The National Democratic Alliance government has proposed labour law reforms to make it easier for factories to hire and fire workers. The rationale: factories will find it easier to respond to changes in demand, which will create more jobs for workers. But even without these new laws, Delhi factory owners have been employing workers and letting the go at will. This lack of economic and social security has taken a toll on workers.
Late in the afternoon, the tea-stall on an arterial road inside Okhla Industrial Area had only a few customers. The roads looked desolate. The air was thick with dust thrown up by lorries ferrying material. Only the rows of bicycles parked outside factory gates gave a clue to the presence of thousands of workers inside.
Behind the high walls, armies were labouring away, polishing metal and stitching garments. Conversations at a tea stall gave a good sense of the workers’ concerns. One man was chatting about a strike that had entered its second day as workers were demanding a wage increase. A fire station officer had just returned from a factory where a short circuit had set off a blaze. The heat combined with the poor maintenance in the factories was keeping him busy with four or five fires every day, he said.
Others spoke about how despite the calm in these industrial lanes, changes were taking place at dizzying speeds, both for workers and the people who owned the factories. Jai Prakash, a young relative of the tea-stall owner, had worked in a factory assembling watch parts until three months ago, but now worked in an electrical unit. He had lost his job after he asked for three months of leave because his child was seriously ill. “The manager replaced me with two workers, at a wage of Rs 5,000 each,” he said. The oldest man in the group, Jagannath, a 60-year old guard at the factory across the road, said in four years he had seen four units leave the building: a printing press, a call centre, a garment exports unit, and a machine parts unit.
A new language
Even bigger changes are looming for industrial areas such as Okhla. In April, the National Democratic Alliance proposed the Code on Industrial Relations Bill 2015 to replace three laws ‒ the Industrial Disputes Act 1947, the Industrial Employment (Standing Orders) Act 1946, and the Trade Unions Act 1926.
The bill introduces an amendment on “fixed term employment”, a proposal first made in 2003 by the Vajpayee government. (It was withdrawn by the United Progressive Alliance government four years later.) It will allow an employer to hire workers on contracts for a fixed period of time. Such workers may be hired and fired as the employer’s will. But during this period, the worker’s wages, hours, allowances and benefits will be the same as that of a permanent worker.
Even though contract labour is already commonplace in both the public and private sectors, industry bodies have welcomed the amendments. They say that the existing Contract Labour (Regulation and Abolition) Act 1970 has ambiguities. The proposed law will remove the uncertainty, and allow more flexible use of contract labour, they claim.
While proposal on the new labour laws were being finalised, garment exporters were among the most vocal in demanding greater flexibility for employers. Since 2014, the 560-member Garment Exporters Association has made several submissions to the government asking for new terms for hiring and firing workers, including on fixed term employment specifically.
That isn’t surprising. The garment industry is among the largest employers in the manufacturing sector. From 1993 till 2005, textile units registered an average annual employment growth of 11.5%, according to data analysed by economists TS Papola and PP Sahu. In the last year, apparel exports grew by over 13%, to Rs 102,929 crore in 2014-’15 from Rs 90,718 crore in 2013-‘14.
Shifts and seasonality
In Okhla, the majority of the 4,500 units employ permanent workers, industrialists say. They contrast this with new factories in Noida (New Okhla Industrial Development Authority) in western Uttar Pradesh, 20 km away, where most factories rely almost entirely on contract labour.
Garment exporters are the largest employers in Okhla. Inside large garment factories, hundreds of tailors can be seen working at long rows of sewing machines. Each is working on a different section of the same garment. One tailor begins with stitching the back, another does the sleeves, another the collar. Their progress is closely monitored by supervisors on the shop floor, who use stop-watches to track the work done by each tailor on a piece.
“All of our workers, over 350 tailors, are permanent,” said one factor manager. “Our buyers – Next, Gap – require this. We have to submit proofs to them.” At their gates, garment units display boards announcing, “No child labour allowed inside.”
While large international buyers seek proof of legal compliance, including of workers being paid wages and benefits as per the law, the garment manufacturers face regular pressure to shed jobs and reduce the workforce because of the sector’s peculiar seasonality. The peak demand for garment exports is between October and March, coinciding with Eid, Christmas and New Year for buyers in the Middle East, the US and Europe. In the peak season, the factories run 24 hours a day. As summer approaches, demand falls sharply.
In June, workers could be seen leaving the factories and heading home by 7pm-8 pm. They recounted that during peak season, they worked 20 to 24 hour shifts from 9 am till 5 the next morning for several days in a row, even at the risk of sickness and heart disease.
The permanently precarious
At the tea stall, by 6 pm, several workers from a garment factory across the road had gathered during their 15-minute break. Their export unit employs over 1,000 tailors. Over tea, several said they had been confirmed as permanent workers with provident fund benefits only recently.
“The owners confirmed 300 of us as permanent just last October,” said Sohan, a young tailor. But since, added Waqil, who has worked as a tailor in Seelampur and Okhla for the last ten years, “they have already got rid of half of us”.
Waqil, a migrant from Mughalsarai in Bihar, explained that tailors who had over the last few weeks asked their managers for leave to go home for the post-harvest wedding season had to been ordered to forgo their time off. Else, they would have to quit and collect their dues.
Imtiaz, a man in his early 30s well-versed in Okhla’s ways, explained that if a factory owner wished to sack a permanent worker, there were many ways to do it. “You can harass the worker by changing his department,” Imtiaz said. “From stitching, you send him to double-locking to thread-cutting. How is it possible for the tailor? You can tell him, he cannot cope with targets. Or, if he reaches half an hour late, you say, ‘take your hisaab [dues] and leave’.”
He continued: “In the hisaab, you know you have been around since the factory’s inauguration, they owe you Rs 40,000 for gratuity, and paid leave. But they will offer you half of that. At this point, you have to take it, and you leave.”
Waqil, the tailor from Mughalsarai, recounted what he had advised one of the younger tailors who had planned to visit home for two weeks. “I told him, write an arzee, an application, stating your request and put it on the manager’s table, keep a photocopy of it with yourself, and deal with the maalik when you return.”
Several tailors workers with the formal status of permanent workers continue to face these uncertainties every time they needed leave, or if their factories are relocated. However, not all the workers are even certain about whether they are permanent or contract workers.
At the same garment factory, several of the tailors recently confirmed as permanent were still anxious. They said that though the employer had given them photo identity cards designating them as tailors, the names of the companies atop the document were different from the actual identities of their employers. They wondered if this difference in the names meant that the company was attempting to show the government that they had been hired through contractors instead as employees on the firm’s rolls.
Such practices are actually quite common, said a Regional Commissioner in the Employees’ Provident Fund Organisation. “A firm will hire 1,000 workers, show 200 workers in PF records,” he said. “Of them, they will sometimes list the same PF account for multiple workers.”
He added: “When such employers are not punished they get a tacit approval from the government to continue these violations. It is as if it is enough virtue that they have given a job to someone.”
Employers and government
Among the most-debated changes is a proposal to amend the Industrial Disputes Act to allow factory owners who have up to 300 workers on their rolls to sack workers without seeking the government’s permission. For now, factory owners with more than 100 workers need official permission to sack workers.
About 9% of Indian factories have up to 300 workers, while 17% have more than 100 workers. The government says that many of large units are claiming to have fewer than 100 workers so that they can circumvent the law.
Number of factories as per size of employment
However, despite the law being on the books, there is no evidence that it has been implemented at all in many years. In Delhi, the labour department has not received a single request from factories to lay off or sack workers in the last five years. “We got only one request for closure, from Narang International Hotel, which we refused,” said Joint Labour Commissioner VS Arya.
Several economists and policy-makers say that while labour laws matter, they are not the most important reason that the number of jobs in India have not increased. Other factors, such as infrastructure, credit are equally, if not more important.
In the last 20 years, Okhla firms have come to hire workers on contract through multiple systems. For instance, Hansa Exports, which moved to Okhla in 1986 from Jalandhar and exports both garments and handicrafts, employed 70 workers. But it also followed the “fabricator system”, a system of subcontracting work to household-level units, or fabricators, that in turn hired the tailors who stitched the garments. In the system followed by Hansa, one tailor usually stitches an entire garment. As per a 2010 World Bank study, 55% of India’s textile units and 17% of garment units rely on subcontracting. Of these subcontractors, nearly 90% in textiles and 70% in the garment sector were household units.
More than changing labour laws, Hansa Exports’ owner 75-year old Prem Suri says he would like the government to change the tax regime for industrialists and checked police corruption. “We pay 5% Value Added Tax, 14% service tax, it is difficult to get a refund,” he said. “When we send a truck with the export goods for dispatch, the police stop the truck and look for reasons to extract bribes because they know our buyers have strict deadlines and that we will pay up anything to avoid a delay.”
Other factories in Okhla run on the “piece-rate system” or a “part-rate system”, assessing productivity per piece or a part of the piece, or under the “chain system” in which many tailors stitched different parts – collars, sleeves, back – of the same garment. Tailors frequently compared the “chain system” to the assembly line of automobiles, in which individual workers fit different parts of a whole product.
With multiple contract systems already thriving within one garment industrial area, it is not clear how the government will enforce its proposed system of fixed-term employment or ensure that workers get any health or social security benefits. Several tailors said that they had worked under multiple contract systems without either provident fund and heath benefits.
Among them was Bablu, a tailor in his mid-20s, who has changed ten jobs in the decade since he migrated to Delhi after learning stitching in Allahabad. His first job was at A-257, Razmataz Export House. He was among the 200 tailors working there as a casual worker hired by the company under a daily piece-rate system, paid per garment he stitched, with no health or social security benefits. One hundred others, “salarywallah” tailors, were paid monthly. But there were distinctions among the “salarywallah” too. Those who were permanent workers got Provident Fund, health benefits, paid leave, and bonus. The contract workers hired through a contractor were paid a monthly wage, no benefits, but sometimes got a bonus of Rs 200 and sweets on Diwali.
After this, Bablu worked for two years at another company where there were 72 tailors, all working at piece-rate. He quit when the company shifted to Gurgaon in Haryana. Next, at A-185, Lilliput Exports, he worked under the “chain system”, except here the company had tweaked the assembly line with an additional layer of hourly payments at the rate of Rs 16.5 per hour, which the workers call the “plus-minus system”.
This is how he explained the rate of payment: “If the company gave 10 minutes and I made seven pieces an hour, taking nine minutes per piece, then I produced one piece extra in the hour. By evening, I had made 11 pieces extra and saved one hour 50 minutes, then they would pay Rs 198 (at the rate of Rs 16.5 per hour for 12 hours) and an additional Rs 32 for the ‘plus’ time.
“If I made 1 piece in 12 minutes, then I produced two pieces less every hour. They would then deduct Rs 32 and I would be paid Rs 166 that day.”
The company employed 300 tailors to make 50,000 pieces in two to five days this way, said Bablu. “But if we saved more than two hours, they would reduce the time target to eight minutes, then to five minutes. Production and profit kept increased, but after a level our wage was frozen,” he said. “Some workers would perform better, some would perform badly and the company’s accounts would even out, but ours wouldn’t.”
Older workers said this was a system of self-exploitation. Jaise gurh mein cheetaa. Like an ant stuck in jaggery, dying.
Professor AJC Bose, an economist at Delhi University, who studied contract work in and around Delhi and Haryana said owners usually linked wages to incentives to keep wages low: “Super profit-making has come to be related to super exploitation.”
Workers’ names have been changed in the report.
This is the second part of a series, part one, here, part three, here.