For the last eight months, at 9 o'clock in the morning, a group of middle aged men enact a small ritual outside the factory gate of GEM group in Jaipur.

They raise their fists in the air and shout slogans. Humaari maange poori karo. Fulfill our demands. Manager, Mallik, Hosh mein aao. Come to your senses, managers and owners. Mazdoor shakti zindabad. Long live worker solidarity.

Five minutes into the protest, they abruptly quieten down, pick up their tiffin boxes, head into the electric wire-making factory from a side gate, and within no time, they are exchanging pleasantries with the same managers they were deriding in their slogans.

“We are negotiating for a wage hike which has been due since January this year,” explained Sher Singh, a man in his fifties, once a firebrand trade union leader, whose eyes have dimmed with age, much like the workers movement in Jaipur’s industrial areas. "Talks are proceeding with the management. We have neither stopped work nor have we done a slow down. We are hopeful they will see how well behaved we are and will accept our demands."

Sweeping changes

It is best to keep matters civil, workers say, given the changes that are sweeping through the industrial landscape.

Over the last decade, most factories have stopped hiring permanent workers, replacing them with contract workers, who not only work at lower wages, but can also be hired and fired at will.

In addition, in July, as part of a slew of labour law changes, the state amended the Industrial Disputes Act to make it possible for owners to sack up to 300 workers on their rolls without seeking the government’s permission. Earlier, owners needed permission to sack more than 100 workers.

The amendment has been hailed by liberal economists as path-breaking reform long overdue in India. Labour inflexibility, it has been argued, has held back Indian businesses from being competitive. Already, there are vocal demands that Rajasthan’s amendment be replicated across India.

But in Rajasthan, there is little evidence to show that sacking workers was ever difficult for businesses.

For one, in the last five years, the labour department has received not a single request for laying-off and retrenching workers. It has received five requests for closing down units. Barring one, it has given clearance for all others.

Two, when asked about impediments to growth, industry owners in Rajasthan have more to say about the cost of credit and the price of land than about recalcitrant workers. spoke with eight industrialists, ranging from a textile tycoon, an electronics manufacturer, a cement factory owner. None of them knew about the exact content of the recent labour law amendments. Most did not even know that the earlier law barred them from sacking more than 100 workers without government permission. One of them, the owner of a plastic-based industrial unit, has recently downsized his unit from 450 workers to less than 100, with no trouble at all.

 Elasticity at the plastic factory

It was payment day at the factory. Walking past long queues of workers in soiled clothes, I entered a plush office, where over cappuccino, the owner told me that he admired China, a country which he had visited 25 times in the last eight years. The crucial difference between China and India, he said, referring to the 1989 protests at Tiananmen Square, was that the former had the guts to gun down students in the streets.  “You cannot grow if you let people protest all the time,” he said. “Our democracy will never let us grow as much as China." At the moment, though, it is not Indian democracy that is killing his business as much as competition.

In 2011, he installed state-of-the-art chinese equipment to manufacturing polyester yarn using plastic scrap. But soon he found many others had entered the same market segment. The entry of more buyers pushed up the prices of plastic scrap. Yarn prices crashed. And he had to close down the polyester unit. Today, a small part of his factory is rolling out mink blankets. The rest is closed down. From 450 workers in 2011, less than 100 workers come to work in the factory every day.

“How did you retrench the rest? Did you seek government permission?” I asked.

“What do you mean?” he looked back, puzzled.

I told him about the law as existed before July this year. “There is no such rule,” he said, furrowing his brow.

As we got into an argument, he called his HR manager to settle the debate.

“You need to seek the government’s permission when you are closing down a unit, not when you are retrenching workers,” the HR manager said confidently. Despite ten years of experience, the HR manager clearly did not know the law, which showed how redundant labour laws have become in actual practice.

“If the factory is not doing well, you close down one unit first,” he said. “Word then spreads among workers in the other units. They start getting prepared for the layoffs. One by one, you close down as many units as you need to.” Within four months, he said, they had sacked more than 300 workers.

Industry owners said they had evolved practices to lay off and retrench workers, which ranged from giving them voluntary retirement packages to simply handing them a month’s paycheck. “Workers have enough options,” said the textile tycoon. “They’ll get work elsewhere. There is no dearth of opportunities.”

“As long as you don’t have a noisy union,” said the electronics manufacturer, “you’ll be fine.”

The stand-off in the courts 

The only case in recent years when a company ran into trouble while sacking workers was the case of Jay Glass Company.

Based in Jhotwara, an industrial area outside Jaipur, the company, which manufactured glass for bangles, decided to close down its operations in 2011. It wrote to the labour department asking for clearance to close down. In its application, it said that competition from China had rendered its business unviable. It also served a month’s notice to its 400-odd workers. While the trade union at the factory initially opposed the closure, its leader, Radheshyam Sharma, claims that they eventually came around.

"We told the owners we were fine with the closure,” he said, “as long as they gave us our salary for three months.” Under law, three month’s compensation to workers is mandatory. “But they did not even want to do that. They wanted to get rid off us cheaply, and then to replace us with contract workers.” ( made several attempts to contact the company owners but did not receive a response).

With the workers’ union opposing the closure, the labour department turned down the company’s application. The company went to the High Court, which asked it to file a second application with the labour department, seeking a review of the case. The second application too was turned down. But that did not stop the owners from locking down the unit, while simply going back to the court to fight a longer battle.

The case has now joined the ranks of Jaipur's long-pending labour disputes. In 1992, Man Industries closed down, retrenching hundreds of workers. In 1999, Jaipur Metals closed down, leaving several hundred workers unemployed. In both cases, worker groups went to court, seeking compensation. “Both the cases have dragged on for years,” said Prem Krishan Sharma, a veteran lawyer and trade unionist, who is now the president of People’s Union for Civil Liberties in Rajasthan. “The workers have grown old, and some have died.”

While it was never easy for workers to put up a fight in court, Sharma says, it has only become more difficult now. “Earlier, you had backing of the unions. There was strength in numbers.” Today, the unions are on the decline, and the recent change in the law could only hasten their demise.

In that sense, more significant than the amendment relaxing norms for retrenchment, which only formalises what is already happening on the ground, worker leaders say, is the one that makes collective action harder. Earlier, under the Industrial Disputes Act, a union needed the support of 15% workers to be recognised as bargaining union. Now, it needs to have 30% workers to get such recognition. By weakening trade unions, the government has made it harder for retrenched workers to even put up a fight for due compensation.

 The future of the working class

Of the 2,000 factories in Vishwakarma Industrial Area, less than 50 have worker unions, Sher Singh claimed, as we sat talking over tea at the entrance to the factory. I asked him if he was hopeful that workers would get the wages they wanted. No, he said. GEM group may not employ contract workers in its main units – GEM Electromechanical Ltd and JLC Electro Met Ltd – but other units owned by the promoters of GEM group, he said, use contract labour who work at half of their salaries.

"They [contract workers] come from Bihar, Uttar Pradesh, Karnataka," Singh said. "They work for Rs 7,000 a month, while we make between Rs 16,000-Rs 20,000. The piece rate in those units comes to Rs 7, we have been told by the management, while at our factory it is Rs 17."

So what has kept GEM group from sacking its permanent workers and replacing them with cheaper contract labour? Could it be the law which, until recently, made it incumbent on factory owners to seek permission from the government before sacking more than 100 workers?

No, said Sher Singh. There are only 78 workers in GEM Electromechanical Ltd – well below the 100 threshold.

In his view, it is not the law which keeps the management from sacking the workers, as much as “Sethji’s sentimental attachment”.

“This is where his business started,” says Singh, speaking of Kamal Kishore Vaid, the founder of GEM Group. “He was an engineer who started this unit with one machine from Japan in 1970s. He used to stand alongside workers and toil on the shop floor. Ask Meher Chand, he’s been here since the start,” he said, pointing to a short, grey-haired man.

Meher Chand was scarcely 18 when he started work at Vaid’s factory. He described how Vaid made true copies of the machine from Japan and expanded the business. “Today, Sethji has made millions – which he deserves too – but all that Meher Chand has managed to buy is a motorcycle,” Singh intervened, at the end of the story.

Stagnant wages

Meher Chand, however, chose other reference points to evaluate his work life. “When I was starting out, I could have applied for a government job, but I opted for factory work, because it paid well," he said. "With overtime, my salary used to come to Rs 280, which was better than the earnings of government employees. Today, however, my friends who joined the government are getting Rs 35,000, while my salary has stagnated at Rs 20,000.”

What’s worse, he says, is that the younger people in his village, Akeda Dongar, which lies adjacent to the industrial area, are no longer getting jobs. “The contract work they get is low-paid and uncertain,” he said. “They are into selling their ancestral land, which in any case is no longer yielding the same yields due to industrial pollution.”

His eldest son is now coming of age and his worries are mounting. “I'll probably open a small shop for him," said Meher Chand. "The future is not bright for our children."