Openomics 2019

The Tiruppur Model: For A Security Blanket

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The evaporation of formal jobs has reshaped the concept of a workday in manufacturing towns like Tiruppur, where young people are only a small crisis away from poverty

WILL YOU BE LONG?” It is past 3 pm and the young man driving me around Tiruppur is getting fidgety. Neither of us has had lunch, but that is not why K Pawan Kumar, 28, is restless, the drumming of his fingers on the wheel out of sync with an Ilayaraja song playing tinnily on the car stereo. It is almost time for his next ‘act’—as school bus driver for two hours— when he realises he won’t make it. He dials a friend, who is happy to stand in for him. “My wife likes to joke that in Tiruppur, even husbands can be replaced within the hour,” Kumar says. At 7 pm, he will jump-cut to pizza delivery for Domino’s, and at 10 pm, swap out the too-tight uniform for a clean white shirt. It is this last job, of driving a heart surgeon to hospital, that gives him satisfaction, he says, “the closest I can come to respectable work”. Kumar has worked in construction in Kerala, travelled the length and breadth of India as a truck driver, nearly lost a digit to a lathe machine, besides naturally dabbling in the textile and garments industry that put Tiruppur on the export map. No matter how many workers flooded the railway platform day in and day out, there were no slow workdays here until a couple of years ago, Kumar says. Now, there is work, but you have to pick up multiple skills and hustle to land a gig.

A boomtown that had learnt to spin gold out of cotton, Tiruppur saw its fortunes soar after the cessation of the global Multifiber Agreement, which imposed quota- based curbs on textile exports from developing countries to the developed world, in 2005. In 2016-17, exports from this cluster of about 8,000 MSMEs, crammed into a 30-sq-km radius in northern Tamil Nadu, stood at Rs 26,000 crore. Since the implementation of the Goods and Services Tax, the town has witnessed a slump—a 10-15 per cent dip in business, entrepreneurs say—from which it is now slowly recovering. About 600,000 people, over half of them migrants from other districts and states, depend on the cluster, which includes knitting, dyeing, printing, bleaching, embroidery and garment-making units. Despite the adverts for work that dot the walls here, poverty is a moat most of them cannot cross. “One eight-hour ‘act’ paying Rs 350 is not enough. Rents and other costs of living have shot up by a lot more than they have in other small towns. On a good day, when I manage four jobs, I can take home Rs 1,000,” says Kumar. His parents run a tiffin cart for textile workers, but the income is barely a scratch on their debt burden of Rs 10 lakh—money they borrowed for repairing their ancestral two-room house and for their daughter’s wedding late last year. “In the 1980s, when garments factories started exporting and paying good wages, thousands of young people, tempted to make a quick buck, entered the workforce in their teens. Who needed a college education when a factory in their backyard was willing to pay every day, 365 days a year?” Kumar says. “I stopped going to school after Class 10 and started working in a textile mill.” In the past 15 years, 16 large mills in Tiruppur have shut down or moved to neighbouring towns like Palladam, Kangeyam and Vellakoil where land prices are considerably lower. Thousands of salaried mill workers have lost their jobs, effectively ending an era of formal work in the textiles sector. An explosion of contractual—in effect, indentured—and casual work sustains the industry, which is estimated to employ 45 million across India, making it the second largest employment generator after agriculture. Textiles and garments account for 14 per cent of India’s exports and a fourth of its foreign exchange earnings. The benefits, however, almost never percolate down to the workers who live a life of resigned desperation in tiny urban burrows. Exploitation for low wages, sexual predation and the tyranny of the contractor—these blots on the success story of Tiruppur have claimed many a young life. “In Tiruppur, our generation has never bothered about medical insurance, [Employee Provident Fund] or earned leave. We have never had jobs,” says Kumar.

Clutching their phones, this lost generation now roams the streets waiting for a call from one labour contractor or another. “If you want to understand how labour is organised here, study phone records. Without this (holding up an Android phone with a vertical gash on the screen) the factories will come to a halt,” says M Anandakumar, a 30-year-old from Rayapuram, a neighbourhood abutting Khadarpet, a market area lined with boxy shops selling refurbished export rejects. The name Khadarpet, locals say, bears a debt to a pioneering Muslim entrepreneur who ventured to Bengal to procure Tiruppur’s first sewing machine. Today, tailoring is a basic skill here and industriousness a religion for anyone who wants to make a living—be it youth looking forward to getting blitzed at a TASMAC store, families that aspire to send their children to a private school, or Nigerians who have cornered a chunk of the low-end garments resale business. And yet, Anandakumar and his friends, aged between 19 and 45 years, seem to be enjoying a day of expansive leisure. Dressed in jeans and ironed shirts, they play dayakkattai, an ancient board game, on the footpath. “We missed the bus today,” explains Anandakumar. Every morning, 80-odd youth line up at a designated spot nearby from where labour contractors pick them up. “We are at the mercy of the companies, who only take in as many people as they need for the day. If we manage to work four days in a week, our families are thrilled,” says Anandakumar, who most often works as a tailor mending garments rejected by international brands. His wife Nadia stops by, upset that he hasn’t been to work for two days in a row. A skilled tailor can earn Rs 400-450 for eight-to-ten hours of work whereas most women, employed to sew buttons or embellishments or to pack garments, are paid Rs 200-250. “The money we make is spent on food, drink, and on paying rent and interest demanded by usurers. Nothing remains for the next day,” says Nadia, parking her second-hand TVS 50.

The Centre has now allocated Rs 500 crore for the Pradhan Mantri Shram-Yogi Maandhan Yojana, a new pension scheme for workers in the unorganised sector earning under Rs 15,000 a month

After the decline of agriculture, the evaporation of formal work in manufacturing has stretched and reshaped the concept of livelihood in small-town India, where young men and women swing between overwork and listless depression, always one small crisis away from debilitating poverty. They have no job security, access to retirement or maternity benefits, or insurance cover. In 2017, the Modi Government, in an effort to bring the unorganised sector under a single safety net, unveiled a draft social security code consolidating 15 existing laws on pension, insurance, medical and maternity coverage, and unemployment benefit. It is one of four new labour codes—the Code on Wages, the Code on Industrial Relations, the Code of Social Security and the Code on Occupational Safety, Health and Working Conditions—intended to rationalise 44 existing labour laws, a reform that has met with resistance from trade union leaders who are wary of dissolving existing welfare boards and pooling money towards a Central fund. Meanwhile, the Centre has now allocated Rs 500 crore for the Pradhan Mantri Shram-Yogi Maandhan Yojana, a new pension scheme for workers in the unorganised sector earning under Rs 15,000 a month. A contributory scheme, it will assure them a monthly pension of Rs 3,000 from the age of 60, for which they would have to pay premiums ranging from Rs 55 to Rs 100 each month from the time of joining the programme. Over 100 million workers are expected to sign up in the next five years, making it ‘the largest pension scheme in the world’, but there is no clarity yet on how to enforce contributions or encourage enrolment. The existing Atal Pension Yojana, which will continue to run parallel to the new scheme, covers 10 million working poor, who will be given Rs 1,000-5,000 per month from the age of 60 years depending on their contributions towards the scheme. “Contributory pension schemes don’t work for the unorganised sector, where workers often earn a survival wage. This is why the Atal Pension Yojana has not been a success. This Government has been talking about social security cover for all, but this is a case of too little, too late,” says Geetha Ramakrishnan, secretary, Unorganised Workers Federation, a Tamil Nadu-based social organisation. “Other than a pension, the basic needs of people who work in the informal sector are housing, education and access to healthcare, and funding for these has not gone up.”

“There is a welcome and long-awaited recognition in the Budget that the majority of rural residents are facing very hard times, but there is no long-term remedy to their worsening situations. Apart from catastrophic health insurance provision, there is little about improvements in healthcare for ordinary people, which would require focusing on care provision in areas of poverty as well as tightened regulation on the rapidly growing private healthcare sector,” says Anirudh Krishna, Edgar T Thompson Professor of Public Policy and Political Science at Sanford School, Duke University. “Providing cash handouts is fine as a short-term, stop-gap measure—but only if, simultaneously, efforts are mounted that get to the roots of the problem. That second (and harder) part, which takes sustained effort over a much longer time period than an electoral cycle, have been left almost entirely unaddressed by this Budget, which leads me to fear a scenario in which a large section of the population is seen as recipients of handouts year after year—without any plan to raise their earning potential by dealing effectively with the underlying problems.”

HOUSING IS A constant source of worry in Tiruppur, where the average wage has remained unchanged over the past five years—largely due to the influx of cheaper labour from north India—but a bare 16-ft-by-20-ft room in a modest neighbourhood can cost Rs 2,000 a month, says Nadia, showing me around her matchbox of a home in Chinnan Nagar, a densely packed neighbourhood where all the new houses have been rebuilt with state subsidy under the Tamil Nadu Slum Clearance Board. The construction of a 300-sq-ft home is subsidised by Rs 2.1 lakh, bringing down the cost by half. The Centre, too, offers a flagship subsidy scheme, the credit-linked Pradhan Mantri Awas Yojana, under which a claimed 15.3 million homes have been built so far.

Until 15 years ago, the 500 families of Chinnan Nagar made leather shoes and slippers, an industry destroyed by the advent of moulded synthetic footwear. “The elders no longer work; companies don’t want to employ them. Naturally, we are dependent on seniors’ pension. Governments must look after children and the old first, the rest of us can manage,” says M Kathirvel, 29, a neighbour. After the midday meal scheme, the introduction of Montessori classes in state-run schools last year is the one big reform in primary education in recent times, he says. “The money I would have spent on my son’s schooling is going into a fund for a small embroidery unit I am going to set up.”

Admitting to the episodic nature of work in Tiruppur, A Nandha Prabhu, who runs a medium export-oriented knitted garments unit, says a lack of manufacturing-friendly policy means that few firms are able to scale up and regularise the terms of employment. “We are no longer able to compete with Bangalore and Thailand, which have become preferred destinations for garment outsourcing because of their export policies and free trade agreements,” says Prabhu, who usually employs around 450-500 people a day in a factory tucked away in a maze of lanes. “I was doing Rs 19-20 crore in turnover three years ago. Since then, the impact of GST, the lack of any government subsidies or trade agreements, and a low duty drawback rate for exports have hit my business hard—I now do just Rs 10 crore in turnover. There are days when I can run the shop with just 60 workers.”

The Economic Survey 2017 had identified apparel, leather and footwear as industries with potential to generate large-scale employment and cited apparel as the most labour-intensive of the lot. By not formulating a subsidy scheme or special package for apparel hubs like Tiruppur, the Government has missed an opportunity, says Raja M Shanmugham, president, Tiruppur Exporters’ Association. “We survived the court order on pollution control in 2011 and adapted to become a carbon-negative, zero-liquid-discharging industry. We have conserved water and given over 1,000 MW to the grid via renewable generation. This is a cluster of self-made businessmen who harbour no ill will against the working class—we want to give them jobs, but there has to be an enabling policy push,” he says. Tiruppur, Shanmugham claims, is well on its way to hitting the Rs 1 lakh-crore mark in annual turnover by 2020. And it wants to take along 1 million workers, not as a public service, but in a rite of mutual renewal.