Industry

Profit over labour: Indian working class the ultimate victims of the neoliberal regime since 1991

Print edition : September 24, 2021

At Hyundai plant in Sriperumbudur, Tamil Nadu, a 2011 picture. In sectors engaged in highly sophisticated and modern production processes, such as the automobile sector, contract workers are increasingly being deployed on the same shop floor as permanent workers; cases in point are Maruti and Hyundai. Photo: REUTERS

If India has become the hot destination for global capitalists since the implementation of neoliberal policies, it is beyond doubt that the industrial scenario has also changed completely after 1991 to the disadvantage of the working class.

It has been three decades since neoliberal economic policies were imposed on India in 1991. These policies, which included liberalisation, privatisation and globalisation, were part of the Structural Adjustment Programme dictated by the International Monetary Fund (IMF) and the World Bank controlled by capitalist powers. The profile of employment and industrial relations in India has changed drastically in this three decades. The Indian industrial situation, which was primarily driven by domestic demand until 1991, has seen a paradigm shift in the post-globalisation era. Upon India adopting neoliberal policies, the organised sector shrank rapidly, while the unorganised sector expanded. With no clearly defined and identifiable employer-employee relationship, both in the private and public sectors, the Indian working class has become the ultimate victims of this neoliberal regime. The proportion of workers in the unorganised sector and the unorganised segment of the organised sector has risen steeply.

Changes in the nature of workers’ employment to facilitate exploitation characterise the neoliberal regime. In this era when the whole world is considered a single market place with no restriction on the movement of commodities, people and capital, industrial production has been influenced more by global factors than the domestic or national situation. Economic liberalisation has also made it easier for the seamless flow of global finance capital. Because of this, corporates have got the liberty to explore and experiment with their investments in different countries. It is needless to say that these investors would prefer places where they have the freedom and flexibility to implement whatever they want to maximise profit. The immediate response of capitalists in the face of any difficulty is to shift their investment to another location with a much more relaxed and flexible environment.

To attract finance capital, every nation that has opened its doors to neoliberal economic policies is compelled to pursue policies that are in line with finance capital’s preferences, thereby helping big financial corporations. This is accomplished by ‘hiring and firing’ workers according to its needs and through flexibility of labour laws, which includes masking the employer-employee relationship by resorting to methods such as contractorisation, outsourcing and casualisation to get the same work done by temporary, daily-wage workers or apprentices, home-based work, and so on, with low wages.

Also read: Neoliberalism: An era of growth sans justice

India has become the favourite destination of international finance both as a market and as an investment hub. The traditional industrial set-up in India has changed drastically in the neoliberal regime. The Indian industrial belt, which had only limited ambitions and reserves to satisfy the domestic market, has now been converted into a global hub of finance capital infusion. To attract more and more investments, successive governments, acting as puppets in the hands of global capitalism, have implemented policies to satisfy finance capital. In this race to incentivise corporates and improve the so-called ‘ease of doing business’, governments have transformed Indian industries into areas where there will be no government monitoring. Concepts such as special economic zones (SEZs) are derived from this government mentality.

Capitalists always prefer to move to countries with lower wages, weaker labour laws and more flexible industrial norms. If India has become the hot destination for global capitalists since the implementation of neoliberal policies, it is beyond doubt that the country’s industrial scenario has also changed completely after 1991 to the disadvantage of the working class.

What the figures say

The average real wage per worker in the organised factory sector declined drastically in India during this period. It came down from Rs.108.41 in 1990-91 to Rs.103.76 in 2010-11. Considering inflation and other economic indicators, this is a steep decline. The share of contract workers in total organised employment has increased from 10.54 per cent in 1995-96 to around 28 per cent at present.

Also read: 1991 reforms: Weak balance sheet

Even in sectors engaged in highly sophisticated and modern production processes, such as the automobile sector, contract workers are increasingly being deployed on the same shop floor as permanent workers; cases in point are Maruti and Hyundai. But they are paid only a fraction, sometimes less than one-tenth, of what permanent workers get. They are deprived of even the minimum wages applicable to the industry. Most of them do not get any other benefits, including the social security benefits that permanent workers get.

Trend of contractualisation

According to data published by the Annual Survey of Industries, the share of wages in net value added has fallen sharply from 30 per cent in the 1980s to 9.5 per cent in 2009, while the share of profit has increased from around 15 per cent to 55 per cent during the same period. Rampant contractualisation is a major factor that has contributed to this steep decline in the share of wages compared with the huge increase in the share of profits.

According to official estimates, only 15.6 per cent of the total workforce in the country are in salaried employment. These estimates also indicate that the majority of the salaried workers are on contract employment; around 50 per cent of the workers in public sector units and more than 70 per cent of the workers in the private sector, including modern industrial units of many multinational corporations, are on contract. Thus, we find a situation in which different types of employment relations coexist within the same establishment.

One, within the industrial unit/establishment, a large number of workers are employed through a contractor or supplied through various employment agencies as contract, temporary, contingent, daily wage, casual labourers, and so on. They do not have a direct employer-employee relationship with the principal employer for whom they actually work, even when they are on the same premises as the permanent workers.

Second, there is decentralisation and fragmentation of the workplace through offloading/outsourcing/distribution of various parts of or the whole production process to different agencies. These jobs are carried out at several places, probably in different countries, often in sweatshops or by home-based workers. The final product is assembled and the brand name is stamped at either the company’s main centre or by another agency in a different location.

Another kind of job contract system is also emerging in sectors such as steel, engineering, capital goods and consumer durables, where a part of the production process is offloaded at a predetermined rate to another agency, which often carries out the work on the same premises. Workers employed in this part of the production process have no direct relationship with the principal employer, who denies any responsibility towards them though they take part in the process of producing the same goods and often on the same premises as the permanent workers who are fewer than them. All these are nothing but ploys by the principal employer to evade responsibility towards workers and thus increase profit margins.

Seven years of the Narendra Modi government have been marked by an aggressive pursuit of neoliberal policies, with an emphasis on increasing foreign capital in all spheres of the economy; increased privatisation; and dilution of labour and farm laws. Basic economic policies have been decided for the sake of capitalists and to appease their cronies. The majority of the laws enacted by this government in the past seven years has been intended to help corporates. Each Bill it introduced contained provisions to appease cronies and shift the burden of their loss to the common man.

Bill against strikes

The dilution of pro-labour provisions in the Acts by merging 29 labour laws into four labour codes is intended to deprive workers of the little protection these laws provided. With this, industrial relations will change like never before, and employers will get the freedom to hire and fire workers at their will. This move is an integral part of the neoliberal agenda of labour law “reforms” that are meant to impose conditions of virtual slavery on the working class.

Also read: ‘A corporate-communal nexus has emerged’: Sitaram Yechury

The last monsoon session of Parliament witnessed the passage of the most draconian law in independent India— the Essential Defence Services Bill . This piece of legislation to prevent workers from going on strike is a shame on our democracy. The Bill denies workers the legal right to participate in a strike in accordance with the law. This was apparently done to threaten the workers of ordnance factories, who jointly opposed the government’s decision to privatise them. In the future, this could be extended to any industry where workers unite and raise their voice against disastrous government decisions. The collective bargaining power of workers is an obstacle for corporates in their profit maximisation trajectory.

Selling assets

Another plan of global capitalism to make the country completely dependent on big corporates is being implemented by destroying the productive capability of the national economy and destroying its self-reliance. For this, national assets are being sold to private foreign and domestic corporate entities at throwaway prices. This will result in destroying indigenous productive capabilities in almost all strategic and core areas of the national economy in a big way.

Almost all Central public sector undertakings (CPSUs) in the crucial sectors of the economy, namely, petroleum, electricity, steel, coal; the entire infrastructure sector, including ports & docks, airports & airlines, railways & public transport; and the entire financial sector, including banks and insurance; and defence production are being targeted for privatisation. As a result, the social fabric of the nation will get affected badly. The privatisation of public sector establishments will result in the loss of a large number of jobs, and there will be no scope for reservation, or for ensuring minimum wages and welfare measures for employees in any of these establishments. This will further worsen the acute unemployment crisis, which is already a big threat facing our nation.

The neoliberal era has also resulted in the worst inequalities. It is estimated that just 1 per cent of the population owns almost half of the world’s wealth. Their wealth is worth $110 trillion. That is 65 times the total wealth of the bottom half of the world’s population. The rich are becoming richer, while the poor are becoming poorer. This is another characteristic of this regime and it is the result of competition among corporates. For example, in the neoliberal regime, even though workers’ wages do not go up, industrial production grows at an exponential rate day by day. This exponential growth in production results in profit maximisation for corporates. The reduction or stagnation in the share of wages and the exponential rise in the share of surplus output are the reasons for the massive increase in inequality.

Also read: Indian neoliberalism: A toxic gift from global finance

However, this tendency, if not controlled, can lead into an ‘overproduction crisis’, as Marx pointed out. Unplanned growth in production and increasing income inequality can result in a decrease in demand. For any investment in the given period, consumption will go down because of surplus production and income inequality. This would ultimately result in a systemic crisis in capitalist economies. Only timely intervention by respective governments can help the world come out of this crisis.

The COVID pandemic has shown us clearly that market-dependent economies failed miserably in saving people’s lives while socialist countries were able to effectively combat the pandemic and reduce the death rate. In India too, States such as Kerala, where affordable healthcare is available thanks to the visionary intervention of successive Left governments, have a lower death toll than the national average. The pandemic turned out to be a litmus test that brought out the fallacy of neoliberal policies. It has shown the human race that the world requires a people-centric development agenda rather than profit-greedy neoliberal economic policies.

Elamaram Kareem is a Member of Parliament of the Communist Party of India (Marxist).

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