With workforce in agriculture shifting to industry, contractualisation of labour becomes a major factor both in Gujarat and across India

Annual Survey of Industries data on percentage of women workers employed in industrial sector
Annual Survey of Industries data on percentage of women workers employed in industrial sector

The latest Annual Survey of Industries report, put out in March 2014, suggests that Gujarat’s industry employs nearly 35 per cent of its workers through contractors, which is proportionately the same as the country as a whole. At the same time, it says, women employees in the industry is on the decline. A counterview.org analysis: 

A recent study on labour and employment situation in India has witnessed a worrying trend. The study, titled “India Labour and Employment Report 2014”, prepared by the a Delhi-based think-tank, Academic Foundation, says that labour markets have witnessed significant changes in the two decades, with a sharp increase informalization of the workforce. This has been happening at a time when the transfer of workers from agriculture to non-agriculture is slow, though with some acceleration in recent years, “but most of the employment generated has been informal and insecure”. Illustrating it by way of example, it says, “The percentage share of contract workers in organized manufacturing sector has increased from 13 per cent in 1995, to 34 per cent in 2011”, suggesting “the growth of regular, protected jobs is slow.”

The situation is as true of India as of Gujarat. Data put out by the Ministry of Statistics and Programme Implementation report, released in March 2014, “Annual Survey of Industries 2011-12”, have suggested that out of 10.60 lakh workers in the industrial sector in Gujarat, 3.72 lakh workers, or nearly 35 per cent, have been employed through contractors. Significantly, the number of contract workers has been rising – the earliest figure available with the Ministry are for 2009-10, when there were 3.40 lakh workers employed in Gujarat industry through contractors. The situation is similar at the all-India level, where on an average nearly 35 per cent of the industrial workforce has been employed through contractors, suggesting that they do not have any social protection.

This has happened at a time when there has been slow but steady shift of workforce in the country, as in Gujarat, from agriculture to industry and related activities, on the one hand, and the service sector, on the other. Thus, in Gujarat, in 2004-05, nearly 56 per cent of the workforce worked in what is called the primary sector, which mainly consists of agriculture, including fisheries. The National Sample Survey (NSS) data, released in January 2014, reveal that this percentage went down to 49 per cent in 2011-12. As for the secondary sector, which consists mainly of the manufacturing sector, the percentage of workforce in Gujarat went up from 22 per cent in 2004-05 to 26 per cent. As for the tertiary or the service sector, its workforce rose from 23 per cent in 2004-05 to 25 per cent.

Percentage of workers employed through contractors by industry. Source: Annual Survey of Industry 2011-12
Percentage of workers employed through contractors by industry. Source: Annual Survey of Industry 2011-12

The contractualisation of labour force has taken place at a time at a time when, according to the Academic Foundation study, “increasing ‘informalization’ of employment has gradually eroded the strength of trade unions.” It says, “It is also evident from the sharp decline in the percentage of work-days lost due to strikes, alongside considerable increase in the incidence of closures. As such, the space for collective bargaining has been shrinking. Recent years have witnessed a significant rise in industrial unrest in several new manufacturing units, which poses a challenge for industrial peace, and is detrimental to the growth of the manufacturing sector.”

The Academic Foundation study simultaneously notices what it calls “a noteworthy trend” of a “decline in the work participation of females during 2005-12.” It points out, “Taking all age-groups into account, it stood at 29 per cent in 2004-05, decreasing to 22 per cent in 2011-12. Discounting for enrolment in educational institutions and the so-called income effect, this substantial decline has much to do with lack of appropriate opportunities for females.” It adds, “This is evident from the very high levels of young female unemployment. The employment of women remains 20 to 40 per cent below that of men.”

Women workforce

If one looks at the industrial sector, then one finds that in Gujarat’s industry employs very few women. The “Annual Survey of Industries” report suggests that, out of the total workforce of 10.60 lakh in 2011-12, women accounted to just 30,673, or 2.89 per cent, as against the all-India average of 12.50 per cent. As one can seen from the report, the states, with relatively better sex ratio, employ more percentage of women in the industrial sector; this is quite in contrast to states which have poor sex ratio.

Thus, in Kerala, 54.65 per cent of the industrial workforce in 2011-12 was of women, followed by Karnataka 32.06 per cent and Tamil Nadu 30.92 per cent. Punjab and Haryana, with poor sex ratio like Gujarat, are only slightly better than Gujarat with 4.45 per cent and 2.89 per cent of women industrial workforce, respectively. The trend of decrease of women in the industrial workforce is not confined to any state – it is an all-India phenomenon. In India, in 2009-10, there were 13.31 per cent women in the industrial workforce, when Gujarat’s percentage was 3.11 per cent.

The Academic Foundation report says, “Labour market inequalities are large and disparities and inequalities have generally increased. The most striking is the disparity between the regular/casual and organized/ unorganized sector workers: the average daily earnings of a casual worker stood at Rs 138 in rural areas and Rs 173 in urban areas in 2011-12, and that of a regular worker at Rs 298 in rural areas and Rs 445 in urban areas, while that of a central public sector enterprise employee was Rs 2,005 per day. And, of course, the public sector employee has many other benefits as well as a secure job. Thus, a rural casual worker earned less than 7 per cent of the salary of a public-sector employee.”Average wages India

It adds, “The gap between per-worker earnings in agriculture and non-agriculture has considerably widened and now stands at a ratio of 1: 6. The share of wages in total value-added in manufacturing has been declining consistently. From around 0.45 in the 1980s, it has fallen to around 0.25 in 2009-10. The shift from wages to profits is large, and is closely connected with acceleration of growth in recent years. Thus, there is substantial shift towards income from capital, contributing to the overall increase in income inequality.”

If one looks at the Gujarat scenario, one finds that as against the average per day urban wage of regular employees, Rs 390, which is one of the lowest in the country, the casual worker in rural Gujarat earned just about Rs 113, which is, again, one of the lowest in the country. Gujarat’s casual workers in urban areas earned Rs 145.  The Academic Foundation report notes, “The most important challenge” faced by India today, because of this gap, “is the large number of ‘working poor’ and under-employed engaged in low-productivity activities in the unorganized sectors. By the current poverty line one-fourth of all workers, about 118 million, are poor. They are largely either casual workers.”

— Rajiv Shah

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