Labour and Indian garment exports: a case study of Tiruppur knitwear industry

In earlier sections, the pattern of distribution of the workforce in Indian textiles and garments sector has been already depicted. The growing share of cotton knitwear in India’s export basket of garments is obvious. Knitwear has gradually increased its share in total garment exports from 16.9 percent in 1983 to 33 percent in 1999, and manufacturing of knitwear in and around Tiruppur accounts for the major chunk of exports under this category.

In fact, its growth since the mid-1980s owes solely to the massive surge in exports of cotton knitwear. Being one of the most vibrant of the export segments, a study of labour market changes in the region would reflect the macro-changes consequent to export production.

Interestingly, labour in the Tiruppur knitwear industry, despite being confined largely to the unorganized sector, has a long history of labour mobilisation through two trade unions affiliated to the two dominant parliamentary communist parties in India, CPM and the CPI (CITU and AITUC respectively). Discussions with respondents among exporters reveal that Tiruppur’s major competitors are China and Bangladesh. However, they claim to have an edge in the relatively low-volume, fashion-intensive category compared to these countries on account of their dense networking and modes of labour use. This observation, as other studies point out, is not unique to Tiruppur and can be safely extended to other centres of garment production in India as well (Tait 2001, 44). In this section, we profile the important changes in the labour market and modes of labour use and attempt to seek inferences for labour in a post MFA regime. However, we also draw upon other studies undertaken with regard to garment industry in other parts of India to adduce further evidence.

5.1 Growing feminisation of the workforce

Exports from Tiruppur began in the early 1980s and has been increasing rapidly since then. Given the high labour requirements of the industry, this growth process has been enabled by the growing incorporation of women and children into the workforce apart from sourcing of migrant labour from the arid agricultural hinterlands of Tamil Nadu. The following table depicts the feminisation of the workforce during this period (Table 3.10)

Given the predominance of ‘informal’ sector activity as the garment sector elsewhere in India, the data is highly unreliable insofar as the magnitude is concerned. Only 904 factories are listed for 1998 when informal sources reveal that there are over 5000 firms in Tiruppur. If the latter number were fairly accurate, it would imply that only 20 percent of the factories are in the organized sector. Further, data for the year 1990 is very inaccurate

and not consistent with the data for the remaining years. Another glaring underestimate is the figures on child labour (‘boys’ and ‘girls’ category). It is clear from visits to the numerous units that helpers in all stitching units are child workers, except in a few direct exporting firms, which account for 15 to 20 percent of the total workforce. These limitations notwithstanding, the data is definitely useful to indicate broad trends in composition, duration of employment and the growth of the industry.

Table 3.10: No. of workers employed in the knitwear industry in Tiruppur

Year Tot. no Sub. Total Men Women Male Female Boys Girls Share of FL returns

1998 904 721 28298 19892 8406 0 0 183 997 33

1997 843 670 12263 8804 3459 0 0 0 0 28

1990 311 289 4338 3993 311 19 15 0 0 8

1985 219 185 2235 1525 312 200 143 50 5 21

Note: ‘Males’ and ‘Females’ are adolescents aged between 15 and 18 while boys and girls represent child labour. ‘Sub.’-factories submitting returns, ‘Share of FL’- Percent share of total female labour employed.

Source: Inspectorate of Factories List, Palladum Taluk for year 1985, and Tiruppur Taluk, respective years.

The important observation is the phenomenal growth in the use of female labour. From a low of around 21 percent in 1985, the proportion of female labour in the total workforce has increased to 33.8 percent. In absolute terms, the number is very high when we consider the fact that the total workforce has increased from an average of 2000 workers to nearly 30,000 workers in 1998. Interestingly, among child labour, girls account for over 90 percent of the workforce. Nevertheless, they seem to be present in a lesser proportion among the older workforce. This is due to the segmentation of the workforce along gender and age lines.

5.2 Segmented labour markets

Though children have been employed in this industry before, with the movement to the export market, the quantum of use has increased manifold. Though it is difficult to come up with estimates of the absolute magnitude, informal sources place the workforce in this sector to number around 200,000. Of these, nearly 20 percent are children and women workers would account for another 30 to 40 percent of the total workforce. The labour market is highly segmented with women and children confined to a specific set of jobs, which as we shall see in Table 3.11, are relatively less paying as compared to jobs in which men predominate.

There is no discrimination in wage rates against women within a job type. However, as can be seen, women are employed predominantly in the lesser paying jobs. The wage rates given in Table 3.11 provide only the average rates, and actual rates are found to be

much lower in firms located on the urban fringes. More women are employed in such firms as they need to be closer home to attend to household work as well. Further, women workers do not undertake jobs in ancillary firms like fabrication units as it would involve working night shifts, which once again undermines their access to relatively better paying jobs. Thus, the structural location of women in a patriarchal household too reinforces the segmentation process. In fact, it may be even argued that jobs that exclusively employ women or children are lesser paying precisely because women and children are employed, since their wages are seen to only supplement the family income.

Table 3.11: Worker characteristics in finishing units, Tiruppur

Processes Job Age Sex Approximate

wage rate in 1999

Cutting Pattern master A M >5000 per month

Cutting master A M 80-100

Stitching Tailors A M,F 75-90

Helpers C M,F 30

Trimmers C M,F 30

Folders C M,F 40

Checkers A F 65

Button holing & fixing A M 60

Label fixing A,C M,F 60

Pressing Iron master A M 90-100

& Packing

Packers A,C F 60-65

Note: Wage rates, except otherwise stated refer to that paid per shift (8.30 AM to 5.30 PM).

‘A’- Adult, ‘C’- Children, ‘M’-Male, ‘F’- Female.

Source: Fieldwork undertaken in 1999.

5.3 Casualisation of labour

With movement to the global market, demand has become more seasonal, uncertain and flexible. It is therefore imperative for capital to flexibilise the workforce to adjust the quantum of labour employed to production requirements. For most firms in Tiruppur, production ceases for nearly four months in a year and hence, it is expensive for firms to maintain a permanent workforce. Along with the movement to the export market, there has been a growing casualisation of the workforce, with recruitment ‘just-in-time’. Workers, especially tailors who constitute bulk of the labour force, are recruited indirectly through labour contractors who would bring in labour whenever required. These labour ‘gangs’

under the contractor move from firm to firm according to employment availability. As a result, workers find employment in the industry only for eight months in a year. On the other hand, workers employed in firms catering to the domestic market are recruited directly and employed on a permanent basis. Given the uncertain employment prospects, households of

the workers are forced to send more than one member of the household to work in the industry so as to reduce the risk of inadequate income due to uncertain employment.

This casualisation of the labour force also precludes them from bargaining for social security provisions that had been fought for and obtained through trade union struggles in the early 1980s. At present, of the 5000 odd firms in Tiruppur, there are only roughly 20 to 25 firms that provide social security benefits to employees, like Employees State Insurance, Provident Fund, etc.

5.4 Work intensity and conditions of work

Under the Indian Factories Act of 1948, and the Shops and Establishment Act, workers ought not work for more than 48 hours per week. However, in Tiruppur, such regular and optimal work hours are found only in firms catering to the domestic market. The movement to the export market has rendered the need for a labour force willing to work for long hours.

Given the importance of sticking to delivery schedules, workers during peak season are found to work intensively for lengthy periods. In tailoring units, workers including child workers, tend to work for 36 hours at a stretch, and then go home for a short break, only to return to work the following day. On an average during peak season, workers in finishing firms, especially tailors, work for a minimum of 10 hours, six days a week. Working for three or four continuous shifts are however quite common.

It is said that the turnover time, i.e., the time taken between the placement of an order with an exporter and the arrival of garments on the sellers’ premises, has come down over time and this squeeze on time available to complete orders subject workers to such intense work hours. And importantly, such intense work hours alternate with bouts of unemployment during which workers are engaged in search for employment. A study finds that the high work intensity and the cotton dust permeating the town has led to serious ailments among workers including children (cited in John 1998). In fact, over 60 percent of child workers reported ill health that included mouth ulcers, respiratory problems, stomach-ache, giddiness, etc.

Apart from such effects of long work hours, work also poses serious hazards due to inadvertent slipping of fingers or hands or dresses into the stitching machine. An incident in point is the recent death of a child worker. While she purportedly worked in a unit that would fall under the Factories Act, the accident however took place in a neighbouring unit run by the owner’s son which was not registered. This unit functioned as an extended production unit of the former firm and worked on the excess orders of the parent firm passed on to this unit to overcome capacity constraints. Hence, legal redressal could not be sought (John 1998, 9).

5.5 Mode of wage payment

During the initial phase of exports, when quality requirements were low, payment of wages moved to piece-rate system from the time-rate system extant in the segment catering

to the domestic market. However, over time, especially from 1990, with the region’s movement to the semi-fashion segment with its attendant quality requirements, wage rates have slowly reverted back to the time rate system in a number of firms. It was felt that under the piece rate system, workers were not paying sufficient attention to the quality of stitching and that the piece rate system was detrimental for production in the new segment. This warranted a reversion back to the time-rate system among tailors. However, through casual employment and recruitment through the labour contractors, entrepreneurs ensured that the work was completed within the prescribed time limits. A few other jobs like cutting, cone winding, etc.

nevertheless continue to pay on a piece-rate basis. The combination of indirect recruitment, casual employment and use of time-rate system to ensure quality despite use of variable labour indicates greater control of capital over labour.

5.6 Wage rates

Despite periodic wage agreements between trade unions and exporters’ association, and consequent hikes in nominal wage rates, real wage rates have continued to stagnate since the early 1980s (Bhattacharya 2000)¹⁷. Further, given the decline in quantum of employment in a year, it is difficult to anticipate any improvement in the total income earned as well. That the wages do not constitute a ‘living wage’ is clear from the fact that most worker households tend to send more than one member to work in the industry (Vijayabaskar 1999). An oft-cited reason is that income from one person is not sufficient to sustain a household over the year. This is especially true in the context of uncertain and seasonal availability of employment. The knitwear complex therefore sustains a low-cost workforce by employing family labour and paying less than a ‘living wage’ to individual members of the household. However, such wage cost reducing strategies are undertaken despite the relatively low share of labour costs in the total cost of production (Table 3.12).

Table 3.12: Break-up of cost of production

Cost components Percentage share

Raw materials (yarn) 60-70

Fabrication 2

Processing 10-15

Finishing 15

Source: Vijayabaskar 2000, 12

Labour costs are factored into ‘finishing’ costs, where labour would account for more than 90 percent of the total. Exporters enjoy a margin of 12 to 15 percent while margins are much less at around 8 percent for the sub contractors. The data on production costs indicate

17 Nominal wage rates are already given in Table 3.11.

that cost reducing strategies can be extended to other components as well, especially that of

‘raw materials’ through productivity improvements in yarn and fabric processing. However, the fact that exporters basically house finishing units where labour costs constitute the bulk of total production cost may direct cost reduction to labour costs.

5.7 Declining unionisation

As stated earlier, the knitwear industry in Tiruppur has been characterised by a strong trade union presence despite its confinement to the ‘unorganized’ sector. Throughout the 1970s and early 1980s, a series of strikes that sought to wrest some rights for workers like shorter working day, implementation of a time-rate system, social security benefits, etc were carried out with a fair degree of success. The rise of a decentralised production system with dense layers of subcontracting is, in fact, partly in response to this labour strength (Cawthorne 1993). At present, however, few firms provide these benefits to the workers.

Working hours have increased considerably as discussed earlier. Given the high fragmentation of production and casualisation of labour, workers increasingly fall outside the ambit of seeking legal redressal. In the course of interviews with trade union officials, everyone concurred that though they have a significant role to play, in recent years their effectiveness has been undermined due to changes in nature of the product market and the attendant changes in production organization. Demand being seasonal and labour status

‘casual’, employment is available only for six to eight months a year. On the other hand, during peak season, the need to stick to delivery schedules forces labour through long work hours. This insecure employment for which ‘local’ capital is less responsible prevents trade unions from demanding any kind of social welfare and employment security measures from producers. Further, since employment is only seasonal, workers do not have an incentive to organize themselves during peak season as they need to work long hours to compensate for offseason unemployment. Another factor that has rendered worker mobilisation difficult is the large scale use of internal migrant labour, especially that of temporary migrant workers.

Even the wage rates fixed after negotiation by trade unions are, however, not adhered to by most firms in Tiruppur.

The unionisation levels have declined and at present trade union membership would not exceed 10,000 members among a workforce of over 200,000. As a senior trade union official remarked,

“I can’t say that we are completely powerless now. We can call for strikes now and we continue to settle capital-labour disputes at the firm level. However, it is true that the number of people who come to us have declined, especially with women and migrant workers’ entry. You can’t blame them. They have work only for a maximum of eight months a year and they would like to work as much as they can during this period”

(Official AITUC, interview by author in Tiruppur, 5/8/2001).

Thus, worker mobilisation has been gradually undermined over the years through an interplay of various factors. Though not necessarily a conscious strategy of local capital, the

logic of global capital’s need to keep costs down under flexible market conditions has definitely influenced this process. The introduction of process improvements and product innovations has taken place during a period when labour’s bargaining strength has been waning. This appears to indicate that the imperatives of competition at the global level has a definite bearing on labour relations in the region. It can be said that the former has undermined to an extent local labour organization, thereby facilitating the formation of a labour market conducive to flexible accumulation.

These changes are very much in congruence with recent trends in characteristics of the global market. In an international survey of the textile and clothing industry carried out by Underhill (1998), the most important contributor to failure was found to be inappropriate products for rapidly changing markets. This has serious implications for workers. The number of buying seasons has doubled in the last few years to between six and eight as retailers are only willing to carry limited amounts of stock in order to respond more quickly to changing trends. Such demands for flexibility are clearly linked to labour conditions since they translate into forced overtime and extended periods of unemployment” (Hale and Hurley, 9). Given such tendency towards greater flexibility in product markets and the onset of more competition among low-income economies, flexibility of labour markets seem to be a necessary condition to compete. However, ‘active’ or ‘functional’ flexibility that enables workers to develop multiple skills, contribute to innovation and enjoy higher wages would be possible only when producers are involved in industrial upgrading and competing through innovation.

5.8 Pressure for labour flexibility

Despite the availability of such a flexible workforce, exporters continue to stress on the need to implement fresh labour laws so as to enable them to exercise greater control over labour.¹⁸ Such measures are especially seen to be important in the context of a quota-free regime and the need to compete with countries like China where labour is reported to work for longer hours, capable of undertaking multiple tasks, etc. Further, India’s workforce appear to be less ‘flexible’ and enjoy a greater ‘bargaining strength’ as compared to some of its competing countries like China and Indonesia. Though, in the case of Tiruppur, these strengths or labour market rigidity are hardly visible, such macro-indicators along with lower labour productivity levels may be used to highlight the need for labour market reforms. In fact, even in Tiruppur, producers insist on the need to restructure labour markets.¹⁹ Formulation of a helpful exit policy is seen as critical to sustain or improve

18 “It is, however, the labour laws which the companies seem most opposed to, the policy appearing to be ‘can hire but cannot fire’ …” (Tait 2001, 47).

19 The Tiruppur Exporters Association President has this to say, “ It is essential that the knitwear industry consolidates its strength and remains competitive in the face of aggressive competition from China, Indonesia and Thailand where reportedly labour works faster and do many different jobs at the same time.” (Apparel Fortnightly May 16-31, 2001, Vol. VIII. No.4, pg. 35).

competitiveness in the world market. To be sure, changes in other realms of policy making have also been demanded like the need to open up the sector to large-scale production,

competitiveness in the world market. To be sure, changes in other realms of policy making have also been demanded like the need to open up the sector to large-scale production,