POLITICAL ECONOMY OF UNORGANISED SECTOR
INTRODUCTION:-
Initially there was a notion that unorganized sector is sign of pre-capitalist mode of production and later than sooner it will be assimilated within organized sector with expansion of capitalism. However we find that not only the sector, but workers who are categorized as unorganized are growing. They are growing with the expansion of capitalism. Some argue that, since there is large segment of unorganized sector which does not earn profit and do not pay sufficient wages thus it reaffirm their assertion that capitalism has not triumphed the world.
The recent trends show that the phenomenon of swelling segment of unorganized workers is not specific to developing countries but it has become part of world economic order. Reorganization of production and distribution on global scale by the imperialist capital is integrally connected with unorganized sector. Unorganized sector has been incorporated in the value creating chain on global scale. Out sourcing of components and parts, outsourcing of intermediate goods and also of finished products is the mode through which it has been achieved. Nike gets its sports shoes produced in Indonesia, Paris designed shirts are cut and stitched in Bangladesh , Rico auto parts are manufactured in India and supplied world over, from U.K to Japan .
It has forced the organized labor in imperialist countries to retreat and thereby increase the rate of profit.
Unorganized workers in India:-
Unorganized workers are largest segment of employed workers in
A large number of unorganized work forces are engaged in agriculture. As per the estimates of NCEUS, as on January 2005, out of 395 million unorganized sector workers, 253 million workers were engaged in agriculture. In the recent past after implementation of new economic policy in 1991 the trend of in-formalization in sectors other than agriculture has increased. The share of non-agricultural unorganized work force in total unorganized work force has increased. From 32% in 1999-2000 to 36 % in 2004-2005 clearly shows that new jobs created in industry and service sector are being out sourced to the informal/unorganized sector. Not only that the percentage of unorganized work force (non-agricultural) in total workers of unorganized sector have increased. It has increased in organized sector too. According to an estimate, around half of the work force in organized sector is now deprived of employment security and they works in extremely horrible conditions on very low wages. Out of 8% work force engaged within organized sector, half of them are unorganized workers.
On the basis of data available from 55th round labor force survey, it is found that out of 56.45 million workforces in the organized sector; about 25.79 million are informal/unorganized work force.
NCEUS have also made distinction between workers of organized sector. There are two categories of workers in organized sector. One who is getting employment benefits, protection of labor laws, social security etc. and on the other hand those who are deprived of all these benefits and legislation available for their counterparts of organized sector.
In the present era of liberalization, (since 1991 in context of Indian economy) trend of hiring workers on contract basis and to outsource the integral processes of production to sub-contractors have increased in private as well as public sector. Outsourcing of even integral processes of production has created a large number of sub contractors in organized/formal sector of economy. Generally, it is presumed that those who are working in unorganized /informal sector are unorganized workers and remaining workforce is part of organized workers. However, the notion of unorganized workers have changed in recent past and those who are employed in formal /organized sector but not getting social security , employment benefits and benefits of labor laws are being considered as unorganized workers.
NCEUS in its report have attempted to define the unorganized workers in following manner:-
“Unorganized workers consist of those working in the unorganized enterprises or house holds, excluding regular workers with social security benefits, and the workers in the formal sector without any employment/social security benefits provided by the employers.”
In the same report of NCEUS unorganized sector got definition in the following manner:-
“ ´The unorganized sector consists of all unincorporated private enterprises owned by individuals or households engaged in the sale and production of goods and services operated on a proprietary or partnership basis and with less than ten total workers.”
There is clear demarcation between sector and workers. Unorganized sector is that which is not incorporated, if so, than not employing more than 10 workers and in all cases private enterprises owned by individuals either as proprietorship or partnership. Even those petty property owner who call themselves ‘self employed’ are also part of this giant workforce named as unorganized workers. They have been forced by the bourgeoisie to self exploit themselves to enhance the rate of exploitation and jack up the rate of profit of bourgeoisie.
Thus the main criterion of unorganized work force is nature of employment and not the sector in which they are employed.
Working condition of unorganized workers in
In the current phase of development, bourgeoisie have adopted the policy of outsourcing the integral processes of production and promoted casualisation at work place to augment its profit. It has made the conditions of workers more vulnerable. The policy of bourgeoisie has deprived the workers of organized as well as unorganized sector of employment security and they are forced to work in extremely horrible conditions on very low wages. The only legislation available to the workers of unorganized sector is Minimum wages Act 1948. After adaptation of Indian constitution, article 43 of the constitution comes into effect which empowers the Indian state to legislate for the benefit of unorganized workers. Article 43 says "The State shall endeavour to secure by suitable legislation or economic organization or in any other way to all workers, agricultural, industrial or otherwise, work, a living wage conditions of work ensuring a decent standard of life and full enjoyment of leisure and social and cultural opportunities.” It took 68 years to pass legislation namely ‘The Unorganised worker’s Social Security Act 2008’. The legislation has been widely criticized on various grounds, including not co-opting the recommendations of various committees constituted by government of India as well as by the committee of parliament. Recommendations of NCEUS, 2nd National Labor Commission, Standing committee of parliament and Report of Petitions committee of Loksabha have been ignored. The emphasis in the new act is on welfare aspect and in that too, for the continuation of those welfare scheme benefits, regular contribution of workers is mandatory. Various government agencies had recommended adopting holistic approach while legislating the social security act, which includes job security, regulation of conditions at work place, education and training aspects of these workers. These did not find place in the present legislation.
The criteria for fixation of Minimum wages were fixed as early as in 1957 by the 15th Indian Labor Conference. It emphasized on ‘need based’ criteria and laid down certain parameters including minimum calorie intake(2700 calories)per person per day, clothing, housing, fuel, water, lighting etc. Further more, Supreme Court of India in case of Reptakos Brett Vs Workmen while passing its judgment in 1991 added education expenses as necessary component for calculating minimum wages. The parameters laid down by the ILC and supreme court of India as well as provisions of Indian constitution are still illusive. None of these criterions were adopted by wage boards of state governments and committees constituted for deciding minimum wages. In a recent reply to the Lok sabha question in November 2010, Shri Harish Rawat , Labor minister has informed to the parliament that the highest minimum wages for unskilled worker is in Delhi i.e. Rs.203 per day and lowest in Assam i.e. Rs.66.50 per day. In prosperous state like Gujrat which claims to be economy, developing at the highest rate among provinces of India has fixed minimum wage for unskilled workers at Rs.100 per day, in both category of agricultural as well as non-agricultural. In central sphere minimum wages for unskilled worker is fixed at RS.146-163 per day. These workers are deprived of skill, education and training thus destined to be stuck in the same category during whole span of working life.
Conditions of contract workers in organized Sector:-
Those who are not part of larger production system registered and incorporated are major segment of unorganized workers but those who are being employed in larger units of production registered and incorporated are also facing the burnt of relaxed labor norms which has been benefiting to the bourgeoisie who are operating in organized manner to super exploit unorganized work force.
Thanks to new economic policy of liberalization, in relaxed labor norms, management in organized sector have started recruiting workers on contract basis. During this period number of contract workers registered under CONTRACT LABOUR (REGULATION & ABOTION) ACT, 1970 have increased from 489776 in year 1996 to 773849 in year 2000. These workers were employed in corporate/registered production units employing more than 20 workers. Major employers of contract workers are public sector enterprises. The Supreme Court of India in the case of ‘Standard Vacuum Refinery Company Vs. their workmen’ (1960-II-ILJ page 233) observed that contract labour should not be employed where: —
(a) The work is perennial and must go on from day to day;
(b) The work is incidental to and necessary for the work of the factory;
(c) The work is sufficient to employ considerable number of the whole time workmen,
(d) The work is being done in most concerns through regular workmen
However, it has become norms to employ workers on contract basis for similar nature of job which is done by the permanent workers in same enterprises on higher pay scale. Cost cutting is the main argument behind employing contract/casual workers for jobs prohibited to be employed from contract workers by the guide lines issued by the supreme court of
In Manesar Plant of Maruti Suzuki India Pvt. Ltd., permanent workers are getting on an average around Rs.25000-30000 per month and for the similar job, casual or contract workers are getting Rs.6000/ -Rs.10000/ per month. (Source: - Hindustan times dated 30.10.2011). Permanent worker of Honda Motorcycle scooter India Ltd. Is drawing a salary of rs. 26000/ P.M. , however his counterparts who have been hired on contract basis are getting Rs.6000-7500/. Contract worker at an SME in Faridabad is getting Rs.4500/P.M. for 12 hour works. Similarly in IFFCO Bareilly all new appointment are on casual /contract basis and after some time, casual workers will out number those who are on permanent employment.
Table 1
Employment in
[Numbers in thousands]
| Type of employees | 1998–99 | 1999–2000 | 2000–01 | 2001–02 | 2002–03 | 2003–04 | 2004–05 | 2005–06 |
| All employees | 8,317 | 7,857 | 7,634 | 7,400 | 7,590 | 7,518 | 8,064 | 8,688 |
| All production workers | 6,174 | 6,049 | 5,933 | 5,757 | 5,961 | 5,887 | 6,373 | 6,893 |
| Directly employed | 5,213 | 4,857 | 4,725 | 4,507 | 4,591 | 4,440 | 4,685 | 4,920 |
| Employed through contractors | 960 | 1,192 | 1,208 | 1,249 | 1,369 | 1,447 | 1,688 | 1,973 |
| Employees other than production workers | 2,143 | 1,808 | 1,702 | 1,643 | 1,629 | 1,631 | 1,691 | 1,800 |
| | | | | | | | | |
SOURCE: BLS estimates made by use of Annual Survey of Industries data from the Central Statistical Organisation of India.
Table 1 shows that in the organized manufacturing sector, number of directly employed workers are decreasing and those employed through contractors have increased to become more than double number from year 1998-99. The number of directly employed workers have decreased from 5,213 thousand in 1998-99 to 4,290 thousand in 2005-06. During the same period, number of workers employed through contractors has increased from 960 thousand to 1,973 thousand in 2005-06. This is the period when policy of liberalization was being pushed by the Indian bourgeoisie shamelessly.
CONTRIBUTION OF UNORGANISED WORKER IN INDIAN ECONOMY:-
The unorganized sector had contributed 50% of G.D.P. in year 2004-05. Non agricultural unorganized sector contributes 45 % of manufacturing and 40% of export in India.
The unorganized sector has a crucial role in Indian economy in terms of employment and its contribution to the savings and capital formation. In the era of globalization and integration of economy of developing countries with world economic order, bourgeoisie of developing countries have promoted and protected the unorganized sector to become competitive in international market. It has helped them in enhancing the rate of profit.
Unorganized sector in Indian economy (like other backward capitalist countries in the world) today is neither accidental nor aberration. It is integral part of the economy. Through it, Indian bourgeoisie super exploits the working class and compels the petty property owners towards self exploitation. In this way, bourgeoisie is able to enhance its rate of exploitation and jack up the rate of profit.
Unorganized sector has been incorporated in the value creating chain on global scale. Out sourcing of components and parts, outsourcing of intermediate goods and also of finished products is the mode through which it has been achieved. Reorganization of production and distribution on global scale by the imperialist capital is integrally connected with unorganized sector. It has forced the organized labor in imperialist countries to retreat and thereby increase the rate of profit. Rico auto industries, first time set up in Dharuhera (40 Kms from Delhi,) in 1986, is now supplying components of auto part to industries in Germany, Japan, UK. It is OEM Supplier to MEC Japan. Herein Rico industries there are similar story of employing contract workers. In Honda motorcycle Factory there are 1800 permanent workers and 4400 on contract. Contract workers in Honda are getting Rs.8000/-Rs.10000/, however the permanent workers are getting Rs.25-30000/ per month. Now Honda motorcycle’s labor cost for same production on current wage structure on an average is estimated @ Rs.25000X 1800 + Rs. 8000X 4400= Rs. 79200000. If they have to pay all the workers @ wages for permanent worker it will cost them RS. (1800+ 4400) X 25000= RS.153000000. This way by employing contract workers, management of Honda is usurping every month Rs. 8.38 crores by employing contract workers in its one plant. Here is the real hidden story of role of unorganized workers in Indian economy. The world bourgeoisie, whether imperialist bourgeoisie or bourgeoisie of the third world, is not only comfortable with un-organized sector, it today vitally depends on this sector to augment its surplus value.
CHALLENGES TO ORGANIZE:-
The task to organize, unorganized workers is challenging especially when capitalist class is on offensive. Workers of unorganized sector are deprived of trade union rights those in organized sector are robbed of existing protection under labor laws. Registered trade union is unable to be functional and registration of new trade unions has become almost impossible. In 1991, 8418 trade unions i.e.15.7% of total registered trade unions other than affiliated with federations were filing their return , however percentage of those filing return have declined and only 7812 trade unions 11.4% of registered union were filing their return in 2002. It shows that scope for trade union activities have been curbed by the state. In his budget speech of 2001 , Finance minister Yashwant Sinha had proposed to apply the industrial disputes Act 1947 to apply on factories having capacity of 1000 workers, presently , it is applicable in factories having 100 workers. Similarly , second labor commission report recommended to apply the act in factories having 300 and more workers.
Recent history of worker’s uprising shows that all agitation has been limited to the demand of recognition of union/ registration of new union. Bargaining for better working condition has no opportunity to come on agenda of worker’s struggle. Struggles of Honda workers, Maruti Suzuki workers, Rico Industries, Graziano Trasmissioni India worker’s struggle, behind all these struggles , their were demands to organize themselves under trade union of their own choice. Indian bourgeoisie is on offensive and they are not ready to concede rights to the workers, protected under existing laws.
Only militantly organized working class of both organized and un-organized sector can force bourgeoisie to backtrack and allow working class a decent living.
Kamlesh Kumar
KRANTIKARI LOK ADHIKAR SANGATHAN
