A living wage : strategies for implementation of the minimun wage : the case of the Indian beedi industry

Abstract

92% of India's total workforce (approximately 320 million workers) is employed in the unorganized sector. Out of these, 4.4 million workers are employed by the beedi (indigenous cigarette) industry. Annually, this industry contributes nearly 13% of the total indirect taxes to the central government. The beedi industry is highly mobile in nature. It is also one of the most exploitative labor intensive industries in India. The industry thrives on the cheap cost of production and locates in regions that have low wages. Most of the production in the beedi industry is carried out by subcontracting, where the workers are exploited in terms of low wages, lack of social security benefits and poor working conditions. In 1966, the Government of India enacted the Beedi and Cigar Workers (Employment of Conditions) Act to protect the workers from exploitation, provide the workers with minimum wages and social security benefits. The Act allows a state government to fix its own minimum wages. This has resulted in varying rates of minimum wages across states. States that have enforced higher minimum wages have witnessed an industrial flight of the beedi firms, leaving behind thousands of unemployed workers. Further, the enforcement and implementation of the Act has been very ineffective. The report identifies successful strategies for implementation of minimum wages in the beedi sector by analyzing the cases of the Kerala Dinesh Beedi Cooperative and the Self Employed Women's Association. These organizations have been successful in their approaches because they were able to 1) organize beedi workers into trade unions and cooperatives, 2) garner political support for their movement, and 3) compete with other beedi producers in the country. The report recommends that implementation of the minimum wages in the beedi industry in India can be achieved by a) developing a national minimum wage policy for the beedi industry, and b) increased cooperation between the trade unions, government, NGO's, political parties, employers and beedi workers.