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Workers Bearing the Brunt?

M Suchitra

The Special Economic Zone (SEZ) policy of the Congress-led United Progressive Alliance (UPA) at the Centre has once again hit the headlines. In February 2006, when the SEZ Act came into effect, much was made of it in the regional and national media. Newspapers and television news channels quoted Commerce Minister Kamal Nath as saying: "The SEZ Act and Rules will provide comfort to and instil confidence in prospective investors." The mood was clearly upbeat.

But now things have suddenly changed. Thousands of villagers and farmers in states like Maharashtra, Haryana, West Bengal and Orissa are agitating against large-scale land acquisitions by big corporations like Reliance Industries Limited (RIL) -- with help from the government -- that wish to develop SEZs. The finance and commerce ministers spoke to the media, contradicting each other. UPA chairperson and Congress president Sonia Gandhi cautioned the chief ministers of Congress-ruled states to be careful while acquiring land. The Reserve Bank of India expressed its reservations over tax concessions being granted to SEZs. Even the International Monetary Fund (the IMF, that ardent advocate of economic liberalisation and globalisation) has warned against the present trend of promoting SEZs in India. In other words, an utterly chaotic situation now prevails.

Yet, the commerce ministry and the Board of Approvals (BoA) for SEZs are going ahead with the process of clearing SEZ proposals. By early-October, the BoA had given "formal approval" to 181 SEZ projects and "in-principle approval" to another 128. The finance ministry's argument that the promotion of SEZs in the present manner would cause revenue losses amounting to Rs 160,000 crore by 2010 was countered by the commerce ministry's assertion that these projections of loss were based on "paper calculations". In addition to world-class infrastructure, it claims, SEZs will bring in investments of up to Rs 100,000 crore and create 5 lakh jobs by the end of 2007.

It is indeed true that these "foreign territories", which enjoy huge tax concessions and financial incentives, provide livelihoods to thousands of people. But what sort of employment do the zones create? Are the benefits of SEZs in terms of employment sustainable? It is important to remember that SEZs entice investors with the promise of cheap labour and a peaceful work environment.

The plight of workers

Take the example of the Madras Export Processing Zone (MEPZ) at Thambaram, on the outskirts of Chennai. The zone, set up in 1984, became an SEZ in 2002 along with seven other Special Export Processing Zones (Kandla, Kochi, Visakhapatnam, Falta, Noida, Surat and Indore). It currently houses over 100 factories, all of them 100% export-oriented. The zone employs around 22,000 workers. About 70% of them are women, most between 18 and 30 years of age. In the morning, company buses pick them up from the suburbs, even villages as far away as 60 km in the neighbouring districts of Chengalpettu, Thiruvallur and Vellur. Many of the workers are contract labourers supplied to the companies by recruiting agencies operating in the villages. They are employed on short-term contracts so that they can be hired and fired at any time. Most of the workers do not get even the minimum wage.

Since industries in the zones are export-oriented, the emphasis is on minimising production costs so that prices are competitive in the international market. It is the workers, especially women, who bear the brunt of tight competition in the global market. To meet production targets, they are compelled to work harder and longer until they burn out or quit. They work 10-12 hours a day, without overtime, and get daily wages ranging between Rs 30 and Rs 70.

"The management keeps on increasing the work quota," says a 21-year-old sewing machine operator in a garments unit, speaking on condition that neither her name nor that of the factory are revealed lest she be fired from her job. "Most days we can't even take a break for tea or lunch. If we even lift our heads to talk to others whilst working, the supervisors shout at us." Many workers complain that if they are unable to finish the quota, supervisors take away their identity cards, making it impossible for them to mark their attendance.

The pressure to meet stiff targets often means that workers can hardly take any time off, even to visit the toilet. "Each of us has a token number, and every time we go to the toilet this number is entered against our names. They check the register to find out how many entries are made. If there are many entries against a person's name, they can even cut our salary or increment," says a 29-year-old woman working in a leather unit.

Workers point out that even pregnant women do not get any consideration when work targets are set, and that they too are forced to work standing or sitting for hours at a stretch. Companies reportedly prefer unmarried women who are assumed to be more efficient and more easily available for overtime work. According to workers, some companies employ women on condition that they do not get married or pregnant in the near future. "At the time of recruitment I removed my thali and told them that I was unmarried," says a 25-year-old worker from Kerala who migrated to Chennai to work in the zone. "At that time I actually had a three-month-old baby."

It is true that some international buyers insist on healthy and safe working conditions and reasonable wages. They play a crucial role in determining the working environment in the firms. Some buyers even visit the companies and place orders only when they are satisfied with the facilities there. There are a few companies in all the zones that abide by labour laws and recognise workers' basic rights as well as the importance of healthy industrial relations. While some lucky employees benefit from this positive trend, thousands of others try to earn their living in an atmosphere of threat, fear and uncertainty.

Stiff targets, overwork and an unhealthy work environment take their toll on the health of workers. A study on female factory workers, mainly at the MEPZ, done by Padmini Swaminathan, director, Madras Institute of Development Studies, revealed that the women suffered from frequent headaches due to tension and intense concentration at work, acute back pain, joint pains, swelling in the legs, severe abdominal pains, various types of allergies, skin ailments, and piles (the result of sitting in the same position for hours on end). The majority of women working in the garment units suffered from respiratory disorders such as asthma, persistent cough and breathlessness.

Since some companies do not remit employers' and employees' contributions to the Employees' State Insurance (ESI) Scheme, many workers are denied the benefits of the scheme. This also happens in the case of the Provident Fund.

The plight of workers on the lower rungs of the hierarchy is the same in most other such zones: no job security, high levels of work pressure and stress and, not surprisingly, premature burnout.

So why do people still work there? Sajitha, who migrated from a remote village in Kerala's Idukki district, following the collapse of the plantation sector in the state, to Kochi to take up a job in a garments unit in the Cochin Special Economic Zone (CSEZ), explains: "Had there been any way out I would have escaped from this hell. But I cannot quit this job and go back to my village. My family depends on me. I feel trapped."

No collective bargaining

Development commissioners (DCs) of various zones have a standard answer to questions about the plight of workers: the zones are not exempt from labour laws. "SEZ workers are entitled to all the rights and benefits enjoyed by workers under various laws outside the zones. Why don't they complain if there is any violation," asks C J Mathew, the development commissioner of the CSEZ.

The answer is simple: they are afraid that they will lose their jobs. "The management says that if we let out the truth the company will be closed down," says Kumaran, a CSEZ worker. He adds that workers are often forced to present a rosy picture of their companies to factory inspectors and enquiry commissions. "Workers in different units are prevented from interacting with each other," points out Ajitha, another worker in the CSEZ.

Although trade union activities are not banned inside the zones, restrictions on the right to join trade unions, the right to collective bargaining and the right to strike are common features of all the zones. Companies campaign strongly against trade unions and threaten employees with dire consequences if they associate with such organisations. "It is difficult to organise contract labourers, especially women," says E Ponmudi, secretary, MEPZ Employees Union. "They are so scared that they literally run away on seeing us." He alleges that while enjoying all the benefits of the zones, the industries squeeze workers in order to maximise their profits, while the central and state governments protect the interests of multinationals by liberalising labour laws.

Labour laws

Ponmudi's point appears valid. While it is true that, unlike in many other countries, in India, labour laws are also applicable to SEZs, in practice these laws are rarely implemented. Workers hardly benefit from labour legislation, not just because the laws are not implemented properly but also because there are many loopholes in the existing legislation concerning zones. For instance, all zones in the country have been declared `public utilities'. This restricts workers from going on strike and reduces the scope for collective bargaining.

In the name of creating an investor-friendly environment, many state governments have formulated SEZ policies that do not protect workers' rights. For example, under Kerala's SEZ policy, the powers of the labour commissioner are delegated to the development commissioner. "Who can we take our grievances to," asks Anju Joseph of the CSEZ Workers' Union. "The DC is only interested in projecting the image of the zone so as to attract investors."

Further, except in emergency situations, state government agencies themselves require prior permission from the development commissioner to inspect industrial units in the zone. Also, the zones are exempted from the Contract Labour (Regulation and Abolition) Act, 1970. Andhra Pradesh, a frontrunner in the SEZ promotion business, has laid down rules that prohibit external union leaders, which significantly and adversely affects the ability of workers to resist victimisation by company managements.

In fact, the original SEZ Bill, introduced for debate in Parliament in May 2005, had a number of provisions that denied workers even their basic human rights. For instance, Section 50 of the Bill said: "Directing that any of the provisions of any state Act relating to trade unions, industrial and labour disputes, welfare of labour including condition of work. invalidity, old-age pensions, and maternity benefits or any other activity relating to the SEZ shall not apply." Though this section was later deleted, under pressure from the Left parties, the fact that it was even drafted shows that the UPA government actually wanted to keep SEZs out of the purview of the country's labour laws.

Industrial lobbies are demanding more liberalised labour laws -- "like those in China" -- to compete in the international market. Since the 1980s, when the communist nation opened up its economy to foreign investments, millions of young workers have been encouraged to toil for low wages for the sake of the country. But recent reports indicate that China is planning to adopt new legislation that seeks to crack down on sweatshops and protect workers' rights by giving the hitherto weak labour unions real powers to negotiate worker contracts and ground rules regarding workplace safety and protection. China seems determined to tackle the severe side-effects of the country's remarkable economic growth. It has taken a quarter of a century for China to realise the perils of the new work culture ushered in by policies that sought to make it the most attractive destination for foreign investment.

Neo-liberal trade and economic policies have already resulted in the spread of an exploitative work culture in India and other developing countries, especially with regard to unorganised labour. And now, apart from huge revenue losses, large-scale displacement of farmers and regional development disparities, the proliferation of SEZs will certainly worsen the plight of workers. In fact, promoting these export enclaves, where domestic trade, tariff and labour laws are not applicable, as the one and only way to development is likely to negatively impact the real development that the country needs.


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The commerce ministry and the Board of Approvals (BoA) for SEZs are going ahead with the process of clearing SEZ proposals. By early-October, the BoA had given "formal approval" to 181 SEZ projects and "in-principle approval" to another 128.

Neo-liberal trade and economic policies have already resulted in the spread of an exploitative work culture in India and other developing countries, especially with regard to unorganised labour. And now, apart from huge revenue losses, large-scale displacement of farmers and regional development disparities, the proliferation of SEZs will certainly worsen the plight of workers.

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