CHAPTER-V Labour Market of Tiruppur, Kannur and Morbi Towns V.l Introduction Flexible specialisation IS a new paradigm for industrialisation in developing countries. What is the condition of labour under the regime ofFlexible Specialisation? Here we need a band of skilled workers with an innovative mind. They produce for the competitive market in a creative and interesting work environment Here working conditions are also humane. We also know that Flexible Specialisation is a strategy of permanent innovation and an accommodation to ceaseless changes of demand in the market by the firms. Here the firms don't require same quantities of labour at all times. The question is of labour flexibility. Labour flexibility refers in general to a logic of tailoring labour inputs in production to shifting levels and qualities of output (Storper and Scot, 1990). There are three domains of labour relations in which producers may attempt to introduce flexibility. Firstly - they make the wage rate downwardly adjustable and strike wage bargains on an individualised, worker by worker basis. Secondly - internal flexibility where polyvalent skills and aptitudes enables workers to perform many different kinds of task inside the production units. Thirdly - external flexibility primarily achieved through turnover, which is particularly high where output level fluctuates widely and workers are easily replaceable. Internal and external flexibility are managerial strategies for adjusting production under conditions of competition and their impact on workers level of security is substantial. There can be three kinds of workers security (Standing, 1988) -job security - the extent to which a worker is guaranteed a job with a particular firm; employment security- the degree of fixity of workers tasks within a particular firm; and labour market security, the workers ability to remain employed within a given labour market, but possibly in a series of different jobs. The main ofthis chapter is to understand the conditions oflabour in the regime of Flexible Specialisation. In addressing the labour market of the three towns, we shall develop few issues from flexible specialisation and try to fit these in the context of labour market of the towns. 136
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CHAPTER-V
Labour Market of Tiruppur, Kannur and Morbi Towns
V.l Introduction
Flexible specialisation IS a new paradigm for industrialisation in
developing countries. What is the condition of labour under the regime ofFlexible
Specialisation? Here we need a band of skilled workers with an innovative mind.
They produce for the competitive market in a creative and interesting work
environment Here working conditions are also humane. We also know that
Flexible Specialisation is a strategy of permanent innovation and an
accommodation to ceaseless changes of demand in the market by the firms. Here
the firms don't require same quantities of labour at all times. The question is of
labour flexibility. Labour flexibility refers in general to a logic of tailoring labour
inputs in production to shifting levels and qualities of output (Storper and Scot,
1990). There are three domains of labour relations in which producers may
attempt to introduce flexibility. Firstly - they make the wage rate downwardly
adjustable and strike wage bargains on an individualised, worker by worker basis.
Secondly - internal flexibility where polyvalent skills and aptitudes enables
workers to perform many different kinds of task inside the production units.
Thirdly - external flexibility primarily achieved through turnover, which is
particularly high where output level fluctuates widely and workers are easily
replaceable.
Internal and external flexibility are managerial strategies for adjusting
production under conditions of competition and their impact on workers level of
security is substantial. There can be three kinds of workers security (Standing,
1988) -job security - the extent to which a worker is guaranteed a job with a
particular firm; employment security- the degree of fixity of workers tasks within
a particular firm; and labour market security, the workers ability to remain
employed within a given labour market, but possibly in a series of different jobs.
The main o~jective ofthis chapter is to understand the conditions oflabour
in the regime of Flexible Specialisation. In addressing the labour market of the
three towns, we shall develop few issues from flexible specialisation and try to fit
these in the context of labour market of the towns.
136
Holmstrom ( 1994) had suggested that, in a country like India - with a
massive surplus of labour, including many kinds of highly skilled labour - there
appears three possible paths to developments. First is the Fordist mass production
(boring, deskilled, but well paid for those lucky enough to find jobs). Secondly the
existence of a low paid insecure work for as many people as possible and more
hopeful scenario in the line of flexible specialisation. In our study we are not
going to consider the first one as suggested by Holmstrom.
It is more than obvious that our three towns have been able to create a
sufficient number of jobs and those coming to the towns were able to engage
themselves in some activities, except during the lean season. (We admit, Kannur
context is different from Tiruppur and Morbi; but we consider Kannur's
potentiality in the job generation). There is almost a suggestive full employment
in the three towns particularly during the peak seasons of the year.
How are the towns of Tiruppur, Kannur and Morbi able to create jobs?
Given that they have been able to create market niches for their products at
national and international level, there is enough demand for their goods
accelerating employment generation. There are two ways in which the towns or
industry or firms can create demand for their products and both have differential
impact on the conditions of labour. Flexibility can take the f{)rm of a 'active
versatility' or 'passive pliability' (Semlingar, 1990). It can consists of an ability
to exploit market niches and quickly respond to additional demand, based on a
skilled and polyvalent labour force, or it can also mean simply to submit to
outside pressure from customers and accept the cutbacks. In a massive labour
surplus economy there are two options 'low road' and 'high road' to industrial
restructuring (Sengenberger and Pyke, 1992).
The 'low road' consists of seeking competitiveness through low labour
costs and a deregulated labour market environment. It is believed that cost cutting
will boast productivity and profit. 'Low road' brings a short-Jived improvement in
competitive performance. In the long run it makes matters worse, because it
inhibits firms from building up the flexibly-skilled self confident workforce
(Holmstrom, 1994). The 'high road' is based on efficiency enhancement and
innovation, through economic gains that allow wage gains and improvement in
social conditions as well as safeguarding workers right and providing adequate
117
standards of social protection.
The whole question in labour market study is based on towns capacity to
explore the market niches for their products and thereby create jobs for the people.
If it is based on 'active versatility' and 'high road' it is good and we have not
much to say. If it is based on 'passive pliability' and 'low road' - how can we
transform the situation? Is it through some institutional regulations? Institutional
regulations for the Interest of working class-might make them more confident,
competitive and innovative and can play an important role in turning the town or
industry's production base from 'passive pliability' to 'active versatility'. Of
course they will produce good products, but entrepreneur's role to explore the
market niche for such products will be important. In the following part we shall
address some of the points on the regulation of labour markets effected through
through labour institutions and the government.
Labour market flexihility (LMF) is interpreted to mean the absence of
norms and institutions and is regarded as essential for the maximisation of both
employment and economic growth. The basic prescription which emerges from
this perspective is that interventions in the labour market by government and
labour institutions should be minimized (Ghosh, 1995). Why LMF has become a
major issue in todays world? Globalization has vastly increased the importance of
exogenous events to which economies now need to continually adjust. LMF is
viewed as an important determinant of an economy's ability to make adjustments
to its productive structure as and when necessitated by exogenous events with
minimum damage to output and employment. The structural reform programme
started by the Government oflndia in 1991, involves a shift of policy regime from
regulated and controlled policy regime to decontrolled and liberalised policy
regime. Government policy has 1iberalised financial and capital markets of foreign
trade regime. There is the agenda of government for de-regulation of labour
market. It evolved several regulations to regulate the wages of labour and
decisions regarding hiring and firing of workers. Deregulation of labour market
requires changes in labour market regulations to achieve LMF so that labour
develops capability to respond to market changes (Boyer, 1988). The necessity to
deregulate labour market has brought labour market reforms to the forefront of
13R
hegemony along with the contemporary preoccupation with compiete reliance on
the market forces to solve all the central problems of the economy (Seth, 1994 ).
There are wide disagreements about the appropriateness of the government
reforms in the labour markets of the developing countries among policy makers.
"Some view government regulations of wages, social security, job tenure and
collective bargaining as djstortions in the utopia created by free market forces.
Others believe that social reality in the developing countries create certain
objective conditions that result in large deviations from the competitive world
envisaged by free market. Therefore, they stress potential benefits of intervention.
They believe regulated market for labour adjusts better to market shocks than
unregulated labour markets. Hence, proper labour market intervention helps in the
minimization of social costs of structural adjustment" (Standing and Tokman,
1 991)
A common assumption underlying the labour market regulations in the
developing countries is that the demand for skilled workers is much higher than
their availability, whereas there exist excess supplies of unskilled workers. In the .
case of skilled workers, demand determines rriarket wage. However, in the case of
unskilled workers, the existence of excess supply necessitates government
intervention through minimum wage legislations (Seth, 1994). Due to the non
existence of any appropriate social security networks, a large number of people
are living below the poverty line. Continuity of job and job security assumes
greater importance as an essential part of the government policy. All these factors
provide the rationale for government intervention through minimum wage and job
security legislations (Seth, 1 994).
A general proposition is that economtc outcomes such as production,
efficiency, accumulation, growth and income distribution are affected by
institutions. The interest in institutions has been more pointed in the analysis of
labour markets. This is so particularly because labour market are social
institutions (non-economic aspects) of a special kind (Solow, 1 990). Labour must
be supplied by human beings who necessarily exist in a social context. Labour
139
market institutions need to allow for non-price influences on the entire chain of
labour processes, including ways in which labour is incorporated into production
about remuneration, working conditions and associated social and economic
guarantees and their determination. Information about jobs, mechanisms for
access to employment, job hierarchy in terms of status or income, motivation and
inducements to work, job and social security, skill formation and many other
factors are vital in labour performance. But the perspectives tend to be dominated
by the questions of the organisation of labour, industrial relation systems and the
state's role in the labour market. Trade Unions are viewed as the primary
institutions in the labour market (Papola and Rodgers, 1992).
The diluted role of governments in regulating LMF has weakened unions
because unions have less space to claim when scope, frequency and intensity of
tripartite industrial dialogues and social partnership are reduced in favour of
decentralized powerplay. Once solidarity is replaced by competition, market
forces tend to prevail in the long run and inflexibilities dissolve away (Mathur,
1994).
The basic issues in a study of relationship between labour institutions and
economic development are, firstly, to identify the links between economic and
social forces which results in individuals undertaking productive work,
productivity of the work and conditions under which it is done. Secondly there are
many factors which induce the workers to work and also affect their work, namely
economic incentives and rewards and the rewarding nature of particular jobs
(Papola and Rodgers, 1992). Labour institutions may serve the interest of
economic efficiency and growth. They may also be instruments to moderate the ill
effects of indiscriminate efficiency mainly in terms of maldistribution of income,
deterioration in non-economic indicators ofthe quality of life.
A common hypothesis often advanced in respect of labour institutions in
India is that they have not been helpful in the efficient and adequate use of the
large mass of available labour for economic development. Trade Unions have
'been often identified as institutions restraining employment and production. Yet
140
some industrial centres like Bombay and Ahmedabad have experienced high
growth despite unionism. In Kerala unionism have been able to sustain high
wages but at the cost of very high _levels of unemployment. Now two questions
arise in our mind. One, does LMF clear away unemployment and two (following
Pi ore 1993) - can labour institutions be housed in a competitive structure, where
cooperation exits between employee and employer (not explained by model of
labour market outcomes).
In this chapter, we intend to study whether institutions (labour, social or
government institutions) in the three towns, through regulation have been able to
turn flexibility to a form of 'active versatility'. We shall look at these issues based
on the empirical experiences we have gathered on working conditions of labour,
employee-employer relations, labour market information system, labour
flexibility, their security and skill formation.
V.2 Labour market information system
How people get into the jobs in these towns? Since all the firms are
private there are no formal procedures to recruit the workf.orce like in the
government establishments. We had interviewed both employee and employer on
how they got into the jobs or how they recruit labour? We provided the following
· options to the workers about the market information system - personal contacts,
advertisements, family and relations, direct visit to firm and any other reasons. We
asked the entrepreneurs whether they recruited workers through advertisement,
word of mouth or through contractors and other methods.
Table 5.1 shows a contrasting picture of labour market information system
for the three towns. In Tiruppur workers came to know about job availability
through personal contact with the entrepreneurs; family, friend and relatives,
direct visit to firms or through advertisement board placed outside the factory
gate. All these are common practice in Tiruppur and have almost equal share in
the labour market information system. We had interviewed 120 male workers and
80 female workers (including the child labourers) in Tiruppur. Altogether 33 male
. 141
workers (about 28 percent) and 27 female workers (about 34 percent) had reported
that they got their jobs through personal contacts. Thirty five male (29 percent)
and 21 female (about 26 percent) reported their job
Table 5.1
Labour Market Information System
Job Acquisition TIRUPPUR KANNUR MORBI tbrou2h
Male Female Male Female Male Female
1) Personal Contacts 33(27.5) 27(33.8) 25(71.-l) 11(44.0) 21(100.00 5(25.0)
Note: * PI: First priority * PII: Second priority * Figures in brackets are in percentage * Sources of data: field work, 1997-98
l.J2
N-15 N-15
acquisition through informal advertisement. For 2I male ( 18 percent) and 15
female workers (18 percent) it was done through family and relations. A
considerable proportion ofworkers (28 in total or about 23 percent male and I7 in
total or 2I percent female workers) got their jobs through direct visits to the ·firms.
We had asked the entrepreneurs how they recruit workers. Majority ofthem (35 in
total or about 61 percent) responded that they first put a board at the factory gate
indicating the type and quantity of labour requirements. Preference of 21
entrepreneurs (36.8 percent) was to send the message by word of mouth. Most of
the entrepreneurs (55 or about 97 percent) resort to word of mouth procedure as
second priority to recruit labours (Table 5.2). Now-a-days some entrepreneurs
display their labour requirements through the cinema halls advertisements. We
had earlier mentioned cinema halls as being a major source of recreation for
Tiruppur workers.
Kannur showed a difference picture. There we interviewed 35 male and 25
female workers. For 25 male workers (71 percent) personal contacts was a major
source of labour market information, while only II female workers (44 percent)
had reported this as an option. Family and relations is another major source of
information for 6 (24 percent) female workers (Table 5.1 ). Out of IS
entreprenuers with whom we had interaction I4 had reported that passing the
message through word of mouth is the main procedure for the recmitment of
labour: A few had responded to preference for recommendations by senior,
experienced workers (Table 5.2). Workers in Morbi town had responded in a
different way. All male workers responded that they got the information of job
availability through personal contact with the employer (Table. 5.1 ). In the case of
female workers, the situation we found was different from the male. Altogether 15
female workers (75 percent) responded that they got the information about job
availability through family and relatives. Rest of the female workers told that they
got job market information through personal contact. All Morbi entrepreneurs rely
on the procedure of world of mouth to recruit labourers (Table 5.2).
V.3 Education and skill of labourers
Tiruppur knitwear industry can also be seen as a generalised process of
skill acquisition. Workers have tended to acquire a range of different skills in
different workshops accentuated by the demand for labour (Cawthorne, 1995).
Even though workers can perform different kind of jobs, for the sake of
efficiency, entrepreneurs do not ask them to shift. New technologies are now
coming to Tiruppur. However, for this workers need not to suffer because the
14J
basic principles to operate the old machine and new ones are same (as reported by
the owner of a firm). Among the types of work performed in Tiruppur knitwear
industry- knitting, cutting, to stitching, ironing and packing, dyeing and
bleaching, embroidery and printing, all ofthem do not require automation, except
in knitting of yarn and embroidery and printing of cloths. Automation is optional
for embroidery and printing works - these are generally done by manual labour.
So, workers can easily adjust themselves to the new machines, after learning a few
basic tips from the technicians. Whole knitwear industry is based on labour
intensive technique and requires only semi-skilled labourers. In Tiruppur's
knitwear industry, entry point for job is through unskilled and semi-skilled jobs
for helpers. They assisted other workers in stitching, iron and packing. Knitting of
yarn, cutting of cloths to different size and stitching require some amount of
training. Helpers in course of time can adapt to these kinds of skilled work. The
dyeing master has to be qualified and highly experienced. He is responsible for
colour matching and quality of colour on the cloths. The workers who engage in
the dyeing section have to be at least semi-skilled. Embroidery and printing works
on cloths require skilled work~rs, irrespective of whether these works are done
manually or not. Automation of these works need further technical training
(Table S.A). Workers do not have to be highly educated. for such jobs. Even with
Table: S.A
Stage of Production, Degree of Automation and Workers Qualification
Stage of Work Automation Workers QUalifications TIRUPPUR Knitting Yes Skilled Cutting No Skilled Tailoring No Skilled Iron and Packin!! No Semi-skilled Helpers No Unskilled Dveing Yes Skilled/Semi-skilled Bleaching No Semi-skilled Embroidery Yes/No Skilled Printing Yes/No Skilled/Semi-skilled KANNUR Winding No Skilled Weaving No Skilled Design/Sample No Skilled Made-up No Skilled MORBI Cabinet box making Yes/No Skilled/Semi-skilled Assembling of auartz No Skilled Design No Skilled Fixation of hands. glass Yes/No Semi/Skilled
144
simple education they can perform the tasks. In Tiruppur, 63 male workers (63
percent) had reported that they had required skills before joining the present job,
while in case of female workers 26 (43 percent) had reported this (Table 5.3).
About educational qualification of workers out of I 00 male workers only 9 had
reported they were illiterate, 26 studied upto primary school, 42 studied upto
middle school and 23 workers responded that they studied upto secondary school.
There is not much variation in educational qualification of female workers from
the male workers. Out of 60 female workers with whom we had interactions only
one had reported that she is illiterate. Among others 13 (about 22) percent studied
upto primary school, 32 (53 percent) studied upto middle school and 13 (22)
percent reported that they studied in high school. One worker reported that she has
passed class XII (Table 5.4).
Table 5.3
Skill before Joining The Present Job
TIRUPPUR KANNUR MORBI
Male Female
Yes 63(63.0) 26(43.3)
No 37(37.0) 34(56.7)
Sample Size 100 60
*Figures in brackets are in Percentage
*Sources of Data: Field work, ,1997-98
145
Male
25(71.4)
1 0(28.6)
35
Female Male Female
21(84.0) 9(42.8) 1(5.0)
4(16.0) 13(57.2) 19(95.0)
25 21 20
Table 5.4
Educational Qualification OfWorkers
TIRUPPUR
Male Female
Illiterate ') (9.0) l (1.7)
Primary 2o (26.0) 13 (21.7)
Middle 42 (42.0) 32 (5:U)
Secondary 23 (23.0) D (21.6)
Higher Secondary - I ( 1.7)
Graduate or technical - -
N. ]()() 60
* Figures in brackets are in percentage * Sources of data, Field work, 1997-98
KANNUR
Male Female
- -
13(37.1) 19 (76.0)
- -
16(45.7) 6 (24.0)
I (2.9) -
5 (14.3) -
35 25
MORBI
Male Female
- -
I (4.8) -
- I 0 (5ti.O)
19(90.4) 9 (45.0)
I (4.8) I (5.0)
- -
21 20
Kannur's handloom industry IS a traditional industry and its skill
acquisition requires practice. The members of traditionai weaver community
families wh0 were involved in weavjng for longer periods of time were
traditionally trained with weaving. However, to become a master weaver and
master dyer it requires experience and practice. This does not mean that for new
entrants it is difficult to enter the job. With practice they can adjust to the demands
of t~e job. In Kannur 25 male workers (71 percent) and 21 female workers (84
percent) reported that they had skills before joining the present job (Table 5.3).
Educational level is higher among Kannur workers than Tiruppur. Almost half of
workers interviewed were High School pass, wheeras 19 out of 25 female workers
(76 percent) just had primary education (Table 5.4). Handloom Industry also does
not require highly educated workers. The entrepreneurs of Kannur told us that
weaving is not considered a high status job (Here we mean to say that there is a
tendency among highly educated people to go in for white collar jobs).
Morbi's clock industry worker have to acquire some technical knowledge.
Since technology is not sophisticated (very few firms make quartz in Morbi),
firms require some kinds of semi-skilled workers. The assembling of quartz needs
a bit skill that can be learned with informal training, apprenticeship and
l-l6
expenence. Cabinet making and glass cutting (done through machines) the
ancillary parts of the clock industry, do not require much skill. However, making
of wooden cabinet boxes for clock requires skill. In fact 9 male workers (42
percent) who responded to us reported that they had skills before joining the
present job. While in the case offemale workers, most ofthem (19 or 95 percent)
responded that they did not have the skill (Tabie 5.3). Most of the male workers
(19 or about 90 percent) mentioned that they had studied till Class X while half of
the female workers who talked to us had been to middle school and other half to
high school (Table 5.4). Since clock industry is a bit technical it demands some
education from the workers than either knitwear or handloom industry. In
Tiruppur, very few workers reported that they had lost job because they were
unskilled. In Kannur and Morbi nobody had reported that they had lost job for
being unskilled (Table 5. 7). This ~emonstrates the demand for labourers in these
towns and the number of extra job these towns have been able to generate.
V.4 Basis of employment: Entrepreneur's view
The sole aim of entrepreneurs is to earn profit and they try to get the best
workforce available in the town. As such they are able to extract maximum work
from the workers. It is seen that very few entrepreneurs give priority for technical
experiences while recruiting labour in all the three towns (Table 5.5). They prefer
experienced one, which is their first priority. Since experienced and skilled
labourers are not available at required numbers in the three towns, entrepreneurs
go in for apprenticeship as their second priority. In Tiruppur out of 57
entrepreneur 55 had reported that they look for experienced workers. Only 2
entrepreneurs had reported that they look for technically qualified workers.
However, 34 entrepreneur told that apprenticeship by the workers is their second
priority as the basis for employment. In Kannur for 12 out of 15 entrepreneurs,
experience of workers is the first priority and apprenticeship by the workers is the
second priority for 11 entrepreneurs. In Morbi, also majority of the entrepreneurs
( 14 out of 15 we interviewed) want experienced workers. Interestingly one had
reported that he recruits workers on personal favour. In Tiruppur and Morbi there
were shortage of skilled workers, while in Kannur this was not the reason.
Preference of people for white collar jobs is more there, than weavers job (as told
147
by the entrepreneurs).
Table 5.5
Management of Workers by the Firms (respondent entrepreneurs) Basis for Employment