The precariat in the time of the pandemic
How the industrial labour economy has weakened the imagination of relief in the time of COVID-19
K. Muniraj leads the way through the dingy stairway to his office on the terrace of a greying two-storey building overlooking a movie hall. A framed commendation for ‘Top GST payer for 2018-19’ adorns the top rack of his cabin. “I won the award for the highest GST payer for Salem region,” says the proprietor of Sri Manjunath Enterprises, a leading manpower supplier, and president of Hosur’s Manpower Contractors Association, a coming together of 45 job contractors supplying labour to the large and medium industries of Hosur.
It is day 17 of the lockdown. Hosur, the industrial town along the Tamil Nadu–Karnataka border, where the first of the industrial estates in the State came up in the early 70s, has been unusually still. Home to some of the biggest automobile and manufacturing plants and their supporting ancillary suppliers, over 113 categories of industries from pharma and food, to aircraft and railway equipment manufacturing units make up Hosur’s industrial landscape.
As Mr. Muniraj speaks, a man walks in and drops wads of tabulated sheets on his table -- the lists of migrant labourers under the various job contractors registered with the association. “We have to give copies to the Collector and the inspector of factories. I think the government may give them (workers) some relief,” he said. But only a fraction of the labour force is trickling in, as some contractors have left town.
Hosur’s industrial hub, tracked through the lockdown, speaks of the inbuilt precarity of the labour force, beneath the veneer of ‘reforms’, pre-dating the COVID-19 pandemic.
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The manufacturing industrial supply chain has the Original Equipment Manufacturers (OEMs) at the top and ancillary suppliers at tier 1 (medium scale), tier 2 (small scale), tier 3 (micro) and tapers to subcontracting tier 4 units.
The final product flows from the entire supply chain, as job flows from the top to bottom in the form of ‘job works’ offloaded to small and micro units, called the feeder units.
This industrial edifice rests on the contract labour economy – made up of a bonafide workforce, accounted for and outsourced to registered industrial units by registered contractors that men like Mr. Muniraj lead; and a parallel shadow labour economy of unregistered contractors outsourcing for unregistered feeder units. Both together contribute to the industrial supply chain.
In this contract labour economy, the company is the principal employer, the contractor is the employer; and the worker, the employee. The company pays the contractor a service charge on the cumulative wage bill. Faced with a pandemic, this contract labour economy with its underlying precarity has weakened the distribution of relief on the ground.
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With no name in the employee roll as proof of employment, a vast majority of this migrant industrial workforce belongs to the shadow labour economy that gets paid in cash, without the safety net of PF and ESI and no employee IDs.
In mid-April, the disquiet inside the migrant workers cluster in Ganga Nagar was contagious. Shakir and his two friends from Bihar’s Muradabad are waiting for word from their contractor, whose mobile phone has been switched off since the lockdown. The trio came in December for a job in a buffing unit (a hazardous chemical process that gives metal a sheen and rust resistance). They buffed petrol tanks and gear box covers. “ The contractor promised ₹100 per piece, but he has not even paid me my ₹25,000 for January,” says Shakir showing photographs of the neatly-arranged shiny aluminium white metal tanks, as proof of his labour, on his phone.
Ajay Behera says he came from Jagathsinghpur in Odisha 10 years ago. At 34, Behera made ₹10,000 per month as a press operator handling hydraulic machines for a small unit. His contractor paid him in cash, without ESI (employee accident insurance), or PF deductions. He remembers an Assamese co-worker, who lost his fingers under the machine and was sent back to Assam to heal on his own without ESI cover. “The landlord came and asked for rent today. But my contractor has not picked up my calls. I also need to send money home for my parents. What about next month? If the units don’t open, we will at least need money to go home,” he says.
Nirmal Sahoo,30, came from Balasore in Odisha to Gummidipoondi in Chennai 12 years ago to work in a dye unit. He moved to Hosur as a loading worker recently for a promised salary of ₹10,000. While he awaits his salary, he is worried about his ageing parents back home.
Umesh, 22, from Arah in Bihar has had his job card (attendance card) snatched away by his contractor when he demanded his salary for January. In February, he started with another contractor and was not paid for that month too. As he spoke, somebody yelled at him for not wearing a mask. “Where will I go for a mask, when I have no money,” he snaps back. Their credit account with the neighbourhood grocer is running out too, he worries.
For a large section of this shadow workforce, the job contractor is also the landlord. 30-year old Anup was brought to Hosur from Assam in February by his contractor Thaveen Basha. He, along with 25 others, work for Basha, who is also their landlord. They were not paid salaries for March. “My landlord says the company didn’t pay. He is yet to ask for the room rent, but he will, soon,” fears Anup, who is a welder in a bike spare parts unit.
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A. Sivan’s phone had started to buzz with enquiries for locally-available workforce in the run up to April 14, when the first round of the lockdown was originally due to end. The treasurer of the Manpower Contractors Association had anticipated limited production in the auto industries. “There is no stock of BS-6 vehicles. There will be a labour requirement, but only local labour stayed put here, in order to avoid infections” he says.
“Our association only deals with large industries and a few medium scale units. The big groups first paid the contract workers for March. Some, even supplied grocery kits for their workers. What you see happens in tier 3, where there is a general fall in labour standards.”
But, on the ground, the reality is spread across the supply chain and lies in the nature of flexibility of labour offered to industry as part of reforms.
As industries deliberated over the legal validity of the Prime Minister’s “appeal” to pay wages even if there had been no work done, on the one hand, and ‘corporate responsibility’ on the other, the labour architecture has been dogged by insecurity from the start, across the chain.
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Day 16 of the lockdown is a a balmy morning after night- long rain in Hosur. A group of permanent employees with greying hairlines, from the factories of some of the largest auto and ancillary companies, gathered under a tree in Mookandapalli secure under the cover of anonymity offered by the COVID-19 protection masks.
“In another 10 or 15 years, when the last of us retire, there will be no permanent employee in our factories. Direct recruitments at the worker level stopped long ago,” one of them says.
If contract and casual labour through job contractors becomes the established norm, albeit with the “employee” status; other forms of labour will shape up on the factory floor under various trainee arrangements. Trainees sourced through various in-house industrial training courses offered by some companies; mandatory apprentice trainees under the Apprentice Act; and various skill development schemes of the Central government that pushed for an “industry-led, practice-oriented” skill development of unskilled labour -- expands the presence of non-permanent/rotational precarious workforce on the production floors as part of on-job trade learning at minimum cost to the company.
“Without the ‘employee’ status and the accompanying protection, the trainees subsidise labour costs in the production process,” says Sathish*, who exited the management cadre of a company to start his own small scale unit to become a supplier.
For an earnest 16-year-old class 10 pass out finding himself as a diploma trainee recruit with a stipend of ₹11,000, being trained on the production floor is a welcome deal. But, the Unions have flagged the inbuilt alienation of this form of temporary labour.
“Consider a worker in his late 20s/ 30s shifting between temporary jobs across production floors, with a bare minimum increase over years, hovering around ₹16,000. Factor in his chances of marriage, starting a family,” he says.
Ramkumar* knows he’s in for a long haul. He just completed his apprenticeship in an automobile plant. “The shop floor is a great place to learn. We take part in actual production when there is shortage. But, now, when I see my seniors moving between temporary jobs each year, I wonder if I’ll ever have stability. At least, if the system promises an opportunity for confirmed employment, then we can stomach a rejection thinking we are not good enough. But, there is no such opportunity even to give us hope.” The industry does not absorb him as a “confirmed” employee thereafter pushing him into the contract circuit, says Kumar* who is amongst the last batch of trainees who got absorbed as a permanent employee in a leading automobile manufacturing unit, a decade ago.
Individual enterprise and skill does not sit well with this set up. That is also why the contractors seek out a migrant workforce for their pliancy in an alien workspace. It’s to their advantage to keep the workers at limited skills and in a cyclical state of temporary unskilled employment for perpetuity.
Bibin Babu and 25 others came to Hosur from Kerala on completing a logistics training course under the Government’s Prime Minister’s Kaushal Kendra scheme, a Skill India programme. “The institute tied up with a Hosur vendor, who advertised for inventory clerks.” They signed up for inventory management but were put in loading and unloading jobs. “We got severe back pain unable to handle the load lifting. That was not the contract. Some of us stopped going from March 10,” the 22-year-old BBA graduate Bibin, says in English. They were not paid for the days worked, and the vendor declared them absconding. The lockdown was announced as they were scouting for another job. They have been stuck there since, with no food or money.
The contractual scheme has also freed the industry from dealing with the workforce. “If a worker is seen as ‘troublesome’, the manager tells us, and we transfer him to another company,” says Mr. Muniraj, as he reminisces over a time, when contractors like him were scared of the unions. “Where is the union today?”
Today, the tension between the permanent and contractual workforce that gnawed the industrial labour landscape has been overridden with newer concerns dominating the dynamics. New forms of government pushed “skill training” programmes on to the factory floor, chipping away at the few remaining safety nets for industrial labour. “The “Modi Scheme” was the biggest supplier of such trainee workers,” says a trade union functionary with an automobile plant, referring to NEEM (National Employability Enhancement Mission).
The NEEM purports to produce skilled labour enabling companies to engage/train unskilled labour at bare minimum remuneration. Without any obligation to hire, NEEM allows cheap labour on the production floor without the trappings of any safety net otherwise available to the worker.
“The government pushed it and companies only availed of it,” says Mr. Sivan. “While we (contractors) have to provide ESI, PF, gratuity, bonus, and all the benefits of a permanent employee to a contract worker, the NEEM trainee was allowed a bare minimum unskilled wage, without any of the welfare benefits.” According to him, between major companies, there were a few thousand workers recruited under the NEEM scheme in Hosur. Incidentally, NEEM hit the GST contribution of the job contractors in Hosur jurisdiction, since NEEM agents were registered elsewhere. “Our GST contribution was cut down with the induction of NEEM trainees. Even the PF corpus was hit by the scheme,” says Mr. Sivan.
But, an AICTE circular dated September, 2019 to NEEM facilitators ordered a freeze to new NEEM trainees in order to “restructure and realign NEEM” with higher educational institutions. But it allowed for continuation of the existing trainee workers to complete their contract period.
The operational costs are high, with companies competing with cheap replacements from China. The cost to a company is ₹16,000 to ₹20,000 for a contract worker, but twice or more for a permanent employee, says Mr. Sivan. But, a ratio of permanent worker to contracted workforce is maintained, he insists.
The wage question
The Hosur Industries Association (HIA) of 145 large scale companies has been huddled up in meetings since the start of the lockdown. R. Rajagopalan, President, HIA, queued up the challenges before the industry – of cash flow in the face of absent demand, fixed expenses of rentals, licence and statutory fees, power, labour; and the moral responsibility to the workforce. “In the face of all this, we are trying to strike a balance between the industry’s ability to pay, moral responsibility, and the ‘need of the worker’. For smaller units with single-digit profit margins, and high labour costs, wage payment will be difficult,” he said. On May 1, the association of large companies had a ‘focused meeting’ on workers’ pay. “We advised companies to make provisions for part of the salary, may be as advances for April. Most of the companies paid for March. But there may be some who may not have paid, says Mr. Rajagopalan.
Hema Engineering Limited, a leading original equipment manufacturer catering to automobile industry is just one of them. The large scale tier-1 supplier with 1,100 of its 1,200 workforce on its contract workforce in 2 units in Hosur, was unable to pay its workers for March and will not be able to pay for April at least immediately. “The fall in the auto sales affected the volume since August and resultant payment delays from suppliers. Despite the low volume, we retained our migrant workers, who have been with us for over 15 years,” says Rajashekar, HR manager of the Hosur units. “We can’t replace them because we trained them. So, we cut down 12 hour shifts to 8 hours and continued depending on exports of BS-3 and 4 orders.”
The company, a leading exporter of mufflers, retained its workforce in anticipation of a market revival, until the lockdown came. Uniquely, the company’s MD was locked down in Italy affecting the cheque clearances for release of workers’ wages.“We have 14 units across the country with their wage payments.” But, they supplied two rounds of groceries worth ₹10 lakh and also availed government kits for their workers, he says. “When we open, we will engage bare minimal workforce, because there is no volume. The industry can sit up and breathe only if the government waives GST for 6 months.”
If a tier-I large scale OEM struggled, the supply chain tapering down to MSMEs is rife with problems.
“You left everything to market and competition. Now you say, ‘pay the worker’. Both the labour and the small entrepreneur is suffering now,” said Velmurugan, MSME entrepreneur and president, Hosur Small and Tiny Industries Association (HOSTIA). HOSTIA representing over 1,000 registered MSMEs, called for a meeting last month and requested entrepreneurs to pay for March in full. But, there are few thousand unregistered micro unit and many of those registered too, were unable to pay their workers. Mr.Velmurugan was aware of this.
“When a small unit shuts down for a month the entrepreneur incurs a loss of ₹25 lakh; a micro unit loses ₹3 to ₹5 lakh. How will the small entrepreneur pay? The government has not announced relief for the MSMEs. They should provide grants to MSMEs for the lockdown, and waive three month’s bank interest. In any case, we (MSMEs) will not be able to pay for April and we will tell the government that. The government should use its own funds to pay. There are thousands of crores of unclaimed funds in ESI, PF, LIC,” he said.
Like him, Mr. Rajagopalan insists that the government spell out a concrete relief package to address the wage question. “It is government’s moral responsibility to come up with a short-term relief package and pay 70% wages from the ESI funds. There is already a worker database available with the Industries department.”
But this still will not address the concerns of the primarily migrant workforce, paid in cash, not covered by ESI/PF. There are also the trainees, apprentice workers – all part of the workforce in some form.
As the industry stands vulnerable in less than a month, unable to lend succour to its workforce, the legitimacy of the reform story that subsidised costs through dispensable labour sticks out. “There was demand contraction in the last few years. The industry did not grow in the last 3 to 4 years like it should have to withstand this shock,” said Mr. Rajagopalan.
According to Mr. Velmurugan, the government should have moderated manufacturing costs; notified each raw material cost plus percentage based on the metal index; minimised processing cost; and ensured decent profit for the small supplier to enable better pay for the worker. The workman’s salary is higher than that of the the staff in societies that value physical labour. When decent wages are not ensured, it spirals down to abysmal quality of life for the worker’s family, he adds.
The Hindu reached out to Ashok Leyland, TVS Motors and Titan Industries – that have manufacturing units in Hosur -- to ask about the composition of workforce, nature of worker relief, and extent of the industry’s moral responsibility to workforce at large. Ashok Leyland’s representative reverted saying the company did not have a comment now; the global corporate communications head of TVS Motors, Varghese M. Thomas acknowledged the mail, but expressed inability to participate. Titan Industries did not respond to the mail.
The public sector
This precarity is not confined to private industrial labour. The government’s own telecom company BSNL has not paid wages to its contract workers for nine months. At 44, Nandakumar, secretary of BSNL Contract Workers Association is struggling to ensure the survival of his family. “BSNL has not paid us since August, 2019.” His Coimbatore-based contractor would release salaries, when BSNL released funds. He started 20 years ago as a BSNL contract worker at ₹900 as salary.
He was last paid ₹10,000. “The government is supposed to be a model employer, but it isn’t,” says Aadhavan Deetchanya, General Secretary of Tamil Nadu Progressive Writers and Artists Association and former BSNL employee part of the trade union. Together, the union has been supporting these workers.
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On April 27, on the 34th day of the lockdown, Inspector of Factories Santosh is holding parleys with the small industries association to help convince the unregistered micro units to hand over the list of workers under them. Tier 3-4 units are reluctant to own up the labour numbers fearing legal action. “We distributed 16,061 grocery kits last week to registered factory workers. But we (Factories Department) can’t provide relief as per rules to other workers because they are unregistered units. However, the Collector has received 10,900 grocery kits to his discretionary quota and wants to distribute them to these migrant workers,” he said.
On May 1, on the 39th day of the lockdown, with no official record on the total migrant workers that included the shadow labour economy, the volunteers of Democratic Youth Federation of India began moving between clusters to manually record the details of migrant workers in order to secure them grocery kits. As the lockdown extension was announced, the government’s grocery kits had not yet reached them.
Through this period of the lockdown, a lot of the migrant workforce was not paid for March. “There is no clarity on the wage enforceability now, since the Supreme Court has not said anything,” says the factories inspector. The responsibility of the principal employer absolved, and the many contractors incommunicado, a lot of the migrant work force had turned to relief by non-state actors.
In this, State investment in welfare held it in good stead. Since the first week of April, Hosur’s ghost workers , without a record, cooped up in their clusters were provided three meals a day by the State-run Amma canteens delivered by volunteers of DYFI.
(*Names changed on request)
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