Naresh Kumar and his 70 co-workers at a metal polishing unit in Faridabad in Haryana were in for a surprise a day after after Prime Minister Narendra Modi’s announced that the existing Rs 1,000 and Rs 500 notes would cease to be legal tender after November 8.
The owner of the factory in Sector-33 in Faridabad in Haryana offered to pay the workers three months salary in advance, if they were willing to sign a document that he presented to them.
“Usually, he is reluctant to give any money as advance when we ask for help when our wage falls short to tide over the month’s expenses,” said Naresh Kumar, who lives in Okhla, Delhi and has worked in metal units on the border of Uttar Pradesh and Haryana for the last 15 years. “But this time, he wanted to pay a large sum of Rs 30,000 as an advance. We told him we would not sign any voucher or document. We refused to cooperate with him.”
Their employer has since credited Rs 9,000, a skilled worker’s wage in Haryana, into their bank accounts. But Kumar, like the other workers, had been unable to access this amount.
He said the factory owner had not allowed the workers, who work on Sundays, to take a day off to queue up at the bank like thousands others did over the past 10 days. “If I do not punch in our entry at the factory, a day’s salary will be cut automatically,” he explained.
Kumar’s three-member household has since been trying to hold on to Rs 7,000 in smaller currency notes that he and his wife Indu Devi managed to get exchanged from his wife’s cash savings soon after Modi made the currency change announcement.
“My wife and I had rushed to different general stores the same evening, to exchange Rs 1,000 notes by making small purchases worth Rs 200, getting Rs 800 back and so on, so we may manage for a few days,” he said.
“But Modi has made a terrible mistake by not thinking even once of the aata (flour) canisters in people’s homes,” he concluded. “On the 8th of the month, when people had not got their wages, or just received their wage that same day, how did he think people would even get the chance to buy aata or grains?”
‘What will change?
As per the National Commission for Enterprises in the Unorganised Sector, more than 90% of workers in India work in the so-called informal economy, receiving wages in cash, including workers in manufacturing.
With the government allowing business entities not to withdraw more than Rs 50,000 per week from their current accounts maintained with banks, employers paying in cash so far are now unable to procure adequate cash to make wage payments.
A medium-sized unit employing 70 to 50 workers in Delhi needs Rs 5 lakh - Rs 7 lakh ready cash to pay salaries.
New Delhi’s Okhla is an industrial area with more than 4,500 garment export units, printing presses, plastics units and other small manufacturing units. As workers stepped out of the factories during lunch break, most reported that had refused to take their monthly wages in old currency notes of Rs 1,000 and Rs 500.
Most wage workers have little option even as their employers owe them salaries for over 10 days now in many instances.
“What will we do with the old notes? They are redundant. We all said we will not accept notes of Rs 500 and Rs 1,000,” said Pankaj, who works in a 70-staff transformer manufacturing unit, his first job, and lives by himself in Tehkhand village inside Okhla.
Brij Mishra, an elderly worker at a printing press, said he and his 10 co-workers declined to accept a cheque payment, though he and a few others hold bank accounts because he found banking difficult to navigate. “It is not easy for us to enter and transact at a bank, I told the unit owner: ‘you have always given us cash, we will wait for cash payment’,” said Mishra.
“Even during normal months,” Mishra added, “we have to ask the owners for an advance, because the wage is too low. Now, it will become very difficult if he does not pay soon.”
Ramesh Singh, a machinist in a tissue paper manufacturing unit, who has worked in Okhla for five years, said he along with 15 workers in the unit had protested when their employer tried to pay them in bigger denomination notes, but accepted one note each of the new Rs 2,000 two days back, while their employer still owes them Rs 7,000-8,000 in credit.
So far though, he had not been able to use the large denomination note for any expenses or payments, he added, as he finished his Rs 20 lunch of rice and dal at a roadside stall.
His main concern, however, remained that Modi’s announcement will change little for workers when the buzz around currency withdrawal settles.
“I have worked at the same factory for five years, but my employer pays me neither provident fund, nor wages as per my skills and grade,” said Singh. “The last time wage grade norms was enforced, I remember, was in 1996 when Madan Lal Khurana was Delhi’s chief minister.”
“Government may introduce any law, any rule, but in Okhla, the same system remains,” he added.
Punulal Dixit, a 48-year old working as a security guard in Noida was returning home to Okhla at noon after completing a 14-hour night shift.
“The company paid Rs 14,000 wage by cheque, but I have had no time to encash it at the bank,” said Dixit who works on all days of the month, including weekends. He would barely get five hours to sleep that afternoon before starting his 90-minutes bus ride to Noida in the evening to repeat the same work routine.
Daily wage workers and those pushing carts inside the industrial area were the among the worst hit and expressed anger and helplessness at the government’s move.
At the domestic container terminal in Okhla, Delhi’s largest container terminal, groups of 5 to 6 workers are paid Rs 1,000 for each truck they unload, which they split among themselves.
On November 7, a total of 58 trucks loaded with material had left the terminal for business centres in Uttar Pradesh, Punjab and Haryana. On November 15, a week after the demonetisation move was announced, this number had dropped to less than half to 25 trucks, show records kept at the terminal.
Kishan Lal, a transporter standing at the terminal gate who owns three trucks, said he had run out of cash to pay drivers as he routinely was paying them Rs 3,000 daily for “fuel, food, and to bribe policemen on the way”. The effect is showing in a drastic shock to contract and daily wage workers’ earnings.
Transporters owe them several days’ worth of work’s payments, said workers, many of whom are seasonal migrants. “Some owe us Rs 2,500, others Rs 1,500 to Rs 1,000,” said Tarkeshwar Singh, an elderly worker from Rohtas in Bihar.
“If a businessman owes us Rs 600, they are now paying Rs 100, keeping rest of payment as pending,” said Pintu Mandal, a landless migrant, who came to Delhi from Chhapra in Bihar to look for work for a few months.
With daily wage workers’ payments stuck and regular wage workers anxious about not being able to get ready cash, vendors selling goods said their earnings too have reduced to a trickle as workers were forgoing routine purchases, even groceries.
“I have collected this payment in the last four hours,” Geeta Devi, a vendor selling coriander, tomatoes and green peas, pointed to four Rs 5 coins lying in a metal container by her side. “If earlier 100 workers bought vegetables every day, now only 40 to 50 people are buying them. My husband and I usually purchased 10 sacks of vegetables from Okhla mandi. We have reduced it by a third the past week, as there is no sale, no earnings.”
Md Abid, a 65-year old fruit-seller looked on morosely as people walked past his apple cart. He was selling apples at Rs 40 a kilo: “Either people do not have enough small notes, or they have only Rs 2,000. What use is that, can I return Rs 1,950 in small change?”
While the immediate effects of the government’s drastic decision are showing in households restricting consumption, the more serious effects may become evident as it starts to hurt workers’ nutrition.