In three months after Lehman Brothers? collapse in September 2008, at least five lakh Indian workers have lost their jobs, found a recent labour ministry survey. And workers in the gems and jewellery sector are the worst hit.
Since 93% of the country?s workforce is in the unorganised sector with no social security cover, the job situation in Surat, the country?s largest cluster of gems and jewellery units, is a morbid indicator of the aftershock of the global financial crisis on India?s labour market underbelly.
The labour ministry assessed the ground realities in Surat in consultation with the city?s district collector, police commissioner and the Gujarat administration and its findings have been shared with the Prime Minister?s Office late last month. FE has a copy of the report, which reveals the ripple effects of job losses on the economy:
* Most gem and jewellery units, big or small, haven?t opened or functioned ?normally? since Diwali. Around 2,500 to 3,000 large diamond units employed about 4 lakh workers, half of which have lost their jobs.
* There were as many as 10,000 unregistered units, employing 5 to 7 workers each, not covered by the Factories Act or any social security scheme. Their annual Diwali break was at least 45 days in 2008, as opposed to the usual 25 days. The labour commissioner and state officials had to intervene to restart 135 units.
* Nine diamond workers have committed suicide, according to the police commissioner. The Rural Labour Commissioner runs a social security insurance scheme, but suicides are not covered.
* 75% of workers in the city are migrants under 35 years of age. Most have left the city after losing their jobs, resulting in an exodus of trained manpower.
* Two-wheeler registrations at the RTO have plummeted drastically, while school admission figures are dismal. As many as 1,848 students have dropped out of school; fresh admissions into schools have halved from 2,900 to 1,400. The district administration has asked schools not to insist on fees for diamond workers? children.
* No diamond worker has any identification proof to seek any assistance provided by the state. All work is on piece-rate basis and there is no safety net.
* The UPA has recently decided to give an unemployment allowance to laid-off workers covered under the Employees? State Insurance Corporation (ESIC) for a period of 1 year. But in Surat, 99% of the estimated one million workers in the diamond industry are not covered by the Employees? Provident Fund Organisation or ESIC. Among the units covered by EPFO or ESIC, only 1% of contributions are recovered, as per the state INTUC president. The UPA has proposed to expand the EPF net to firms employing even ten workers (from the current threshold of 20), but a Cabinet nod hasn?t come as several ministries have opposed the idea.
* The Gujarat administration has taken several steps such as holding job fairs, re-skilling those laid-off and enabling access to bank loans for self-employment. BJP MP Parshottam Rupala has sought an ad-hoc interim relief package from the Centre.
The commerce ministry told Rupala that measures to help exporters have been taken, but unemployment is not its concern.
A special tripartite committee was set up in December 2008 to monitor and resolve the situation in the diamond industry on a day-to-day basis. Though it was decided to restart all units by January 1, only about 141 medium and big units employing 41,558 workers have restarted.
The state is working towards exempting the sector from VAT and Entry Tax. The Centre has asked the EPF and ESIC commissioners to review the coverage of workers. It has also asked the state to formulate a social security scheme for unorganised sector diamond workers. Most units have been facing a liquidity crunch since Diwali as finished diamond prices have fallen sharply, leaving them with no cash to buy raw material or pay wages. The Mumbai terror attacks worsened the scenario as buyers that were supposed to fly to India didn’t turn up.