Demonetisation: Two-thirds of job seekers at Jaipur Chowktis faced wage payment problems

demoniExcerpts from the People’s Union of Civil Liberties (Rajasthan) study, “Impact of Demonetisation on Casual Labour at the Chowktis of Jaipur”:

In the wake of the unexpected and sudden withdrawal of 86 percent currency from circulation on 8th November, 2016 various reports have shown that workers in almost every sector have been adversely affected. It has also been reported that employment has been constricted heavily in different sectors across the length and breadth of the country.  Diamond and gems industry and cloth industry in Surat; gems and jewelry in Jaipur; bangle and glass industry in Moradabad; leather industry in Agra and Kanpur; textile industry of Ahmedabad; transport industry in Delhi; construction industry almost everywhere  has seen reported considerable losses in jobs. These are the industries which have had stable employment opportunities on regular basis.

In every city and town there is a large segment of labour which survives on daily or short term employment. To seek employment such labourers gather at certain places where those looking for daily wagers also reach to hire labour. These labourers are either hired directly by the employers or through small time labour contractors for small contracts or at times by skilled experienced labourers to assist them in their job work on contract. Majority of such workers are hired for construction in nearby areas, repair work and paint. Some are hired for various kind of menial work. At some places they are hired by cottage or small scale industries for assistance in production. The present assessment relates these workers.

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People’s response to demonetisation

Jaipur has about fifty odd labour markets, called Chowktis at different places. The average workers at a chowkti may vary from 200 to 300 hundreds to even up to 1000 workers at times. Tens of thousands of workers come out on roads every day in the morning to look out for a day’s work. In all 737 casual labourers spread over 20 chowktis were interviewed in the city of Jaipur. The survey was done by 64 law students from 13 different law colleges and Universities over a period of four days, from 20th to 23th December 2016.

Whereas during pre-demonetization period 577 workers got employment out of 1000 workers who sought employment compared to 354 during post-demonetization period last ten. Thus the rate of employment which was 57.7 percent earlier came down to 35.4 percent. By any standard this is quite steep given the fact that the period of information relate to more than a month post demonetization.

A more detailed analysis of responses suggests that the impact has been varied. For a small number of workers the employment situation during the last days was usual whereas for others it was a no-employment situation. Excluding rare exceptions all the respondents reported loss of work and incomes. Over ninety six percent reported either less income or no income at all. Almost 11 percent reported zero incomes during the last ten days from the date of survey.

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Impact of demonetisation on wage rate

The reported loss of income is on many counts:

  • One, as we noted above there has been contraction in labour demand leading to oversupply of labour. Due to sharp decline in labour demand, the price of labour has fallen almost in proportion to reduction in labour demand.
  • Second, many reported that the payments were made in old notes whose value had depreciated in the market and thus they could exchange these old notes at a reduced value of up to 25 to 30 percent. Most of the workers reported that an old five hundred rupee note fetched Rs 350 to 400 and Rs 1000 note about Rs 700. Not only that even payment in new Rs 2000 note fetched only 1800 in smaller denomination notes due to paucity of change.
  • Third, the income also eroded because of rise in staple food items like wheat flour. Responses suggest that the price of wheat flour which hovered around Rs 20 a kilogram shot up to Rs 25 or more a kilo post demonetization.
  • Fourth, it is not only the current income which has been knocked off considerably there is also strain on future incomes both directly and indirectly. Due to lack of jobs and incomes, many workers having low income base have been forced to take small survival loans from moneylenders at a high rate of five percent a month for bare survival. This high interest is going to make a considerable cut in the future earnings as well.

Almost two-thirds of workers reported that they are facing problems related to payment of wages. One problem already stated is related to payment being made in old notes. The payment in old notes and high denomination new notes was a real problem. In several stances only part payment has been made and in others the payment has been deferred.  There is lack of surety whether the arrears will be given in the future.

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Impact of demonetisation on job availability

In all about 96 percent respondents recorded their responses. About 90 percent of all responses (Table 7) indicate that there has been negative impact on food intake. For about 20 percent the impact has been huge. People reported having slept hungry for days; having starved; surviving on bread and tea and biscuits; eating at akshay patra; having just one meal a day and so on.

About 54 percent of reporting respondents reported that relations have been impacted due loss of job and incomes. 34 percent of total strained relations were reported within family. There have been regular fights, arguments and even physical assaults within the families due to money problem. One person even reported that his wife has deserted him due to money problems.  Conflicts have been reported between workers and employers, workers and their landlords and so on as well.

After the announcement of demonetization the purpose of demonetization gradually shifted from the initial three objectives to a new objective of making economy cashless or less-cash.

Data suggests that about 64 respondents do have a bank account. The bank accounts exist from past few months to last several years, mostly having been opened in last three to four years.  They are NREGA, Jan Dhan, Bhamashah; however, further details suggest that merely having a bank account cannot be an indicator of wide uses of bank for transactions.

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Impact of demonetisation on livelihood

The reason why the bank accounts are not in use is that the respondents do not have need to transact through bank on a regular basis on the one hand and low income base obviating the need for a bank account to park savings. In most of the cases the accounts have been opened to get social benefits in MGNREGA payments, housing subsidy, pensions, receive different types of subsidies like gas subsidy and so on. Secondly most of the migrants who reported having bank accounts stated that they do not have an account in Jaipur.

Most of the accounts were opened for the purpose of availing social benefits. Most of the banks accounts have been opened either under Jandhan yojana or for pensions or for gas or pensions/MNREGA/subsidies/scholarships and so on.  Moreover, 168 accounts out of a total of 456 are located out of the city of Jaipur. Indicating that the workers do not use banks in their day to day existence.Transactions through banks are therefore rare.

Almost half the bank account holders do not go to bank at all. It is not that they are using cards but they do not use the bank at all. Accounts have no balance or little balance and there are no transactions. The regular users are ones who get social benefits in the banks. Even such accounts are not more than ten percent of all accounts. Even those who were using bank earlier reported that after demonetization they have stopped going to bank as there is not money to deposit and/or takeout.

Demands:

  1. Labour Department of the Government of Rajasthan should immediately conduct an impact assessment study on all labour, particularly casual, construction, factory and of small and medium enterprises all over Rajasthan
  2. In the meanwhile provide one year’s Ration, Pulses and Oil at subsidised rates to all the Mazdoors of the Chowktis all over Rajasthan, beginning with Jaipur.
  3. Provide shelter, temporary and permanent to the workers.
  4. Compensate for all impacts including ill health and deaths
  5. Immediately launch a Rajasthan Urban Employment Guarantee Scheme, through an ordinance brought immediately. The minimum wages should be as per Central Government notification for urban areas.
  6. Immediate issuing of Social Security card and number to each worker.
  7. Prevent the imposition of cashlessness.

Download full study HERE

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