplying households have the option of entering the land lease market and becoming land operators. This village has witnessed 23 lease market contracts, of which eight contracts involve pure tenants. In a different sense, 10 per cent of the labour-supplying households have leased in land and have partly internalised the demand for labour. In addition, a major share of the labour-supplying households own land (53.75 per cent) or have leased in land (10 per cent) and use their labour time in their own lands (see Table 8). In this village, 63.75 per cent of
RESEARCH NOTE
339
the households either own land or have leased in land, and in the process, they have partly internalised the demand for labour. Velagapalli village has a smaller number (40) of labour-supplying households in the farm sector. All the nine households in the C1 group have entered the casual labour market. There are no long-term contracts in the village. The dominant resource adjustment mechanism for the labour-supplying households is the entry into the land lease market. The village has 23 pure tenants or 57.5 per cent of the labour supplying households have leased in land and partly internalised the demand for labour in the households. In this village, only 20 per cent of the labour-supplying households own land while 57.5 per cent of the households have leased in land. Thus in this village, 77.5 per cent of the labour-supplying households are operators of the land, while only one household has temporarily migrated to another village in search of employment (see Table 8). The composition of labour-supplying households and the choices made by them are different in the two villages. The share of C1 households in the labour-supplying households is higher in Badarala village (36.3 per cent) as compared to that in Velagapalli (22.5 per cent). The proportion of households owning land among the labour-supplying households is very high in the case of Badarala (53.7 per cent) as compared to Velagapalli (20 per cent). The share of households entering the casual labour market is 26.2 per cent in Badarala and 22.5 per cent in Velagapalli. In Badarala village, there are an equal number of households that have long-term contracts and that are pure tenants. While in Velagapalli village, there are no long-term contracts, a major share of the labour-supplying households is pure tenants. Thus, in one village, a higher share of labour-supplying households own land while in the other village, a large share of labour-supplying households have leased in land. 2. Labour-demanding Households Labour-demanding households can be conceived to have three options to cultivate the land. One is to use casual labour contracts, the second is to use long-term contracts, while the third option is to lease out their land. In Badarala village, there are 72 households that are directly labour-demanding (in terms of casual labour or long-term contracts) or indirectly labourdemanding by leasing out the land. Of these 72 households, 69 own land while 3 are pure tenants that is, potential suppliers of labour that have got converted into labour-demanding households. All the land operators use casual labour, which is why one is presenting data on other forms accessed by the labour-demanding households to access labour. One of the important institutions used by the labour-demanding households to organise production is that of long-term contracts. There are 63 households that comprise either attached labour (43) or regular farm servants (20). As can be seen from Table 8, the number of labour-supplying households having long-term contracts in the village are 8, implying that 55 households from outside the village have long-term contracts with labour-demanding households in this village. Households in the C4 category own 346.5 acres of land and have leased in 127.5 acres of land but have also leased out 28 acres, implying a net leasing in of 99.5 acres. These households use long-term contracts with labour-supplying households to cultivate the land.
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Table 8 Choice Exercised by Labour Supplying Households to Earn Livelihood in Two Surveyed Villages (Land in Acres) Class
HHs
CL AL HHs HHs
Owned Land No.
Tenancy
Area
No. Area
Pure Tenancy No.
Leased Out
Pure Leased out
Area
No.
Area
Mig.
No. Area
Badarala C1
29
21
8
0
0
0
0
0
0
0
0
0
0
0
C2
51
8
0
43
84.44
23
73
8
24.5
3
5
2
4
0
Total
80
29
8
43
84.44
23
73
8
24.5
3
5
2
4
0
Velagapalli C1
9
9
0
0
0
0
0
0
0
0
0
0
0
C2
31
23
0
8
6.02
27 54.3
0
23
46.1
0
0
0
0
1
Total
40
32
0
8
6.02
27 54.3
23
46.1
0
0
0
0
1
Note: ‘CL HH’ refers to households participating in the casual labour market, ‘AL HHs’ refers to households with attached labour contracts, ‘Mig.’ refer to households witnessing migrations. Source: Field Survey, 2010.
The C4 group of households use long-term contracts and casual labour market contracts for cultivation. These households are engaged in the net leasing in of land. The C5 households total 12 in number and own 162.8 acres. Among these households, five are pure leasing out households, and the extent of land leased out by them is 27.8 acres. In addition, three more households are partly leasing out the land. The method of adjustments entails either using attached labour and/or casual labour in the cultivation process, or more importantly, using the tenancy market for adjustment. In Velagapalli village, 25 labour-demanding households own 116.1 acres of land but operate only 88.5 acres of this land. Unlike Badarala village, where the land operated by the demand side households has increased, the land operated in Velagapalli has decreased. Other things remaining constant, a decrease in the land operated as compared to land owned implies a decrease in the demand for labour. Of these households, 21 own land and four are pure tenants. As all the demand side households operating land use casual labour, here one is presenting information on other mechanisms used by the labour-demanding households to access labour. In the village, there are 18 households in the C4 group, with 14 of them owning land and the rest being pure tenants. The C4 households do not lease out but lease in land and consequently, the land operated by these households increases. The households in this group use attached labour (three attached labour households) and depend on casual labour for the organisation of production. There are seven households in the C5 group. For this set of households, leasing out of land looks to be the main option, and 71.3 per cent of the land owned by this group is leased out. These households generate not a direct demand for labour but an indirect demand for labour by leasing out the land (see Table 9). The structure of the labour market and the institutions used by the households to reallocate resources are different in the two villages. On the supply side of the labour market,
STRUCTURE OF THE RURAL LABOUR MARKET
341
the number of pure labour-supplying households (C1) as well as the share of households owning land on the supply side is different in the two villages. Badarala village has a higher share of pure labour-supplying households and also a higher share of households owning land on the supply side of the labour market as compared to Velagapalli village. On the demand side of the labour market, Badarala village again has a higher share of pure labourdemanding households (C4) as compared to Velagapalli village, which has a higher share of mixed labour-demanding households (C5). The methods of re-allocation of resources depend not only on the structure of the labour market but also on the land–man ratio and the selection of crops to be cultivated. Badarala, with its importance of pure labour-demanding and pure labour-supplying households on the two sides of the market, and its casual labour market and long-term contracts, pre-dominates the labour market exchanges. However, in Velagapalli, the importance of pure tenants on the supply side of the labour market and importance of mixed labour demand households on the demand side generates tenancy as the most important mechanism for re-allocation. VI. CONCLUSION The West Godavari district in Andhra Pradesh has witnessed a significant growth in output during the post-Green Revolution period. This growth has been the result of intervention by the State to facilitate increased production or of intervention by the industry for assured output. However, in the labour market in both the villages, there is a demand for land among the labour-supplying households. In one village, it takes the form of land owned by the labour-supplying household (Badarala), while in the other village, the labour- supplying households have entered the tenancy market (Velagapalli). In the process, the laboursupplying households become organisers of production, leading to an internalisation of their demand for labour. As more and more labour-supplying households become organisers of Table 9 Options Taken up by Labour-demanding Households for Organising Production in the Two Surveyed Villages (Land in Acres) Class
HHs No.
Owned Land No.
AL No.
RFL No.
Area
Tenancy No.
Area
Pure Tenancy
Leased Out
Pure Leased Out
No.
Area
No.
Area
No.
Area
Badarala C4
60
57
346.5
33
19
25
127.5
3
30
7
28
0
0
C5
12
12
162.8
10
1
0
0
0
0
8
38.8
5
27.8
Total
72
69
509.3
43
20
25
127.5
3
30
15
66.8
5
27.8
Velagapalli C4
18
14
51.55
3
0
6
18.4
4
9.80
0
0
0
0
C5
7
7
64.52
2
0
0
0
0
0
6
46.02
4
7.57
Total
25
21
116.07 5
0
6
18.4
4
9.80
6
46.02
4
7.57
Note: ‘AL’ refers to attached labour, ‘RFL’ refers to regular farm servant. Source: Field Survey, 2010.
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production, they are likely to completely or partially withdraw from the supply side of the labour market. Further, being owner-operated households, they are also expected to withdraw from the demand side of the market. A combined effect of this could be a reduction in both the wage rate as well as employment in the market. This might provide more incentives to labour-supplying households to withdraw from the labour market, thereby reinforcing the incompletely formed market. References Abraham, Vinoj (2009), “Employment Growth in Rural India: Distress-Driven?”, Economic and Political Weekly, Vol. 44, No. 16, April 18, pp. 97-104. Acharya, Sarathi (1989), “Agricultural Wages in India: A Disaggregated Analysis”, Indian Journal of Agricultural Economics, Vol. 44, No. 2, pp. 121-39. Bhaduri, Amit (1984), The Economic Structure of Backward Agriculture, Academic Press, London. Bhalla, G.S. and Hazell, Peter (2003), “Rural Employment and Poverty Strategies to Eliminate Rural Poverty within a Generation,” Economic and Political Weekly, Vol. 38, No. 33, August 16-22, pp. 3473-84. Bhalla, Sheila (1992), “The Formation of Rural Labour Markets in India”, in T.S. Papola and Gerry Rodgers (eds.) Labour Institutions and Economic Development in India, Research Series 97, International Institute for Labour Studies, Geneva, pp. 125-60. Bharadwaj, Krishna (1994), “On the Formation of Labour Market”, in Krishna Bharadwaj (ed.) Accumulation, Exchange and Development: Essays on the Indian Economy, Sage Publication India Pvt. Ltd., New Delhi, pp. 322-52. Chavan, Pallavi and Bedamatta, Rajashree (2006), “Trends in Agricultural Wages in India 1964-65 to 19992000”, Economic and Political Weekly, Vol. 61, No. 38, September 23-29, pp. 4041-52. Deaton, Angus and Dreze, Jean (2002), “Poverty and Inequality in India: A Re-Examination”, Economic and Political Weekly, Vol. 37, No. 36, September 07-13, pp. 3729-48. Eswaran, M. and Kotwal, A. (1989), “Credit and Class Structure”, in Pranab Bardhan (ed.) The Economic Theory of Agrarian Institution, Oxford Clarendon Press, New York, pp. 166-84. Eswaran, M.; Kotwal, A.; Ramaswami, B. and Wadhwa, W. (2009), “Sectoral Labour Flows and Agricultural Wages in India, 1983-2004: Has Growth Trickled Down?” Economic and Political Weekly, Vol. 44, No. 2, January 10-16, pp. 46-55. Government of India (2001), Census of India, General Population, Series 1, Part II-B, Primary Census Abstract, Office of the Registrar General Ministry of Home Affairs, New Delhi. Herdt, W.R. and Baker, E.A. (1972), “Agricultural Wages, Production and High Yielding Varieties”, Economic and Political Weekly, Vol. 9, No. 13, pp. A23-A30. Himanshu (2005), “Wages in Rural India: Source, Trends and Comparability”, Indian Journal of Labour Economics, Vol. 48, No. 2, pp. 375- 406. Jose, A.V. (1988), “Agricultural Wages in India”, Economic and Political Weekly, Vol. 23, No. 26, pp. A46-A58. Krishnaji, N. (1971), “Wages of Agricultural Labourers”, Economic and Political Weekly, Vol. 6, No. 39, pp. A148-A151. Mishra, V.N. and Govinda Rao, M. (2003), “Trade Policy, Agricultural Growth and Rural Poor”, Economic and Political Weekly, Vol. 38, No. 43, October 25-31, pp. 4588-4603. Narayanamoorthy, A. and Deshapande, R.S. (2003), “Irrigation Development and Agricultural Wages: An Analysis across States”, Economic and Political Weekly, Vol. 38, No. 35, pp. 3716-22. North, D.C. and Thomas, R. (1971), “The Rise and Fall of the Manorial System: A Theoretical Model”, Journal of Economic History, Vol. 31, December, pp. 777-803.
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The Indian Journal of Labour Economics, Vol. 54, No. 2, 2011
LABOUR, EMPLOYMENT AND SOCIAL SECURITY CHALLENGES FACED BY SECURITY PERSONNEL ENGAGED BY PRIVATE AGENCIES Sanjay Upadhyay* The services sector plays an extremely important role in terms of its contribution to the GDP as also in the generation of employment opportunities. The private security service industry is one of the key constituents of this sector. As per the broad estimates, there are approximately 18-20 million private security personnel engaged by over one lakh private security service agencies throughout the world. In India alone, there are almost 6 million security personnel engaged by thousands of private security firms operating in various parts of the country. These security personnel play the most crucial role in the functioning of these security service agencies. However, a large majority of them have to face various challenges in terms of risks to their life, lack of social security and deplorable conditions of work, among other things. This paper, which is based mainly on the analysis of data collected from security personnel and management officials employed in select private security firms in Okhla in Delhi and NOIDA in Uttar Pradesh, examines some of the hardships and challenges faced by security personnel. The paper also makes specific recommendations aimed at mitigating these hardships and challenges. I. INTRODUCTION The services sector forms the backbone of the social and economic development of a region. During the past few decades, it has emerged as the largest growing sector in the world economy, making an enormous contribution to output and employment. Its growth rate is higher than that of the agricultural and manufacturing sectors. This sector also assumes paramount importance in terms of its share in employment. At the international level, even as per the broad conservative estimates, there are approximately one lakh (0.1 million) security and intelligence service agencies operating in various countries of the world. As per different sources, these agencies engage almost 18 to 20 million private security personnel. Available estimates suggest that eight major countries of the world alone (including India, Germany, China, Canada, Russia, the UK, Australia and Nigeria) have more than 60,000 private security services agencies, engaging approximately 12 million private security personnel, who are mainly working as security guards, armed security guards and security supervisors.1 * Fellow, V.V. Giri National Labour Institute, NOIDA, Email: sanjaynli@gmail.com. This paper is an abridged version of the study on ‘Labour, Employment and Social Security Issues of Security Guards Engaged by Private Security Agencies: A Case Study of Okhla and NOIDA’, conducted by the author for V.V. Giri National Labour Institute.
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In India also, one of the key constituents of the services sector is the private security service industry. As per various estimates, the private security services industry is presently growing at the rate of 25-30 per cent per annum.2 As per various sources, in monetary terms, the size of the Indian private security services industry varies from Rs. 25,000 to 30,000 crores. Indiaâ&#x20AC;&#x2122;s private security services industry is the largest guarding operation in the world and the total strength of the employees of private security agencies vastly outnumbers the combined strength of the Army, Navy, Air Force and other para-military forces. In India, currently more than 15,000 security agencies are operating in various parts of the country. As per various sources, these agencies engage almost 5.5 to 6 million employees (Berrong, 2009). II. LITERATURE REVIEW Although a lot of studies have been conducted focusing on a number of other services, yet as far as the issues of security personnel engaged through hundreds of private security agencies spread throughout the country, especially the labour, employment and social security issues with specific reference to India are concerned, they have not yet invited the adequate attention of the researchers. The studies so far conducted have mainly remained confined to an estimation of the private security firms operating in various countries, the personnel engaged by such companies, the trends in composition of the industry in terms of the number of males and females engaged (Berrong (2009), with regard to India; Sanders (2005), with regard to Canada; Volkov (2001), with regard to Russia; Page and Rynn (2005), with regard to Europe;, the evolution of the private security industry and the proportionate share of major security firms providing private security services (Parfomak, 2004), in the case of USA; Prenzler, et al. (2009), in the case of Australia; and Abrahamsen and Williams (2005), in the case of Nigeria. Some of the scholars working on the broader theme of contract labour in different countries have focused attention on the various issues of contract labour engaged in different industries. These studies have been published by the ILO, Bureau of Workers Activities, (1997). This publication includes studies by Saboia; Echenique; Cugnet and Depraz; Patel; Hock and Sivananthiran; Fareedy; Liden; and Birch (all published in 1997). A review of these studies reveals that these studies, inter alia, also make a mention of the eminent legal framework for regulating the contract labour and the legal safeguards to protect the interests of contract labour. It further reveals that in many countries, legislators and courts of law have aimed to provide contract workers with the same standard of protection and social benefits as are available to directly recruited workers. One common means for this has been to establish the joint and several responsibilities of the principal and secondary employers with regard to the application of labour law and regulations. The study by Abrahamsen and Williams (2005), conducted on the theme of the globalisation of private security, inter alia, also mentions the specific legislation dealing with the private security industry, its scope and limitations.
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The above elaboration makes it amply clear that though the private security industry is one of the major service sectors globally as well as at the national level, and in spite of the fact that security personnel engaged by private security firms nationally as well as internationally vastly outnumber police force and play a critical role in crime prevention, no reliable and authentic estimates are available as yet about the number of private security firms, the number of personnel engaged by such firms, and the proportionate share of various players in this field. Similarly, various kinds of labour, employment and social security issues faced by the security personnel engaged by thousands of private security firms have also not yet got the adequate attention of scholars, especially in the context of India. This study was thus undertaken in order to address some of these issues. III. OBJECTIVES OF THE STUDY Some of the specific objectives of the study are as follows: (i) To make a broad estimation of private security firms and security personnel engaged by such firms at the national and international levels; (ii) To capture the major labour, employment and social security issues relating to security personnel engaged by various kinds of private security firms; (iii) To assess the status of implementation of major labour and social security laws applicable to security personnel engaged by private security firms; and (iv) To suggest suitable, legal measures to protect the interests of private security personnel. IV. AREA AND UNIVERSE OF THE STUDY The National Capital Region (NCR) of India, by and large, represents the characteristics of all the major metropolitan cities in the country as far as the categories/kinds of private security firms and the security personnel engaged by them are concerned. There are approximately 1.5 lakh security personnel in the NCR, engaged by approximately 500 security firms of various categories in terms of security personnel engaged by them and the area of their operation. The areas covered under the study include Okhla in Delhi and NOIDA in the state of Uttar Pradesh (UP), two of the major industrial centres of NCR. It is estimated that Okhla and NOIDA taken together have approximately 20,000 security personnel engaged by almost 200 security firms. Out of these firms, a total of 40 firms (including 20 each from Okhla and NOIDA) were selected for the study by following the stratified random sampling method. As regards the number of respondents, a total of 200 security personnel (including 100 each from Okhla and NOIDA) were selected. The agencies covered represent the local/ regional, NCR-based, national as well as international security service agencies. Out of the total of 40 agencies selected, 13 were operating at the local/regional level, 12 at the NCR level, 13 at the all-India level, and the remaining 2 at the international level. Table 1 gives a description of the private security firms and the security personnel from the various categories of the firms selected under the study. As regards the place of service-wise representation/distribution of the respondents, they represent almost all the places of their usual deployment such as factories, Central/state
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Table 1 Security Agencies and Security Personnel Covered under the Study Categories of Security Agencies in Terms Number of Percentage of Security Personnel Engaged Agencies (%) Up to250 8 20 251-500 4 10 501-1000 6 15 1001-2000 6 15 2001-5000 6 15 5001-10,000 4 10 10,001-20,000 4 10 20,001-50,000 1 2.5 >50,000 1 2.5 Total 40 100
Security Personnel 30 24 24 30 30 20 20 10 12 200
Percentage (%) 15 12 12 15 15 10 10 5 6 100
Source: Field Survey, 2009.
government/public sector institutions/offices, BPOs/corporate offices of private companies, hospitals, housing societies/apartments, private houses, educational institutions, shopping malls/multiplexes, banks/offices of insurance companies, media offices, construction sites, religious places, and petrol pumps. V. SCOPE OF THE STUDY The study mainly focuses on the various labour, employment and social security issues of the security personnel (mainly security guards) engaged by private security agencies such as their working hours, remuneration, various kinds of allowances, leaves granted, security of employment, level of implementation of the major labour law provisions applicable to them, and general level of awareness among the security personnel with regard to their rights under different labour and social security laws applicable to them. The study also makes a number of recommendations. VI. METHODOLOGY AND SAMPLING TECHNIQUE The relevant data and information for the purpose of the study was collected both through primary and secondary sources. The primary data has been collected by administering structured questionnaires to select security personnel, officials of select security service agencies and principal employers. The selection of security agencies and security guards for the purpose of the study was made by following the stratified purposive sampling method. The secondary data has been collected from the available literature in the relevant field, including news magazines/periodicals brought out by private security agencies and the Internet, among other sources. VII. MAJOR LABOUR AND EMPLOYMENT ISSUES The major labour and employment issues of the private security personnel that emerged from the study have been delineated under different categories below.
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1. Wage/Salary-related Issues One of the most important issues emerging from the study is the non-payment of minimum wages to a substantial proportion of private security personnel. The study reveals that in Okhla, only 38 per cent of the respondents were getting wages that were either equal to or slightly higher than the minimum wage. Most of the respondents being paid the notified minimum wage belonged to the category of those performing eight hours of duty per day as their normal duty hours. As high a proportion as 54 per cent of the respondents, including both those performing eight hours of duty and those with twelve hours of normal duty per day were getting less than the notified minimum wage. It is further important to note in this regard that 8 per cent of the respondents, though performing twelve hours of duty per day as the normal duty, were getting even less than the monthly wages prescribed for performing eight hours of duty per day. However, 100 per cent of the respondents who were getting less than the minimum wages were security guards, that is, none of the gunmen/supervisors or ex-army men were getting less than the minimum wage. In NOIDA (UP), though the employment of private security personnel does not fall under the list of scheduled employment, yet the persons working as security guards, armed security guards/gunmen and supervisors may be construed to fall under the categories of unskilled, semi-skilled and skilled category of workers, respectively. The study reveals that 53 per cent of the respondents in these categories were getting less than the minimum wage. Another important issue relating to wages is the non-payment of the overtime rate of wages for overtime work. The Minimum Wages Act provides for payment for overtime work at the rate of double the wages payable for normal duty hours. However, the study reveals that none of the respondents doing overtime work was getting wages at the overtime rate, and that only a very small proportion of 14.5 per cent of the respondents (almost with an equal proportion in Okhla and NOIDA) were getting wages for overtime work at single rate. All these respondents belonged to the multinational firms covered under the study. Contrary to the norm, almost 80 per cent of the respondents (almost with an equal proportion in Okhla and NOIDA) performing four hours of extra duty as normal duty were getting wages for overtime work even at less than the single rate, 5 per cent of the respondents though doing overtime duty of four hours per day were getting wages only equivalent to work for eight hours a day. All these respondents belonged to the firms operating at the local level. The next important issue falling under this category is the payment of salary in a consolidated form instead of as per any pay structure. The study reveals that a substantial proportion of over 90 per cent of the respondents (almost with an equal proportion in both Okhla and NOIDA) were getting paid a consolidated amount by way of their salary and only one-tenth of them were getting salary as per pay structure. All these 10 per cent of the respondents belonged to the multinational and national private security firms selected under the study. The non-issuance of pay slips is another important issue falling under this category, which is indicated by the fact that a substantial proportion of 77 per cent of the respondents (Okhla and NOIDA taken together) revealed that they were not issued any pay slip. This
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included 3 per cent of the respondents (all in NOIDA) belonging to one of the multinational private security firms and working in the corporate office of one of the reputed dailies. The remaining 23 per cent of the respondents getting pay slips mainly included 4 per cent of the respondents working in large private hospitals, having directly employed security guards as well,3 while 5 per cent of them were working in corporate offices of the private and public sectors, 3.5 per cent were working in reputed educational and training institutes, and 2 per cent were employed in the residential colony of a public sector. The absence of a system of regular salary increment also emerges as one of the major issues under this category. This is revealed by the fact that 69 per cent of the respondents (including 62 per cent in Okhla and 76 per cent in NOIDA) disclosed that the agencies engaging them did not give them any annual increment. Out of the remaining 31 per cent of the respondents, 22 per cent (including 28 per cent in Okhla and 16 per cent in NOIDA) revealed that their salaries were increased once a year, 2 per cent shared that their salary was increased once two years and the remaining 7 per cent said that the increase in their salary was linked to their performance. Delayed payment of salary, irregular dates of payment, and unauthorised deductions (for flimsy reasons) are some of the other issues that need to be focused on under this category. 2. Issues Relating to Working Time The provisions of labour law provide for eight hours of duty per day as normal duty hours and also put a ceiling on the maximum overtime hours of work. However, the study reveals that almost 55 per cent of the respondents (almost with an equal proportion in Okhla and NOIDA), were doing twelve hours per day normal duty, excluding the overtime work.4 In addition, almost 35 per cent of the respondents, though they had eight hours of duty as the normal duty hours, had to do, on an average, 60 hours of overtime work per month (with the duration of the work ranging from 24 to 160 hours). Another issue relating to the working time is that a majority of the security personnel have to mandatorily work during the night, which is clearly indicated by the fact that 90 per cent of the respondents under the study disclosed that they were required to work during the night. Further, a large number of respondents claimed that performing continuous night duty impacted their health quite adversely. Another important issue related to this aspect is that most of the security personnel are not given any break for lunch/dinner during working hours. In addition, despite the fact that by way of the nature of their duty, most of them have to put in long hours of continuous standing duty, a substantial proportion of them are not provided any cabin or shed at their duty point to protect them from the vagaries of nature such as scorching heat, shivering cold or pelting rain. 3. Issues Relating to Various Kinds of Leaves One of the crucial findings emerging from the present study is that most of the private security agencies do not extend the benefit of various kinds of leaves to the security personnel engaged by them. The analysis of data on this aspect presents very startling facts, indicating that almost 90 per cent of the respondents were not being extended the benefit of any kind
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of leave (except medical leave in case of only about 34 per cent of the respondents having coverage under ESI), including even the weekly offs and leaves on the occasion of national holidays. In all, only 5 per cent of the respondents averred that they were extended the benefit of casual leave of 8-12 days in a year, only 8 per cent (including 7 per cent in Okhla and 9 per cent in NOIDA) pointed out that they were extended the earned leave facility of 12-15 days in a year. As regards maternity leave, all the nine female respondents covered under the study had coverage under ESI. As regards festival holidays, only 3 per cent of the respondents divulged that they got 2-3 paid festival holidays (on the occasion of festivals like Holi, Diwali, Id-ul-Fitr/Id-ul-Zuha, and Christmas). An equal proportion of the respondents said that either they got the additional payments for duties on the days of national holidays (that is, Independence Day, Republic Day and Gandhi Jayanti) at a single rate or got compensatory offs. Table 2 gives a clearer picture of the status of various kinds of leaves extended to the respondents covered under the study. 4. Uniform Charges The study also reveals that most of the security personnel have to pay a substantial amount by way of the charges for the uniforms provided to them. The analysis of data pertaining to this aspect reveals that nearly 87 per cent of the respondents (with almost an equal proportion in Okhla and NOIDA) had to pay an amount ranging from Rs. 300 to Rs. 1500 for the uniform provided to them depending on the items and pairs of uniforms provided at the time of the initial engagement. The average uniform charges were Rs. 860. It is further pertinent to mention in this regard that a substantial proportion of those paying less than the average have to pay separately for the sweater/jacket. It is further important to note that of the 87 per cent of the respondents claiming that they had to pay money for uniforms provided by the security agencies, almost two-third said that the uniform charges were deducted from the salary of the first month itself while the remaining one-third stated that the charges were realized over a period of 2-6 months. Only 13 per cent of the respondents disclosed that Table 2 Status of Availability of Various Kinds of Admissible Leaves Category of Leave
No. of Responses in Okhla Indicating Availability of the Leave
No. of Responses in NOIDA Indicating Availability of the Leave
Total
Percentage (%)
Casual leave
5/100
5/100
10/200
5
Medical leave
0/72*
0/60*
0/132*
0
Earned leave
7/100
9/100
16/200
8
Festival leave
3/100
3/100
6/200
3
12/100
8/100
20/200
10
3/100
3/100
6/200
3
Weekly off National Holidays
Note: *Out of the total of 200 respondents, 28 in Okhla and 40 in NOIDA had coverage under ESI, therefore, in the row indicating medical leaves, their number has been decreased out of the total of 100 respondents in Okhla as well as NOIDA. Source: Field survey, 2009.
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they were provided uniforms by security agencies engaging them free of any charges. The study further reveals that most of the security personnel serving various private security agencies have to pay uniform charges not only at the time of initial engagement but also subsequently as and when they are provided various items of uniforms. It is also pertinent to mention in this regard that 15 per cent of the respondents claimed that after working for a private security agency for a period of more than one year, they were provided uniforms at regular intervals without any charges. 5. Lack of Proof of Employment and Retaining Original Documents Most of the security agencies do not issue any appointment letter as a proof of employment to the security guards engaged by them. The study in this regard indicates that over 90 per cent of the respondents were not issued any appointment letter by their agencies. Similarly, 18 of the respondents complained that they were not issued even identity cards as a proof of employment. It is also important to mention in this context that though most of the security personnel are not issued any solid proof of appointment, yet a substantial proportion of the companies engaging them always ask for original documents in proof of their educational qualifications and retain those documents with them not only for verification but for a fairly long time. As many as one-third of the respondents affirmed that the documents relating to their educational qualifications such as original mark sheets or certificates of the examination passed/discharge slip of the army are taken away by the companies engaging them so that they cannot leave in between. 6. Dissimilarity in Conditions of Work, Wages and Other Benefits Given to Security Personnel An analysis of the data pertaining to wages and other benefits reveals that there were a lot of dissimilarities in wages, conditions of work and benefits extended to the security personnel engaged through the security agencies and the oneâ&#x20AC;&#x2122;s engaged directly. None of the directly engaged private security personnel was getting less than the minimum wage, the average monthly income of directly engaged private security personnel from salary and overtime was much higher (at Rs. 6500 approximately) as compared to that of the security personnel engaged through contractors (Rs. 4500 approximately). All the directly engaged security personnel were getting breaks for lunch/dinner for a period ranging from 30-45 minutes, all of them were covered under Provident Fund and ESI (except those who were working in hospitals and had the facility of free treatment), all claimed to have been issued appointment letters and pay slips on a regular basis, 80 per cent of them revealed that they were being given bonus as per the provisions of the relevant statute, as also annual increments and opportunity for promotions. None of them had been charged any money for the uniforms supplied at the time of their initial engagement or when subsequently supplied uniforms on a yearly basis. Half of them said that they were given regular weekly offs and all of them affirmed being given Casual Leaves in the range of 12-18 leaves in a year and leaves on
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353
the occasion of various festivals and national holidays. Among them, 40 per cent also sated that they were getting 6-7 days of Earned Leaves in a year. 7. Lack of Organisation Increased consciousness among the workers about the commonality of their problems and realization among them about their collective strength has proved to be one of the most effective tools for resolving their problems and improving their overall working conditions all over the world. The millions of security personnel engaged by thousands of private security agencies can also not be an exception to this common phenomenon. However, the study reveals that only 3 per cent of the respondents claimed to be members of any such union of security personnel while the remaining 97 per cent of the respondents said that they were not members of any such union. 8. Other Issues Some of the other residual problems and issues of private security personnel (as highlighted by a substantial proportion of the respondents) include: lack of availability of basic amenities at the worksite such as drinking water, toilet, chair/stool to sit and first aid facility; lack of proper training opportunities; lack of promotional avenues (pointed out by almost 70 per cent of the respondents); non-payment of bonus; compulsion to wear clothes unsuitable to climatic conditions; monotony and boredom (when posted at isolated duty points and during the night); and misbehaviour by the employers. VIII. MAJOR SOCIAL SECURITY ISSUES A number of social security measures have been provided under various labour laws for the purpose of addressing the social security needs of different categories of workers. Some of these measures include Provident Fund, medical benefit, sickness benefit, maternity benefit, and disablement benefit. These measures have been provided under two major labour enactments, that is, the Employees Provident Fund and Miscellaneous Provisions Act, 1952; and the Employees State Insurance (ESI) Act, 1948. Both these enactments, subject to certain conditions, are equally applicable to security personnel engaged through private security firms. The following sub-sections discuss the major social security challenges faced by private security personnel: 1. Non-coverage of Substantial Proportion of Security Personnel under Provident Fund The study revealed that more than 50 per cent of the respondents, with an almost equal proportion in Okhla and NOIDA (that is, 53 per cent in Okhla, and 51 per cent in NOIDA) were not covered under the Provident Fund (PF). Out of the 47 per cent of the respondents in Okhla, who said that they were covered under Provident Fund, 5 per cent did not know the share of their own PF contribution and as many as 37 per cent of the respondents did not know the employerâ&#x20AC;&#x2122;s per month contribution towards their PF account. In the case of NOIDA too, the picture in this regard was equally dismal, though as compared to Okhla,
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2 per cent more (49) respondents reported to be covered under PF here. However, 8 out of these 49 respondents did not know the amount that was being deducted from their salary by way of employee’s contribution and as many as 30 per cent of the respondents did not know the amount that was being contributed by the agencies engaging them, by way of employer’s contribution. It is pertinent to mention in this context that a substantial proportion of the agencies also divide the salary of the security personnel into the Basic Wage and number of other allowances such as House Rent Allowance, Washing Allowance, etc., in such a way so as to show their wages to be much below the minimum wage in order to avoid a substantial of their own contribution towards PF and thus deprive a large number of security personnel engaged by them from the social security in the form of PF, thereby defeating the very objective of this social security legislation. This practice was allegedly followed not only by smaller and medium sized agencies but also by larger/national/multinational agencies covered under the study. 2. Non-coverage of Substantial Proportion of Security Personnel under Employees’ State Insurance The provision of health security/health insurance against various kinds of health hazards, risks, and contingencies arising out of employment or during the course of employment is an important aspect of social security. In order to address this concern and its related aspects, the Government of India enacted the Employees’ State Insurance Act way back in 1948. The employees covered under the Act are entitled to: Medical Benefit; Sickness Benefit; Maternity Benefit; Disablement Benefit; Dependent Benefit and Funeral Expenses. In addition, the scheme also provides for two other important need-based benefits including Vocational Rehabilitation and Unemployment Allowance (under the Rajiv Gandhi Shramik Kalyan Yojana). An analysis of data with regard to this aspect revealed that almost 70 per cent (including 76 per cent in Okhla and 64 per cent in NOIDA) of the total number of respondents covered under the study did not have coverage under ESI. Out of the remaining 30 per cent of the respondents having coverage, only one-third claimed to have got the ESI card within less than one month’s time. Out of the remaining two-third respondents, one-third said that it took them more than three months time to get the card while the rest complained that it took them as long as six months to one year time to obtain the card. It is also important to mention in this context that out of the respondents getting less than the minimum wage for their respective categories, more than 80 per cent did not have coverage under ESI, as a result of which, on an average, they had to spend nearly 3-4 per cent of their meagre income for the purpose of meeting their own and their dependents’ medical requirements from time to time. IX. STATUS OF AWARENESS ABOUT THE PROVISIONS OF MAJOR LABOUR AND SOCIAL SECURITY LAWS A number of labour welfare and social security measures have been introduced under different labour and social security enactments. The major enactments applicable to security personnel
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engaged by private security agencies include: The Minimum Wages Act, 1948; the Contract Labour (Regulation and Abolition) Act, 1970; the Employees State Insurance Act, 1948; and the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952. If effectively enforced, these enactments can play an extremely important role in mitigating most of the hardships of the security personnel and in improving their working and employment conditions. The level of awareness about the major objectives and provisions of these enactments among the beneficiaries is of crucial importance in this regard. However, an analysis of the data related to this aspect under the study reveals that most of the beneficiaries were either totally unaware of most of the provisions of these enactments or had a very inadequate level of awareness with regard to their entitlements under these laws. The following sub-sections highlight the status of awareness among the respondents with regard to the provisions of the various pertinent Acts. 1. The Minimum Wage Act It is startling to mention that as high a proportion as 92 per cent of the respondents (with an almost equal proportion in Okhla and NOIDA) were not aware of the minimum rate of wages applicable to them. 2. The Contract Labour Act An overwhelmingly high proportion of 92 per cent of the respondents (including 96 per cent in Okhla and 88 per cent in NOIDA) were not aware of the fact that there is a separate and specific law for the purpose of protecting the interest of the employees engaged through contractors such as security personnel engaged by private security agencies. 3. EPF A substantial proportion of 13.5 per cent of the respondents in all (including 11 per cent in Okhla and 16 per cent in NOIDA) among those having coverage under the Employees Provident Fund Act, 1952, were not aware of their own contribution towards their PF account and as many as 79.5 per cent of the respondents (with an almost equal proportion in Okhla and NOIDA) were not aware of the employer’s share of the PF contribution. 4. ESI Contribution Out of the total of 68 respondents having coverage and getting the ESI benefit in Okhla and NOIDA as a whole, a substantial proportion, that is, almost one-fifth of the respondents were not aware of even their own monthly ESI contribution while as many as almost four-fifths of the respondents were not aware of their employers’ contributions. X. CONCLUSION The issues highlighted above mainly relate to the enforcement of the provisions of the major labour and social security laws; awareness among the private security personnel about their entitlements under these laws; sensitisation of the agencies and the organisations engaging
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them and the enforcement officials; and the adoption of a human approach towards the issues and concerns of private security personnel and training. Therefore, in order to mitigate the hardships and challenges faced by a large number of private security personnel and to improve their plight and predicament, there is need for interventions that would address all these aspects. Accordingly, it is suggested that all the private security personnel should be issued proper appointment letters by the security agencies engaging them, clearly indicating their conditions of employment. The provisions of law relating to payment of minimum wage, bonus, PF, ESI, number of hours of work, various kinds of leaves, weekly offs and intervals of rest, the provisions dealing with the issue of pay-slips, PF statements, ensuring similarity in wages and other conditions of work with the directly engaged private security personnel (wherever applicable), basic amenities at the worksites and conditions of work need to be effectively and strictly enforced. In addition, in the states where the employment as security personnel does not form part of the schedule of employments under the Minimum Wage Act, 1948, this needs to be done by issuing the necessary notifications at the earliest. There is also an imperative need for a Central Act for the purpose of regulating the employment of private security guards and for making more effective provisions for their terms and conditions of employment and welfare on the pattern of the Maharashtra Private Security Guard (Regulation of Employment and Welfare) Act, 1981. Promotional avenues, increment in pay at regular intervals and various kinds of allowances are some of the important indicators of the quality of employment. Therefore, it is suggested that all the private security personnel should be given increments in their salaries and the opportunity of getting promotions at regular intervals. The agencies engaging private security personnel may also consider paying the security personnel various allowances like: House Rent Allowance, Conveyance Allowance and Childrenâ&#x20AC;&#x2122;s Education Allowance, depending on their economic condition. Since most of the security personnel stay away from their families, therefore, they should also be given Leave Travel Concession (LTC) on the pattern of that given to government employees, enabling them to travel to their home towns and visit their families at regular intervals. All the security personnel should also be provided uniforms free of charge as per the prevalent climatic conditions at the time of their engagement as well as subsequently at regular intervals by the security agencies engaging them. They should be treated in a dignified manner both by the agencies engaging them as well as the organisations utilising their services. Organisations like labour institutes, the Central Board for Workers Education and trade unions can also be motivated to take up initiatives for generating awareness among the beneficiaries about their entitlements under various labour laws. There is also a need to regularly orient and sensitise the officials of private security agencies, the organisations engaging them and enforcement officials towards the major issues concerning private security personnel. In addition, various universities and other educational institutions also need to introduce diploma and short-term certificate courses for imparting training and upgrading the skills of private security personnel. The major issues and concerns of private security personnel can be addressed only by making interventions at all these levels.
RESEARCH NOTE
357 Notes
1. These estimates are based on the approximate aggregate number of security firms and security personnel engaged by such firms as available in the literature relating to the private security industry in various countries of the world. 2. As per the estimates of the Central Association of Private Security Industry (CAPSI), India, during the coming years, the growth rate may go up to 40 per cent. 3. Since directly employed guards get pay slips on a regular basis, the ones engaged through contractors could also build pressure for issuing pay slips to them. 4. They had to do this duty intermittently, in which case a substantial proportion of almost 20 per cent of them were working continuously even for 24-36 hours.
References Abrahamsen, Rita and Williams, Michael C. (2005), “The Globalisation of Private Security”, Country Report, Department of International Politics, University of Wales, Aberystwyth, Nigeria. Berrong, Stephanie (2009), “India’s Growing Security Industry, Security Management”, Available at http:// www.securitymanagement.com. Accessed on 15 June 2009. Birch, Julian (1997), “Contract Labour in British Construction Industry”, Contract Labour: Looking at Issues, Nine Country Cases, ILO, Geneva, pp. 69-77. Cugnet, Bernard and Christophe, Depraz (1997), “Changing Patterns of Employment in Forestry in France”, Contract Labour: Looking at Issues, Nine Country Cases, ILO, Geneva, pp. 32-37. Echenique, Jorge (1997), ‘Contract Labour in Chiles’s Fruit Agriculture Industry”, Contract Labour: Looking at Issues, Nine Country Cases, ILO, Geneva, pp. 26-31. Fareedy, F.A., (1997), “Contract Labour in Manufacturing in Pakistan”, Contract Labour: Looking at Issues, Nine Country Cases, ILO, Geneva, pp. 55-61 Hock, Kiong Lee and Sivananthiran, A. (1997), “Contract Labour in Malaysian Plantation, Construction and Saw-milling Industries”, Contract Labour: Looking at Issues, Nine Country Cases, ILO. Geneva, pp. 45-54. Liden, Ewa (1997), “Contract Labour in Forestry in Sweden”, Contract Labour: Looking at Issues, Nine Country Cases, ILO, Geneva, pp. 62-68. Page, M. and Rynn, S. (ed.) (2005), “SALW and Private Security Companies in South Eastern Europe: A Cause or Effect of Insecurity?” (International Alert/Saferworld/SEESAC) Available at: http://www.seesac. org/reports/psc.pdf. Accessed on 21 June 2009. Parfomak, Paul W. (2004), “Guarding America: Security Guard and US Critical Infrastructure Protection”, Congressional Research Service Report. Available at: http://www.fas.org/sgp/crs/RL32670.pdf. Accessed on 25 June 2009. Patel, B.B. (1997), “Contract Labour in India in Manufacturing, Construction, Plantation and Forestry”, Contract Labour: Looking at Issues, Nine Country Cases, ILO, Geneva, pp. 38-44. Prenzler, Tim; Earle, Karen and Sarre, Rick (2009), “Private Security in Australia: Trends and Key Characteristics”, Trends and Issues in Crime and Criminal Justice, No. 374, June, pp. 1-6., Australian Institute of Criminology, Australia. Saboia, Joao (1997), “Contract Labour in Brazilian Construction Industry”, Contract Labour Looking at Issues, Nine Country Cases, ILO, Geneva, pp. 16-25. Sanders, Traver (2005), “Rise of the Rent a Cop: Private Security in Canada, 1991-2001”, Canadian Journal of Criminology and Criminal Justice, Vol. 47, No. 1, pp. 175-90. Volkov, Vadim. (2001), “Security and Enforcement as Private Business: The Conversion of Russia’s Power Ministries and its Institutional Consequences”, in Victoria E. Bonnell and Thomas B. Gold (eds.), The New Entrepreneurs of Europe and Asia: Patterns of Business Development in Russia, Eastern Europe and China, Westview Press, Boulder, Colorado, pp. 83-103.
GROWTH, EMPLOYMENT AND LABOUR MARKETS: Perspectives in the Era of Globalisation in India Editors J. Krishnamurty and Rajendra P. Mamgain 2009, Pages: x+488pp, Price: INR 695.00, ISBN: 978-81-89654-64-1 (Hb) Published by Daanish Books, Indian Society of Labour Economics and Institute for Human Development Introduction J. Krishnamurty and Rajendra P. Mamgain Growth, Employment and Poverty Employment, Equity and Growth—Ashok Mathur; Agricultural Growth, Employment and Poverty: A Policy Perspective—R. Radhakrishna; Marginalised Sections of Indian Agriculture: The Forgotten Millions—V.S. Vyas Employment and Unemployment Unemployment and Employment in India: An Overview—K.M. Naidu; From Employment Planning to Employment Policies—Yoginder K. Alagh; Employment and Unemployment in a Society in Transition—S.R. Hashim; Human Capital Base of the Indian Labour Market: Identifying Worry Spots—G.K. Chadha Structural Adjustment and Structural Change Structural Adjustment, Labour Market Flexibility and Employment—T.S. Papola; Attack on Poverty and Deprivation: Role of Structural Change and Structural Adjustment— C.H. Hanumantha Rao; Workforce Restructuring, Wages and Want: Recent Events, Interpretations and Analysis—Sheila Bhalla Globalization and Employment Can Globalisation and Labour Rights Coexist?—Lakshmidhar Mishra; Work, Livelihoods and Rights—Deepak Nayyar; Challenges of Decent Work in the Globalising World— D. Narasimha Reddy; Globalisation and Employment Trends in India—G.S. Bhalla The State and the Labour Market under Capitalism State, Market and Labour: A Political Economic Perspective—C.P. Thakur; Labour Market under Capitalism—Prabhat Patnaik
The Indian Journal of Labour Economics, Vol. 54, No. 2, 2011
book reviews Susan Hayter (ed.), The Role of Collective Bargaining in the Global Economy: Negotiating for Social Justice, Edward Elgar, Cheltenham, UK and Northampton, MA, USA, in association with International Labour Office, Geneva, Switzerland, (2011), pp. x + 327, Price: CHF 50; USD 50; GBP 30; EUR 33. In their 1984 book titled What Do Unions Do?, Richard B. Freeman and James L. Medoff described trade unions and collective bargaining as two-faced labour market institutions (LMIs) with ‘monopoly’ and ‘collective voice/institutional response’ faces. This ‘institutionalist’ approach, which recognises the potential role that LMIs can play in enhancing economic efficiency and productivity, has motivated labour economists over the past two decades to debate the question as to how and under what conditions does the ‘institutional response’ face of LMIs gain greater prominence as compared to its ‘monopoly’ face? These debates have also informed the further and more difficult question of what is to be done to enhance the effectiveness of LMIs in delivering sustainable economic growth with higher wages and productivity in the global economy today. This book, edited by the International Labour Organisation (ILO) researcher Susan Hayter, collects articles presenting diverse analytical approaches and which focus on various issues, countries and economic contexts. As Hayter implies while citing Freeman and Medoff (1984) in the introduction of the book, all ten chapters, along with Hayter’s introduction and conclusion, are written loosely from an ‘institutionalist’ perspective on trade unionism and collective bargaining, that is, they generally emphasise the potentially positive role of these phenomena in economic performance. The volume can be read as a useful survey of the current state of development in the ‘institutional’ approach to researching labour market institutions. The chapters of the book thus offer a fresh approach towards answering the above questions, on the basis of which several features can be highlighted. First, the labour market issues and policies covered in these chapters range from the role of collective bargaining in improving employment security, enhancing vocational training, increasing enterprise performance, tackling wage and other labour market inequalities, and even preventing financial crises, to the role of agreements between multinational enterprises and global union federations in promoting collective bargaining in the developing countries. While this diversity of issues and policies covered here can be seen as a reflection of the ongoing shift in the labour regimes under globalisation, it also indicates the potential capacity of the institutionalist approach to engage with them. Second, though Hayter accepts in her introduction that it was with limited success, one of the appealing features of this volume, especially for readers of this Journal, is the effort to offer a balanced perspective from the higher-income and developing countries. Thus, some chapters in this book cover specific advanced capitalist countries such as Germany, France and the UK, as well as more broadly the OECD countries, along with some focus on the study of middle-/low-income countries such as South Korea, Chile, and China, while others deal with a global perspective. Once again, this reflects the development of the institutionalist
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research that has been moving beyond its traditional focus on the European and US labour markets over the past two decades. Third, and following on from the previous observation, many of the studies in this book highlight the context-specificity of labour market institutions and policies. The effectiveness of innovative measures for employment security, regulated flexibility in working time, and the promotion of training negotiated as part of collective bargaining depend crucially on specific labour–employer relations, the capacity of local agency, as well as on the role played by the State in supporting them. The extent to which LMIs are associated with enhanced economic performance or improved income distribution similarly depends on these local conditions and institutional configurations. Where institutions, measures and policies are perceived to be ineffective, many of the chapters explain this in terms of ‘less developed industrial relations systems’ and the ‘weakness’ of collective bargaining institutions, typically measured by low union density, narrow collective bargaining coverage, and weak union governance. The issue as to why industrial relations are ‘less developed’ in some countries, particularly in the global south, is, however not addressed extensively, though some studies cite the lack of economic development, a fragmented labour market structure, or unfavourable political or legal conditions as being responsible for the situation. This reflects an internal tension within the analytical framework of the institutional approach, with the distinction between what is endogenous and what is exogenous to the socio-economic process being both ambiguous and shifting according to the needs of the analysis. Fourth, returning to the theoretical approach adopted by the collection of studies presented in this book, as already suggested, the authors generally adopt an institutionalist view on labour market institutions. However, beyond this, there is no core theoretical or methodological framework that binds these chapters together. Some studies describe observations and statistics at particular industry, country or international levels, some draw on the game theory and other bargaining models to illustrate strategies and options for agents, some make use of econometric models to empirically estimate the effect of collective bargaining on labour market outcomes, and some others still are concerned with social inequality in terms of prosperity and wealth, and the sustainability of the global capitalist system. As has already been observed above, such diversity reflects the ability of institutionalists to accommodate and appeal to a wide range of topics and analytical approaches. However, at the same time, it may also signal the possible vulnerability of this approach to be increasingly accommodated in the mainstream, given their committed dependence to understanding labour relations in terms of negotiation and dialogue as opposed to industrial relations or class struggle. Fifth, and finally, whether as a means to improve the performance of firms, to generate employment, to compress wage inequality; or as a key component of ‘inclusive development’, or to prevent a financial crisis, there is a general consensus amongst the contributors to this book that trade unions and collective bargaining can play critical roles in the global economy today. How this might be achieved is, however, a more difficult question to address, and various propositions may be put forward in seeking its response. Some argue for legal and political support from the state, some call for labour market reforms, some highlight the importance of international framework agreements, and others still call for trade unions to
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revitalise their organising drives. Once again, this presumably depends on the context as well as the analytical purpose and approach. While this book is not the last word on the subject, it is an extremely useful and thoughtprovoking book that should be on the reading list of anyone who seeks to understand the role of collective bargaining in the global economy today. Satoshi Miyamura Department of Economics School of Oriental and African Studies University of London. sm97@soas.ac.uk Jan Breman, Outcast Labour in Asia—Circulation and Informalisation of the Workforce at the Bottom of the Economy, Oxford University Press, New Delhi, (2010), pp. xii+391 (Hardback), Rs. 895. As is well known, the persistence of large-scale abject poverty has been one of the biggest challenges to the development agenda in the so-called developing countries. Soon after the advent of formal ‘decolonisation’ in the post-World War II era, most of these countries embarked on trajectories of State-led economic transformation, partly as a fulfilment of the promises made to the masses in their respective anti-colonial struggles, and partly due to the optimism generated by the powerful ‘new’ sub-discipline of ‘development economics’ within the mainstream of the profession of economics itself. For reasons of space, it is not possible to engage with even a very brief assessment of the aforesaid strategy for economic development; however, it is worth noting here that in spite of the developing world having achieved reasonable economic performance in terms of growth and industrialisation, the progress with respect to the basic well-being indicators of the masses has been modest and uneven. As it happens, the limited success of dirigisme was used, inter alia, by the market fundamentalists to push for neo-liberal economic regimes, which started gaining ascendancy towards the late 1970s. By now, the disturbing economic and social consequences of the turn to neo-liberalism have been very well documented. In fact by the end of the 1980s itself, there was a substantial theoretical and empirical literature that sharply and forcefully called into question the efficacy of the new liberal orthodoxy. It seems that the global society has witnessed huge regressions with reference to even the most basic indicators of well-being. For instance, as per a recent estimate of the Food and Agriculture Organisation (FAO) of the United Nations, the number of hungry people worldwide is 963 million, up by 142 million as compared to the corresponding figure in 1990-92. Likewise, there has been a substantial increase in recent years in the World Bank’s estimate of the incidence of global poverty. Not surprisingly, the developing world, and in particular its masses, have been hit relatively hard due to the ascendancy of neo-liberal economic policies. The world of work and workers has been subjected to a whole range of regressive trends on account of such policies. There is a substantial literature in social sciences engaged with such concerns and Jan Breman is surely among the significant voices enquiring into the plight of the relatively vulnerable segments of workers in select countries in Asia, where he has also been conducting field studies.
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Professor Jan Breman’s academic engagement with the world of labour at the bottom of the rural and urban economy is well known. Much of his work on this subject is based on painstaking fine-comb micro-studies carried out in different parts of Asia. The canvas of several of these studies, often drawing on repeated field visits over long periods, (for example, for over almost fifty years in the case of South Gujarat), has been large in terms of transcending narrow disciplinary boundaries. Thus, Professor Breman often weaves together the economic, social, political and cultural dynamics of life and work at the lower rungs, in the process offering a remarkable degree of connectedness and comprehensiveness. His penetrating studies have, in fact, firmly established him as a frontline scholar on the subject. This book, the latest in Breman’s contribution dealing with the world of the labouring poor, is a compendium of essays written over the last ten years, mostly as invited pieces, (as contributions to either conferences or edited volumes), and largely revolve around labour migration from the countryside to the urban settings in search of livelihood. The focus of the author is on the reserve army of labour at the bottom of the rural economy, which lacks social, economic and political wherewithal, and the struggles of the workers constituting this army to find a foothold in the urban economy. The author draws on his field work from India, Indonesia and China, and shows that a large number of such workers, who get pushed out from the rural agrarian labour process due to their growing redundancy, get temporarily incorporated in urban–industrial spaces typically in the informal sectors, and are often driven back to where they came from after the expiry of their time-bound contracts. Thus, there is a substantial mass of workers who remain footloose, and their labour migration typically takes the shape of labour circulation, with the migrants scrounging for livelihoods at different places in their trajectory of mobility. They cannot quite shed their agrarian–rural identity, nor can they become urban–industrial ‘citizens’, and their departure from one socio-economic context never signifies a definitive ‘arrival’ into some other setting. In Breman’s phrase, such a situation is characterised by a massive ‘labour nomadism’, and the essays in the volume document, dissect and analyse the nature and conditions of this nomadism in a historical and comparative perspective. After the introductory essay, which offers a very good window to the rest of the volume, the manuscript is divided into five well-organised sections, containing eleven essays in all. Taken together, these essays provide a most engaging and insightful account of what Professor Breman chooses to call ‘outcast labour’ in Asia. The volume demonstrates that the barriers to inclusion for this extremely vulnerable hardcore of the working masses into a life of dignity, stability and decent work are very difficult to break and that the recent policies of ‘globalisation’ have only worsened the prospects of escape from their wretched existence for these workers. I have no hesitation in saying that here is a work that is extremely illuminating and rewarding for all those interested in the subject of migrant labour. This masterly collection of essays should also be of immense interest to a wide range of readership in social sciences. Praveen Jha Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi praveen@mail.jnu.ac.in
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Poverty and Social Exclusion in India, World Bank, Washington, DC (2011), pp. 173. Not priced This book is basically a report based on many background papers written for this project. It summarizes finding of these background papers in a report format with a core theme which focuses on social exclusion and poverty. This report also draws from some other reports of the World Bank. Three principal groups identified for this report are Scheduled Tribes (Adivasis), Scheduled Castes (Dalits) and women. The report is organized into four chapters. The first chapter is basically a summary along with identifying common themes running into rest of the three chapters, namely, on STs, SCs and women, respectively. The report attempts to address the question as to who has gained and who has not from Indiaâ&#x20AC;&#x2122;s growth surge. It makes it very clear at the outset that rather than looking at the whole issue in context of inequality in India, which has been a matter of concern of late, it looks at it from the perspective of social exclusion and provides the justification for doing so. In fact in many discussions on social exclusion there is a tendency to look at exclusion from the perspective of outcomes, which are necessarily a stock idea. One needs to establish the processes which may have led to these outcomes. A standard practice followed is to look at deprivation in outcome space of certain social groups, historically identified as marginalised groups. STs, SCs and women are clearly and well defined marginalised social groups in India. This method of analysis falls short of establishing this deficit in outcomes as a product of social exclusion. This report is aware of this pitfall and that is why makes it clear at the outset that it looks at social exclusion as a process which leads to these outcomes. It also states that apart from instrumental value addressing social exclusion for its intrinsic value is sufficient reason. This report does not go into a detailed analysis of social exclusion in selected social groups, but identifies for each group a sub-set of issues that offer some new insights. These issues are identified with a specific focus on poverty, as the title of the report itself suggests that it deals with social exclusion having a bearing on poverty. It focuses on poor labour market outcomes despite the expansion in education for SCs and distinct disadvantage in survival and its correlates which go beyond the health sector for STs. For women, it focuses on poor health and survival outcomes, but also the disadvantage of women in the labour market and the vulnerability of women to violence within the family and insecurity in public spaces. This report is based on several data sources, namely, multiple rounds of the NSS, the NFHS, the RCH Survey and the India Human Development Survey. Exclusion of STs from mainstream is different from one of SCs, primarily because the former is based on spatial isolation and the latter is based on pollution and the purity notion of Hindu rituals. The report looks at exclusion of STs as deprivation in two outcomes, namely, poverty level and child mortality. There has been reduction in poverty in India during the last two decades but the poverty level among STs is still very high. In terms of poverty, STs are twenty years behind the average population and they are poorer than any other social groups. However, it is shown that there are very unequal results across states and according to place of residence. Urban STs are found to be doing better than
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their rural counterparts. But the most important contribution of this report is in providing a nuanced analysis of â&#x20AC;&#x2DC;survival disadvantage hypotheses of STs; Child deaths in tribal areas typically cluster around periods of seasonal stress. Child mortality among STs far exceeds their relative share in rural population. Tribal children are on a par with others at birth, but fall well behind by the time they are five years old. This report further breaks down child mortality into neonatal, post neonatal, infant, child and under 5 and shows that probability of survival of children of STs and non-STs do not differ significantly during the first year. However, from second year onwards this gap widens and becomes statistically significant. A major contribution of this report is that it refutes the conventional narrative that the higher mortality among tribal children is explained by the poverty status of these children. Even when poverty effect is controlled, tribal children show a higher likelihood of dying than their non-tribal peers between the ages of 1 and 4. These findings about STs in terms of deprivation in capability space or deficits in outcomes have been reported elsewhere also. This can be established as an outcome of social exclusion only when underlying processes can also be specified. This report makes an attempt to do so by highlighting a couple of key processes in case of STs. Malnutrition, lack of access to healthcare, lower breadth and intensity of immunization coverage are identified as key processes behind high child mortality in STs. However, the report assigns the central role to dispossession from land and natural resources as explaining deprivation in STs and links this up with limited voice of STs. Deprivation and exclusion of SCs (Dalits) is different from that of SCs (Adivasis), which is often clubbed into an omnibus term SC/ST in analysis and policy-making. This report investigates two arenas, education and labour market, to understand linkage between social exclusion and poverty in case of SCs. This is true that there has been expansion of education in SCs, but it will take generations to overcome the initial disadvantage. However, greater convergence is reported between STs and non-STs at higher level of education. The belief systems still affect outcomes. Since caste is a system of occupational segregation and occupations are inherited, the remnants of that system still mark labour market outcomes. SCs are more likely to participate in labour force compared with non-SCs/STs, but these effects are stronger among rural women than among other groups. SCs have been historically a landless social group and therefore have been workers, mostly casual workers, in the fields of landed castes. Of late, there has been a tendency of opting out of the labour market and a slight increase in non-farm self-employment. Still, SC men are mainly restricted to menial, low paying and often socially stigmatized occupations. SC women are also withdrawing not only from casual labour but also from labour force, a phenomenon observed in ST and non-SC/ST women also. The option of moving into self-employment is practically closed for SCs due to various reasons. This report shows that returns to education are lower among SC men than among others. Higher levels of education result in exit from casual labour for all social groups, but are least pronounced in the case of SC men. Even in case of salaried job, SCs are always discriminated against. There is a definite earnings inequality between SC men and non-SC/ST men. A large part of this gap is accounted for by differences in treatment or the return to characteristics rather than endowments. SCs are stuck in lowpaying jobs because there is horizontal as well as vertical segregation. While discussing the
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issue of discrimination in the private sector, an interesting point made in this report is that groups that are discriminated against may adopt self-discriminatory behaviour over time. However, it needs to be investigated as to why there is so much of disjunction between SC solidarity movements, especially political mobilisation and these outcomes. In other words, what explains the failure of political mobilisation translating into outcomes for SCs? Women constitute half of population of India and cut across all social groups. Therefore, it is difficult to arrive at any generalised conclusion. This category encapsulates all variations within a social group along with regional variation. This report focuses on three dimensions of female disadvantage, namely, survival disadvantage, participation in market and threat to womenâ&#x20AC;&#x2122;s physical security. Lower survival rate among infant girls, high maternal mortality and sonâ&#x20AC;&#x2122;s preference is well documented in literature. But this report quotes some micro studies to show that there is an incipient turnaround in preference for sons. Conventionally it was believed that better outcomes in fertility and in education among women are associated with increasing age at marriage. But the Indian experience has shown that it need not always be the case. However, the literature on direct effects of early child marriage and early child birth on outcomes is inconclusive. Despite progress over the last decade, less than half of Indian women receive complete antenatal care, and most births take place at home. It is well known that there is considerable degree of domestic violence perpetrated against women in India. This is reiterated by this report and it goes one step ahead by showing significant association between violence against women and reproductive health and child health outcomes. However, like earlier studies, this too fails to specify pathways and direction of causality between violence and empowerment. It is also not very conclusive about what can help protect women from violence. Employment, education and land ownership are considered as important in this regard. However, female participation in the labour force is in itself subject to varied analysis. It has been found that education lowers the likelihood of womenâ&#x20AC;&#x2122;s participation in the labour force. Even when the women work, there is all likelihood that their wages would be lower than men. Inequalities in wages and opportunities are an additional disincentive for women to work. The report identifies certain common themes. The most important one is that exclusion can be explained by inequality in access to markets and inequality in voice and agency. Voice and agency have played out in different ways among all three groups, but are particularly salient drivers of exclusion. In fact, this is the core from where social exclusion can be rightly captured. Somehow, like many earlier studies, this study also focuses more on outcomes. This central role of voice and agency needed to be explored in much greater detail to establish the process of exclusion. Overall, this report is a very good summary of many background papers and other secondary sources. It definitely adds to our understanding of linkages between poverty and social exclusion. Nripendra Kishore Mishra Associate Professor Department of Economics Banaras Hindu University (B.H.U), Varanasi nripendra.mishra@gmail.com
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Jaspal Singh, Instruments of Social Research, Rawat Publication, Jaipur, (2011), pp. 305, Rs. 775. The book under review is divided into ten chapters entitled Instrument of Social Science; Max Weber: Interpretative Sociology; Social Research: Meaning and Characteristics; Scientific Methods: Meaning and Characteristics; Observation; Interview and Questionnaire; Measurement and Scaling for Social Research; Sampling; Data Processing and Analysis; and Report Writing. In social science research, the use of traditional methods has declined and advance scientific methods are increasingly being used with greater focus on data analysis rather than data collection, which was used in the past. The instruments presented in the book are used by sociologists today to devise ways of collecting and processing information until the writing of the final report. In the first chapter, the author discusses various instruments of social research, that is, creativity, methodology, data collection, conceptualisation and technique. He also points out that research instruments help us gather reliable data with an assured degree of creativity for theory construction. These instruments also help us sharpen our ability to explain the essence of the reality and to grasp both its overt and covert meanings. This further enables us to construct hypotheses, theories and laws, which differ from each other in terms of their degree of certainty. However, their validity and reliability must be verified with persistence and imagination. In the second chapter, the author deals with Max Weberâ&#x20AC;&#x2122;s interpretative sociology. He claims that sociology deals with the present, while history deals with the past. Social scientists try to interpret the available evidence by trying to ascertain how the events concerned would have taken place. One cannot explain the past in terms of present-day standards, nor can one impose oneâ&#x20AC;&#x2122;s own standards ways of thinking on others. The standard should be scientifically understood and explained in terms of its significance. The author explains that interpretation of the facts is a means of bringing out the meaning of the facts under observation and imbuing them with some sense. According to Weber, the science of sociology attempts to understand the meaning of any action while also seeking to explain it. The third chapter discusses the meaning and characteristics of social research. The author avers that the preparation of the research design for social surveys entails working out the necessary steps for constructing theories. The problem needs to be formulated first after which suitable concepts need to be chosen and inserted at strategic points in a theoretical framework. Suitable concepts are constructed for the measurement of the underlying variables. These are knitted together into a suitable tool in the form of an interview schedule with the representative sample of the population. The collected of data are then treated statistically. These are interpreted and confronted with various elements in the theoretical framework. The outcome thus needs to be accepted, rejected or modified accordingly. The fourth chapter highlights the various scientific methods used for research, as also the meaning and characteristics of social science research. The author asserts that knowledge is now recognised as the fourth factor of production along with land, labour, and capital, as scientific research helps increase productivity. In order to understand the method of science,
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the author has tried to distinguish it from what it is not. He points out that the method of science is different from common sense, tenacity, authority and intuition. Objectivity, quantifiable and theoretical orientation, and universalism are the main characteristics of the method of science, which is founded on the assumptions behind empiricism. The fifth chapter of the book deals with the participants’ observations in the field location, as also during the fieldwork, rapport-building, data collection, data analysis, and report writing, and the ethics of participant observation. The author states, “Observation is an important method of social [and] anthropological research, and establishing [a] rapport is the key to its success”. He also asserts that “the three factors, [viz.] data collection, analysis and report writing are not discrete stages. These activities go on side by side”. Unethical conduct is harmful not only for an individual investigator but also for his successors. In the sixth chapter, the author discusses the use of two key research tools, that is, the interview and questionnaire. He describes various types of interviews used in research, while also providing details of the interviewer, interviewees, the interview situation, the presence of people other than the interviewer and the interviewee, the technique of posing questions and getting answers, and other aspects of an interview such as perception, probing, recording, cheating and data processing. As regards the questionnaire, the author discusses the manner of formulation of questions, and other related subjects such as precision double barrel questions, bias, jargon, acquiescence, frame of reference, suggestions, inclusion and exclusion, sequencing items, and printing. In the seventh chapter, the author describes the techniques of measurement and scaling used in social research, and explains that scaling is a means of achieving the goal of expressing the matter under observation in an exact manner. He also highlights other aspects of measurement used in social science research including the quality of scales, reliability, validity, sensitivity, unidimensionality and level of scales, the nominal, ordinal, interval and ratio scale, all of which are important aspects that need to be assessed before data analysis. He also adds that measurements precisely reveal various dimensions of a matter under consideration, though they conceal more than they reveal. The eighth chapter of the book describes the various types of sampling, sample bias and standard error. He also explains the use of sampling techniques comprehensively to enable even a reader from a non-statistics background to understand these concepts easily. However, the author still urges readers to exercise caution and consult experts before using sophisticated sampling techniques. In the ninth chapter, the author provides an elementary introduction to the adequate analysis of systematically collected data through the use of social statistics. He also cautions the readers to use numbers carefully. Firstly, it is important to understand the underlying assumptions. For example, chi-square cannot be applied on very small samples. Similarly, Pearson’s product moment coefficient of correlation is applicable only to the ratio-type data. The misapplication of statistics could bring out erroneous results. The author thus emphasises that data analysis can be learned by repeatedly processing the data, applying appropriate statistical measures, precisely interpreting the results, and fitting the outcome into theories. He further states that data analysis is a matter of both theory as well as practice, and requires
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focused attention, as also dialogue with accomplished scholars in the field. In any case, there can be no doubt that various instruments of research can tilt the results one way or another, depending on their usage and interpretation. While analysing the information, one should avoid unnecessarily accumulating large masses of data in the hope that they will yield the desired outcome. Keeping all these tips in mind at the time of preparing a research design would stand the researcher in good stead at the time of writing of the report. Thus, in this chapter, the author covers variable types of data, including simple statistics, data coding and higher statistical techniques like odd ratio, chi-square test, correlation and regression, among other things. The last chapter is devoted to all aspects of report writing, including preparatory work in the library, compilation of contents, the style of writing, and completion of the report through typing and printing. This chapter also highlights some emerging issues related to reports like the style to be used, the target audience for the report, plagiarism, organisation of ideas and words, and sentences and paragraphs in the report, revision, binding, dissertation and thesis. The book can, therefore, be viewed as a reliable research guide for scholars conducting empirical sociological research. It could also prove to be very useful for post-graduate students and research scholars with non-statistical backgrounds. The author has explained survey methods, survey tools, sampling technique, simple statistics and report writing in a simple yet detailed manner, while trying to cover all aspects of social research. While the reader can benefit immensely from the use of this book, s/he should still follow its guidelines with caution and also consult experts and other books before using any sophisticated tools. Balwant Singh Mehta Associate Fellow Institute for Human Development bsm_ihd@yahoo.com Indira Hirway, M.R. Saluja and Bhupesh Yadav, Employment Guarantee Programme and Pro-poor Growth: The Study of a Village in Gujarat, Academic Foundation, Delhi, (2010), pp. 225, Rs. 795. In macro-economic theory, public works programme is prescribed as a policy measure to correct recessionary downfalls in the economy, which works through multiplier and accelerator effects triggered by additional employment, income and increased demand in the economy. The intensity of multiplier depends on the: (a) marginal propensity of consumption (MPC) that drives the effective demand in the economy; and (b) ability and capacity of the economy to produce those goods and services locally in order to meet the increased demand. The quantum of increase in imports due to a rise in demand, necessitated by the inability/ incapacity of the economy to produce those goods and services, discounts multiplier effects. The Computable General Equilibrium (CGE), Social Accounting Matrix (SAM) and other methods are used to quantify the multiplier effects of public works programme. Empirical studies using CGE, SAM and other models have assessed such effects under various economic conditions in various economies.
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India launched a massive public works programme, namely, the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) in 2006 under conditions that were not recessionary. The GDP was growing well at the average rate of 7.8 per cent per annum during the period 2002-03 to 2006-07. It had reached the level of 9.5 per cent in 2005-06, the year of enactment of the MGNREG Act (MGNREGA), and 9.6 per cent in 2006-07, the year of its implementation. The rate of inflation (wholesale price index) was 4.4 per cent in 2005-06 (average over the previous year) and a little higher at 6.5 per cent in 2006-07. The gross domestic capital formation was high at 32.5 per cent in 2004-05, and stood at 34.3 per cent in 2005-06, and 35.9 per cent in 2006-07. The other economic indicators were also buoyant. It seems that political considerations played an important role in the introduction of the MGNREGS. Amidst growing personal, sectoral and regional inequalities, disenchantment with the liberalisation and reform policies was growing among the people. The voting out of the BJP-led National Democratic Alliance (NDA) Government post its ‘India Shining’ campaign in the 2004 parliamentary election was the first manifestation of this public disenchantment. It is learnt that the defeat of the BJP-led NDA government at the Centre was masterminded by the rural voters, who felt economically bypassed by the high-growth reform phase and politically marginalized under the BJP-led government that was supported by the business and middle class. While discontent with the reform phase was growing, the Congress party, the initiator of the reform policy, was trying to increase its rural base that had shrunk after a horizontal split in its traditional vote bank, triggered by the Mandal and Masjid politics of the previous decade. It thus made a political promise to introduce a ‘universal right to work programme’ on the eve of the 2004 Parliamentary election and routed it through legislation to demonstrate its sincere pro-poor commitment, unlike its merely rhetorical ‘Garibi Hatao’ campaign under the leadership of Mrs. Indira Gandhi in the early 1970s. This book by Hirway, Saluja and Yadav is an empirical study of the multiplier and gender effects of the MGNREGS in the Nana Kotla village of Sabarnakantaka district of north Gujarat, and uses the SAM model to show the output, employment and income multiplier effects of the programme. Nana Kotla is a small sized village dominated by Other Backward Castes (OBCs), Scheduled Castes (SCs) and Scheduled Tribes (STs). The village is characterised by a low level of literacy and a sharp gap in the male–female literacy rate. However, the low literacy level of the population is not necessarily because of the lack of schools in the village. It has two primary schools, yet 17.62 per cent of the school-going children, including 9.65 per cent of the boys and 24.78 per cent of the girls, are outside the school. The incidence of poverty in the village is not alarming, but has been found across all types of households. The ratio of poverty was found to be relatively higher in the labour households, who constitute about 50 per cent of the total households. Agriculture, animal husbandry and wage earning are the main occupations of these households. About 80 per cent of the households are dependent on primary sector activities and another 10 per cent are involved in the primary sector as their secondary occupation. Although the rate of outmigration from the village is not very high, yet about 200 people reportedly go outside the village everyday in search of work. All households in the village except for the agricultural
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and service households exhibited negative savings during the study. Indebtedness was prevalent, but it was both productive and non-productive. The village economy is dominated by the primary sector: agriculture contributes 54 per cent of the total output; animal husbandry 16 per cent; construction 10 per cent; and the self-employed in non-agriculture 20 per cent. Agriculture and labour earn the largest share of the total income of the village economy. There is thus obvious income inequality in the village. Large and small farmers constitute 12 per cent of the households, but earn 24 per cent of the total income of the village. On the other hand, labour households constitute 47 per cent of the households, but earn only 28 per cent of the total income. About 70 per cent of the total cultivated area is rain-fed. The main crops grown in the village include maize, castor, millet (jowar), cotton, wheat and tur. The nature of the economy and the socio-economic conditions of the people suggest that Nana Kotla is a fit case for studying the multiplier and other effects of the MGNREGS. In the first two chapters of the book, the authors explain the employment guarantee programme (EGP) as a component of the full employment strategy, and argue that the EGP can help in achieving a full employment scenario by promoting labour-intensive growth in a labour-surplus economy like that of India. The theoretical possibilities of achieving a full employment situation through EGP in India are also not ruled out. Amit Bhaduri (2005) has built a strong case for decentralised development through the universal right to work programme, and argues that there lie huge unutilised capacities in the wage goods industries to tap multiplier effects. He has also suggested a method for its financing, which is different from the Keynesian prescription. There are merits in such arguments, but the experiences of the Employment Guarantee Scheme (EGS) in Maharashtra suggest that both the design and implementation of the programme play a crucial role in achieving those objectives. It needs to be emphasised here that the demand for wage employment under the EGS in Maharashtra remained almost constant for nearly three-and-a-half decades of its existence, defying assumptions of the multiplier and accelerator effects. The authors examine Indiaâ&#x20AC;&#x2122;s employment and unemployment scenario over the last two decades and argue that the gap between the demand for and supply of employment is increasing. The pace of job creation under the high-growth reform phase is inadequate to meet this gap. The authors accept MGNREGS as a part of the employment generation strategy, but leave the issue of quality employment and shifting of surplus labour from agriculture largely unanswered. Will the multiplier effects of the MGNREGS be strong enough to overcome these gaps? Or, do we need to implement other policy measures simultaneously with the MGNREGS? The authors would have been well-advised to take these considerations into account in order to build a convincing case of EGS-based employment strategy in India. The demographic profile of Indiaâ&#x20AC;&#x2122;s population, characterised by an increasing proportion of people in the working age group, suggests that the situation is becoming alarming and needs to be addressed rapidly and comprehensively. The implementation of the programme in the Nana Kotla village was slow and tardy in 2006-07, the year of the study. It was also marred by procedural lacunae. Nevertheless, the
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effects of the programme were noticeable. The SAM of the village economy of Nana Kotla shows significant output, employment and income multiplier effects of the programme, which, however, varied across sectors and population. The multiplier effects of six check dams that were de-silted in 2006-07 show an output growth rate of 2.23 per cent and an income growth rate of 1.17 per cent, though both these figures varied across sectors and households. The growth in output was the highest among the self-employed in non-agriculture, followed by animal husbandry, agriculture and construction (p. 191). Similarly, the growth in income was the highest among large and small farmers, followed by marginal farmers and the self-employed in non-agriculture. It was the lowest in the case of service and labour households (p.192). The variation in the sectoral and household income growth rates raises the fundamental question of distribution; much of the criticism of the growth pattern witnessed during the liberalisation phase is centred around this issue. The initial income multiplier effects of the MGNREGS show that the problem is unlikely to be solved with such interventions. Since the multiplier has been derived by using the static SAM model, the result would vary slightly with the use of a dynamic model. Even then the trend is convincing and the result is unlikely to turn around with the use of the dynamic model. The employment multiplier shows differential levels of (secondary) job creation for the male and female population in the economy, though the primary employment generated under the MGNREGS was in favour of female workers. As a result of the multiplier effects, the growth rate in female employment was 1.30 per cent against 1.84 per cent in the case of male employment. This also shows the male-dominant character of the village economy. The time use survey, used in the study, finds that female workers in the village work for longer hours than their male counterparts. However, they work mostly in non-SNA and non-paid SNA employment. It is argued here that the MGNREGS has the potentialities to convert the unpaid work of women into paid work. Women would also benefit because of the creation of common property resources that could help in reducing drudgery for rural women. This interesting case study of Nana Kotla village prompts us to examine the multiplier effects of this massive public works programme at the national economy level. The study suggests that the preliminary distributional effects were more favourable for the economically better-off sections: rate of growth of income was higher in the case of large and small farmers than in the case of labour households. The book thus raises a serious question about the design aspects of the programme that need to be examined in detail. This makes the book a timely contribution to the discussion on the implementation and design aspects of the programme with a view to increasing its efficacy. Ashok Pankaj Institute for Human Development New Delhi ashokpankaj@rediffmail.com
53rd Annual Conference
INDIAN SOCIETY OF LABOUR ECONOMICS 17-19 December, 2011 Mohanlal Sukhadia University, Udaipur, Rajasthan
Call for Papers Last Date: 3O September, 2011
The 53rd Annual Conference of the Indian Society of Labour Economics (ISLE) will be held during 17-19 December, 2011 at Mohanlal Sukhadia University, Udaipur, Rajasthan. Prof. S.S. Gill, Director General, Centre for Research in Rural and Industrial Development, Chandigarh, will preside over the Conference. The topics for this year’s conference are: (i) Women’s Work, (ii) Labour and Environment, and (iii) Social Protection for Workers in India. Those who wish to contribute may send papers along with a summary of about 1000 words in hard as well as soft copy latest by 30 September, 2011 to the Hon. Secretary, The Indian Society of Labour Economics, NIDM Building, IIPA Campus, I.P. Estate, Mahatma Gandhi Marg, New Delhi – 110002, INDIA. The soft copies may be emailed to: isle.conference53@gmail.com. The summaries of the selected papers will be brought out as a publication of conference summaries while selected papers will be reviewed and published in the future issues of the Indian Journal of Labour Economics. Two awards have been instituted for best paper writers, below 40 years: Ruddar Datt Memorial Award and Sanjay Thakur Young Labour Economist Award (carrying prize money of Rs. 10,000 each). Those willing to be considered for the awards have to furnish age proof along with their full paper before the deadline. Latest information on the conference can be obtained from www.isleijle.org or in email from isle.ijle@gmail.com For registration and reservation of accommodation for the conference, please contact either the Organising Secretary or Co-organising Secretary of the Conference: Prof. Anju Kohli (Mob: 09414165756/ Res: 0294-2521614/ Email: akohli2k@yahoo.com), Dean and Professor of Economics, Department of Economics, University College of Social Science & Humanities, Mohanlal Sukhadia University, Udaipur – 313001, Rajasthan, India Dr. Anuprabha Choudhary (Mob: 09414158614/ 07597911168/ Res: 0294-2521614/ Email: anu_30p@yahoo.co.in) at the same address. The registration fee is Rs. 600 for India, US$ 75 for SAARC countries and US$ 100 for other countries. For spouse or an accompanying person, the fee is Rs 500 for India, US$ 50 for SAARC countries and US$ 75 for other countries. Payments should be made in favour of the “Local Organising Secretary, 53rd Annual Conference of ISLE” through Demand Draft payable at ICICI Bank, University Campus Branch, Udaipur, Rajasthan. Those who are not members of ISLE have to separately send the society’s membership fee along with the filled out form available on the website, to the Hon. Secretary at the society address mentioned above. The annual membership fee for individuals in India is Rs. 400 and for overseas US$ 60. Individual life membership in India is for Rs. 4000.
THE INDIAN SOCIETY OF LABOUR ECONOMICS Office Bearers, 2011 President
: G.K. Chadha, CEO, South Asia University, New Delhi
Conference President : Sucha Singh Gill, Director General, Centre for Research and Industrial Development (CRRID) Vice-Presidents
: Biswajit Chatterjee, Professor, Jadavpur University, Kolkata S. Mahendra Dev, Chairperson, Commission for Agricultural Costs and Prices,Government of India L.D. Vaikunthe, Professor, Karnatak University, Dharwad
Hon. Secretary
: Surjit Singh, Director, Institute of Development Studies, Jaipur
Hon. Treasurer
: Narayan Prasad, Professor, Indira Gandhi National Open University, New Delhi
Hon. Joint Secretary
: Seema Singh, Associate Professor, Delhi Technological University, Delhi
Editor
: Alakh N. Sharma, Director, Institute for Human Development, New Delhi
Managing Editor
: Rajendra P. Mamgain, Director, Indian Institute of Dalit Studies, New Delhi
Executive Committee Members, 2011 Gaddam Bhaskar, Kakatiya University,Warangal, Andhra Pradesh Parkash C. Deogharia, Vinobha Bhave University, Hazaribagh, Jharkhand Sudha Deshpande, Formerly of Bombay University, Mumbai Virender Kumar Dubey, Institute of Resource Development, Jabalpur, Madhya Pradesh Indira Dutta, L.D. Arts College, Ahmedabad Ratan Kumar Ghoshal, University of Calcutta, Kolkatta Mohammed Izhar, Aligarh Muslim University, Aligarh Giri Babu M, Nagaland University, Lumani S. Madheswaran, Institute of Economic and Social Change, Bangalore G. Manjunath, Deputy Labour Commissioner ( P&S), Bangalore N.K. Mishra, Banaras Hindu University, Varanasi, Uttar Pradesh C. Muthuraja, The American College, Madurai, Tamil Nadu Preet Rustagi, Institute for Human Development, New Delhi Ghanshyam N. Singh, Formerly of Magadh University, Bodh Gaya Jasbir Singh, University of Jammu, Jammu S.P. Singh, Indian Institute of Technology, Roorkee Sukhwinder Singh, Punjabi University, Patiala Vandana Upadhyay, Arunachal University, Arunachal Pradesh
Regd. No. RO. No. 2484/58
The Indian Journal of
Labour Economics The Journal, currently in its 54th year of publication, is an organ of the Indian Society of Labour Economics. Aimed at promoting scientific studies in labour economics, industrial relations and related topics, it features peer reviewed articles, research notes, book reviews, documentation and statistical information, particularly in the context of India and other developing countries. The Journal is indexed and abstracted in COREJ, LABORDOC, EconLit, e-JEL and JEL of the American Economic Association (produced by Journal of Economic Literature), GEOBASE : Human Geography and International Development Abstracts.
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Payment should be made in favour of The Indian Journal of Labour Economics through DD or local cheque payable at Delhi. For all editorial and business correspondence : The Managing Editor The Indian Journal of Labour Economics NIDM Building, IIPA Campus, I.P. Estate Mahatma Gandhi Marg, New Delhi - 110002, INDIA Phones : 011-23358166, 23321610 l Fax : 011-23765410 e-mail : isle.ijle@gmail.com Website : www.isleijle.org Published and printed by Alakh N. Sharma on behalf of the Indian Society of Labour Economics at the Institute for Human Development, New Delhi. Printed at S.P. Printech, G-19, Laxmi Nagar, Delhi-110092, Phone: 22514076, 9899094076.