Frayed labour laws in Surat's power looms

Non-compliance with labour laws by employers and the absence of any rigorous monitoring mechanism leave the migrant workers in Surat’s power looms vulnerable to exploitation and without any cushion to fall back on in times of emergencies such as the pandemic still raging.

Migrant workers in Surat waiting in a queue to board buses to travel back home in May 2020.

Surendra is in his mid forties. The cuticles of his fingers have turned black from the thick machine oil that he has worked with regularly for decades. He has worked in power-loom factories for 12 to 14 hours a day amid the deafening sound of the loom machines. Surendra found it difficult to recall the exact year he started working in power looms. “I came to Surat from Odisha with my uncle. I was a boy then, around 17 years old.” He has spent more than 20 years in Surat, known as the Silk City of India. Though he has been working in his current factory for the past 12 years, he knew neither the name of the factory nor his actual employer. “I do not know the name of the owner, Rajesh bhai, our supervisor, pays our wages,” he said.

The crisis of survival among migrant workers across the country is a continuing reality, and power-loom workers in Surat have not escaped unscathed. While the sudden outbreak of the pandemic was a significant event that made visible and exacerbated the living and working conditions of migrant workers, their core challenges stem from their structural exclusion from policy and governance systems, which have in turn made them vulnerable in any kind of emergency.

On the basis of a careful analysis of the existing structure of labour regulation formulated to protect migrant workers, who are overrepresented in the power-loom industry of Surat, we argue that a combination of informal structures such as exclusion from labour laws, weak enforcement, neglect by policymakers and unscrupulous industrial practices has imperilled the workers. As a result, they continue to struggle even after some sort of normalcy has resumed in the cities.

In this analysis, we highlight the legal gaps that lead to the prevalence of informality and unregulated extraction of labour power from loom workers in Surat. It is supported by empirical evidence from the sector, which is rife with wage theft, arbitrary dismissal and denial of minimum wage. The primary qualitative data were collected through a survey of 2,971 workers conducted by Aajeevika Bureau and Urban Management Centre in Ahmedabad between October 2020 and March 2021. Ten focus group discussions (FGD) and 15 in-depth interviews (IDI) were also conducted by Aajeevika Bureau among power-loom workers living in different industrial clusters of the city in June 2021. The observed industrial practices have been contrasted with laws on wages and social security.

Legal gaps and unscrupulous practices

Existing labour laws relating to informal migrant workers, such as Inter-State Migrant Workmen (ISMW) Act, 1979, the Bonded Labour System (Abolition) Act, 1976, and the Contract Labour (Regulation and Abolition) Act, 1970, suffer from profound neglect by the departments responsible for their implementation. In a response to the Gujarat High Court, the Gujarat government stated in May 2020 that approximately 11.5 lakh migrants work in the city of Surat. Yet, only 7,512 were registered across the entire State as inter-State migrant workers. This shows the gaps in the implementation of laws and explains the insecurity that workers suffered last year about travel, job loss and accommodation.

The Occupational Safety, Health and Working Conditions Code (OSH) of 2020 subsumes the Inter-State Migrant Workmen (ISMW) Act of 1979 and the Contract Labour Regulation Act of 1970. The manner of their incorporation in the OSH Code constitutes a massive erosion of labour protections. The ISMW Act provided four forms of protection to workers to ensure their safe migration and freedom at work—the provision of a journey allowance (for the return journey between their homes and worksite); a displacement allowance to cover the major expenses associated with their displacement; employer-sponsored housing in the destination; and a passbook to be maintained by the contractor detailing the terms of the employment relationship, hours of work performed and their attendance. Save for the journey allowance, the OSH Code omits these obligations on the part of the employer. Accommodation is one of the most important areas of concern. The power-loom workers we surveyed earn an average of Rs.12,500 a month, of which they tend to spend around Rs.2,500 (amounting to close to 25 per cent of their total income) on rent. Housing is one of the most essential forms of support they require as migrant workers in the city, and yet the OSH Code legitimises the transfer of this major cost onto workers.

The older legal arrangement required establishments and contractors employing over five migrant workers and 20 contract workers to be registered as such with the government. This enabled closer oversight by the Labour Department in ensuring that the contractor or employer upheld their legal obligations towards migrant and contractual workers. The OSH Code adopts higher numeric thresholds for registration—only those establishments and contractors that hire over 10 migrant workers or 50 contract workers will be required to register with the Labour Department, rendering the overwhelming majority of the migrant and contractual workforce invisible before the labour inspectorate.

While wage theft is quite widespread in the informal sector, it has increased considerably during the pandemic. In the latest budget of the Union Labour Ministry, no allocation has been made for industrial dispute mechanisms such as schemes for strengthening adjudication machinery, organising Lok Adalats, creating a mechanism for better resolution of disputes, prevention of violation through mediation and effective enforcement of labour laws. Additionally, the total number of inspections conducted by the Labour Department and conviction rates have also gone down. In the year 2017-18, 38,336 inspections were carried out, but the following year saw only 36,470 inspections. There were 4,326 convictions in 2017-18, but only 2,433 in the following year.

Given the lack of legal awareness among workers and limited channels for communicating their grievances to the Labour Department, inspection remains the most powerful tool for implementing labour laws. Except for emergency inspections, which may be conducted in case of fatal or serious accidents, strikes, lockouts, closure of the unit or upon court orders, the Labour Department is required to give the employer intimation of impending inspections under the Central Inspection Scheme of 2015. The scheme contravenes Convention 81 of the International Labour Organisation (ILO) on Labour Inspections, which India ratified in 1949. Recent attempts at labour regulation lean heavily towards self-certification by employers—creating an even greater possibility of labour violations unless the labour inspectorate is empowered to proactively verify the information submitted through self-certification.

The state of maladministration in the power-loom sector can be traced back to a bigger structural issue: the majority of textile production units are either unregistered under law or, more commonly, registered under the Gujarat Shops and Establishments Act, which shifts the responsibility for monitoring its implementation from the Labour Department to the Surat Municipal Corporation (and in case of units located outside city limits, to the respective Gram Panchayat). Neither of these bodies has the same institutional capacity or inclination to enforce labour protections like the Labour Department. This mischaracterisation of what is clearly industrial work, and subsequent non-registration as a factory, also relegates loom workers to less rigorous industrial safety and fire safety standards. It denies them registration under contributory social security schemes and enables the employer to evade non-wage costs associated with employment.

Lack of enforcement

Workers are entitled to no less than the statutory minimum wage set for eight hours of work. In practice, however, workers typically work a 12-hour shift and are paid on the basis of their output (piece rate). The Government of Gujarat is yet to notify a piece rate for this sector. Currently, employers decide the rates on the basis of the quality of the yarn they use, the quality of the output and prevailing market rates. Despite the long hours, workers are not paid any overtime wages and are compelled to manage a strenuously large number of machines in order to maximise their earnings. Wages are disbursed to workers on a fortnightly cycle. The law on payment of wages entitles workers to receive full pay for the work they do in a fortnight within the next two days—and yet most employers withhold 10 days of wages in every wage cycle to compel workers to work for the same establishment. According to one power-loom owner: “Only through such practices can we be assured that my labourer will not leave the factory in the middle of the month.”

Workers engaged for over 30 days are entitled to an annual bonus calculated as a percentage between 8.33 per cent and 20 per cent of their annual pay (depending on the profitability of the enterprise that year). According to the field survey, the average monthly income of a power-loom worker is Rs.12,000. This would make him eligible for an annual bonus of Rs.11,995. “At the time of Diwali, they give a five hundred rupee note and say, have some sweets, that is all we get as bonus,” said Pawan, a 50-year-old worker. As continuity of service is crucial to eligibility for bonus, gratuity and other social security benefits, proof of employment (and duration of service) is vital to power-loom workers. Yet, the majority of them are paid in cash (against which they receive no receipt) and have no appointment letter, making it harder to prove the duration of the employment relationship legally. Given the size of power-loom units, loom workers are eligible for registration under the Employees’ Provident Fund Scheme and the Employees’ State Insurance Act—social security schemes funded through contributions from employees and employers. Yet no worker we interviewed had ever heard of these provisions or ever received a wage slip, ESI card or EPF registration number. Lengthy service is rewarded through the payment of gratuity—an entitlement for all workers who spend longer than five years in the same establishment. The loom sector appears to have a high proportion of workers who are therefore eligible to receive gratuity within 30 days when they retire, die or are terminated. Gratuity is calculated at half a month’s salary (last drawn) for each completed year. However, these workers had not heard of such practices. They were stressed about basic job and tenure security, which made them wary of taking leave for more than a day or two.

The field survey revealed that the majority of the workers had no insurance coverage despite the availability of multiple insurance schemes. The law on employee’s compensation guarantees that workers’ medical expenditure and costs incurred because of injuries sustained while at work and occupational diseases linked to the work should be covered by the employer. In case of death of a worker, the Labour Department must be notified at the soonest, and the worker’s survivors must be paid compensation as per the law. However, in most cases where workers had sustained severe injuries at work, often leading to death, the owners paid a meagre amount, less than the calculated sum, and did not inform the Labour Department. The same study exhibited heavy reliance of workers on private clinics, which are expensive and unaffordable. Even when workers have to be admitted to such hospitals because of a workplace injury, their employers sometimes refuse to bear the expenditure of their treatment.

The unscrupulous practices in the sector therefore appear to be more functional than structural. As previously noted, many of the factory owners refrain from registering their establishment correctly or provide incorrect data on the number of workers, so that they do not have to pay for the workers’ social protection schemes such as Provident Fund, ESI and pension. The workers, on the other hand, are not aware of their rights, and this provides employers fertile ground on which to manipulate them over wages, bonus, gratuity, and many other benefits that they are entitled to.

Perhaps the bigger argument to be made here is the rampant mainstreaming of these legal violations in the larger power-loom labour market, which leaves workers with no choice but to accept these working conditions. As a result, a power-loom worker like Surendra is denied of all rights of social security even after working for 12 years in the factory and is left alone to suffer during the pandemic. When the pandemic struck, many workers like Surendra were left to fight hunger, joblessness and health problems on their own though as permanent workers they were entitled to social security benefits. They continue to suffer.

The solution to this crisis lies in long-term planning and policymaking that pay special attention to these migrants, who have an important role to play in the city. Income support, effective access to the public distribution system under the One Nation One Ration Card (ONORC) scheme and registration under the Employees’ State Insurance (ESIC) and the EPF could be some of the measures in the short term. Perhaps the government could amend the OSH Code to restore some rights it took away such as displacement allowance and employer-sponsored accommodation and actually implement that chapter when the Code is brought into force. In the longer term, there is an urgent need to deploy a special task force to map the miserable situation of migrant workers during the entire pandemic and accordingly modify its policy strategy on migrants.

Shilajit Sengupta is Research Executive at Aajeevika Bureau and pursuing his PhD at National Institute of Advanced Studies, Bengaluru.

Vikas Kumar is Labour Policy Analyst at Aajeevika Bureau.

Kavya Bharadkar is Researcher—Labour Law and Policy at Aajevika Bureau.

The authors would like to thank Sanjay Patel, Sharad Zagade, Ashwin Vadatiya and Shiva Malik for their contributions to the field survey and analysis. The names of workers have been changed to protect their identities.