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INone of his public meetings following the demonetisation announcement on November 8, Prime Minister Narendra Modi said workers would get their legitimate due if employers paid their wages into their bank accounts. Going cashless therefore was in the interests of the mazdoor, or the working class, it implied. What he left unsaid was the difficulties in opening accounts and activating them apart from the loss of daily wages for the day or two a worker had to take to draw his or her wages from the bank.
With the onus of pushing the idea of a cashless wage payment system on his Ministry, Union Minister for Labour and Employment Bandaru Dattatreya introduced a Bill in Parliament to amend the Payment of Wages Act, 1936, making it mandatory for establishments to make wage payments by cheque or through banks. But with just a day to go for the winter session of Parliament to end, the Bill could not be passed. Within a week, the Union Cabinet cleared an ordinance to put this into effect.
The Centre of Indian Trade Unions (CITU) and other central unions like the All India Trade Union Congress (AITUC) have criticised the ordinance route. Tapan Sen, CITU general secretary, described the decision as “unwarranted, especially when the entire banking sector in the country was in disorder”. He pointed out that 35 per cent of the habitations in the country were out of the coverage of bank branches and that a large chunk of workers, including in urban areas, in the low-paid unorganised sector did not have bank accounts. Compulsory bank payments would affect migrant workers too, he said, urging the government not to “indulge in undue haste”.
It was clear from the outset that measures to put the Prime Minister’s decision into action would follow irrespective of what workers or employers thought about the move. The Union Ministry of Labour and Employment got into the act soon, exhorting workers to open bank accounts. On November 26, the Ministry launched a campaign to open bank accounts for workers in the organised and unorganised sectors, and in a press release on November 30, it called on all to “join together in this mission to take India to the next level and dream of a digital India”.
The press release claimed that around three lakh bank accounts had been opened, though it did not mention how many had been activated. By the first week of December, it began getting clearer that digital India was at best a pipe dream. But as the fiat had come from above, the Ministry sent out an advisory to all State governments, Labour Departments and related Ministries to ensure that payment of wages were done through banks or by cheque. On December 6, it issued another statement which said: “With the passage of time, technology has [under]gone a sea change. A large section of employed persons have now bank accounts. So payment of wages only through cheques or through bank transfer in the bank accounts of employed persons will reduce the complaints regarding non-payment or less payment of minimum wages, besides serving the objective of digital and less cash economy.”
On December 7, Dattatreya met Finance Minister Arun Jaitley and asked for mobile ATMs to be installed in all industrial clusters, especially in remote and rural areas, and for more lower denomination notes (Rs.10, Rs.20, Rs.50 and Rs.100) to be issued as “it would be beneficial to a large number of workers”. He also urged the Finance Minister to expedite the process of bringing “more Rs.500” notes into circulation to ensure the availability of the same to industrial and other establishments. It was now apparent that the Labour Minister was aware that the digital dream was out of reach.
No one dare oppose
As far as the trade union and other ideological affiliates of the Bharatiya Janata Party were concerned, they could not openly criticise any of the decisions of the government. On November 9, the day after the cataclysmic announcement, the Bharatiya Mazdoor Sangh (BMS) issued a statement cautiously welcoming the move. But every trade unionist knew that the working class had been hugely inconvenienced by the demonetisation move and from the pressure to go “cashless”.
Laghu Udyog Bharati (LUB), the Sangh Parivar affiliate representing micro, small and medium enterprises (MSMEs), conducted a survey among its members and submitted a memorandum to the Ministry detailing the immense difficulties that small industrialists were facing. Its survey revealed that 70 per cent of the MSMEs had suffered production and debt-recovery setbacks. Soon after reports appeared in sections of the media about the discontent in the LUB, office-bearers of the union literally went underground, preferring not to comment. One of them told Frontline that he could send those media reports as he could not share the details of the memorandum.
However, it was reliably learnt that at a meeting held on December 16 at the Ministry, in which representatives of the International Labour Organisation, trade unions and the National Labour Institute were present, LUB members pointed out to the Minister that in one of their visits to a camp where 300 accounts had been opened, they had found that none of them were activated. Further, the LUB, the Faridabad Employers’ Organisation and the representatives of the Confederation of Indian Industry expressed concern over the effect that demonetisation and the cashless drive was having on the MSME sector. Industry representatives explained that even if online transactions were made, workers were unable to withdraw the money. Most of them ended up losing their daily wages as they had to queue up at banks or ATMs. The limit set on withdrawals per week was also inadequate for industry to pay wages, they explained. It was learnt reliably that one industry representative even told the Minister that “there should be one person in the Reserve Bank of India who should understand how the small and medium sector industry operates”.
This meeting was a day after the government unsuccessfully tried to push through an amendment to the Payment of Wages Act. A press release issued after the meeting said: “Keeping in mind hurdles like low education, less knowledge about mobile phone usage, poor connectivity, poor handsets, after much deliberation and discussion it was understood that nothing can replace cash liquidity in the economy.”
Amendment to Payment of Wages Act
The Payment of Wages (Amendment) Bill, 2016, tabled in the Lok Sabha sought to amend Section 6 of the principal Act in order to enable employers to pay wages by cheque or by crediting money to workers’ accounts via electronic transfer. The amendment Bill states: “Appropriate government may by notification in the official gazette specify the industrial or other establishments, the employer of which shall pay to every person employed in such industrial or other establishment, the wages only by cheque or by crediting the wages in his bank account.” The government would additionally notify industries where payment would only be done by cheque or electronic transfer.
Clearly, the operative word here was “shall” though the Minster of Labour was at pains to point out to the media that the option of paying by cash was also there. Strangely, the text of the proposed amendment did not have this option. The Bill introduced by Dattatreya could not be passed in the Lok Sabha even though the nod for it had come from above. The majority of the central unions have opposed the Bill as well as the ordinance route used to push through the amendment.
Unions have not been opposed to payment of wages through banks. In fact, they had been demanding this for a long time. However, they feel that not only was the timing inappropriate, given the severe cash crunch, but also the motives of the government were suspect. “When their attempts to recover black money have backfired, with most of the currency coming back into the system, this new excuse has come in handy,” said a trade union leader. Workers who had received their wages on November 7 (for the month of October) got them in the old currency notes that were declared illegal tender on November 8. In effect, wages have been pending for more than a month.
The present Act covers establishments whose employees do not earn more than Rs.18,000 a month. It also allows payments by cheque or online transfers only after the employee has given such authorisation. The provision for such authorisation was inserted in the main Act in 1973. In essence, an employee cannot be compelled to take a cheque or agree to online transfer of wages. The Union Cabinet’s ordinance effectively negates that right. “The consent of the worker has been effectively done away with,” A.K. Padmanabhan, CITU president, told Frontline. He said unions were not against the opening of accounts for workers; in fact, the unions had repeatedly brought to the notice of labour officials that even in public sector units, employers were reluctant to help employees, the casual workforce, open bank accounts.
When confusion reigned, the Labour Ministry issued a clarification on December 21 stating that the amendment was not mandatory. “The appropriate government (Centre or State) will have to come up with the notification to specify the industrial or other establishments where the employer shall pay wages through cheque or by crediting the wages in employees’ bank accounts. It is therefore clear that the option of payment of cash is still available with the employers for payment of wage,” the statement said.
By then, the discourse had fully shifted from black money recoveries to cashless payment. But there were few takers for it even within the government. Hence, unable to wait until the next Parliament session, the Union government now decided to bring an ordinance to amend the Payment of Wages Act, making it mandatory for employers to pay wages by cheque or into bank accounts of workers. The Centre and the State governments were to soon notify the industries.
Who bears the brunt?
The industrial working class in the unorganised sector has been among the worst hit by the demonetisation move. In the industrial areas of Gurugram and Faridabad in Haryana, where working seven days a week is the norm, several units had either cut down their workforce, mainly casual labour, or reduced shifts or the number of days of production. Daily wagers engaged in loading, unloading, and construction-related work and all forms of hard menial labour were particularly hit. Other than this category, the casual workforce employed through a contractor or the thekedaar were either told to go home or wait until the currency supply in the system was restored.
When Frontline spoke to a cross section of workers, industry associations and trade union representatives, it came to light that none of them believed that a recovery, either for the MSMEs or for the industrial workers in the unorganised sector, was possible even after the December 30 deadline the Prime Minister had promised for the short-term pain that citizens had to undergo.
Sector 37 in Gurugram was a bustling industrial hub of textile and automobile parts manufacturing units. Many vendors of big automobile companies operate from here. There was a time it was called Japanese city, recalled Rajinder Saroha, a former factory worker and now district secretary of the CITU.
The bulk of the workforce here consists of contractual and piece-rate workers with no formal contractual terms of employment; they are hired and fired at the whims of employers. Demonetisation has hit them hard in a number of ways. Many were just “laid off” after six months of work, some others after a longer duration, and some compelled to “go on a holiday”. The employers, the workers said, did not have the money to pay them and therefore were letting them go. And new recruitments had all but come to a halt.
Hundreds of workers told Frontline that they had work for just three days a week. “Earlier, they used to call us on Sundays as well. Ab kaam down chal raha hai [Now work has slowed down],” said Mukesh, a piece-rate worker at an auto tool factory. Another worker, in a garment export unit, said that several of them, including women workers, had been asked to leave. Their dues had been settled, in many cases by cheque. But the banks were not encashing their cheques citing too much work. “If we put all the money in a bank, how will we manage on a daily basis? We don’t earn that much in order to save,” one of the workers said. Almost all of them complained of harassment by their landlords, who sometimes resorted to violence and threatened eviction if the rents were not paid on time.
Akhtar from East Champaran in Bihar said that many employers were paying workers in old currency notes. If a worker refused, he had the option of taking his wages after four months. No official from the Labour Department had visited them to look into their plight. Labour inspectors were bribed, and if any worker spoke the truth, not only would he be beaten up but thrown out of work.
J.N. Mangla, former president of the Gurgaon Industry Association, said that industry had hoped that things would recover within two weeks of the Prime Minister’s announcement on November 8. “Not everyone is getting Rs.50,000 from the current account [withdrawal limit imposed by the government]. We have to make a lot of payments in cash. The small-scale industry [SSI] is also rural-based. Many workers in SSIs don’t have bank accounts. The workers want wages in cash. Cashless is okay as an idea, but 100 per cent cashless?” he said.
According to his estimate, there was a 15-20 per cent production loss in Gurugram, which has some 2,000 of the 15,000 small-scale units in the State. “We are cooperating, but all limits are being crossed. Workers have left in large numbers. Online payments are welcome, but this industry cannot survive without cash. Daily wagers have to be paid on a day-to-day basis. Industry is worried that things won’t recover after December 31,” he said.
S. Kapoor, executive director of the Faridabad Industry Association, said the auto parts manufacturing industry, especially the tier I and II categories that supplied parts to auto majors, had been badly affected. Of the 12 lakh workers in Faridabad, a major industrial hub, seven to eight lakh were in the unorganised sector. “I would be wrong if I say there have been no layoffs. As demand has gone down, the shifts are fewer as well,” he said. Members of the labour “class”, he said, were semi-literate and for them to operate bank accounts or make online transactions was an unrealistic expectation. “A labourer who goes to an ATM seeks the help of another to punch the numbers. I hope workers are able to withdraw their money on January 7 at least,” he said.
Private banks, he said, were moving their ATMs to big companies, but for the small industrialist and the workers employed by him, opening bank accounts was proving to be difficult. The migrant worker had no PAN card or any proof of identity. He said zero-balance accounts were not being opened, contrary to the lofty claims being made. “There are banks that have run out of cheque books. The labour class must have the confidence that he or she can draw money at an ATM. That confidence is missing,” he said, adding that all these problems had been flagged to the Union Labour Minister.
The situation of MSMEs was the same everywhere. A CITU leader said that several MSMEs had closed down in northern Chennai. The trade union has called for a nationwide protest on January 3 against demonetisation and its disastrous impact on the working class.
How the poor live?
The labour chowk at Bhooteshwar temple in old Gurugram is where daily wagers mill around looking for work. By 12 noon, the place would be mostly empty, with most of them having landed some job for the day. But post-demonetisation, most of them hang around from 4 a.m. in vain.
For the past one and a half months, Brajesh Kumar from Uttar Pradesh, Bhanwar Lal from Alwar in Rajasthan, Ram Kumar from Madhya Pradesh and Sitaram from Bihar, all migrant workers, have had no work. “Earlier we used to get work for all seven days. Now there is nothing. We are starving. I have this five-rupee coin in my pocket. That’s all,” said Bhanwar Lal.
Dharmendra, who worked in a factory, was thrown out after 15 days without any payment. “This time it is because of Narendra Modi that we are not getting our money,” he said.
Arun, a graduate, was looking for any work, including loading and unloading. Aditya Pandey from Azamgarh said all the daily wage workers like him were landless. “We wouldn’t have come here, suffering like this, if we had some land back home,” he said, lamenting that he had not been able to send a single rupee back home since November 8.
The wage rates had also gone down and the labourers were ready to work for less. They said that there was no guarantee of payment even if they got some work but they were willing to take a chance.
Fruit and vegetable sellers too expressed their anxieties over reduced sales for over two months now. “Not only have the number of customers declined, those who come do not buy much. So we earn less than half of what we used to make earlier. Godown owners have gone into debt. If I do not sell some of this fruit today, tomorrow I will have to sell it at half the rate,” Shakeel, a papaya seller in Gurugram, told Frontline.
Altaf, a jaggery vendor, is morose. He used to sell 200 kg daily; post-demonetisation, it is just one-fourth of that. “I have to pay for the pushcart, the jaggery, polythene bags, and feed the buffalo that I hire for transport. My margin is Rs.10 a kg. If I do not even earn this much, what will I eat?” he said.
Yogesh runs a pao bhaji shop that caters to mostly daily wage workers. Many migrant workers, he said, had left for their villages. “I am unable to recover my costs. I have no storage facility, so if the bhaji is unsold, I have to throw it away,” he said. The biggest problem for him is the Rs.2,000 note. “If 10 people come and give me Rs.2,000 for a plate costing Rs.30, what am I supposed to do?” he asked
At the subzi mandi (vegetable market) in Gurugram that has around 250 stalls, a vegetable seller scoffed at the idea of Paytm. He said: “I know about ATM. What is this Paytm?”
For Ishwar Deo, 55, the gurdwara near the subzi mandi has been a lifeline. A daily wage worker, he comes to the gurdwara everyday for a free meal. “There is no work. My pockets are empty. I am desperate for work, any work. I sleep on the footpath. Had I enough money for transport, I would have gone to my village in Bihar,” he said.
“Have you embraced the change?” says a cheery advertisement for a credit card company. This catchword for going “cashless” is just one of the many advertisements that rain on you daily in the print media and on radio, television and the Internet. For those waiting for work at the labour mandis, the only change they have had to forcefully embrace is that of going “incomeless”.
– T.K. RAJALAKSHMI