Dynamics of labour Welfare and Special Economic Zones in Gujarat

Transcription

1 CHAPTER VIII Dynamics of labour Welfare and Special Economic Zones in Gujarat 8.1 Introduction Gujarat has always been an enterprising state with large part of activities is in progression of economic development. Gujarat as a state has played critical role in terms of creating and developing environment of entrepreneurship, thus, enhancing the economic status of the citizen and contributing to the nation. Gujarat, a state with approximately 6 crore of population, has witnessed Gross State Domestic Product (GSDP) at constant prices rose by 8.76 per cent in the last financial year , one of the best in the country. The percentage share of Gujarat in India's fixed capital investment is around 16 per cent (Government of Gujarat, 2013). Gujarat is one of top ranked state for output value and net value added among all the states in India. On the other hand Gujarat does possess one of highest employment rate in country alongside one of the lowest minimum wage rate. Labour law in the state has been amended several times for more flexibility to attract investors in the state. It has been observed that these amendments in labour law are highly exploitative in nature and against the interest of worker. It is also reflected with labour related issues such as minimum wages, working condition, quality of employment, implementation labour welfare measures; performance of Gujarat has been dismal. In tune with the above stated facts and in the previous chapters, this chapter talks about various dynamics of labour welfare and Special Economic Zones (SEZs) in Gujarat. Gujarat SEZ Act provides us inputs on state role in context of labour. Location of SEZs has been studied comparatively between the geographic spread of SEZs and that of ports of Gujarat, it provide us some reasoning on regional disparity with in Gujarat. 189

2 8.2 Special Economic Zone in Gujarat: Legal Framework The Central Government has offered various incentives and facilities both to developer of SEZ as well as the industrial units coming up in SEZ. Firms with proposal for manufacturing, trading or service activities are permitted in SEZ. All approvals are to be given by the Development Commissioner for establishment of a unit in SEZ. The State Governments role is to offer specified facilities and concessions for promotion of units in SEZs. Figure no 8.1: State wise SEZ in India Source: Department of Commerce, GoI, 2014 To develop infrastructure, economy and employment opportunities in Gujarat, the State Government had enacted the Special Economic Zones Act 2004, well before the enactment of SEZ Act by Government of India in order to provide a hassle free operational regime and encompassing state of the art infrastructure and support services Gujarat State SEZ Act 2004 With respect to Government of India s guidelines for the establishment of SEZs, to formulate a policy as a part of objective to develop economy and infrastructural facility in Gujarat, the State Government had enacted the Special Economic Zones Act 2004 in order to provide smooth operational regime and incorporating state of the art infrastructure and support services. 190

3 Gujarat SEZ Act 2004 was enacted to provide guidelines and rules for the operation, maintenance, management and administration of a Special Economic Zone in the state to constitute an authority for matters connected there with or incidental there to. The Gujarat Special Economic Zone Act 2004 approves establishment of SEZs with the objectives of: (a) Generation of additional economic activity (b) Promotion of exports of goods and services; (c) Promotion of investment from domestic and foreign sources; (d) Creation of employment opportunities; (e) Development of infrastructure facilities; The resolution of Gujarat State SEZ Act 2004 includes the areas of management of zones, power, environment, water, labour regulations, sales tax and other levies and law & order Gujarat State SEZ Rules 2006 On the basis of this Gujarat SEZ Act 2004, certain amendments were made, SEZ Rules 2006 were announced by the government of Gujarat. Chapter II of SEZ Rules 2006 adopted from SEZ Act 2004, describes the process of establishment of Special Economic Zone and appointment of developer. These Rules provide Fiscal as well as non-fiscal benefits. The following section throws light on both these types of benefits provided for by the Rules. A. Non-Fiscal Benefits The following non-fiscal benefits are provided for in SEZ Rules 2006: (i) Single window clearance prescribed a common application for approval, clearance, license, registration and no objection certificate under one or more laws (ii) Infrastructure facilities and services that include generation and supply of electricity; water extraction, treatment, transmission and distribution; waste water treatment and solid waste management; provision of minor port and related services; provision of roads and bridges; provision for gas distribution network; provision for communication and data network transmission; and any other services as may be prescribed by the regulations. (iii) Supply of electricity (iv) Water, road, gas and other facilities 191

4 (v) Delegation of powers of Labour Commissioner to Development Commissioner. B. Fiscal Benefits Chapter 8 of SEZ Rules states the fiscal benefits that the developer and the unit-holder in the zone can avail of. (i) State Taxes and Levies- All sales and transactions within the processing area of the Zone shall be exempt from all taxes, cess, duties, fees or any other levies under any State law to the extent specified below: Stamp duty and registration fees payable on transfer of land meant for approved Units in the Zone. Levy of Stamp duty and registration fees on loan agreements, credit deeds and mortgages executed by the Unit, industry or establishment set up in the processing area of the Zone. Sales Tax, Purchase Tax, Motor Spirit Tax, Luxury Tax, Entertainment Tax and other taxes and cess payable on sales and transactions. Inputs (goods and services) made to Zone Units from Domestic Tariff Area shall be exempted from sales tax and other taxes under the State laws. The Developer shall also be entitled to the benefits of exemption provided in subsections (1) and (2) for the entire Zone. C. Over and above of the fiscal and non-fiscal benefits, the Rules mention norms related to i. Processing area ii. Non-processing area iii. Concession to contracts in SEZs (All Exemptions and concessions are allowed to Contractor appointed by a Developer or Co-developer) iv. Exemptions for infrastructure for social purposes in non-processing area of the Zone v. Norms related to minimum area requirement for setting up of SEZ. vi. Norm for the Developer or Co-Developer to have at least 26 per cent of the equity in the entity proposing to create business, residential or recreational facilities in an SEZ 192

5 vii. viii. Clearance to be given by State Government because while recommending a proposal for setting up of an SEZ to the Board, the State Government indicates whether the proposed area falls under reserved or ecologically fragile area The State Government certifies details of land area Thus, the industry friendly SEZ policy of Gujarat has taken Gujarat from traditional industrial clusters to industrial estates and has further advanced to establish 85 SEZs by the end of Special Economic Zones in Gujarat Weber (1909) noted two main factors that affect the location of industries, they are transportation cost and labour costs. In the classical (Launhardt, 1882; Weber, 1909) and "early" neo-classical location theory (Greenhut, 1956), location rationale was not really an issue since it is implicitly assumed. SEZ have many characteristics which defy the traditional theories of traditional industrial set up. Generally it is the government which take developmental initiative, provides infrastructure facilities, provides facilities for trade transaction related to inspection of goods, single window clearance for exports, issuing various export certificates for maintenance of quality, facilitating credit and payments and providing facility for easier imports required for the manufacturing for exports etc. Gujarat has been exception that regard, as it created conducive environment to conduct business, with the view of overall economic development of the state but somewhere down the line as a state it has forgotten to secure interest of weak stakeholder (labour, farmers and other marginal groups) of this developmental process. Special Economic Zones (SEZs) has been the growth engines of Gujarat that has played its part in development of manufacturing, augment exports and create employment. With objective of developing the infrastructure in Gujarat, the State Government has enacted the Special Economic Zones Act 2004 in order to provide a trouble free operational regime and incorporating world class infrastructure and supporting facilities. SEZs have been established in Gujarat with a view to create a globally competitive and hassle free environment for manufacturing activities. The Gujarat Special Economic Zone Act 2004 extends to the whole state of Gujarat. It approves establishment of SEZs with the objectives of: (a) generation of additional economic activity; (b) promotion of exports of goods and services; (c) promotion of 193

6 investment from domestic and foreign sources; (d) creation of employment opportunities; and (e) development of infrastructure facilities. The existence of SEZs in Gujarat has its roots in natural infrastructure available in the State. Gujarat is a peninsula with a coastline of 1600 kms. This coastline is developed with almost 41 small, intermediate and large ports to facilitate trade (BISAG, 2015). The fundamental reason for establishing the SEZ that it should be dedicated facility for export related activities and thus should be near to either a sea-port or an airport making export transportation convenient and hurdle-free. Thus, the ports have boosted the growth of the number of SEZs in Gujarat. It has been projected that potential of number of SEZs units envisaged to be set up in Gujarat by 2020 is 23,150 (Pandit and Vijaylaxmi (2011). There is a possibility of more number of SEZs to establish be in order to enable maximum utilization of ports in Gujarat. 8.4 SEZs in Gujarat: Coverage and Implications Since adoption of the SEZ Act 2005 in India, the number of SEZs approved and notified stand at 491 and 352 respectively. Of these, Gujarat has about 28 SEZs in the category of notified (plus operational or functional), and almost an equal number in the category of approved (formal or in-principle) (Dept. of Commerce, 2015). Currently Gujarat has about 60 SEZs in different categories across the state (Commissionerate of Industries, Gujarat 2015). Table no 8.1: SEZs in Gujarat: A Profile Status of SEZs No. Area in Ha. Districts (No) Functional Prior to SEZ Kachchh (1); Surat (2) Act Notified and Operational 12 14, Bharuch (2), Gandhinagar (1), Ahmedabad (2), Jamnagar (1), Kachchh (2), Surat (2), Vadodara (1), Amreli (1) Notified 16 1, Kachchh (3), Ahmedabad (5), Bharuch (3), Gandhinagar (4), Vadodara (1) Formal Approval 19 7, Jamnagar (1), Bharuch (1), Kachchh (4), Ahmedabad (7), Vadodara (3), Gandhinagar (2), Valsad (1) In-principle Approval 10 4,811.4 Ahmedabad (3) Kachchh (5), Amreli (1), Valsad (1) Total 60 29, Source: GSWAN (

7 Of these, three SEZs, viz., Kandla, SURSEZ and Surat Apparel Park were already functioning prior to the SEZ Act in 2005 came to force. About hectares of land has been allotted to the 60 SEZs in the state. The average works out to be 490 hectare per SEZ. In fact, the area covered under SEZs varies significantly from 10 hectares in cities like Ahmedabad, Gandhinagar and Vadodara to 5000 hectare in Kandla. Obviously the SEZs in the proximity of major urban centres are likely to be smaller in terms of land allotted as compared to those in the coastal areas. It may be noted that the land area diverted to SEZ in Gujarat accounts for nearly 0.34 per cent of the total net sown area in the state; this is substantially higher than that at the national level (Shah et al., 2008). Prima facie low productivity and desert proneness besides comparative advantage in promoting growth in secondary and tertiary sectors in the state could be seen as the rationale for the push towards land-based industrialisation/ infrastructural growth in the state. The same rationale may hold in the case of extensive development of ports in the state. Figure 8.2 reflects that textile and apparel SEZs comprise of 13 per cent of the total functioning SEZs in Gujarat. This is a significant percentage considering the requirement and establishment of a dedicated industry specific special economic zone. Considering the fact that there are more than 10 industrial sectors prevailing in India, export of textile and apparel is promoted through a special scheme called Special Economic Zones has witnessed substantial growth over the years. Figure no 8.2: Sector-wise Classification of Functional SEZs in Gujarat Source: Department of Commerce, GoI,

8 Moreover, instead of including these products as a part of multi-product zone, the government has shown interest in establishing a dedicated textile special economic zone may lead to development of those sectors. Another important feature is the variation in the size of land covered across SEZs in the state. For instance, 10 out of 60 SEZs have obtained larger than 1000 hectare of land. Together they account for 23,045 hectare of land. The largest among these are Kandla (5000 hectare), Reliance (4494 hectare), Sterling Infrastructure (3380 hectare), Mundra (3110 hectare), and Dahej (1812 hectare). It is important to note that all these SEZs are in the coastal area for obvious reason of easy transport. But one can imagine what adverse impact these large industrial facility can cause to costal ecology and lives of population residing in coastal region of Gujarat. Table 8.2 presents land allotted for SEZs in some major district of Gujarat. More than half of the land already allotted to major 15 operational SEZs in Gujarat is concentrated in two districts, viz., Kachchh and Bharuch. If we add Jamnagar, the three districts together account for 80.8 per cent of the total land area under these SEZs. This pattern raises a number of pertinent issues pertaining to spatial concentration and agglomeration economies, intensive impact on environment, and damage to coastal ecology. It may be noted that a substantially large proportion of the land diverted for the operational SEZs in the state belong to the categories of revenue waste land, pastures land under the village Panchayats and the forest land under mangroves on the coasts. Table no 8.2: Area of SEZs by District Sl. No Districts No. of SEZs Area in Ha. 1 Kachchh Bharuch Jamnagar Ahmedabad Valsad Surat Vadodara Amreli Gandhinagar Total 60 29, Source: Department of Commerce, GoI,

9 The sectorial composition of the SEZs presents a fairly diverse picture. The single largest category refers to Electronics and ITES (17), followed by Engineering (10) products. Pharmaceuticals, Chemicals, and Apparel and Textiles have 4 SEZs each. Of the remaining 21 SEZs, a majority (i.e. 12) are in the category of multiproducts. Though Gujarat is just one of the 28 states of India, if analysed as an independent entity, its pace of industrial growth is far impressive than most of the Indian states. Further, India s growth is the end-result of the contribution of all its states put together. Therefore, percentage share of contribution of each state also plays a role in the overall growth of the country. In fact, usually it is the country policy, the 5 year Plan and the budgetary dispensations that help the states of a country to grow. However, in a democratic set up like India, the attitude towards growth and vision of the people and the minister of the state acts as a catalyst to take the advantage of the policies framed at the Centre level and push its region to grow economically. This chapter also highlights the fact that SEZs in Gujarat are not just spread strategically near ports and industrial regions but also covers most of the districts of Gujarat. Therefore, the considerable role of Gujarat in growth of India explains the need for facilitating and assisting policy driven as well as non-policy measures towards proportionately higher contributing states. A noteworthy fact that, though India conceived an idea of an Export Processing Zone way back in 1965, but it could come with a full-fledged special economic zone policy only in the year Further, even after a policy was introduced, India enacted a Special Economic Zone Act only in Thus it almost took 40 years for India to chisel out a shape from its ideas related to promotion of exports. But surprisingly, the state of Gujarat has been too agile with respect to international competitiveness in industries, exports and commerce. Not only did Gujarat enact its own Gujarat State SEZ Act 2004 (based on India s SEZ Policy 2000) but also the first state to have India s (as well as Asia s) first export processing zone at Kandla. In a span of three years in 2007, after enacting the SEZ Act 2004, Gujarat had in its basket, approvals of 51 SEZs in Gujarat, which increased to 60 in another three years in Thus, Gujarat has out performed the other states in India as far as SEZ policy framing and implementation is concerned with respect to infrastructure investment, number of approvals and number of notified SEZs. 197

10 Although data related to SEZ specific exports is not clear, it can be said that Gujarat contributes significantly to Indian exports too as the sectors contributing to exports from India (chemical and pharmaceuticals, gems and jewellery and textiles and garments) with major industries of Gujarat. Further, there is three major sectors which comprise of maximum number of SEZs in Gujarat (SURSEZ related to gems and jewelry, SAP related to apparel, AAP related to apparel and Reliance infrastructure). Remaining multiproduct SEZs (Kandla SEZ, MPSEZ or Adani Port SEZ and Dahej SEZ to name a few) have also a significant contribution to the exports from Gujarat. Similar to policy development and implementation, there is a glaring difference in the growth rate of SEZs in Gujarat and other states of India. Out of all the 28 states, Gujarat ranks 5th following Andra Pradesh, Tamil Nadu, Karnataka and Maharashtra with respect to SEZ approvals. However, review of literature highlights that only 14 states of India have notified and fully-functional SEZs. And as far as notification is concerned, Gujarat lags behind almost 8 to 9 states (West Bengal, Karnatak, Jharkahand, Chattisgargh, UP, Punjab, Kerala, Goa, MP) out of the 14 states. Since no documentation of exports from Gujarat is available, it was difficult to compare economic activity performance of SEZs in Gujarat and other states with notified SEZs. However, it is very logical to say that states with more number of notified SEZs will end up investing more amount of money totally to build infrastructure and related facilities. Therefore, inorder to catch-up, Gujarat needs to have more notified and fully functioning SEZs which will automatically result in larger investment and production activity and thus outsized exports or profits Land Utilisation pattern of SEZ in Gujarat It is evident froom the data on land utilisation pattern by the SEZ and Units in SEZ, that there is wide spread trend in underutilisation and non utilisation of existing land across the country. Gujarat has been no different in that regard with vacant land up to hacteres, whixh more than 83 percent of land has been allocated to SEZ. Data from table 8.3 clearly suggest that there is underutilisation and unutilisation land across Gujarat in various SEZ. More or less it also suggests low level of investment made and creation of low level of employment. 198

11 Table 8.3: Land Utilisation pattern of SEZ in Gujarat Sr No. Name Total Area notified (In Ha) 199 Total Area utilized (In Ha) Processing Area Vacant (In Ha) 1 Kandla Special Economic Zone 2 Surat Apparel Park Surat Special Economic Zone Reliance Jamnagar Infrastructure Limited 5 Zydus Infrastructure Private Limited 6 Gujarat Industrical Development Corpn. Electronic Park Dahej SEZ Limited Gujarat Industrial Development Corporation Apparel Park Aspen Infrastructure Limited E. Complex Pvt. Ltd Sterling SEZ and Infrastructure Limited 12 Jubilant Infrastructure Limited Aqualine Properties Private Limited 14 Tata Consultancy Services Limited 15 Larsen & Toubro Ltd Euro Multivision Ltd Adani Port & SEZ Gift SEZ Limited Ganesh Infrastructure P Ltd Source: Kandla SEZ report, 2015 The Special Economic Zones (SEZs) and the damage they are causing to local communities and livelihoods form part of this major problem. It is in the face of such "forced development" in the name of SEZs should be under review and similar studies to be undertaken across the country. Since no secondary data were available within any of the government departments of Gujarat, they laboriously scanned 80,000 gazette notifications and coded and recoded the information in order to maintain uniformity in presenting the measurements of land in their study. A database of revenue land, region-wise and decade- wise suggest that "40 per cent of the 18,638 villages of Gujarat are affected" and that "Special Economic Zones will aggravate the problem" (Lobo and Sharma, 2010).

12 8.5 Gujarat SEZ and Advantage Location Gujarat is a state with 26 districts. Out of these, only a few have actively played a role in establishment of SEZs. This could be either because of the location of the district or the industrial history of the district. Both the points of view can have contributed to development of industries in Gujarat. Exploration of SEZs location in Gujarat reveals that it has been strategically thought out keeping the strength of region intact. Data on distribution of SEZs in Gujarat reveals that maximum numbers of SEZs in Gujarat are located in Ahmedabad (17), Kutch (14), Gandhinagar (7) and Bharuch (7). These figures justify the logic of location theory as 'The Manchester of India' Ahmedabad has been significant for textile trade in India. It has traditional history of textile trade related activities such as cotton ginning, textile manufacturing, engineering, chemicals, petrochemicals, paper and pulp and pharmaceutical manufacturing. In the same way Bharuch also has been long known for industrial base and has been home for industry related to chemical, hydrocarbon and pharmaceutical industrial units. Figure no 8.3: SEZs and its Location District Source: Department of Commerce, GoI, 2014 Therefore, it is evident that SEZs related to historical trade in the region been established. Coastal area district such as Kutch is a district with tradition of port related trade activities. Though the ports in Kandla, Mandvi and Mundra (established 200

13 in Kutch) have been active in manufacturing, transportation and import-export business, but it has been only noted after the establishment of first EPZ of Asia in Kandla in the year It is also advantageous position as it is easier to conduct foreign trade through ports and SEZ's main priority is exports, it is also convenient to establish SEZs along or near the costal lines and existing ports. Therefore, it is evident that maximum number of SEZs in Gujarat got established in Kutch. On the contrary, Gandhinagar being the capital of Gujarat and a political hub without any history of economic activity or proximity to ports or railways stations, yet it is home to 8 SEZs which got established within last 5 years. Most of SEZ in Gujarat is located and concentrated in coastal area near to ports but in last decade Gujarat has also witnessed emergence of cluster of SEZs near Gandhinagar, Ahmedabad and Bharuch which do not possess port facility or history of trade activity. It has taken place only due to government intervention and has no incentive as location advantage. 8.6 Gujarat SEZ: Labour Welfare Dynamics The key element of labour welfare analysis are important; but our understanding of labour welfare policy is informed more generally by the theoretical and ideological perspectives within which concepts are situated and used and from which perception and analysis flows. Ideological frameworks which structure our understanding and this include ideologies of welfare which structure our perceptions of the aims and activities of policy. However, academics seeking to analyse welfare have developed ideological frameworks into more sophisticated theoretical perspectives, which aim to offer a rigorous explanation of policy informed by previous academic debate and empirical evidence. Theories on welfare are therefore referring to the more sophisticated ideological frameworks developed by academics and aiming to provide an overall explanation of how labour welfare policy could, and should, be understood. They are sometimes also referred to as metanarratives, as they operate above the more focused debates on particular problems or concepts. These different frameworks are of course contested and in principle mutually exclusive. In effect it must be chosen between different perspectives in deciding how to analyse labour welfare; how to compare and contrast their different strengths and weaknesses. 201

14 8.6.1 Gujarat SEZ and Employment One of the foremost objective of establishment of SEZ as manufacturing hub to geneerate employment and attact investment. The estimated employment in Gujarat based proposed SEZ is lacs persons (Govt. of Gujarat, 2013) but in actual it stand at person with overall figure at India level which accounts for person (Government of India, 2012). Table no 8.4: Direct Employment Created in Special Economic Zones (SEZs) of Gujarat ( Upto ) State No. of Persons Employed Gujarat India Source: Dept of Commerce, GoI, Status of SEZs Labour in Gujarat Concept of labour welfare has been the contagious issue in Gujarat as well. The amendment of the Industrial Disputes Act in 2004 by state government allowed greater flexibility in the labour market for SEZ. It allowed firms within the SEZ to lay off workers, without taking the permission from the government, by simply serving one month s notice to the worker. To facilitate the firms to exit, the law was amended such a manner that the management can close a unit by giving just two months notice to the relevant authority. Contrast to this the normal legal framework suggest compulsion of getting permission from the government, with the latter providing an opportunity to workers. The Government of Gujarat amended the definition of industrial dispute by exclude the issue of termination of service of an employee in an SEZ, thereby considerably reducing the scope for sense of security among workers. While Gujarat saw a 60 per cent growth in employment opportunities in manufacturing units during , is commendable especially when there is prevailing phenomenon of job less growth across the country (Pandit and Vijaylaxmi, 2011). Considering that the Industrial Disputes Act dates back to 1947, there is a strong case for formulating a new legislation to govern industrial relations in the country. Several state s amendment over last two decade; led the law to be out-dated. There is clear case of revision considering present economic environment. The most stringent conditions, especially regarding retrenchment, may be excluded for the 202

15 SEZs. This may allow these zones to be mass opportunity for employment and allow market forces to work in the labour market. With the government is not involved in every employment related decision, employers would be encouraged to employ workers in formal set-up and expand manufacturing unit; it may allow companies to leverage economies of scale. Government of Gujarat had introduced several changes in functioning of SEZ s unit in context of labour. Amendments have allowed companies to retrench redundant workers without requesting for the permission from the Government. As per rules of Gujarat SEZ Act which instructs that in case of lay off, it required to give a formal notice, severance pay and a compensation of 45 days for a year of work rather than the 15 days given to other workers. State government also allow Fixed Term Employment under the Industrial Standing Order Act 1946 and Gujarat Rules 1955 which defines conditions of employment, consolidated annual return scheme; keeping inspection registers, and following the Supreme Court verdict. Than government it also introduced provision of no pay for no work. It can be observe that due these industry friendly policies of State Government has created more manufacturing based jobs than other states, particularly such as West Bengal & Kerala with deterring labour laws. However, these reformative changes have been also introduced by a handful of other states and are generally partial in nature. Government of Gujarat introduced concept of Fixed Term Employment for SEZ Act, which has helped in accounting for the least manpower days lost due to labour strife, among comparable industrial states but it has also led to exploitation of workforce. State government has been providing various forms of relaxation to firms in terms of non-implementation of labour welfare measures which is quite conclusive and exploitative in nature. These economic zones are treated as foreign territories in Gujarat as well as across India. The units in these zones are exempt from duties, and import licensing for raw materials and components is not needed. An added attraction is that the labour comes cheap and the zones are more or less free of trade unions. Economic zone in Gujarat comprise of large number of women workers especially in apparel and light assembling based work. Women are being employed because they submissive in nature and less prone to unionisation. Women workers are paid low wages then the male counterpart for same kind and amount of work. Work in 203

16 SEZ unit is such as, while there is plenty of work to go around, these aren't jobs to be envied. Large number of the total workforce in SEZs is made up of contract workers, who do not enjoy any of the benefits and privileges that regular employees do. The Contract Labour (Regulation & Abolition) Act 1970 specifically prohibits employing contract workers in activities which are "permanent and perpetual" in nature. Largely most of the activities conducted by the SEZ units in Gujarat are permanent and perpetual in nature and yet the practice of employing contract workers goes unabated. Workers are largely paid as low as Rs to 6000 per month and are often made to work more hours than the stipulated eight hours without adequate extra payment. The rules of the Minimum Wages Act offer no protection to contract workers. Worse situation is that most of contractual workers are hired through contractors and part of workers salary goes to contractors as commission. The workers, once they enter the premises do not have any contact with the outside world. The work atmosphere is oppressive, atmosphere of fear and verbal abuse is part of norm. The workers are reluctant to talk, and are afraid of being sacked from the job. SEZ employment in Gujarat was a great hope for workers in general, but now workers feel being exploited and cheated. These zones do not provide any accommodation facilities nor are there any crèches. Transportation facilities are inadequate and used only to bring workers from distant area, workforce is comprised of large number of casual and cheap labour. It has been observed in PHARMEZ SEZ in outskirt of Ahmedabad that workers were provided pick up facility but no drop facility by buses. Workers are left in the lurch once the shift is over, particularly when a shift finishes late in the night, safe transportation is difficult to find. Exploitation is not limited to the blue collar jobs in SEZ; even the employees in higher level for technical work are hired on eleven months contract with meagre wages, and then their employment is terminated. Then after reasonable time these workers are hired again and cycle of contractual eleven month work with low wage goes on. Labour welfare measures such as Minimum Wages Act, Provident Fund and Employees State Insurance has been only on paper but on the ground picture is different. Shifting of authority from Labour Department to Development Commissioner has been last nail on the coffin for labour right, a DC is of the administrative head of 204

17 these zones. With that the last resort for redressal of grievances of workers has been taken away as administration is vested in a DC, is largely beaurocratic in nature and working for promotion trade and to attract investment, concern for labour welfare may have negative impact on said objective. Another example of ignorance of labour plight that recently the Gujarat state assembly passed the Labour Laws (Gujarat Amendment) Bill, 2015, has proposed to amend the Industrial Dispute Act empowering the government to impose ban on strikes for one year (the first time) and subsequently it can go up to further two years. Another debatable decision has been taken as the time limit for workers to raise the issue of industrial disputes has been curtailed to one year from three years. The proposed amendment also lifts restrictions on termination of workers and payment of compensation in case the termination occurs in Special Economic Zones (SEZs). These steps do attract companies to the certain extent but same time it also raises question on objective of overall policy of government as it will lead to decline in quality of life for workers Labour Laws (Gujarat Amendment) Bill, 2015 New amendments introduced as Labour Laws (Gujarat Amendment) Bill, 2015 by the Government of Gujarat, instruct that for the payment of wages under the Minimum Wages Act should be made by cheque instead of cash for an establishment employing not less than 20 persons. The state government has also revised penalty rates for violation of various amendments in labour laws but allowed a selfcertification cum consolidated annual return scheme for employers to reduce the number of inspections and interference by government authorities. The only bright spot for worker come up as government has introduced three-fold increase in minimum wage of construction workers. As it is evident from the proposed amendments in labour laws most likely to benefit corporates and undermine the labour rights as it take away the remaining little security cover workers have. The provision allowing employers to pay fines but not face penal action for violating labour laws may encourage violation of labour law. With this new amendment now state government has decided to include outsourcing agencies (contractors) in the definition of employers. Generally outsourcing employment has history of exploiting worker on various count such paying low wages, longer hour of work and other various kind of exploitative practices. Not to 205

18 forget last but not the least employment generally remains casual in nature with these kinds of measures. By including outsourcing agencies (contractors) in the definition of employees, government may be recognising and validating these unfair practices. This chapter goes beyond these traditional industrial theories. Geographic spread of SEZs in Gujarat and their activity pattern prove that establishment of SEZs is motivated quite by government policies and little by natural industrial-economic location factors. Gujarat being an entrepreneurial state, has carried on with traditional industrial activities with established industrial clusters, has changed its industrial focus and ventured into non-traditional and entirely diversified sectors through Special Economic Zones but implementation of labour welfare measures and quality of work raises question on state policy. 206