research paper from inmantec the indian textile1 and apparel sectors2 comprise the second largest...

8/13/2019 Research Paper From Inmantec the Indian Textile1 and Apparel Sectors2 Comprise the Second Largest Employerst

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Use of Marginal Productivity as Wage determination in Apparel

Sector

Dr. Rajeshwar Nath, Associate Professor, Inmantec Business School , Aqib Sewar

(student

Preface

The most promising industry in the world has been The Textile Industry. Infact the earliestindustrialization has taken place here as it is agro based and fulfill the needs of people. The strikes and

lockouts has become a common phenomenon because of it being a labour intensive industry. Conflict with

management over any issues which advocator of the working class sense is detrimental to labour,,

demand for a change in the policy with united support of the working class there. In India the 8s has

passed through this phase when initiator of the lab our grievances rose to a prominent figure with the

huge support of the labour class. The struggle at that time became contagious and work at almost all

textile mills in !umbai came to halt. !any have to sift to other places as it was taking a long time to

settle and capital invested was sinking. "radually it called for some changes in the labour policy but has

seeded a bitter taste in relationship with management. This article is all about the struggles which failed to

find an e#uitable solution.

The Indian textile$ and apparel sectors comprise the second largest employer after agriculture, with

more than %% million persons engaged in this industry. In &'(), it contributed $ per cent to "*+, $)

per cent to the total exports and 8 per cent to the total manufacturing output of India based on calculations

from the -nnual urvey of Industries and *irectorate/"eneral of 0oreign Trade, India1. 2y virtue of being

among the earliest established industries in the country, and being a ma3or sector responsible for rapid

growth of the newly industrialized countries, in addition to the data given above, the textile industry plays

a significant role in the Indian economy. This industry has a rich past in India, in addition to its

dimensions in culture and heritage, so much so that any study of Indian history would be incomplete

without a detailed treatment of the country4s textile trade. Textile production has been an integral part ofthe lives of millions of poor people, including farmers, in India for centuries.% In addition, textile

production has backward linkages with agriculture and allied activities, at least in the case of natural

fibers. - strong and diverse raw material base, cheap labour, an ever/growing domestic market and

relatively better technologies' than some of the other developing countries are the key strengths of the

Indian textile sector that have resulted in such a pronounced prominence of this industry. The

development of a modern textile industry in India gained momentum after a similar trend in 2ritain, owing

to the availability of indigenous cotton, cheap labour, access to 2ritish machinery and a well/developed

mercantile tradition in India.

2riefly, some fundamental features of the Indian textile and clothing industry are5$. The textile sector includes spinning that involves producing yarn from fibers, weaving that

&. involves manufacturing fabric from that yarn, and processing that involves chemical treatment and

colouration of yarns and fabrics for durability as well as aesthetics.

%. The apparel sector includes the processes that result in the manufacture of readymade garments

from fabrics.

'. - comprehensive study of Indian textile history is given in 6oy, $77.

). 0or example, 9akshmi !achine :orks, India, is one of the largest textile machinery


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manufacturers in the world. The presence of companies such as these has ensured that many

advanced technologies are accessible to Indian industry.

Literature review

-s !r 6a3eev hah has mentioned in his article to The times of India on the current status of the textile

industry in the state of "u3arat in India.

The three/week/long strike in four textile mills of -hmedabad in ;une, involving , workers, does notfind mention in the official statistics on man days lost. The latest figures, obtained from the labour

commissionerate, show that in the first six months of this year, 3ust about $,%7 man days were lost in

"u3arat. 9abour experts say, if the workers< strike in the textile mills is taken into account, the actual mandays lost in "u3arat would reach around $.% lakh, a tall order.

Considering that the workers went on strike for &/odd days, the -hmedabad textile sector alone wouldaccount for $.& lakh man days lost. 9abour expert +rof =idyut ;oshi said, >This is apart from sporadic man

days lost because of the refusal of large number of workers to work in urat

- top labour department official conceded that the $/day strike in urat in ;anuary &$$ involving a big

portion of $) lakh workers in the powerloom sector, was never counted as >man days lost>."iving reason for refusal to count the textile sector, state labour commissioner ? @ 2hatt said, >This is

because the textile sector does not fall under the Industrial *isputes I*1 -ct but under the 2ombay

Industrial 6elations 2I61 -ct, under which all disputes are supposed to be handled by the trade unionfounded by !ahatma "andhi, the Textile 9abour -ssociation, or !a3ur !aha3an.>

Trade unionists find the explanation strange. 2elonging to -hmedabad, -shim 6oy of the @ew Trade

Anion Initiative, said, >-n industrial dispute is an industrial dispute, whether it is in the textile sector orany other sector.> +rof ;oshi adds, >:hile counting man days lost, government only takes into account

registered trade unions. Thus, most of the small scale sector falls outside the purview of man days lost.>

A huge ailing public sector5

! A recent trend amon" manufacturers of ado#tin" e modern techniques$ and

! %he e&istence of a number of re"ulations and a #referential tariff structure

(fa'ourin" natural fibres and con'entional means of #roduction.

Des#ite bein" amon" the world leaders in te&tile #roduction in )*+ and the fact

that India has a selfreliant 'alue chain of te&tiles, the countr- had been steadil-

losin" "round in the world te&tile maret, to"ether with a loss of im#ortance inindustriali/ation at home. %he decline of the Indian te&tile industr- is 'er-

cons#icuous relati'e to the countr-0s other industries as well as the te&tile industries

of other countries in the de'elo#in" world, as is e'ident from the stee# fall in the

share of Indian te&tiles in the international maret and in total Indian eorts.

In the ))+s, the Indian te&tile industr- faced a se'ere recession, both in terms of

em#lo-ment as well as in the number of o#erational mills1factories, which continued

durin" the mid)2+s and )) des#ite fundamental chan"es in the tariff structure
http://timesofindia.indiatimes.com/topic/Mahatma-Gandhihttp://timesofindia.indiatimes.com/topic/Mahatma-Gandhi


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amon" other #olic- as#ects. Althou"h s-m#toms of reco'er- ha'e been of late,

owin" to the maret eansion resultin" from the #hasin" out of 34A quotas, there

was an astonishin" decline in eort "rowth from more than 5 #er cent in 6++*1+5

to +.*7 #er cent in 6++51+8 (3inistr- of %e&tiles, 6++8.

Durin" the #ast few decades, numerous te&tile mills ha'e been declared ailin" and

ha'e been closed. 9owe'er, man- of the mills under the National %e&tile

:or#oration continued to o#erate, des#ite losses, owin" to the lar"e number of

em#lo-ees in'ol'ed. ;'en in the #ri'ate sector mills, em#lo-ment has been a majorissue. Althou"h the sector has lar"el- reco'ered, its #erformance #ost34A has not

been encoura"in".

A wide ran"e of re"ulations in the te&tile industr- in'ol'in" bureaucratic difficulties

in eansion and the hi"hl- distortional tariff structure were #artl- res#onsible for

this stead- recession. 4or e&am#le, han -arn obli"ation5 required the s#inners to

allocate a fi&ed #art of their #roduction to handloom wea'ers. %his not onl-

restricted the #rofits of s#inners, but also raw material access and costs for wea'ers

and others further u# the 'alue chain. %he reser'ation of the "arment sector8 under

the Small Scale Industr- Act had restricted lar"escale in'estment in this sector,which led to hu"e losses in efficienc- that could ha'e been otherwise achie'ed b-

economies of scale. In the informal or unor"ani/ed a##arel sector, which is

#ro"ressin" well, the #rocesses are not #lanned and s-stematic. %he worin"

conditions are not satisfactor- as the labour re"ulations cannot be enforced and a

hireandfire #rinci#le is in #lace.

%his is true e'en in a #art of the or"ani/ed sector, wherein the manufacturers recruit

contract labourers in order to minimi/e the losses the- face due to the infle&ible

labour re"ulations #re'entin" them from firin" their #ermanent em#lo-ees e'en

durin" recessions. In fact, some studies ha'e obser'ed a ra#id "rowth of theinformal sector in the te&tile industr-, es#eciall- after the reforms of )).

%able . A'era"e annual "rowth rates in the or"ani/ed te&tile and a##arel sector in

India ())71)a"es

Real fi&edca#ital

)5156 to)8+18

*.+7< +.


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%able 6.

%rends in some ratios of ca#ital (?, out#ut (@ and em#lo-ment (N

-ear @1? ?1N @1N)8718ea'in"in'ol'es manufacturin" fabric from @arn

7. Processin"colouration of -arns and fabrics for durabilit- as well as aesthetics

BankyarnobligationFre#uired the spinners to allocate a fixed part of their production to handloom

weavers. -fter coming into effect in $7G' it was fixed at ) per cent of the total marketable yarn reduced

to ' per cent then to & per cent in &%.

In the informal or unorganized apparel sector, the processes are not planned and systematic. The working

conditions are not satisfactory as the labour regulations can not be enforced and a hire and fire principal is

in place. 0rom the table$ it has been inferred marginal productivity of labour

$7$/& to $7G/G$/growthin marginal productivity was $.$'7/ growth in real wage&.'8G again in $7G$/

G& to $78/8$ growth in marginal productivity of labour was &.&% where as growth in real wage was

&.88&more than needed. :e can understand the turbulent phase could be $7$/& to $7G/G$ when

labours were not paid and were exploited.

-gain in the period $78$/8& to $77/7$ the growth in marginal productivity of labour was 8.7 where asthe increase in real wage rate was only ).''.

- partial exploitation of labour. -gain in the phase $77$/7&to$777/ the growth in marginal productivity

of labour was .G%& where as growth in real wage was only &.%G8 hence labours were not well paid for

their contribution in these days.

:here as in contrast to those early days the growth in marginal productivity of labour was only $.8) in

&$/& to &'/) where as the growth in real wage rate was ).$ here the labourers are paid more than

re#uired considering the table & In India the textile industry is labour intensive'. -nd with up gradation in

technology/ till $77G/78 capital(labour out was increasing but after &$/&to &'/) it shows a

declining rate of growth that calls for technical up gradation.

0rom the table ' it can be concluded that for the corresponding period in &'/) average productivity of

labour was&.%7& where -s for the same corresponding period the marginal productivity of labour was

$.8).

Infact !arxian concept that labours are the real producers and concept of collective bargaining revolves

around this. Collective bargaining because most of the work force do not raise their voice for their raise of

wages, and for partners in profit or against working conditions. It provide a platform for their upliftment.


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Infact of all the theories of determination of wages this seem to be conducive . :age fund theory was an

ad3ustment theory that it is already decided thatwhat sum of money will for wages of labour if less

workers it will go for other purposes if more workers it has to be ad3usted according to that.

ubsistence wage theory was a frown expression of management upon workers which consider them to a

class which can not come out from the vicious circle of poverty.

+roponents of living standard theory was basically a minimum expenses on worker as their urges and

wants are confined to their basic needs and they will remain confined to their existing standards of living

withor without less raise in wages.

*emand and supply theory decided that as in those time labours are more in supply but industries were

numbered and also according to -rthur lewis model their was migration of labours from agriculture to

industry rural to urban and knows well they can not afford to remain unemployed for a week that was

already too much at that time.

E00 all these theories marginal productivity theory was based and linked the works to efficiency

References

Das D?.6++7,EFuantuf-in" trade barriersE worin" #a#erNo+*, Indian council for

research on international economic relations, New Delhi

Goswami, =,))+, H Sicness and "rowth of Indian %e&tile Industr-Anal-sis and

#olic- o#tions ;conomic and Politic'al >eel-, 'ol 6*, no

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