Indonesia: contrasting fronts of capital, labour and the state
12 February, 2015
While there is still some uncertainty about the direction that President Joko Widodo (Jokowi) will take Indonesia since his election in July 2014 (he only assumed office in October), there are several worrying signs. Australians will be most familiar with his intransigence on the looming executions of Myuran Sukumaran and Andrew Chan. Within Indonesia, there are other political questions afoot. Key to this is a serious and longstanding conflict in the Indonesian state between the Corruption Eradication Commission (KPK), which has targeted a range of corrupt state officials, politicians, business people and lawmakers, and the police. Enraged by the KPK naming Budi Gunawan as a corruption suspect days before his inauguration as new national police chief, the police arrested the KPK’s deputy chairman in January.
Jokowi, who was elected as an anti-corruption, cleanskin politician, is caught between his supporters, who no doubt expect him to defend the KPK, and the old guard of Indonesian politics, including the police, the parliament and his own party, the PDI-P (Partai Demokrasi Indonesia – Perjuangan), none of which are interested in their allies being caught out by anti-corruption campaigners. Jokowi’s voting base transcends the rural and urban poor as well as more affluent ‘middle class’ Indonesians and some sections of business, like the small-to-medium sized business sector from which he himself hails.
Those hoping that Jokowi might bolster anti-corruption forces will be disappointed that, at best, the president is standing back and allowing the establishment to marginalise the KPK. Budi Gunawan’s nomination was probably supported by PDI-P chair, Megawati Sukarnoputri, and there is great pressure on Jokowi to allow the police to effectively neutralise the KPK by naming key leaders as corruption suspects—in which case, any serving KPK officer is required to step down. At the time of writing, the case wasn’t resolved, with some odd developments, like the decision of last year’s losing presidential candidate, Prabowo, to back Jokowi’s stance.
While the fate of the KPK and competing pressure on Jokowi dominates the headlines, changes on the labour front—which is the focus of this blog—have received less attention. It should be said that many unions, and other civil society organisations, have vocally supported the KPK, often urging them to be much more aggressive in targeting corruption. One welcome development was a protest called by the metalworkers’ union FSPMI in defence of the KPK (which also confronted a pathetic rump of pro-police protestors called the ‘Save Indonesia Alliance’).
Meanwhile, the national parliament will soon consider a bill to cut severance pay requirements for workers, particularly in labour-intensive manufacturing, which employers complain are a disincentive to employ workers. This is a sign of a hardening in attitudes against unions (Victoria University’s Indonesia expert Max Lane makes this point in this interesting interview on Melbourne’s 3CR radio). This comes after a strong union campaign in 2014, on the back of a wave of national protests and strikes in 2012-13, for higher minimum wages from municipal governments, which achieved mixed results (for a scorecard, see my analysis of ‘the wage question in Indonesia’ on 19 November here).
The Jakarta governor, Basuki Tjahaja Purnama (Ahok), was particularly strong-willed in resisting union demands, to the point that Jakarta now has a lower minimum wage than the industrial city of Bekasi, despite its relatively high cost of living. The absurdity of Ahok’s stance is even clearer with new data from Indonesia’s Central Statistics Agency (BPS) which shows that the proportion of poor residents increased in the capital in 2014, with inequality increasing substantially. Key to rising poverty was rampant inflation, which the official Decent Living Index (KHL) used to calculate minimum wage levels failed to address. According to BPS’ chief official: ‘Only the upper and upper middle class enjoyed the city’s economic development last year. Meanwhile, the poor are becoming poorer.’ As an indication of his hard-line approach, Ahok responded by saying that he believed poverty could be even higher than the official statistics indicate!
Despite the mixed outcome for unions in 2014, some business groups have suggested that their wage demands led to the cancelation of contracts, with the Indonesian Footwear Association (Aprisindo) claiming that 16 planned footwear factories, backed with Rp 4.8 trillion ($US 379 million) of Japanese and South Korean investment, were cancelled because of the conflict. While I don’t know about the veracity of this claim, it certainly runs against alternative evidence—for example, the Economist Intelligence Unit survey of 75 manufacturers that showed 54 new large-scale plants would be built by 2019, taking Indonesia past rival economies like Malaysia and Thailand in terms of total number of large manufacturing operations.
Employer groups should be pleased with Jokowi and Ahok, his one-time deputy governor, for their opposition to workers’ wage demands. But the politics of the presidency around labour is more complex than straightforward ‘anti-worker’ union bashing. In my view, there are contrasting fronts of the state’s attitude towards labour conditions and rights. I will mention three different areas of contention and regulation here: the exploitation of migrant workers, the terrible conditions of mining workers and the ongoing demands of Indonesia’s increasingly confident unions, above all the Congress of Indonesian Trade Unions (KSPI) in which the FSPMI plays a pivotal role. These cases traverse divides between workers in different income groups as well as the divide between ‘formal’ workers labouring in factories and ‘informal’ workers who largely work in small enterprises, often outside protective regulations such as minimum wage laws. This is probably true for the vast majority of agricultural labourers, domestic workers, construction workers and self-employed workers.
In each area, the response and engagement of the state seems quite different. First, the exploitation of migrant workers has become a huge issue in Indonesia. In 2012, official data showed 4.3 million Indonesians working overseas, although the real figure may be 2-4 times higher than this, with Saudi Arabia and Malaysia the biggest destinations. There are different categories of international migrant workers (known as TKI), like the 150,000 domestic workers employed in Hong Kong, a similar number of Singapore or the hundreds of thousands of plantation workers in Malaysia, including at least 200,000 from East Lombok. Indebtedness to labour contractors—a form of labour bondage—mistreatment, abuse and sexual harassment of women, as well as the precarious status as ‘non-citizens’ in foreign countries are key problems for these workers. For domestic workers, there have been some highly-publicised international cases of abuse, such as the Hong Kong employer facing up to seven years prison for beating an Indonesian maid. Worse still, perhaps, is the plight of workers who have been lured as domestic workers to the Middle East.
The exploitation of migrant workers has become such an issue that the government has been forced to make a high-profile stand. Jokowi has pledged to repatriate all ‘stranded’ overseas workers, while domestic worker migration to some Arab countries like Saudi Arabia, Qatar, Oman and Kuwait has been banned. In a recent case, Indonesian diplomats have tried to take action against 20 employers in Bahrain for abusing Indonesian maids, among 10,000 estimated to work in the country. These workers are effectively bonded with 2 year contracts and fees of $US 1300-2100 to break contracts early. The government has also imposed a moratorium on migration to the UAE. Nusron Wahid, head of Indonesia’s migrant workers’ board BNP2TKI recently suspended 30 migration and placement agencies for violating this ban.
In some cases, unregistered agencies have been sending workers overseas while, in others, workers have been promised jobs in Bahrain, Egypt and Oman and then smuggled into the UAE illegally. ‘Welcoming’ these workers home is now part of the government’s political rhetoric, although it is clear that the driving forces behind migration and bonded labour run much deeper than this, with connections to the lack of decent, secure employment in regional and rural Indonesia.
The second area of contention is the appalling record of health and safety for mining workers in Indonesia, which government has seemingly been far less willing to react to. Another worker was killed at the massive Freeport gold and copper mine in West Papua recently, on the back of several incidents, including the death of four workers hit by a mining vehicle late last year as well as 28 workers nearly two years when a tunnel collapsed, ironically during a safety training session. As I wrote on 22 October last year, nine workers died at a separate mine in accident in Papua in July and, in October, 19 workers were killed in a gold mine collapse in Kalimantan.
In the case of Freeport, the company’s record has been met with several strikes and blockades and unions have raised the issue nationally, including by the KSPI in protests in Jakarta. A combination of factors – the relative remoteness of many mines on the ‘outer islands’, the lure of wage income for rural workers and the informal character of most employment relations – perhaps explains why there is been far less government response to this issue in comparison to the growing national discussion about the exploitation of overseas migrant workers.
The final area of contention raised here is the ongoing campaign by unions over wages and employment conditions in the major cities and industrial zones, particularly in the manufacturing sector. With the presidential and parliamentary election campaigns long-finished and minimum wage cases also largely resolved – albeit with mixed results, as mentioned above – attention may well turn back to the industrial front, and with good reason. Lagging real wages continues to be an issue while, on Batam Island, a major electronics industrial zone, there have been recent cases of factory closures. In January, over 300 workers were left without jobs at a Chinese-owned Adidas supplier when the owner absconded without notice, following similar incidents by Malaysian and Japanese electronics manufacturers in recent years.
Elsewhere, the campaign against outsourcing and precarious employment continues. Several unions have united recently to achieve regular work for 280,000 workers in the public sector, including in large state-owned firms the State Electricity Company (Perusahaan Listrik Negara – PLN) and oil and gas giant Pertamina. Unions claim that 65 per cent of workers in garment, textiles and footwear industries may be outsourced or hired on short-term contracts, and up to 61 per cent of workers in metal and electronics manufacturing.
So here we have the contrasting fronts of state, capital and labour in Indonesia: state officials intervening in a national conversation about the exploitation of migrant workers (while not addressing the underlying drivers of migration and bonded labour), the state all but ignoring informal (and often criminal) activities in the mining industry and a continued imperative for unions to fight in the absence of any willingness by governments, including Jokowi, to accommodate workers’ interests over wages and employment conditions.
Manesar’s ASTI workers: fighting back against India’s contract labour system
11 December, 2014
This post is from Surendra Pratap from the Centre for Workers Education, New Delhi (reprinted with Surendra’s kind permission). It concerns an important and ongoing campaign by workers at ASTI, a Japanese automotive and electronic parts manufacturer based in Manesar, an industrial town about 40 km southwest of Delhi. The report includes a call for solidarity and financial support. This campaign highlights the excesses of the ‘contract labour system’ that operates in this industrial zone, and many other similar zones across India. In the auto industry in this area, at least 70-75 of all workers in medium-to-large manufacturing firms are hired by labour contractors, who collude with management to keep wages low and deny collective bargaining and trade union rights. This commonly occurs in violation of labour laws, particularly the Contract Labour (Abolition and Regulation) Act 1970, which is supposed to outlaw the employment of contract workers as ongoing employees in ‘core’ business activities. This report is also significant because it highlights the growing role of women as industrial workers in north India as well as the problem of the main trade union federations in India, which often fail to represent the interests of contract workers and other precariously-employed or ‘informal’ workers. What follows is an edited version of a post that also appears on Surendra Pratap’s blog: http://workerscentre.wordpress.com/. The first part is an update on the campaign from 10 December. (Please note that, as of 10 Dec, the hunger strike referred to in the text had been called off, with further plans for mass protests in the area.) The second part is a report from 8 December that explains the issue in a bit more detail, followed by an appeal from the ‘ASTI Theka Mazdoor Sangharsh Samiti’ (ASTI Contract Workers Action Committee) and, finally, a bit of background on the ASTI company and its role in the Gurgaon/Manesar industrial zone.
Tom Barnes, 11 December, 2014
Update 10 December, 2014
Dear Friends and Comrades
On 9th December, all major factory union leaders in the regions including from Munjal Kiriu (who are themselves on strike since 24th September 2014), Maruti Suzuki Manesar, Maruti Suzuki Gurgaon, Suzuki Powertrain, Suzuki Motorcycles, Autofit Dharuhera, Endurance Manesar, Baxter Manesar and Hero Honda Manesar, were present during a meeting with the ALC (Additional Labour Commissioner) for Gurgaon on the issue of ASTI workers. But labour department officials said that the management was not ready to accept workers’ demands and so cannot do anything. On 10th December, a labour contractor working for ASTI slapped the permanent workers’ union leader (permanent worker) for wearing black bands in support of the contract workers’ struggle. Thereafter, all the major factory union leaders reached ASTI gate, held a meeting in solidarity and warned management to take action against this contractor and accept the workers’ demands.
All permanent workers went on strike, stopping work but remaining inside the factory (i.e., factory occupation).Thereafter, management held a meeting with union office bearers representing permanent workers. The meeting continued for 3-4 hours till late night. But management said that it was ready to take back only those who joined up to 2011, but not those who joined after 2011. In this way, the management was not ready to take back more than 260 workers (the huge majority of female workers). The contractor who slapped the union leader was compelled by the management to apologize to satisfy the union. The threat of losing their jobs probably worked and the permanent workers could not take any strong steps in support of contract workers and returned to work next day.
Meanwhile, the conditions of workers on hunger strike are becoming serious. Yesterday one female worker, Bhavana, was sent to the hospital when her condition became serious. Anger is also growing against the central trade unions for not taking strong action in support of contract workers. The union in ASTI is affiliated to Hind Mazdoor Sabha (HMS). HMS-affiliated unions are supporting the struggle and other unions are also extending their support but the protesting contract workers feel that lack of sound solidarity between contract and permanent workers is due to inaction by the HMS leadership. They hope the HMS central leadership will interfere and resolve this crisis.
The workers said that the solidarity of trade unions that was established in the Gurgaon region till 2011 was destroyed due to union rivalry and this is the main crisis of labour movement in Gurgaon. If all the unions affiliated with central trade unions like HMS, CITU and AITUC come together and extended their full support to the ASTI workers struggle, there is no force that could stop our victory. The workers also need solidarity support from ASTI workers union in Japan to compel the management to respect the workers’ rights in its India facility. Due to prolonged struggle they are also facing serious financial crisis and need broader support from all.
Please send your solidarity and support message to the ASTI contract workers forum at: email@example.com, he is also cc to this mail. Send your financial support to the bank account provided in appeal below.
Report 8 Dec, 2014
5 Female and 2 Male workers in ASTI Electronics in India on hunger strike for last 14 days
Act to save their life and support their struggle to end the contract labour system
The 310 terminated contract workers, including about 250 women workers of ASTI electronics, have been protesting at their factory gate since 1st November 2014 for reinstatement. They were terminated after contract and permanent workers successfully united themselves and went on a strike. During the strike, they successfully registered their trade union. The termination of contract workers was targeted to break the unity between contract and permanent workers and tame the union. The struggling contract workers have not received any wages since October 2014 and facing various kinds of threats, harassment and repression, but they are continuing their struggle and are not ready to compromise.
The sit-in-protest at the factory gate has continued since 3rd November 2014. The workers and the unions from various factories in the region are extending their support to the ASTI workers struggle and regularly participating in demonstrations and gate meetings. The hostile attitude of the management compelled the workers to start an indefinite hunger strike. Seven workers started fast-unto-death since 25th November 2014.
Only after the conditions of workers on hunger strike started deteriorating, the labour department came in to take action and tripartite negotiations started. First, they offered retrenchment compensation for two months but workers rejected this and demanded reinstatement. Recently, it was vaguely and verbally offered that the workers of PCB department may be reinstated, but workers demanded to make an agreement in writing and take back all workers and not of only one department.
The recent offer is also targeted to create a divide between contract workers. The workers are successfully fighting against such attempts of divide and rule. Lastly, the permanent workers dared to take the risk of losing their jobs and openly came out in support of the contract workers. However, with lengthening of the struggle the problems are increasing and the conditions of workers on hunger strike are getting serious. Out of seven workers on hunger strike, one male (Sanju) and one female worker (Rashika) were hospitalized after their conditions became serious. The conditions of other five workers on hunger strike, including four female and one male worker (Swagatika, Bhavna, Rinku, Honey and Krishna) are also getting serious day by day. Therefore, it is urgently needed to mobilize the support for ASTI electronics workers struggle and compel the labour department and the management to take quick action and reinstate all contract workers as regular workers.
It is also worth highlighting that the ASTI workers struggle is not only important for ASTI workers, it is relevant for the whole labour movement in India. Following aspects of the movement reveal its general significance:
- Since 2005, there has been a wave of workers’ struggles against repression of workers when they attempted to form trade union and demanded rights to collective bargaining. In all these struggles, in varying degrees the permanent and contract workers were united, and particularly in the Maruti Suzuki workers’ struggle (2011-12) the demand for end of the contract labour system was raised strongly. ASTI workers struggle is taking this struggle to its culmination by demanding regularization of all contract workers. It is in this regards the victory of ASTI workers will be a victory of labour movement in India in its struggle to end the contract labour system
- Nowadays the conditions in factories are such that it is very difficult for the contract workers to organize themselves. ASTI workers struggle is one of such brave and successful attempts of organizing and leading a prolonged struggle for regularization of contract workers. The success of their struggle will be an inspiration for contract workers all over India
- In factory sector the number of women workers is increasing, but women are least represented in the leadership of the labour movement. Generally it is considered that the women workers do not easily come forward for struggles for rights. Women workers in ASTI dared to break this myth. ASTI workers struggle is one of struggles where women are taking the leadership of the movement. This has a larger relevance for the labour movement of India in general.
The above relevance of the movement makes us duty bound to support and help the ASI workers struggle by all possible means.
The demands of the workers are simple and justified under the law of the land: a) Termination of workers is illegal and therefore reinstate all workers, and b) Due to the perennial nature of work, contract workers cannot be engaged (under the law), therefore all contract workers should be regularised.
An appeal by ASTI Theka Mazdoor Sangharsh Samiti, Manesar, Gurgaon, 3rd December 2014
We the contract workers of ASTI Electronics factory at IMT Manesar, Gurgaon are on Dharna from 3rd November and seven of us continue fast-unto-death from 25th November with our just demands against contractualisation, illegal lay off, and exploitation.
We had a tripartite meeting with the management and labour department day before and yesterday 2nd December. The management of ASTI continued with their adamant anti-worker attitude, and spoke through the contractors in the meeting. The DLC (Deputy Labour Commissioner) of Gurgaon, J.C. Mann also spoke in the management’s language, and told us off that there is no work so we have been laid off. We did not buy their false arguments and said that most of us have been working in the factory for the last 4-5 years in perennial nature of work in the assembly line. We should rather be made permanent by law and the contract itself is a sham contract. There was no resolution in the tripartite meetings, and the DLC rather than giving us any concrete promise has now passed on the case to the ALC (Asst. Labour Commissioner) Gurgaon.
Anti-social elements instigated by the management have been continuing to harass us, to inform which, a team of workers also met the Police Commissioner Gurgaon yesterday, but no concrete steps have been taken by the police other than forming barricades from the management’s side in front of the factory.
The health of five women and two male workers on fast-unto-death from 25th November is deteriorating, and ketone body has been found in the blood samples. But the Gurgaon administration has not even sent a single doctor or any medical assistance to the dharna site till date. A team of workers from ASTI Theka Mazdoor Sangharsh Samiti also met the DC (Deputy Commissioner) Gurgaon to tell the administration to remind them of their responsibility but to no heed. We shall go to meet the DC Gurgaon again tomorrow 4th December at 11am and we appeal to pro-worker individuals and forces to come in solidarity in the meeting with the DC Gurgaon.
We are enthused to have received solidarity from workers in industrial belt. But at present, we are continuing with our struggle in the face of severe odds of anti-worker management-administration-police nexus. We are faced with a severe financial crisis which is becoming a hurdle in sustaining our struggle. We appeal to all pro-worker forces and individuals to come to our dharna site and also to contribute financially to our struggle.
Contact for further details: Shivani and Raghuvendra (ASTI Theka Mazdoor Sangharsh Samiti): 09555671885; 9654553194, 9971735073
The Background of the struggle
ASTI Electronics India Ltd is a subsidiary of Asti Corp, Japan which produces wiring harness, switches, controllers, and other automotive and electronics parts. It supplies to auto companies like Suzuki Motorcycles, Maruti Suzuki, Yamaha Motors, Omron Automotive etc. It has branches in Japan, China, Vietnam and India. There are 150 permanent workers and 310 contract workers in its harnessing unit at Manesar, Gurgaon. There are two modes of production; one is manual and the other is automatic. Production takes place in three shifts. The manual section produces three thousand units per shift with 50 employees, of which only 17 are permanent. The Automatic section produces 12000 units per shift employing 25 workers, of which only 3 are permanent. There are two layers of production process used in this company; sub assembly line where each table is occupied by one worker and later the processed material goes on the conveyor belt assembly line. Most of the workers work as operators. Contract workers earn ₹5000-7000 per month ($US81-113). To learn more about the role of female workers at ASTI, read this article, which also emphasises that most are migrants from poorer states and regions.
On 18th February 2014, contract and permanent workers formed their unity and went on one day strike for their demands. They successfully registered their trade union during the strike. They demanded for wage settlement and regularization of contract workers. The management had been on an offensive since then, while constantly plotting to further the division between the permanent and the contract workers. To harass the workers the speed of the assembling belt kept increasing after the union formation. On 1st November 2014, without any prior notice the management terminated all contract workers.
On 3rd November, all 310 terminated contract workers including 250 female workers started sit-in-protest at factory gate. On 13th November, workers from various factories held a rally in Manesar from Munjal Kiriu to ASTI factory gate against suspension of workers in Munjal Kiriu, and termination of contract workers in ASTI. On 17th Nov, workers of ASTI were joined by workers from other factories in a spirited rally in the Manesar industrial area. On 19th November a joint demonstration of Munjal Kiriu workers (struggling for last two months) and ASTI Electronics workers was organized at ASTI factory gate. Workers and union members from Maruti Suzuki, Hi-Lex, Endurance, Autofit and some other organizations like Workers Solidarity Centre Gurgaon & Inqlabi Mazdoor Kendra also participated.
On 25th of November, seven ASTI workers including five women workers launched into an indefinite hunger strike, after two rounds of negotiations failed, where the company just offered them two months’ salary. On 29th November, a demonstration was organized at ASTI gate. District administration deployed over 1000 policemen to stop the demonstration. However, huge participation of workers made the demonstration successful. Workers and unions from various factories including Maruti Suzuki, Endurance, Satyam Auto, Munjal Kiriu, Autofit, Rico auto, Baxter, and other organizations like CITU Gurgaon, Workers Solidarity Centre Gurgaon (WSC), Inqlabi Mazdoor Kendra (IMK), and Krantikari Naujawan Sabha (KNS) participated in the demonstration.
In the first week of December the workers won another victory in terms that defying all threats of losing jobs, the permanent workers openly came forward in support of contract workers struggle. Rather than going on strike, they continued working but did not eat for one day in solidarity of workers on hunger strike, and now they are working in the factory with black bands around their foreheads as a form of protest against the management. The conditions of workers on hunger strike is getting serious day by day and out of fear that the anger of workers in the whole region may burst any day, finally the labour department compelled the management for tripartite negotiation. A tripartite meeting was called today and was still going on at the time of writing of this draft.
Is labour the missing link in research on Asia’s automotive value chains?
3 December, 2014
Much of the excitement about the economic rise of Asia is concerned with industrial development. Many argue that the rise of the so-called new ‘middle classes’—a euphemism for rising middle income households and western-style consumerism—has been, and is being, accompanied by a shift towards cutting-edge ‘modern’ industries. The idea, which transcends a range of economic development theories, is that high-growth economies, particularly in East Asia, are undergoing a transition from labour-intensive, low-technology and relatively low-value ‘light’ manufacturing activities, such as garments, textiles, toys, consumer electronics, etc, to more capital-intensive, technologically-sophisticated and higher-value manufacturing activities, like ship-building, steel, aerospace and auto production.
My research has mainly focused on the role of auto production and workers within it, focusing especially on India, to some extent China and, increasingly, Indonesia. Historically, the auto industry is a leading sector in capitalist economies, setting standards in quality manufacturing, technology and employment relations. ‘Fordist’ mass production emerged from this industry, revolutionizing complex manufacturing. By the 1980s, a new model of ‘lean production’ had become widespread. This was originally developed by Toyota after World War II and is based upon a management philosophy (Womack, Jones and Roos, 1990) of waste reduction, cost cutting and demand responsiveness. Although different companies used different terminology, lean production has become the norm in most major carmakers. In Asia, lean production has been introduced by transnational corporations, mostly from Japan, Western Europe and the US, since the 1980s.
The auto industry is a very well-researched area in richer, OECD countries (Kochan, Lansbury and MacDuffie, 1997; Pulignano et al, 2008; Rinehart, Huxley and Robertson, 1997). As it has spread across Asia, as well as Latin America and, to a lesser extent, Africa, studies on middle income and developing countries have also grown. For example, research has been conducted on countries as diverse as South Korea (Lansbury, Kwon and Suh, 2007; Lansbury and Woo, 2001) or Brazil (Humphrey, 2003; Posthuma, 1995). More recently, studies have emerged on China (Chin, 2010) and India (Gulyani, 2001).
However, comparatively little research has been conducted on the role of workers in Asian auto production. Key works have tended to focus on relations between state institutions and foreign firms (like the works by Chin and Gulyani cited above) or on relations between global institutions and local production (Noble, Ravenhill and Doner, 2005). There has even been a World Bank-sponsored comparative study of auto production in China and India (Sutton, 2004) but, like most other studies, there was little focus on employment or labour.
There are some very useful studies of auto workers in countries like China or India (e.g. Bose and Pratap, 2012 or some chapters in Posthuma and Nathan, 2010). But most studies continue to downplay the crucial role of labour. In my view, this relates to a more general problem that has been raised in the literature on ‘Global Value Chains’ (GVCs). A GVC refers to a supply chain dominated by ‘lead firms’. GVCs encompass diverse industries and lead firms are usually powerful transnational corporations. The auto industry is one type of GVC, dominated by global firms based in the West and Japan.
It has been widely acknowledged that the GVC literature as a whole has tended to downplay the importance of workers (Barrientos, Gereffi and Rossi, 2011; Taylor, Newsome and Rainnie, 2013). There have also been some intriguing explanations for labour’s absence—see, for example, Neilson’s (2014) outstanding article on the shift to the ‘mainstream’ in GVC research or, from a more radical angle, research on the theoretical roots of GVCs (Selwyn, 2012).
Labour’s (relative) absence is particularly problematic as it can lead to false expectations. See, for example, the prediction that auto industry development represents good-quality, highly-skilled and stable jobs for workers (Lakhani, Kuruvilla and Avgar, 2013). This view contrasts sharply with some of the empirical studies cited above, which suggest employment and working conditions in auto factories in different Asian countries can often be very poor (although this can depend significantly on the company in question).
The lack of research into labour continues to be a problem. Take, for example, a very interesting piece in the most recent issue of Journal of Contemporary Asia (Doner and Wad, 2014). This article looks at auto development in Southeast Asia, particularly in Thailand and Malaysia, and suggests that divergent national development paths have been followed in these countries despite the common experience of economic crises and local sectors which tend to be dominated by foreign transnational corporations. The analysis is most interesting but, again, there is virtually no mention of the impact on workers or their communities. This is a major omission.
Take Indonesia, for example: the new industry minister recently claimed that about 3.1 million workers were employed in car and motorcycle production in Indonesia. Many of these workers are joining unions and have played a key role in recent conflict over wages (see analysis here and here). While quite a lot of research has been conducted in Indonesia on the labour-intensive industries that were central to economic development during the Suharto era, and that continue to play an important role, relatively little research has been conducted on labour issues in the auto industry or, indeed, other capital-intensive sectors. And Indonesia is not alone—the lacuna on labour continues in these industries that, the argument goes, will be increasingly crucial to economic development and prosperity across Asia.
Barrientos, S., Gereffi, G. and Rossi, A. (2011) ‘Economic and social upgrading in global production networks: a new paradigm for a changing world’ International Labour Review, 150 (3/4), pp. 319-340
Bose, AJC and Pratap, S., 2012. Worker voices in an auto production chain: notes from the pits of a low road. Economic and Political Weekly, vol. 47, no. 33, pp. 46-59.
Chin, G.T., 2010. China’s Automotive Modernization: The Party-state and Multinational Corporation. Basingstoke, Palgrave Macmillan.
Doner, RF & Wad, P (2014) Financial Crises and Automotive Industry Development in Southeast Asia, Journal of Contemporary Asia, 44(4), 664-687
Gulyani, S. (2001). Innovating with Infrastructure: The Automobile Industry in India. Basingstoke: Palgrave.
Humphrey, J., 2003. Globalization and supply chain networks: the auto industry in Brazil and India. Global Networks, no. 3, pp. 121–141.
Kochan, T.A., Lansbury, R.D. and MacDuffie, J.P., 1997. After Lean Production: Evolving Employment Practices in the World Auto Industry, New York, Cornell University Press.
Lakhani, T., Kuruvilla, S. and Avgar, A. (2013) ‘From the Firm to the Network: Global Value Chains and Employment Relations Theory’, British Journal of Industrial Relations, 51, 3, 440-472
Lansbury, R.D. and Woo, S., 2001. Production systems, human resources and employment relations in Korea: the case of Kia motors. Asia Pacific Journal of Human Resources, vol.39, no. 2, pp. 54-66.
Lansbury, R.D., Kwon, S. and Suh, C., 2007. The Global Korean Motor Industry: The Hyundai Motor Company Global Strategy. Routledge, London.
Neilson, J. (2014) Value chains, neoliberalism and development practice: The Indonesian experience, Review of International Political Economy, 21:1, 38-69
Noble, G., Ravenhill, F. and Doner, R., 2005. Executioner or disciplinarian: WTO accession and the Chinese auto industry. Business and Politics, vol. 7, no. 2, pp. 1-33.
Posthuma, A., 1995. Restructuring and Changing Market Conditions in the Brazilian Auto Components Industry, Santiago, Economic Commission for Latin America and the Caribbean
Posthuma, A. and Nathan, D. (eds) (2010) Labour in Global Production Networks in India New Delhi: Oxford University Press
Pulignano, V., Stewart, P., Danford, A., and Richardson, M., 2008. Flexibility at Work: Critical Developments in the International Automobile Industry. New York, Palgrave Macmillan.
Rinehart, J, Huxley, C. and Robertson, D., 1997. Just Another Car Factory? Lean Production and Its Discontents. New York, Cornell University Press.
Selwyn, B. (2012) ‘Beyond firm-centrism: re-intregrating labour and capitalism into global commodity chain analysis’, Journal of Economic Geography, 12(1): 205-26
Sutton, J., 2004. The Auto-component Supply Chain in China and India: a Benchmarking Study, London School of Economics and Political Science, http://sticerd.lse.ac.uk/case/_new/publications/abstract.asp?index=2057, accessed 28 January, 2013.
Taylor, P., Newsome, K. and Rainnie, A. (2013) ‘Putting Labour in its Place’: Global Value Chains and Labour Process Analysis, Competition and Change, Vol. 17 No. 1, 1–5
Womack, J.P., Jones, D.T. and Roos, D., 1990. The Machine that Changed the World, New York, Scribner.
Henry Bernstein: the ‘class of labour’ approach to capitalism and agrarian change
26 November, 2014
Henry Bernstein, Emeritus Professor of Development Studies at SOAS, University of London, has made another very good intervention into debates about food sovereignty and agrarian change. Bernstein’s article, ‘Food sovereignty via the “peasant way”: a skeptical view’, appears in the second of two volumes on ‘Global Agrarian Transformations’ marking the 40th anniversary of the Journal of Peasant Studies (Vol 41, Nos 5 & 6, 2014). The first of these volumes looks at important research topics in the field, including land dispossession, the financialisation of agriculture, vulnerability and marginalization due to crisis and the blurring of rural/urban divides (Fairbairn et al, 2014). This fourth area is particularly important to me, given some of my recent research looking at migrant workers in India’s National Capital Region, where millions maintain connections between industrial zones, cities, towns and villages (Barnes, Lal Das and Pratap, forthcoming). For anyone interested in agrarian political economy, and agrarian change more generally, the two volumes are essential reading.
I should say that I am no expert about this area (my research has focused on the urban informal economy) and I haven’t studied all of the articles yet—so I won’t be offering a full review here or commenting on strengths and weaknesses of its contents. What follows is, instead, more a personal reflection on Bernstein’s reiteration of a longstanding perspective and how this is important to my own research.
In this case, Bernstein makes some important points about the vast Food Sovereignty (FS) literature. Significantly, entire second volume of this JPS commemoration is devoted to this topic. Yet Bernstein suggests that the literature has been dominated by radical populist ideas about movements of farmers and peasants, as well as Chayanovian ideas about the benefits of small-scale agriculture in sustainable food production. Chayanov was a Russian agrarian economist critical of the Soviet state’s food procurement and collectivization policies in the 1920s and 30s. (Like so many others, he was later murdered by the Stalinist state.) Bernstein (2014) is concerned about the influence of these ideas in the FS approach, which he defines as a ‘comprehensive attack on corporate industrialised agriculture’, the advocacy of the ‘peasant way’ (i.e. small-scale farming) and the creation of a political program to support this as a global alternative based upon sustainable agriculture with social justice (p. 1031), e.g. Wittman et al (2010).
Bernstein’s critique is written in his typical style, complete with numerous and lengthy footnotes, lots of subheadings and as many questions posed as answers provided. As he himself admits, the article is not so strong at addressing ‘what is to be done’ or an alternative to the FS movement. However, he does provide a clear alternative theoretical and analytical framework, which I discuss below. He also poses what I think are fair and often searching questions about FS. For example, while some versions of FS locate the source of the problem, at least partly, in capitalist social and economic (i.e., class) relations, the general framing of the issue is closer to Marx’s notion of ‘primitive accumulation’. He suggests FS has an under-developed view of capitalism as an economic system, where it is sometimes just a label or, in other cases, a euphemism for globalization, the world market, industrialized agriculture or even ‘modernity’. Some of these ideas have fed into the most important framing of the issue via Phillip McMichael’s research on ‘international food regimes’, he argues.
Bernstein also critiques notions of ‘resistance’, which vary between the great movements of peasants in the 20th century to the ‘everyday forms’ popularized by James C Scott. Finally, he suggests that the really big problem with FS is its understanding of the state as the channel through which protective policies can be delivered, e.g. the regulation of price and supply for global trade in food and agriculture, subsidies for small farmers and even the development of strong national-level policies to protect peasants from the worst effects of the world market. Bernstein seems doubtful that capitalist states are capable of accepting and implementing this reform agenda.
For my own research, the most useful argument is Bernstein’s problematisation of the ‘peasant’. He asks whether peasants are just small farmers, or perhaps also farm labourers, foraging communities, indigenous or tribal communities, or even just ‘poor’ people who live in rural areas. He questions the usefulness of a concept that can be used to describe individuals who survive in these different social positions and is highly critical of scholars who frame ‘peasants’ as a ‘a common “other” to large-scale farming’ (p. 1042). He puts his own ‘basic position’ rather starkly: ‘[There] are no “peasants” in the world of contemporary capitalist globalisation’ (p. 1044). As suggested in the article, Bernstein has clarified this position over many years in other books and articles. It does not mean that there are no small-scale farmers. Instead, Bernstein is alluding to his ‘classes of labour’ approach to agrarian change. In my view, the best enunciation of this is his brilliant Class Dynamics of Agrarian Change (2010).
In this little book, Bernstein provides a radical framework for understanding the role of class and gender in rural areas, the distribution of land, the organization of agricultural production, the legacy of colonialism in Asia, Africa and Latin America and the different paths of capitalist development that have occurred in these different regions and countries of the Global South. He poses a classical Marxian dilemma: on one hand, the massive growth in agricultural productivity and output in the 20th century has made is possible for the world to feed its growing population; on the other hand, capitalist development has generated massive inequalities in terms of income and living standards. Capitalist development leads to class differentiation in agriculture—hence the idea of multiple ‘classes of labour’. His analysis—which I won’t try to outline here—has practical consequences for the advocacy of peasants’ movements. To take one example from India, the Karnataka State Farmers Association is part of La Via Campesina (The Peasant Way) global network and organized against genetically-modified (Bt) cotton. But ‘it is run by and for rich and medium farmers, who continue to oppress rural labour…’ (Bernstein, 2010: 121).
Bernstein has summarised his approach thus:
‘Classes of labour have to pursue their reproduction through insecure and oppressive—and typically increasingly scarce—wage employment and/or a range of likewise precarious small-scale and insecure “informal sector” (“survival”) activity, including farming in some instances; in effect, various and complex combinations of employment and self-employment… In short, there is no “homogeneous proletarian condition” within the “South”, other than that essential condition I started from: the need to secure reproduction needs (survival) through the (direct and indirect) sale of labour power’ (Bernstein, 2007: 5).
According to this view, the mass of the world’s people rely, either directly through wages or indirectly through subcontracting arrangements, on the sale of their labour power. For Bernstein, ‘the relative size and weight, and importantly the composition, of the informal economy [which remains dominant in the Global South] varies significantly with historically specific patterns of capitalist development’ (Bernstein, 2007: 8-9). This approach, and call for research in ‘historically specific patterns’, has strongly influenced my own research in India, which is summarized in my forthcoming book, Informal Labour in Urban India. As the title suggests, I am interested in applying the classes-of-labour framework to cities and, in doing so, trying to extend the analysis to informal workers in an urban environment. Debates about different forms of labour, including self-employment and wage-labour, are still contentious among labour scholars: see, for example, my review of a recent special issue of Development and Change journal, particularly the exchange between Saumyajit Bhattacharya and Barbara Harriss-White. In typical fashion, Bernstein (2014) refers to Prof Harriss-White in a footnote (number 29!) and her emphasis on petty commodity production, suggesting that ‘class differentiation in the countryside measured by agrarian accumulation is more or less frozen, in her view’. Whether or not this passing reference is fair, there is no question that Bernstein has provided a solid theoretical framework to analyse agrarian change and capitalist development in the Global South.
Barnes, T, Lal Das, K.S. and Pratap, S. (2015, forthcoming) ‘Labour contractors and global production networks: the case of India’s auto supply chain’, Journal of Development Studies
Bernstein, H. (2007) ‘Capital and labour from centre to margins’, keynote address at conference on Living on the Margins. Vulnerability, Exclusion and the State in the Informal Economy, Cape Town, 26-28 March, 2007, http: //www.livingonthemargins.org/_documents/Bernstein.pdf
Bernstein, H. (2010) Class Dynamics of Agrarian Change, Halifax (Ca.): Fernwood Publishing.
Henry Bernstein (2014) Food sovereignty via the ‘peasant way’: a skeptical view, The Journal of Peasant Studies, 41(6)
Fairbairn, M. Fox, J. Isakson, S.R., Levien, M., Peluso, N. Razavi, S. Scoones, I. & Sivaramakrishnan, K. (2014) Introduction: New directions in agrarian political economy, The Journal of Peasant Studies 41(5)
Wittman, H. Desmarais, A.A. and Wiebe, N. (2010) Food Sovereignty: Reconnecting Food, Nature and Community, Black Point: Fernwood Publishing
The wage question in Indonesia
19 November, 2014
The battle between unions and employers over minimum wage laws is a contentious issue in Indonesia. Recent wage decisions in different cities and regions highlight major problems with living costs, as well as the unevenness of Indonesia’s labour geography.
As widely predicted, the minimum wage has proved to be a hot political and economic issue in the early months of Jokowi’s presidency. As I wrote on 22 October, the cost of living has long been a contentious issue in Indonesian cities. In Jakarta, food and fuel prices have been increasing, alongside increasing poverty last year. Trade unions have continued the street protests that were only temporarily abated during the election earlier in the year. Protests in various parts of Indonesia began to increase by early October, focused on the minimum wage decisions of municipal governments in various cities. As I highlighted, there is controversy not only over the level of minimum wages but also over the methods used to calculate them.
This week, Jokowi’s replacement as Jakarta Governor, Basuki Tjahaja Purnama (also known as Ahok), sided with employers in declaring the capital’s minimum wage at Rp 2.7 million per month (about $AU 255). This is roughly a 12.5 per cent increase on the wage set by Jokowi last year but is way below union demands for Rp 3.5 million to keep up with surging food and fuel prices. ‘The expected wage increase is not much higher than that proposed by employers’, wrote the Jakarta Post. Apart from Ahok’s intransigence—the Governor seems to delight in tough-talking, including belittling his opponents—this decision highlights the uneven results of union campaigns across Indonesia.
While it looks like the big employers, represented by their peak body, Apindo, are getting their way thus far in Jakarta, this isn’t necessarily the case in other cities. In Indonesia, minimum wages are set at a local level by ‘wage councils’, which are required to have representation from government authorities, employers and unions. The Mayor of Surabaya, Indonesia’s second largest city, recently refused to sign-off on the minimum wage set by her local wage council, which had been proposed at below Rp 2.6 million. Interestingly, the Mayor’s reticence comes despite threats by Japanese firms, articulated via the Japanese consulate, that rising wages in Surabaya and other East Javanese cities and towns would force their relocation to Vietnam. In Central Java, where wages are much lower than Jakarta or Surabaya, unions have won a commitment from the Governor for a 10 per cent increase next year, which, if implemented, will have an impact on workers in cities like Semarang, Solo and Purwokerto.
In the industrial city of Bekasi, the heartland of Indonesian auto production, unions had a victory with the local wage council setting a Rp 2.95 million minimum wage. Said Iqbal, president of the KSPI, one of the three big union confederations in Indonesia, emphasized that Jakarta wages would now be lower than Bekasi wages. Even in the electronics-industrial island of Batam, where the Mayor set the island’s minimum wage at Rp 2.66 million, well below union demands of a 45 per cent increase to compensate for rising fuel prices, unions have mobilized against city authorities and demanded a review. Union agitation has forced authorities to block roads into some industrial areas on Batam to prevent unions from encouraging workers to join protests.
In the city of Medan, thousands of workers have resisted the North Sumatra governor’s decision to set a minimum wage of Rp 1.63 million, threatening to occupy his office until he offers a 30 per cent increase. Interestingly, while Apindo has argued for wage cuts in several areas and implied that it will refuse to implement some decisions, it argued that it was ‘ready’ to accept the decision in Medan. The Bekasi Wage Council’s decision, and a similarly large wage increase in the city of Sukabumi in West Java, led to Apindo angrily accusing city authorities of manipulating cost of living calculations. The employers’ association argued that 80 per cent of firms in Bekasi would be unable to afford the pay rise, leading to capital flight, especially among more labour-intensive production units like export garments.
So unions have broken through in some areas, most notably in Bekasi, and continue to defy municipal decisions in others areas, such as Batam. In this context, it will be very interesting to observe the extent to which unions are prepared to confront Ahok’s intransigence. It is also somewhat ironic that Apindo has attacked minimum wage calculations in Bekasi and Sukabumi when this has been the issue most emphasized by unions. The Legal Aid Institute (LBH) in Jakarta, one of several very important labour NGOs with links to the KSPI and to overseas (particularly German) unions, has provided an excellent explanation of why the Decent Living Index (KHL) used to calculated minimum wages has been so controversial. They show that data taken from official Indonesian statistics (BPS) gives prices for basic essentials that fall well below KSPI estimates. For example, BPS food and drink estimates used in KHL calculations fall 34 per cent below union estimates. For housing costs, the shortfall is 21 per cent, education 52 per cent and transport costs, 18 per cent. Even if one is extremely generous to Apindo’s arguments, it is clear that current calculation practices institutionalize real wage cuts. Alas, the Jakarta KHL, set at Rp 2.5 million, was commensurate with employer demands.
LBH Jakarta’s report also suggests that there are different interpretations of ‘decent living’. Based on analysis from Asian Floor Wage activists, who observe factors like minimum calorie intake, costs of shelter, medical care, education, etc, Jakarta workers would need over Rp 4 million per month to satisfy their ‘decent living’ criteria. As LBH also argue, a ‘living wage is only one component of a decent life’ and point to data on the millions of workers who are not registered by their employer to receive basic social security, which could further assist with living costs. Some more excellent analysis of problems with the KHL’s calculations has been provided by Patrick Tibke. He argues that the KHL in Jakarta was ‘a document riddled with errors compiled by a team of ruthless statisticians who clearly have very little regard for the welfare of low-wage workers’. For example, water costs do not take into account the need to use fuel to boil water so it is drinkable. He also shows that the 75 gram monthly ‘meat’ allowance is nearly 30 times less than the recommended intake in Thailand and nearly 54 times less than the Malaysian equivalent.
Conflict over wages raises a whole series of interesting and important questions, some of which I note here: Judging by some of Apindo’s rhetoric, is it possible that many employers will simply refuse to observe wage laws in regions where government decisions go against them? In those areas, like Jakarta, where local decisions favour employers, to what extent can labour resist these changes? There are even broader questions about the remit of minimum wage laws in Indonesia and the extent to which these are implemented in practice, the breadth of coverage over the country’s largely informal workforce (including millions of low wage workers in rural areas) and the extent to which minimum wage laws serve as a guide to wage-setting in enterprises. And there are wider political economy questions over the threats, some hollow and some more ominous, that employers will shift production to lower-wage countries. Whatever the answer to these questions, it is clear that Indonesian capital and state institutions are struggling to manage the demands of organized workers as the economy continues to expand.
Postscript: wage campaigns led by ‘formal’ workers and unions are certainly not the only significant development for followers of Indonesian labour affairs. In recent times, there has been a lot of focus on the plight of Indonesian workers who work overseas as migrants (TKI). The horrific deaths of two Indonesian women working as domestic workers in Hong Kong has drawn attention to the numbers of poor, rural workers who engaged in conditions of bonded labour. Perhaps 6.5 million Indonesian work overseas, many of them as domestic workers. Some regions specialize in particular jobs. For example, 80 per cent of TKI from the province of West Nusa Tenggara, mostly from East Lombok, work in Malaysian plantations. The plight of domestic workers in Hong Kong, where hundreds of thousands of Indonesian women work in households, has also been raised in the context of Hong Kong’s democracy movement. Even The Economist has raised this as an important issue. These reports suggests that the exploitation of TKI will be another labour problem that activists will use to demand action from Jokowi’s nascent administration
Modi: the ‘Great Reformer’?
5 November, 2014
Despite all the fuss, Prime Minister Modi’s proposal to reform India’s ‘rigid’ labour laws faces major problems and obstacles. Even if his changes are implemented, there are no guarantees they will have the economic impact that neo-liberals are hoping for.
Indian Prime Minister Narendra Modi will be a high profile visitor at the G20 summit in Brisbane in mid-November and, whilst in Australia, is also booked to address parliament in Canberra. It’s also nearly six months since he became leader so it seems like a good time to assess his record so far. I’m not in a position to provide any sort of ‘score card’ of his government, but I want to provide a few thoughts on what his prime ministership represents and to focus, in particular, upon his proposed economic and labour market reforms.
First, it should be acknowledged that Modi is incredibly popular in India. The scale of his victory at the May general election was enormous. His Bharatiya Janata Party (BJP) won 283 seats (that’s not including its coalition partners) while the incumbent Indian National Congress, the party of India’s independence, won just 43 seats. To put this on some kind of historical scale, Congress won a total of 414 seats at the 1984 general election, 30 years ago. At this election, the BJP, which had formed only two years earlier, won a total of two seats. While there have been many twists and turns in Indian national politics in the past three decades, I want to emphasise a simple point: the BJP’s seat-count in 2014 represents a massive increase from its origins in the 1980s and that Congress’ result represents a similarly massive decline. It also appears that the vote surge for the BJP reflects Modi’s individual credibility. It seems, for instance, that Modi’s time campaigning in Maharashtra and Haryana made a difference to the number of votes his party gained in October 2014 elections in those states, leading to further historically important victories for the BJP.
Why was Congress so comprehensively crushed in May? While I’m not an expert in Indian politics – I mainly follow developments in the economy and in labour movements – my guess is that Manmohan Singh’s government was judged as a massive failure. Despite their unexpected win at the previous general election in 2004, big business, large media organisations and international financial institutions had high hopes that Congress could deliver on a series of (mostly neoliberal) economic reforms and continue to raise economic growth levels which had spiked in the early 2000s. In particular, big business pushed for reforms to labour laws and financial regulation. Even though it did not deliver on these demands in its first term, Congress was reelected with an increased majority in 2009—it increased its number of seats in the Lok Sabha (lower house) from 145 to 206, to large (now largely forgotten) media acclaim internationally.
But there were continuing problems at the ‘bottom’ of Indian society that Congress failed to fully address. By the late 2000s, many economists and other academics recognized that economic growth in the first half of the decade had been largely ‘jobless’. In particular, female labour force participation—which was already low by international standards—fell further from 53 per cent in 2004 to 40 per cent in 2010. A range of new protective laws were introduced by Congress, but these tended to suffer from poor implementation or lack of enforcement. The Unorganised Workers’ Social Security Act 2008 was supposed to provide social security for ‘informal workers’ but lacked the fiscal support needed to assist enough eligible households. The Right to Education Act 2009 stipulated compulsory free education for all children below 14 years of age yet child labour remains rampant. Perhaps most well-known is the Mahatma Gandhi National Rural Employment Guarantee Act 2005 (NREGA), which was passed to provide 100 days of voluntary manual work per year at the minimum wage for one member of each rural household. While the NREGA has had created some work, established programs involving tens of millions of poor workers and has had uneven results depending upon the region, it has also suffered from endemic problems of ‘leakages’, corruption and abuse by local officials. During its second term, the government also saw economic growth and investment start to fall. Per capita Gross National Product was eight per cent on average from 2005 until 2008. From 2008 until 2012, it averaged below six per cent and, in 2013, fell below five per cent. Investment-to-GDP fell from 33 per cent in 2007 to 29 per cent in 2012 (whereas investment-to-GDP tended to rise during this period in the other so-called BRIC economies).
So Congress failed to placate elites in business and politics or the aspirations of workers and the poor. It was also faced with various corruption scandals and an anti-corruption movement led by an assortment political and civil society figures. Draft legislation to create an anti-corruption watchdog – the Lokpal Bill – failed to pass through the national parliament and could not be implemented. Modi was – and is – widely regarded as a ‘clean’ politician with a record as an efficient, straight-talking administrator who can get things done.
His agenda during the general election campaign was also contradictory as the BJP attempted to appeal to various classes, castes and regional interests. BJP election material varied from region to region but tended to place a big emphasis on rural and agricultural infrastructure. For example, Modi promised a national optic fibre network and emphasized his record as Chief Minister in his home state of Gujarat, in northwest India. In Gujarat, Modi was known for diverting investment to rural infrastructure, like dams and irrigation as well as developing electricity for large farms. His policies coincided with a boom in cotton production and, in return, Modi received strong backing from many medium- and large- commercial farmers. Modi also received strong support from middle-income city dwellers (the so-called ‘middle classes), who form perhaps a fifth of Gujarat’s population.
However, Modi’s record in Gujarat is also highly controversial. Many people, including high profile academics like the economist Jagdish Bhagwati, argue that Modi developed a successful, pro-development ‘Gujarat model’. Others, like the economist Amartya Sen, have been much more critical, pointing to ongoing problems of rural poverty and marginalization in the state. While Modi encouraged infrastructure in rural areas, one of his most controversial measures was to encourage the construction of the enormous Sardar Sarovar dam in the Narmada Valley, which dispossessed thousands of locals and sparked a long-lasting campaign that drew considerable international solidarity in the 2000s.
Most controversial of all is Modi’s role in the 2002 riots which targeted Muslims and, according to official figures, led to well over 1000 deaths. While Modi himself has been officially cleared of any wrong-doing, it is widely accepted that leading members of the far-right group, Rashtriya Swayamsevak Sangh (RSS), were responsible for initiating and leading an anti-Muslim pogrom. RSS members and sympathisers in the police have also been implicated in the violence. Modi’s Minister for Women and Child Development, Maya Kodnani, personally led one gang of thugs targeting, beating and killing Muslims. In August 2012, Kodnani was jailed for 28 years for murder. Modi himself is a lifelong member of the RSS and was chosen to lead the BJP, the movement’s electoral wing, in Gujarat in the mid-1980s. The controversy over his role in 2002 led to United States’ nine-year refusal to grant him a visa to enter the country. This ban was only lifted by the Obama administration as it became clear that Modi was poised to win the 2014 general election.
This is not simply a historical issue. It seems that the RSS and the BJP are actively encouraging anti-Muslim agitation in New Delhi right now, where local elections are imminent. While the BJP currently rules in the neighbouring states of Rajasthan and (since October) Haryana, it is aiming to capitalize on Modi’s recent surge by contesting for power in the Government of the National Capital Territory, formerly a Congress stronghold. In recent weeks, BJP/RSS activists have been targeting low-caste colonies with minority Muslim populations, leading to violence in Trilokpuri, in East Delhi, and tensions in Bawana, in northwest Delhi. In Trilokpuri, the local BJP MP swiftly blamed Muslim youth for clashes between young men and, in Bawana, the local BJP MP – and, shamefully, a Congress councillor – spearheaded local mass meetings against a traditional procession marking the Muslim holy month of Muharram.
Much of Modi’s role as a one-time RSS organizer, and the public face of this viciously anti-Muslim political movement, has been downplayed by Indian and international media since his election victory in May. Attention has turned to the promise of economic ‘reform’ that he supposedly represents. In this context, the French academic and India specialist, Christophe Jaffrelot, wrote a very interesting appraisal of Modi’s first 150 days in office in which he emphasized the continuity in economic policy between Congress and the BJP. Jaffrelot notes that that there was little radical change in Modi’s Union budget. His also suggests that Modi’s proposed changes to labour laws are ‘contentious’ but ‘not revolutionary’. In my view, this is a very important point that worth exploring. Modi’s proposed overhaul of India’s labour laws is central to his vision of economic reform and is one of the main reasons why big business welcomed his election victory with such enthusiasm.
In October, pledged to end the ‘Inspector Raj’ as part of his ‘Make in India’ campaign. ‘Make in India’ is a broad slogan which represents Modi’s desire to encourage greater private and foreign investment in India, particularly in manufacturing. The idea of an ‘inspector raj’ is similar to the old ‘license raj’, which was a system of industrial controls and restrictions on private industry that most post-independence governments implemented as part of a state-centric, import substitutionist model of economic development. Most of these rules – which limited how many large private firms could be established, limited what they could produce, whether and how much they could export or how much they could diversify production – were dismantled in 1991, although several restrictions on private capital had been gradually eased since the 1970s. The ‘inspector raj’ refers to ‘harassment by officials’—specifically, inspectors employed by state labour departments who are meant to ensure that employers comply with labour laws. Modi is proposing to computerize the labour inspection system so that employers are able communicate directly with government through a single ‘portal’ to reduce paperwork. Inspectors will apparently be given a random, computer-generated number of firms to inspect, rather than the current alleged ‘arbitrariness’.
Modi calls this ‘minimum government, maximum governance’. One of the problems with this is that there it assumes inspectors are doing their jobs. My own research in New Delhi and nearby industrial zones in Gurgaon, Faridabad and Manesar suggests that the Department of Labour, which is based hundreds of miles away in Chandigarh, lacks the resources to properly inspect industrial units. In addition, bribery is rife. I remember an employer in a large auto components firm in Manesar telling me in April 2013 that ‘100 per cent of industry is paying bribes’. His firm, with about 400 employees, was paying Rs 2-3 lakhs (about $AU 3700-5600) in bribes each year to various government officials, including a single labour inspector who drove his scooter to the factory every Saturday to pick up an envelope of cash. (This research is forthcoming in the Journal of Development Studies in December—more to follow.)
I have written about Modi’s labour reform agenda in a post on 18 September. My colleague, Surendra Pratap, in Delhi has also posted some really useful information about this (also see this very useful article). Just to reiterate the key aspects of his agenda, Modi says he will make some changes to the Minimum Wage Act, the Labour Laws Act and the Apprenticeship Act, which will allow inter-state migrant workers to be hired as apprentices, set their wages as a ‘stipend’ of 70-90 per cent of the minimum wage (with no medical insurance) and pay half this stipend for one year for ‘small’ enterprises—defined as firms with a turnover below Rs 100 crore, or c. AU 18.6 million)! In addition, Modi is a fan of changes proposed by the BJP governments in Rajasthan and Madhya Pradesh. These governments are planning to:
- lift the threshold for the Contract Labour (Abolition and Regulation) Act from firms with 20 or more workers to firms with 40 or more workers
- lift the threshold under the Industrial Disputes Act on requirements that employers seek permission to sack workers or close factories from firms with 100 or more employees to firms with 300 or more employees. In addition, no party to a dispute (e.g. a sacked worker) will be able to officially challenge an employer’s decision for three years after it is made. And the legal threshold for recognition of trade unions will be raised from 15 per cent density in an enterprise to 30 per cent.
- lift the threshold for the Factories Act from firms with 10 or more workers (20 for firms without power) to firms with 20 or more workers (40 for firms without power). This Act sets working conditions, such as working hours, for most medium-to-large firms in India.
If you are interested how Indian labour laws work, you can read the posts cited above or you can consult some of the excellent academic studies on this topic (Shyam Sundar, 2005; 2012; Hill, 2009). Briefly, the Indian labour law makes a distinction between the ‘organised sector’, defined as firms with 10 or more employees, and the ‘unorganised sector’, defined as firms with fewer than 10 workers. Rules and regulations are relaxed for these smaller firms, where the vast majority of Indians work.
In this sense, Christophe Jaffrelot is right—Modi’s ‘reforms’ are unlikely to spark a radical transformation in investment or growth as the lion’s share of workers are already employed in circumstances where most of these ‘rigid’ laws don’t apply. A neoliberal retort is that such restrictive laws are the main reason why most workers are employed outside the organized sector. In truth, most workers were employed in the unorganized sector decades before economic liberalization started. And, following several years of jobless growth in the 1990s and early 2000s, organized sector employment started to grow again—despite the existence of supposedly ‘rigid’ labour laws (Ghose, 2012).
Major union confederations—the Central Trade Union Organisations as they are officially known—are planning to organize a major national protest, including some strike action, later in the year against Modi’s plans. In my view, they are quite right to do this but, as Jaffrelot suggests, these reforms hardly seem likely to produce the results that neoliberals have pushed for. They simply do not address the issues that most Indian workers (or, for that matter, employers) have to face. It is also worth concluding that the BJP-led national government from 1998-2004 had very similar aspirations to transform labour laws—and demonstrably failed to deliver. Despite Modi’s current popularity, he still has to get his legislation through a less-than-favourable upper house (Rajya Sabha), where Congress and its allies retain more seats than the BJP.
So, despite Modi’s rhetoric, there are few guarantees that he will be able to deliver this time or that, should he succeed, his ‘reforms’ will have any significant impact on the economy, other than to formalize something that already happens, i.e. the mass employment of low-paid, precariously-employed workers who lack genuine collective bargaining and trade union rights.
Ghose, A. K. (2012) ‘The growth employment interaction in a developing economy’, Indian Journal of Labour Economics, 55(1): 23-31.
Hill, E. (2009) ‘The Indian industrial relations system: Struggling to address the dynamics of a globalising economy’, Journal of Industrial Relations, 51(3): 395-410.
Shyam Sundar, K.R. (2005) ‘State in industrial relations system in India: From corporatist to neo-liberal?’ Indian Journal of Labour Economics, 48(4): 917-37.
Shyam Sundar, K.R. (2012) Contract Labour in India: Issues and Perspectives, New Delhi: Daanish Books
Nokia: electronics and labour in India
22 October, 2014
The decision to close production at Nokia’s Sriperumbudur plant near Chennai has intersected with some interesting political developments in the south Indian state of Tamil Nadu. The plant closure is affecting about 1,100 workers in the factory and may have knock-on effects on other firms linked to Nokia’s local production of mobile phone handsets. While I don’t have any special or insider knowledge of the case, or of the campaign by the Centre of Indian Trade Unions (CITU) demanding state intervention to protect workers’ jobs, the issue raises questions about electronics manufacturing in India and invites broader reflection about the trajectory of Indian economic development and the consequences for workers.
First, let’s establish some context: the Finnish transnational electronics giant, Nokia, has announced it will end production at its Chennai plant by November. Earlier in the year, Nokia sold its global handset operations to Microsoft for €5.4 billion. After the deal was announced, the Government of Tamil Nadu accused Nokia of claiming tax breaks for export sales targets it had not fulfilled. Such subsidies are a normal part of ‘business’ in India. They form part of national ‘Special Economic Zones’ (SEZ) policy designed to attract export-oriented investment from foreign and domestic corporations. Many states in India have their own version of the national policy, with subsidies like tax holidays on export sales, cheap water and electricity, public investment in roads and land offered at below-market rates (Banerjee-Guha, 2008). Governments in Tamil Nadu, ruled for decades by coalitions led by either of the two main Tamil regionalist parties, AIADMK (currently in power) and DMK, have had some success in attracting foreign investment in different industries. For example, the government succeeded in getting Hyundai and Ford to set-up major auto factories in the late 1990s. In 2006, Nokia established a major facility in Sriperumbudur, where Hyundai is also located.
After accusing Nokia of illegally dodging tax, leading to an ongoing court case, the government froze Nokia’s factory assets. For most of 2014, Nokia has continued to produce as a contractor for Microsoft, keeping several hundred workers on its payroll. Now, with Microsoft deciding to stop sourcing handsets from Chennai, the factory is set to close. The factory union, the Nokia India Employees Union, is linked to CITU, one of the key trade union confederations in India, which has led protests calling for the AIADMK-led government to take control of production at the factory and produce ‘Amma’ brand mobile phones. ‘Amma’ (Tamil for ‘mother’) is linked to the decision of the former Chief Minister J Jayalalithaa—widely known as ‘Amma’—to establish state-subsidised production of water, salt and even pharmaceutical products. For instance, the state has fixed prices for bottled ‘Amma’ water at Rs 10 per litre. Whether or not CITU’s call is a wise move is unclear to me, especially given Jayalalithaa’s recent conviction for corruption and DMK’s rather opportunistic support for the protests.
While I’d be interested to hear more about the actual struggle—about which I I hope activists @TNLabourBlog might be able to enlighten me—the wider issue I want to reflect upon concerns the future of electronics production in India. Electronics production is really not that big India by regional (i.e. Asian) and global standards. It lags well behind China’s massive electronics output, led by the likes of Foxconn, with a local market worth hundreds of billions of dollars and several hundred thousand workers concentrated into industrial colonies, particularly in Shenzen (see Hong Kong-based activist group, Sacom, for a labour activist perspective on the Foxconn workers, although there are some other scholarly sources too, e.g. Jenny Chan’s research in Contemporary China Studies at Oxford).
In India, the industry peak body, the India Electronics and Semiconductor Association (IESA), claims that local product output is worth about $US71 billion in 2014. Production is mainly domestic oriented and focuses on consumer durables like mobile phones, TVs and computers. IESA is upbeat about the industry’s prospects, especially as it is supposed to receive a Rs 10,000 crore boost (about $US 1.6 billion) from Modi’s ‘Make in India’ campaign. This is the prime minister’s flagship program to encourage investment in India through a range of reforms, including SEZ-type policies as well as the removal of ‘unnecessary laws and regulations’ (like protective labour laws) and fewer bureaucratic procedures for investment approvals. Details of this program are still being rolled out and no one can yet say how much impact it will have—although one must point out that investment rules in India have been gradually but substantially liberalised over the past two decades. For example, in the auto industry (my main area of study), approvals for foreign TNCs have shifted from maximum 49 percent shares in joint ventures with local firms in the mid-1990s to automatic approval for 100 percent foreign-owned factories since 2000.
Even with these changes, electronics manufacturing in India has always lagged behind other ‘emerging markets’. It is much more famous for its software services. The dominant explanation for this has been, first, India’s ‘comparative advantage’ in well-educated, English-speaking ‘middle class’ professionals and, second, trade and investment liberalisation since 1991. In the 1990s, India became the destination of choice for global IT offshore outsourcing and some Indian firms, like TCS, Infosys and Wipro, transformed from small start-ups to substantial transnational corporations. The IT industry’s growth since the 1980s is commonly explained as a triumph of liberal reform. For example, in 2004, The Economist claimed that such reform “has brought faster growth, particularly in those parts of the country and of the economy that have opened up most to competition and have been least shackled by government. The most obvious example is the IT industry”.
A useful retort to this argument come from the ‘developmental state’ tradition in international relations scholarship. In particular, the work of Evans (1995) and Pinglé (1999) focused upon the role of state institutions, rather than ‘free markets’, in nurturing successful industries in countries like India. Evans argued that thriving industries needed to demonstrate ‘embedded autonomy’: bureaucrats from state institutions needed to work closely alongside private industrialists (i.e. be ‘embedded’) but not beholden to their interests as cronies (i.e. be ‘autonomous’). Autonomy was crucial so that state institutions could ‘discipline’ capital into achieving the performance targets (e.g. export volume) needed to generate high levels of industrial growth. Pinglé argued that this analysis had operated in India at an industry level through the creation of ‘developmental ensembles’ between state and capital. So NASSCOM, the peak industry body for software services firms, worked very closely with the Department of Electronics to create such a developmental ensemble, leading to a thriving software services industry in the 1990s. The failure to do this in electronics manufacturing explains why India never followed its East Asian counterparts in developing strong manufacturing sectors, she argued.
A different approach comes from Jyoti Saraswati in his outstanding 2012 book, Dot.compradors. In my view, this is the best book written on the origins and development of well-known India’s IT industry (also see Saraswati, 2008, for an article length version of his framework). Rather than a state- or market-centric explanation, he argues that the IT industry’s success and electronics manufacturing’s relative failure was a consequence institutional conflict between the state and sections of private industry. His framework is influenced by the ‘linkagency’ approach developed by the radical economist Ben Fine. I think this is somewhat similar to the notion of ‘uneven and combined development’ used by several other radical/Marxist scholars.
Saraswati demonstrates, firstly, that the demand for IT was initially connected with the state’s geopolitical concerns. In 1962, India was defeated in a border war with China. This was followed by China’s detonation of a nuclear device in 1964 and the US embargo imposed against India during its 1965 war with Pakistan. Following these episodes, a government report (the Bhabha Report) recommended that Indian-owned firms were necessary to build national self-reliance in electronics production and recommended that the government reduce foreign ownership in this sector. The report generated conflict between sections of the state. Foreign ownership restrictions were opposed by the Ministry of Defence (MOD). The MOD’s electronics unit, Bharat Electronics (BEL), which produced electronic equipment in Bangalore to service the Indian military, had contracts with TNC subsidiaries which were threatened by the Bhabha Report’s recommendation. The Report’s authors were influenced by the Department of Atomic Energy (DAE), which was highly influential in the state and a “champion of self-sufficiency” (Saraswati, 2008: 1142). Tensions led to the establishment of the Department of Electronics (DOE) in 1970.
At this time, American giant IBM had a near-monopoly on computer sales in India, having generated large profits by importing and leasing second-hand computers for Indian firms. This practice was widely interpreted as a problem for India’s foreign exchange position. Having inherited the DAE’s preference for self-sufficiency, the DOE tried to curb IBM’s market power. After several years of negotiation, IBM famously opted to close its Indian operation in 1977 rather than share control with the DOE. During this period, the DOE and the DAE agreed to establish a new state-owned electronics firm, Electronics Computers of India Limited (ECIL), to produce computers for the domestic market.
Following IBM’s departure, ECIL became the dominant firm in the IT industry. However, it was unable to successfully create a market for computers. Institutional rivalry between the DAE and the MOD prevented it from sharing the foreign-acquired technology of BEL. The ongoing inefficiency of ECIL’s operations meant that the successful domestic hardware industry was unable to thrive. Local computers required substantial maintenance, creating a market for early software service providers in the 1970s and early 1980s. Another state-owned firm, the Computer Maintenance Corporation (CMC) had been established in 1975 for this purpose.
Following IBM’s departure, the CMC became the main vehicle for software development and maintenance in the country: “In short, the emergence of CMC, and corresponding software capacity, was to some extent an unanticipated but deliberate consequence of India’s determination to develop indigenous capacity in hardware provision” (Saraswati, 2008: 1144). Additionally, a small number of management consultants emerged. Some small firms benefited from the Software Export Scheme established in 1972 in response to ongoing foreign exchange shortages. This scheme lowered duties on imported computers was provided credit for capital spending on export production. These firms were allowed to service the growing international demand for software and began providing services to large Indian firms who had begun to import cheap computers and electronic parts from East Asian countries. By the early 1980s, these imports were seen as a substitute for ECIL’s low-quality products.
It is in this period that India’s software services sector emerged. Small software services firms flourished by providing services for both the US export market and for domestic firms requiring system maintenance for cheap imported hardware. Thus, while selective liberalisation has played a role in the success of India’s IT industry, its emergence is equally the consequence of institutional conflict and the unintended consequences of ‘self-reliance’. Since the 1980s, these software firms, marshalled by NASSCOM, have received enormous subsidies from the state, including the SEZ policies mentioned above.
Since the 1990s, electronics manufacturers, like Nokia, have also received a generous share of subsidies. But one of the implications of this argument is that India never developed supremacy in electronics production like some East Asian emerging economies—above all, China in the 1990s and 2000s—because the state did not target this industry and especially because of an unintended consequence of institutional conflict. The failure of local electronics production helped to create a market for dynamic local software firms, tipping the focus of the IT industry from hardware production to software and maintenance. It remains to be seen whether this situation will change. Perhaps Modi’s ‘Make in India’ rhetoric will shift things—it is still too early to tell. But I think it helps to understand Nokia’s (and Microsoft’s) decision to wind down production in Tamil Nadu, and the implications of this for electronics workers and unions, in this longer-term context.
Banerjee-Guha, S. (2008) “Space relations of capital and significance of new economic enclaves: SEZs in India,” Economic and Political Weekly, 43(7): 51-59
Evans, P. (1995) Embedded Autonomy: States and Industrial Transformation, Princeton: Princeton University Press
Pinglé V (1999) Rethinking the developmental State: India’s Industry in Comparative Perspective, New Delhi: Oxford University Press
Saraswati, J. (2008) “The Indian IT industry and neoliberalism: The irony of a mythology,” Third World Quarterly, 29(6): 1139-1152
Wages clash looming in Indonesia?
22 October, 2014
After the recent focus on electoral politics in Indonesia, culminating in the victory of Joko Widodo’s (Jokowi’s) presidential campaign, trade unions look set to return to the streets. The underlying issue facing workers hasn’t changed that much since Jokowi’s election victory in July: the cost of living is rising, particularly in urban regions, and this is eating into real wages. In Jakarta, an indication of this is that the number of people officially below the poverty line actually increased last year due to food and fuel price inflation. Unions have led several large strikes and street marches in recent years to campaign for higher wages and other issues like restrictions on company outsourcing. In October last year, about two million workers participated in a general strike.
On 2 October, about 50,000 workers marched in cities across Indonesia demanding higher wages, better and free medical insurance and an end to ‘outsourcing’, i.e. hiring through labour-hire firms. Unions have threatened to call much larger protests in the next 4-6 weeks unless their demands are taken seriously. In Jakarta, unions are threatening a two-day strike by the end of October unless the minimum wage is increased to Rp 3.2 million per month (about $AU 300). The current minimum wage in Jakarta is less than Rp 2.4 million ($AU 225). In Batam, an Indonesian island off Singapore’s coast and a key ‘Free Trade Zone’, unions are pushing for a 50 per cent increase in the minimum wage. Most firms in Batam are electronics manufacturers headquartered in Singapore.
At the heart of these protests is the leadership of the Federation of Indonesian Metalworkers Union (FSPMI), which forms the core of the Congress of Indonesian Trade Unions (KSPI) and organises thousands of manufacturing workers. Union organisation in Indonesia is divided into three competing peak bodies that remain mutually distrustful while many unions remain reliant upon specialist advice from labour NGOs and funding from unions in Europe and the United States (see Ford, 2009, for the best analysis of Indonesian unions in the post-Suharto era). The KSPI, which split from the still-active Suharto-era ‘official’ union (KSPSI) several years ago, has arguably played the key role in rebuilding the labour movement. With significant financial and institutional support from the International Metalworkers Federation and legal/strategic support from the Trade Union Rights Centre (a labour NGO funded by the Confederation of German Trade Unions DGB), FSPMI has become a well-organised union with a substantial dues-paying membership concentrated in the manufacturing zones of West Java and Batam. In many ways, FSPMI has become the key labour union in the country given the massive concentration of manufacturing investment in cities like Bekasi, Tangerang and Karawang that link into the Greater Jakarta urban region.
While I’m certainly no expert on Indonesia, I spoke to several FSPMI unionists in Jakarta in February and their achievements are impressive. For example, the union has a major presence in the auto industry (which is one of my main areas of research). Indonesian auto production is dominated by Japanese firms, especially Toyota which has operated in a partnership with local manufacturer Astra International since 2003. Toyota Astra has six factories, mainly based on Bekasi, and employs about 35,000 workers as well as substantial links to auto parts makers who employ thousands more. As well as Toyota, other key firms include Honda, which has factories in Bekasi and Karawang, Nissan, Daihatsu, Suzuki and, since September, Tata Motors from India. (For some reason, there is still relatively little investment from European and American carmakers.)
Remember that one of the Indonesian economy’s defining features during the Suharto era was ‘light’ manufacturing, focused on export-led investment in textiles, clothing and footwear. One of the signs of Indonesia’s economic development since the 1990s is that capital-intensive manufacturing like the car industry has been on the rise, leading to some economic rivalry with Thailand and Malaysia. Higher wages have seen many labour-intensive manufacturers relocate to even lower-wage Asian countries like Vietnam and Cambodia although significant light manufacturing remains in Indonesia and, importantly, the country remains predominantly rural-based. Nevertheless, by 2011, Indonesia could produce about three million cars and 4-5 times more motorcycles and scooters.
FSPMI’s automotive division, SP-AMK (Serikat Pekerja – Automotif Mesin dan Komponen), claim about 80,000 members in over 230 auto plants. In February, I met with their local president in Bekasi, Rustan ST, and secretary Heryanto Achmad. They claimed that 46 per cent of the auto industry is covered by union-negotiated collective agreements, which usually last for two years. While SP-AMK mainly has a presence in the auto supply chain where most auto employees work, KSPSI, the Suharto-era union, has a stronger presence in the assembly factories of Toyota, Honda Motorcycles and Daihatsu. SP-AMK also has members in Yamaha, Suzuki, Hino trucks, Mitsubishi, Nissan, Kawasaki, Honda parts and Isuzu. About half of SP-AMK’s current membership came from the KSPI split with KSPSI after 1998, with the rest recruited through organising drives. Clearly reflecting the influence of German/European unions, SP-AMK’s leaders have a clear industrial strategy based on organising drives for collective wage agreements. They wait until 60-70 per cent of workers in a plant are convinced before engaging employers in collective bargaining. The main problem, according to Pak Rustan is workers who lack the ‘skills’ to negotiate rather than employer hostility. (This is quite different to my research in India where auto employers are usually deeply hostile to recognising unions). Thus, there is a mindset of ‘worker education’, based on a Western-style collective bargaining strategy, which underpins SP-AMK’s work.
But collective bargaining is only part of FSPMI’s approach. Led by Said Iqbal, who is now also KSPI president, the confederation has often taken to the streets to challenge government policies on minimum wages and outsourcing. FSPMI also remains pragmatic about official politics: controversially, Iqbal supported Prabowo Subianto’s presidential bid, although the union as a whole had differing opinions. In different areas, unionists ran as candidates for various, often competing political parties. With the elections over for now, it seems that attention has turned back to the streets and workplaces. One of the long-term demands of the movement is to widen the number of goods included in inflation calculations, which are used to influence minimum wage decisions, from 60 currently to 84. Thus, the issue is not just the level of minimum wages which act as guidelines for manufacturing workers’ wages in Indonesia, but the method of calculation.
Authorities have resisted these demands, especially in Jakarta, and have tried to focus the debate on the level of wages rather than how they are calculated. The Jakarta government’s ‘wage council’ has promised to restrict the minimum wage to a 10 per cent increase in 2014/15, well below union demands for a 30 per cent rise. In fact, the city government led (at the time) by Jokowi gave permission for 14 firms, each with over 1000 employees, to pay sub-minimum wages in January. It is important to remember that Jokowi is basically representative of business. He was a furniture businessman in his hometown, Solo in Central Java, and led his local employers’ association before entering politics and successfully running as the local governor. His campaign reflected the frustrations of small-and-medium sized firms with the corruption and inefficiency that plagues big business and state institutions in Indonesia. Partly for this reason, and partly because he was running against the despicable Prabowo for Indonesian president, many Indonesians and Indonesia watchers around the world regard Jokowi as somehow ‘progressive’. While he no doubt stands on some sound principles, he is not, and has never been, friendly to unions or workers. If Indonesian authorities, nationally and at a local level, continue to resist the KSPI/FSPMI-led push for living wages and better employment conditions, then industrial conflict could well become one of the hallmarks of Jokowi’s nascent presidency.
Ford, M. (2009) Workers and Intellectuals: NGOs, Trade Unions and the Indonesian Labour Movement, Honolulu: University of Hawaii Press
Elsewhere in Indonesia…
While protesting in Jakarta on 2 October, the KSPI also raised the plight of workers at the Freeport gold mine in Papua province (West Papua). In late September, four workers at the American-owned mine, the world’s largest gold mine and the third largest copper mine, were killed in an accident involving a mining vehicle. Workers blockaded the main road to the site for several days until the company finally agreed to act to improve safety conditions. The brief civil disobedience of the Freeport workers, and the solidarity from KSPI workers in Jakarta, is a reminder both of the vast scale and spread of Indonesia’s working class as well as the appalling conditions under which workers are employed in Indonesian mines. In July, nine more gold miners died in a separate accident in Papua and this month 18 workers were killed in a gold mine collapse in the province of Kalimantan.
State, capital and labour in the Chinese automotive industry
18 October, 2014
In my previous post, I looked at recent debates among labour researchers on the progress of Chinese labour movements. At the heart of these debates are questions about the role and power of the Chinese state in attempting to influence industrial conflict in ways that they can more easily control, as well as the role of the All-China Federation of Trade Unions (ACFTU) as a branch of the state rather than a representative of workers’ interests. The role of state repression is obviously a major issue for labour movements around the world, but the specific role of China’s authoritarian one-party state is extremely important if we are to examine the future of labour movements there. No doubt, fears of an anti-democratic crackdown lie at the heart of recent protests in Hong Kong (here is one of several excellent analyses of events in Hong Kong). In this post, I want to explore how the Chinese state uses nationalism and conflict between sections of capital to sow and maintain divisions among workers in the mainland.
I want to do this by looking at recent moves by state institutions against foreign producers in the Chinese auto industry. While this is just one among many important industries in China, recent conflict between the state and foreign transnational capital tells us something about state attempts to influence industrial conflicts involving workers, as well as economic development more broadly. The pretext for this post is the fines issued against dozens of foreign carmakers in September, totalling hundreds of millions of dollars, for supposedly ‘anti-competitive’ practices.
First I want to provide some context for the enormous Chinese auto industry. China is, by far, the largest producer and consumer of motor vehicles in the world. By 2011, it was producing nearly 14.5 million passenger cars and nearly four million commercial vehicles. It surpassed Japanese production volumes in 2006 and the US in 2009. By comparison, the US was making fewer than three million cars, Japan about 7.1 million and Germany nearly 5.9 million in 2011. Average annual growth in Chinese production between 2000 and 2011 was 22 percent (Barnes, 2012). Today, China represents about a quarter of all automotive output in the world. Auto assembly plants are located all over the country and virtually all transnational carmakers have a presence.
Apart from scale, the other distinctive feature of the Chinese auto industry is the role of the state. All foreign carmakers must partner in a ‘joint venture’ with a state-owned enterprise and are limited to a maximum of 50 percent ownership under Chinese law. According to one study, there were 12 major joint ventures in China by the mid-2000s: Shanghai Volkswagen, FAW-Volkswagen, Shanghai GM, Dongfeng Citroen, Dongfeng Nissan, Dongfeng Jia, Guangzhou Honda, Chang’an Suzuki, Chang’an Ford, Beijing Jeep (now Beijing Benz), Beijing Hyundai and FAW-Tianjin-Toyota (Gallagher, 2006). Although there has been recent growth in domestic-owned operations, most passenger cars in China continue to be manufactured through joint ventures between foreign corporations and state-owned enterprises.
The most authoritative work on China’s auto industry policy is Chin (2010), who convincingly argues that the state used its 1994 Automotive Industry Plan (AIP) to leverage concessions from foreign capitalists eager to establish facilities in this emerging market. The AIP required that automotive assemblers use at least 40 percent local content in their local operations. The state also leveraged technology from foreign firms. For example, it encouraged competitive tendering between GM, Ford and Toyota in 1995, with Shanghai GM eventually establishing a Pan-Asia Technical Automotive Centre to produce ‘R and D’ for local producers (Gallagher, 2006). Chin (2010) argues that incentives for increased local content eventually succeeded in modernising the automotive sector by disciplining new and established joint ventures, while restricting the ability of foreign transnational corporations to dominate through equity investments. It also disciplined Chinese enterprises by requiring partnerships with well-established international automotive brands. Crucially, the AIP did not place any restrictions on foreign equity levels in most parts of the automotive components industry. This made is easier for foreign firms to invest with the confidence that quality automotive components would become available.
This background is important if we are to understand recent attempts by the state to discipline foreign corporations. In August, China’s National Development and Reform Commission (NDRC) fined 12 Japanese auto supply firms a total of 1.24 billion Yuan (about $AU 230 million) for allegedly anti-competitive pricing (Yang, 2014). The following month, they fined FAW-Volkswagen 250 million Yuan (c. $AU 46 million) for fixing prices for Audi car dealerships and repair shops in Hubei province and established a ‘probe’ into Daimler. Foreign firms have certainly noticed these changes. A survey of 164 foreign firms by the American Chamber of Commerce in China in August found that 60 percent felt ‘less welcome’ in the country than before, compared to 41 percent in 2013. Forty-nine percent said ‘foreign companies are being singled out in recent pricing or anti-corruption campaigns’. Targets in other sectors included Microsoft and Apple. Several foreign auto firms, including VW, Daimler/Mercedes, Tata, Fiat, Toyota and Honda have cut vehicles and spare parts prices in the wake of these fines and probes.
In my view, there are two conclusions to draw from this conflict. One is that Chinese state actions are probably designed to make it easier for Chinese-owned supply firms to compete with foreign firms. The second is that, despite complaints from foreign firms’ representatives, these moves are unlikely to dampen the thirst of foreign capital for profits in China’s enormous domestic market. For example, GM has just flagged plans to invest $US 14 billion in five new joint venture plants in China by 2018 to lift their annual sales from 3.5 to five million. As Chin (2010) argues, foreign firms have been prepared to accept fairly tough treatment in order to access Chinese markets since the 1980s and 90s.
As a labour researcher, my interest is more in the implications of this state-capital bartering for workers and labour movements. My colleague, Prof Anita Chan, an expert in Chinese labour relations at the University of Technology, Sydney, tells me that Chinese state-owned partners in joint venture companies control employment relations in these auto companies and that it is probable that Chinese nationalism is used to influence workers. The basic idea is that Chinese state-owned enterprises in the auto industry try to present themselves as representing and protecting workers’ interests against the practices of foreign corporations. If true, this role for state institutions is probably enhanced by the absence of genuinely-representative or independent trade unions in China.
As far as I am aware, this argument has not been adequately explored. There is no doubt that conditions in the auto industry, like other sectors, can be highly exploitative. Health and safety issues are often very important, as highlighted by a widely-reported gas explosion at the Zhongrong Metal Products plant in Jiangsu province in eastern China, which killed at least 75 people in August. There were numerous safety lapses at the plant, including dangerously high levels of aluminium dust in the factory. The plant supplies parts to several global carmakers, including GM as well as BMW, Mercedes, Honda and Mazda. This tragedy is also a good illustration of problems in ‘global value chains’ in which large transnational corporations rely on outsourced production to China and other industrial centres in the Global South but effectively refuse to take responsibility for poor labour or environmental standards among their suppliers.
The role of intra-capital relations and Chinese nationalism in influencing industrial conflict poses a research question that is probably well-worth exploring. In my previous post, I looked at different positions on whether there has been a shift towards a more offensive ‘class consciousness’ among Chinese workers, including within the auto industry. Perhaps one might argue that there has been as much conflict between different sections of capital (state-owned, domestic-private and foreign) as between capital and labour.
Barnes, T (2012) Towards a Comparative Political Economy of Labour in the Indian and Chinese Automotive Industries, Paper presented to Indian Society of Labour Economics conference, Varanasi, December 2012
Chin, G.T. (2010) China’s Automotive Modernisation: The Party-State and Multinational Corporations, Basingstoke, Palgrave MacMillan
Gallagher, K.S. (2006) China Shifts Gears: Automakers, Oil, Pollution and Development, Cambridge, Massachusetts: MIT Press
Yang Jian (2014) Antitrust probes will become the new normal in China’s auto industry, 19 September, http://www.autonewschina.com/en/article.asp?id=12296
Labour Rights & OccupyCentral
3 October, 2014
Why labour movements in Hong Kong and China are crucial to the democracy movement. In this post, I look at debates about labour rights and unions in mainland China.
Events in Asia have been focused on the enormous and inspiring protests against Chinese state interference in Hong Kong’s parliament. At the time of writing, the protest movement is still unfolding and, while I have no expert or insider knowledge of it, I agree with my friend Kevin Lin’s analysis that it will be more difficult to deal with the Communist Party’s intransigence unless the movement can deepen from the streets to the workplaces and communities. As well as this informative piece, Kevin has offered an excellent analysis of the class divisions that underpin the city as a global hub of finance capital and the gateway for foreign investors into mainland China. According to the Hong Kong Confederation of Trade Unions, about 10,000 workers have been involved in strike action in support of the street protests. Such actions partly reflect the low real wages and precarious employment that afflict large parts of Hong Kong’s working class population. Whether or not questions of social class or labour movements are in the minds of protest organisers, these actions, as well as the dockworkers’ strike last year, suggest that it might be possible to widen the protests from a predominantly street-based movement to one that can leverage workers’ structural power to achieve its democratic aims.
For me, this raises two strategic questions: one, as Kevin Lin and others have suggested, is the central role of workers and labour movements in the struggle for democratic rights in China. The other concerns the role and power of the Chinese state. The extent to which protestors are thinking about these questions is not something I can address. But, in the following post, I want to post my thoughts on some recent interventions on the labour movement in mainland China. In a later post, I will offer some thoughts about the role of Chinese state institutions and nationalism in shaping workers struggles. I also want to point out that the following musings are not based on any expertise of my own—they are based on my readings of debates among genuine China specialists and, as usual, reflect my preoccupation with labour movements in Asia. They also reflect my belief that we need to situate current events in Hong Kong in the contest of social struggles in mainland China, in which labour rights play a central role.
On Chinese labour movements
Strikes and protests are extremely common in China and have been in the rise for many years. There invariably occur outside the influence of the All-China Federation of Trade Unions (ACFTU), which is basically an institution of the state. One estimate is that there was a 14-fold increase in ‘mass incidents’ from 1994 to 2008, with perhaps a third of the 127,000 incidents in 2008 related to labour struggles (Elfstrom and Kuruvilla, 2014). There has been considerable discussion about the importance of the 2010 Nanhai Honda strike to labour struggles. In a fascinating excerpt from his new book, labour researcher Eli Friedman argues that labour protests in provinces like Guangdong in southern China have become more ‘offensive’ in character. Nanhai Honda, he argues, also demonstrates the structural power of workers in complex manufacturing production networks anchored in China. Like all foreign auto assembly firms in China, Honda operates in joint ventures with local state-owned enterprises. It partners with Guangzhou Automotive Group Corporation as well as enterprises in other parts of the country. However, foreign auto firms are allowed to operate 100%-owned supply firms.
Nanhai Honda, established in 2007, is one such supply firm which manufactures parts for Honda’s joint ventures assembly operations. There was an official union at the plant but, as Friedman explains, it was incapable of representing its 2,000 employees’ interests. His excerpt outlines in fascinating detail how informal discussions among a small number of workers unhappy with their wages developed into strike action. This took most other workers by surprise when it began in May 2010. Not all workers joined the first strike action, with just 50 workers initiating a sit-in at the factory gate and returning to work the following day. Three days later, attempts to achieve a negotiated outcome broke down and 300 workers went on strike. The dismissal of two strike leaders further galvanised the strikers. Within a week, Honda’s entire operation in China was shut down. With the firm losing RMB 240 million a day (about $AU 45 million), the workers formalised their demands for higher wages and union ‘reorganisation’.
Throughout the process, the plant union alternated between passivity and openly supporting management by attempting to sow divisions among the workers. Friedman argues that, if anything, the ham-fisted attempts by the union to sabotage the strike convinced workers to defiantly maintain their actions. The government deployed police to contain the strike and succeeded in the bringing it to a close. Workers were encouraged to formally negotiate with representatives and sought legal counsel: in other words, to engage in a process of collective bargaining. By early June the workers had achieved large wage increases. Regular workers’ wages increased by at least one third and low-paid interns’ wages increased by over 70 percent.
Some analysts have interpreted the Nanhai Honda success as a defining moment in a general shift towards a more confident and assertive working class. For example, Elfstrom and Kuruvilla (2014) argue that favourable changes to labour laws, media reports of labour disputes and growing labour shortages have acted as ‘cognitive cues’, influencing a shift from defensive to offensive campaigns. In the 1990s, struggles were more defensive, they argue: many workers in state-owned enterprises were trying to protect themselves against mass sackings while many of the tens of millions of migrant workers fought against discrimination in urban areas. Since the early 2000s, they suggest, workers have shifted towards a more offensive orientation by, for example, pushing for higher wages and improved employment conditions. Other scholars like sociologists Lu Zhang and Beverly Silver have expressed similar views about the militancy of Chinese workers (Silver, 2003; Zhang, 2011). Thus, the Nanhai Honda dispute is interpreted in this light.
Certainly, there is evidence of rising wages in China, particularly in the coastal manufacturing zones, during the 2000s (Riskin, 2014; Buckley, 2014). But the claim that these structural (and other) factors have made workers more confident to demand their rights requires more critical reflection. As impressive as Elfstrom and Kuruvilla’s (2014) record of labour disputes is, they appear to misinterpret some of the literature. For example, they suggest that leading China scholar Anita Chan believes there has been a shift to ‘interest-based’ demands. In fact, her (and Kaxton Siu’s) argument is that Chinese struggles have tended to be limited to ‘rights-based’ demand. In their study of migrant workers’ protests in China, Chan and Siu framed rights-based demands as the ‘push for legal compliance when legal rights are being violated’:
“In this sense, the law imposes a maximum on claims—these can be no more than the minimum standards that the law requires. Interest-based demands go beyond the minimum standards defined by law: for example, a demand for a wage rise above the legal minimum wage. Thus, the issue at stake in interest-based claims is not one of legality, but of whether management chooses to accept or resist workers’ demands” (Chan and Siu, 2012: 87-88).
The authors go further is suggesting that this ‘distinction between the two types of rights can only exist when the standards set by the labour laws are recognized as a legitimate framework for regulating labour relations’ (Chan and Siu, 2012: 88). Changes to Chinese labour laws in recent years, such as the Labour Contract Law 2008 (see Gallagher and Dong, 2011), represent attempts to channel labour disputes into institutional parameters that the state can more easily control. In this context, formal labour organisations, such as labour NGOs, have tended to restrict workers’ disputes to rights-based demands, not the interest-based demands as Elfstrom and Kuruvilla point to. If we incorporate this counter-argument, then we might interpret rising wages slightly differently: for example, what evidence is there that rising wages can be explained by employers attempting to retain workers in high labour turnover industries? The issue is not that more disputes and strikes have been happening—this seems beyond doubt—but what the political character of these disputes is.
One possible reason why ‘mass incidences’ have risen is the inability of official unions to represent the interests of workers and institutionally restrict the number and scope of disputes. As the Nanhai Honda dispute rather starkly demonstrates, enterprise-level unions, which are supposed to officially operate in every Chinese workplace, are tools of management or, in some cases, local government/Communist Party officialdom. In another article, Eli Friedman argues that recent attempts to establish sectoral unions (i.e. industry-wide unions) are unlikely to succeed as an alternative to workplace unions (Friedman, 2014). In Guangzhou, where Friedman spent many months of field research in 2008-2010, sectoral unions were undermined because of divisions within capital. Here, where most production comes from foreign firms, industry associations are often divided (e.g. by nationality) undermining the basis for industry-level collective bargaining from the employers’ side. While sanitation workers campaigned for a sectoral union in this period, only a tiny percentage of workers are covered by sectoral wage agreements.
Friedman’s fieldwork in the city of Wenzhou, Zhejiang province, reveals that sectoral unions were more prevalent due to the greater role of small-to-medium sized businesses. In the eyeglass sector, which employs about 12,000 workers in the city and produces about 60 percent of all spectacles in China, the impetus for industry-wide agreements came from employers and the state as a means of lowering labour turnover (Friedman, 2014: 492). This is a very important point as it implies that there are multiple strategies for workers in tightening labour markets. While some workers may take industrial action, others, like the eyeglass industry in the Rui’an area of Wenzhou, will shift frequently between employers in the search for better wages. In this context, the push for sectoral unionism comes from capital. The key empirical finding in Friedman’s research is that these wage agreements are not really implemented on the ground. In fact, most employers he interviewed had never heard of them. Hence Friedman’s conclusion: that the institutional weaknesses of sectoral unionism create equally intractable barriers to genuine collective bargaining as workplace-level unions. This is a powerful conclusion despite longstanding attempts to import Western collective bargaining methods from the outside (see this interesting article on China Labour Bulletin’s Han Dongfang for a taste of this strategy).
Such institutional weaknesses continue to create space for alternative forms of leadership and organisation. Arguably the most important example of this was the Yue Yuen shoe factory strike in Dongguan in April. Dongguan is a large city in Guangdong province. Yue Yuen is a Chinese contract manufacturer that employed 400,000 people in 2012 and made 300 million pairs of shoes in 2013. That’s about a fifth of all the casual and sportswear shoes in the world! In Dongguan, Yue Yuen employs about 60,000 workers in six factories, mainly producing for Adidas and Nike. Most of the workers are women. This strike, which mobilised about 50,000 workers, seems to have been mainly led by middle-level managers who discovered that Yue Yuen was under-funding employees’ pensions. Rather than using the workers’ monthly wage to calculate pension contributions, Yue Yuen had been using the local monthly minimum wage. (Thanks to Kevin Lin for pointing out the leading role of managers to me). Although they underplay the role of managers as strike leaders, activist site Gongchao posted a fascinating analysis of the strike in July. While the strike fizzled out under severe state repression, Gongchao claims that it was ‘the biggest strike of migrant workers in China since the beginning of the boom in the 1990s’. A further factor in the strike’s defeat may be the ability of branded manufacturers like Adidas to source products from alternative sites, as reports by scholars at the ‘Chinese Labour in the Global Economy’ workshop at Nottingham University, 11-12 September.
This raises further implications in the context of above claims that China’s workers are shifting towards more offensive demands. One could argue that the Yue Yuen workers’ demands reflect generational change in China more broadly than a shift towards a more ‘offensive’ class mentality. Whereas the earlier generation of migrant workers in China in the 1990s often desired to return to their home towns or villages, where they would rely on their families for care in retirement, the new generation often regard themselves as permanent arrivals and demand similar rights as ‘local’ workers. A strike over contributions to a social insurance fund, like the Yue Yuen case, makes sense in this context. These workers want the right to settle down and retire without being ripped off by unscrupulous corporations.
The strike also raises implications for the role of ‘leaders’ and education in industrial disputes, particularly in such a repressive labour regime as China’s. One implication of this could be that the managers who led the strike were easier to ‘buy-off’ with higher wage offers. While this may have contributed to the campaign’s defeat, it also makes it more difficult for capital and the state to ‘keep a lid’ on struggles by channelling disputes through formal collective bargaining. Thus, there remains no genuinely representative layer of officials or negotiators (i.e. a trade union bureaucracy) who act as ongoing intermediaries between capital and labour, as has long existed in western countries. This is one reason why debate continues among Western unionists and labour researchers about whether or not to engage collaboratively with the ACFTU. This was debated at the Nottingham University workshop recently (see link above). The critical research of scholars like Eli Friedman and others raise serious doubts about efforts of western unions to engage with a state-controlled union with an extremely limited capacity to adapt and represent workers’ interests.
Buckley, P.J. (2014) in Davin, D. and Harriss-White, B. (eds) China-India: Pathways of Economic and Social Development, The British Academy, Oxford University Press
Chan, A. and K. Siu (2012) ‘Chinese migrant workers: factors constraining the emergence of class consciousness’ in B. Carrillo and D.S.G. Goodman (eds) China’s Peasants and Workers: Changing Class Identities, Cheltenham, Edward Elgar: 79-101
Elfstrom, M. and Kuruvilla, S. (2014) The changing nature of labour unrest in China ILR Review, 67(2): 453-80
Friedman, ED (2014) Economic development and sectoral unions in China, ILR Review, 67(2): 481-503
Gallagher, M.E. and Dong, B. (2011) ‘Legislating Harmony: Labour Law Reform in Contemporary China,’ in Kuruvilla, S., Lee, C.K. and Gallagher, M.E. (eds) From Iron Rice Bowl to Informalisation: Markets, Workers and the State in a Changing China, Ithaca, ILR Press: 36-60
Riskin, C. (2014) in Davin, D. and Harriss-White, B. (eds) China-India: Pathways of Economic and Social Development, The British Academy, Oxford University Press
Silver, B. (2003) Forces of Labor: Workers Movements and Globalisation since 1870, Cambridge, Cambridge University Press
Zhang, L. (2011) The paradox of labour force dualism and state-labour-capital relations in the Chinese automobile industry. In S. Kuruvilla, C.K. Lee and M.E. Gallagher (eds.), From Iron Rice Bowl to Informalisation:Markets,Workers and the State in a Changing China, Ithaca, ILR Press: 107-137.
Maruti Suzuki strike: two years later, 147 workers still in jail
24 September, 2014
Some readers may be aware of the industrial dispute at Maruti Suzuki in Manesar, near New Delhi, which took place in 2011-12. For many labour activists, this was the most important dispute in India since the 1980s. The best coverage and analysis (in English) can be found here. Although wages have increased significantly for Maruti Suzuki workers since the dispute, and the company has apparently stopped hiring workers through labour contractors (a major source of friction for Indian workers), about 550 regular workers were fired and thousands of contract workers.
Fewer will know that there are still 147 workers locked in Bhondsi jail in Gurgaon. These workers have been in jail for over two years without any conviction. They have been detained on suspicion of involvement in riots in July 2012 that culminated in the death of a company HR manager at the Manesar plant. Despite recent attempts to get bail for just two of the jailed workers, very little has changed. Now police are claiming that they found stolen car doors and iron bars in the houses of many of these jailed workers. In a sympathetic report, The Hindu claimed that 89 of the jailed workers have been held on the basis of testimony from representatives of Maruti Suzuki’s labour contractors and that, based on their witness statements, the workers apparently engaged in rioting by alphabetical order of their names!.
There are other reports that the Maruti Udyog Kamgar Union (MUKU) is now publicly supporting the jailed workers (Doval, 2014). If this is correct, it’s an interesting development. MUKU was established in the early 2000s as a company union at Maruti’s original plant in Gurgaon after management had defeated the previous, independent union, which was later de-registered. During the 2000s, MUKU did virtually nothing to support the interests of the vast majority of Maruti Suzuki workers, who are hired by labour contractors and not eligible to join unions. While there were murmurings of rank-and-file support, MUKU did nothing to support the younger workers at the Manesar plant in 2011-12. Why it would now decide to support the jailed Manesar workers isn’t clear but, if true, this report represents a welcome development in a struggle characterised by outrageous company and state repression.
Elsewhere in India…
Elsewhere in the auto industry, Bajaj Auto, which manufactures motorbikes, scooters and auto rickshaws, has hiked wages at its Chakan factory by up to Rs 10,000 per month (about $AU 177). This comes after a sustained industrial campaign by workers who made the unusual demand that workers be part-paid in a company share ownership scheme. The new deal offers workers a pay rise but no share options. But it’s only for permanently-employed ‘regular’ workers. The Chakan plant has about 2,000 workers, only 900 of whom are regulars. Great if you’re a regular worker; meaningless if you’re a casual or a contract worker. Unfortunately, this keeps happening across India. One of the novel things about the Maruti Suzuki action in 2011-12 was that it united regular workers with contract workers, trainees and apprentices. The campaign had it problems and, as mentioned above, was met with severe state repression. But one of the positives is that wages for all workers – including non-regulars – went up significantly. The Bajaj Auto result represents the bad old days of union practices in India.
Doval, P. (2014) Maruti’s union seeks bail to workers arrested in Manesar violence, Economic Times, 26 July
Indonesian labour under Jokowi
24 September, 2014
Disagreement about which candidate to support in recent presidential elections may well feed into arguments about which direction Indonesia’s labour movement should now take. Prof Michele Ford, who heads up the Southeast Asia Centre at Sydney Uni, recently wrote a very interesting op-ed in the Jakarta Post on the relationship between the new Indonesian president Joko Widodo (Jokowi) and the unions. Prof Ford, who is a leading expert on unions and labour relations in Indonesia, has been critical of the main leader of the Federation of Indonesian Metalworkers (FSPMI), Said Iqbal, who decided to support establishment candidate, Prabowo Subianto, for what appeared to be careerist reasons. The FSPMI is one of the most important and well-organised unions in Indonesia, with a strong base in industrial zones like Bekasi and Karawang, east of Jakarta. In this article, Prof Ford makes the thought-provoking claim that ‘Jokowi and Iqbal should be natural allies’.
Elsewhere, one of FSPMI’s leaders, Nyumarno, was sworn into the West Java regency legislative council along with 30 other new members. Nyumarno represented Jokowi’s party, the Indonesian Democratic Party – Struggle (PDIP), and says he wants to introduce a local law for a new industrial court. It will be very interesting to see how union activists who have achieved electoral success running as candidates for non-labour political parties will be able to represent union members’ interests in the early period of Jokowi’s presidency.
More recently, there has been some struggle in the streets. On 15 September, about 10,000 workers jammed the streets of central Jakarta to present their ’10 demands of the people’ (sepuluh tuntutan rakyat). Their manifesto includes demands against outsourcing, contractualisation and privatisation, as well as a call for a national living wage (upah layak nasional). The protesters were led by Congress of Independent Unions Action (KASBI), which has been based on West Java and, as Prof Ford says in her book Workers and Intellectuals (2009), has a history of participating in broad alliances to pose leftwing demands on the state over education and healthcare as well as labour rights and wages.
It will be very interesting how unions go under Jokowi’s presidency. In particular, let’s see how much emphasis is placed upon parliamentary negotiations and alliance-building as opposed to mobilisation in the streets, factories or industrial zones. Perhaps we will see both! One of the difficulties is that Jokowi is not known for his sympathy to unions. In fact, he is quite pro-business. On that note, London’s Financial Times ran a rather interesting article in August on new efforts to attract new investment in the Solo area—Jokowi’s homeland—in central Java. Among these efforts is a push to get new factories to source material to Japanese garments giant, Uniqlo.
China and India compared: SOAS study
19 September, 2014
Some preliminary results from a fantastic research project on workers in China and India have just come out. The project is called ‘Labour conditions and the working poor in China and India’ and involved academics from the Department of Development Studies at the School of Oriental and African Studies (SOAS) in London, Jawaharlal Nehru University in New Delhi, Hong Kong Polytechnic University and Peking University. It looked at the conditions of construction workers and garments workers in the two countries and was funded by the Economic and Social Research Council in the UK and British government’s Department of International Development. I’m sure lots of interesting publications will emerge from this. SOAS has released some bite-sized reports here. You can read them for yourself but I just wanted to comment on the standouts for me.
First, there are some clear similarities between Chinese and Indian construction. Both sectors are dominated by large firms (four of the five biggest construction firms in the world are Chinese) who contract to builders who subcontract to various firms who actually employ the workers. In both countries, work is intensive, wages are low and labour relations are highly ‘informal’. Having said this, things look a lot worse for Indian construction workers. In Delhi, virtually all workers are short-term interstate migrants hired by labour contractors. Most are not paid until their job is finished. Unlike China, whole families – men, women and children – migrate and work together on construction sites. Two-thirds haven’t completed primary school. There are no unions and very little social protection. Prof Ravi Srivastava’s report paints a dim picture for these workers in India.
On the garments sector, there is some survey research on workers in larger firms (the organised sector) in the New Delhi area but the really alarming material (for me) concerns the wages of workers who labour in small workshops or homes. While self-employed ‘own-account’ workers and wage workers in ‘micro-units’ earned Rs 6,503-6,950 per month ($AU 115-123), ‘homeworkers’–individuals working for piece-rate wages from home—earned Rs 1,280 ($AU 23). That’s an extreme poverty wage. Dr Alessandra Mezzadri’s report talks about workers going into debt to make ends meet but one wonders how any workers could survive on these wages, particularly in the NCR where costs of living are always high. Dr Mezzadri has written some excellent articles on these workers and the inability of ‘corporate social responsibility’ campaigns to address their concerns. So I’m really looking forward to seeing more information about the results of this project, as it comes out.
India: Modi’s labour law reforms
18 September, 2014
Since assuming office after the BJP’s crushing victory in the Indian general election in May, PM Narendra Modi has wasted little time in fast-tracking his reform agenda on labour laws. Big business, international financial institutions and many mainstream economists have high hopes that Modi can deliver a raft of pro-business policies like a new Goods-and-Services Tax (GST) or liberalising foreign investment in ‘multi-brand’ retail (Layak, 2014). But labour laws have been a major focus. Modi is proposing to amend the Factories Act 1948, Apprentices Act 1961 and the Labour Laws Act 1988 to ease ‘doing business’. In response, the leaders of the major trade union organisations (there are 12 such ‘peak’ bodies in India) called a national convention for September in New Delhi where they aimed to thrash out a response.
India’s core national labour laws have changed little since independence, even during the economic liberalisation of the last 30 years. They are premised on the idea of that the state should regulate a core of (non-agricultural) businesses with 10 or more employees, or 20 or more for those firms without electricity. This is called the ‘organised sector’ and is often used as a proxy for something similar called the ‘formal sector’. Most organised sector firms are required to register under the Factories Act 1948 which, in theory, means they must allow labour inspectors from state governments to enter and ensure company practices are consistent with the law. Everyone employed outside this sector – over 90 percent of all workers in India – is part of the unorganised or informal sector. Many regulations on working hours, female labour, irregular work, etc, are only applied to the organised sector. This model was designed during the colonial period and was based on the assumption that the organised sector would grow as India ‘modernised’. But it has been fairly clear since the 1970s that things have gone in the opposite direction: India’s labour forces have been ‘informalised’.
For many years, business groups have demanded that restrictions on organised sector firms be lifted. The main demands have focused on removing restrictions in the Industrial Disputes Act 1947 and the Contract Labour (Abolition and Regulation) Act 1970 (Shyam Sundar, 2012). The first law says that firms with 100 or more workers must seek state permission before sacking workers or closing facilities. The second law is supposed to limit the employment of ‘contract workers’ in ‘core’ or ongoing business operations. While Modi’s changes don’t deal with all employers’ concerns, they do represent a major change. For example, he wants to increase the threshold for firms to register under the Factories Act 1948 from 10 to 40 workers.
Many similar changes are already being implemented by a BJP-led government in the state of Rajasthan. Last month, Gautam Mody, secretary of the New Trade Union Initiative (NTUI), an independent union, explained these changes in detail. Like Modi’s proposals, the Government of Rajasthan raised the floor for Factories Act registration. It also raises restrictions under the Contract Labour Act from firms with 20 or more worker to forms with 50 or more workers. Furthermore, the government has made it easier to employ apprentices as cheap labourers by allowing firms to terminate workers without restriction during an apprenticeship and to treat types of casual and contract labour as apprentices. It has increased the threshold for state permission for layoffs or closure under the Industrial Disputes Act 1947 from 100 to 300 and it has increased the minimum number of workers in a firm required for trade union recognition from 15 to 30 percent. The state of Madhya Pradesh, also governed by the BJP, now says it will follow Rajasthan’s lead.
It will be fascinating to see what the unions plan in response. There was a general strike organised by the central trade union organisations in February 2013 which probably involved tens of millions of workers, although participation was uneven by region and industry. Whatever they do, unions will be running up against mainstream, neoliberal views which blame labour laws for restricting India’s growth and industrial development. This argument gets repeated all the time in the mass media but there is little actual evidence to back it up. Violations of labour laws, including minimum wages, health and safety provisions, rights to medical insurance, pensions and collective bargaining, are standard in India. Research I helped undertake in the New Delhi auto industry, one of the most advanced in the country, shows that about 75 percent of all workers in large factories were hired by labour contractors as ongoing, production-line workers, usually in direct violation of the Contract Labour Act (Barnes, Lal Das and Pratap, forthcoming).
An unusually-enlightened editorial from the automotive section of India’s Economic Times questioned the myth that the proposed labour law reforms will produce major economic benefits. It blames the lack of manufacturing development in India (compared to other Asian economies like China or South Korea) on poor labour standards. So they get the final word on this:
‘The old, sclerotic [automotive] industry was soon replaced by local versions of cars sold all over the world. This was supported by a strong ecosystem of component makers. Yet, over time, the car-making hubs around Delhi and Tamil Nadu have been marked by periodic labour unrest, as aspirations of workers collide with what industry is willing to offer. Most of the workforce is contractual, earning a fraction of what a proper blue-collar worker would earn, with few, if any, privileges of leave, insurance and medical assistance. These things have to change if manufacturing has to generate consumer demand as well’. Well said.
Barnes, T, Lal Das, K. and Pratap, S. (forthcoming) ‘Labour contractors and global production networks: the case of India’s auto supply chain’, Journal of Development Studies (accepted 14 September, 2014)
Layak, S. (2014) What India Inc expects from PM Narendra Modi, Economic Times, 29 June
Shyam Sundar, K.R. (2012) Contract Labour in India: Issues and Perspectives, New Delhi: Daanish Books
New film: ‘On the Threshold – Class Struggle in Delhi’
19 September 2014
I’ve just watched this educational documentary made by a group of leftwing activists. Overall, it’s very good and well worth watching for anyone interested in labour movements in India. The film is in Hindi with English subtitles. The film-makers received some funding from the South Asia office of the Rosa Luxemburg-Stiftung, the educational wing of Die Linke, the Left Party in Germany. The film comes in three parts. Part one looks at the working and living conditions of the workers in the New Delhi region. It mainly focuses on garments and auto workers. As they show, most workers earn the equivalent of $AU 100-200 p/month, depending on where they work and how much overtime they do (note that the Government of Haryana has just announced plans to increase the state minimum wage from about Rs 5500 to 7400, or from about $AU 97 to 131). Part two looks particularly at the industrial campaign at Maruti Suzuki in 2011-12. There were lockouts and factory occupations in July and October 2011 and a violent confrontation in July 2012, leading to hundreds of workers being sacked and 147 workers still in jail. Part three offers some analysis. They are very critical of the central trade union organisations. They show that most of the workers are ‘contract workers’ who cannot join unions and they end up also criticising the ‘union demand’, i.e. the demand to register new unions that contract workers cannot join. Speakers in the film repeat the call for union struggles to take a more ‘generalisable form’, although this is left a little vague. The film is long (2 hours) and, while I can probably think of other criticisms, it’s very enlightening and educational. If you’ve seen it, feel free to drop me a line and tell me what you think.
Relocating industry to Gujarat
19 September, 2014
Recently, there have been some major efforts to build up the local auto industry in Gujarat, western India. Currently, auto production—which is key to the country’s ambitions to develop a dynamic manufacturing sector—is dominated by three regions: a Special Economic Zone (SEZ) surrounding the small town of Chakan, near the city of Pune, 150km southeast of Mumbai; the Chennai Metropolitan Region in Tamil Nadu; and the National Capital Region (NCR) that surrounds New Delhi, including industrial zones like Faridabad, Gurgaon, Manesar and Greater Noida. Under Modi’s chiefdom, the state government convinced many foreign transnational corporations to invest in Gujarat. They managed to lure Tata Motors away from West Bengal, whose plans to build supposedly the world’s cheapest car, the Nano, were bitterly opposed by local landowners and politicians, creating a movement that helped to bring down that state’s long-serving Communist government in 2011.
Today, the Nano is being pumped off the assembly line at Tata’s factory in the town of Sanand in Gujarat, not far from the state capital, Ahmedabad. Now other major corporations are following suit: Modi personally met with Ford global CEO Mark Fields in July to seal a $US1 billion investment for a new factory at Sanand, with planned capacity of 250,000 cars per year (Thakkar, 2014). More recently, he has met GM global CEO, Mary Barra. As parts of its plans to cement its 53 percent market share in scooter production, Honda is planning to set up a 3000-worker factory in the Greater Ahmedabad area with annual capacity of 1.2 million scooters (Chauhan, 2014).
These plans for expansion in Gujarat are even more interesting when one considers that auto sales have struggled in the last couple of years, alongside industrial production as a whole. The Vice-Chairman of Toyota’s operation in Bangalore, Vikram Kirloskar, reckons that 2.5-3 million jobs were destroyed in the industry in the two years to June, representing about a 10 percent decline (Economic Times, 2014). It remains to be seen whether these signs of a recovery in investment and factory-building will concentrate in Gujarat. There has also been talk about Maruti Suzuki, India’s largest carmaker, setting up production there too. If so, Gujarat could well emerge as India’s fourth auto-industrial zone and as a new base for industrial relocation.
Industrial relocation is always a double-edged sword for workers. On one hand, thousands of migrants workers will likely swarm to new industrial sites in search of jobs and opportunity, as they have to industrial zones across India. On the other hand, this will be used as a weapon against auto workers in the existing zones. Maruti Suzuki already threatened to shift production to Gujarat during the major industrial confrontation in Manesar, near Delhi, in 2011-12. I remember speaking to a plant manager at a major Maruti parts supplier in 2013: he said the company was seriously considering shifting production in response to the unionisation drives that had broken out in the area. On a global scale, auto makers have history of relocating plants in response to workers organising or pushing for higher wages. It happened in Detroit, home of America’s big 3 (Ford, GM, Chrysler) as far back as the 1950s. So, relocation to Modi’s Gujarat—a state under the thumb of the BJP and its despicable family of organisations—combined with changes to labour laws is likely spell some tough and challenging times for auto workers in India.
Chauhan, CP (2014) Honda to set-up world’s largest scooter plant in Gujarat, Economic Times, 4 August
Economic Times (2014) Automotive sector lost 25-30 lakh jobs in last 2 years: Vikram Kirloskar, Economic Times, 28 June
Thakkar, K. (2014) Modi wants Ford to put Sanand a global manufacturing map [sic] Economic Times, 3 July