National Commission on Labour (1967)||
29.30 Small-scale industries (small industries) include industrial units with investment in plant and machinery not exceeding Rs. 7.5 lakhs irrespective of the number of employees; in case of ancillaries to large industries the limit is extended upto Rs. 10 lakhs. Small industries occupy an important place in our economy both in view of the employment they generate and the contribution they make to the national product. There has been a phenomenal growth of small industries in the last fifteen years. In 1960, some 92 per cent of the registered factories in India with 38 per cent of total employment were run as small-scale, each with a capital of less than Rs. 5 lakhs. Unregistered units are estimated to have more employees than those engaged in all factories, both large and small. The 36,400 small factories registered under the Factories Act employed in 1960 over 13,30,000 persons and accounted for 17 per cent of the fixed capital of all registered factories, and produced 33 per cent of their gross output and 25 per cent of the net output. Besides the numerous units registered with the various State directorates of industries, many unregistered units manufacturing a variety of products also operate and contribute substantially to industrial production. While the latest data are not available, it would be a safe guess that in terms of economic activity their current position may not have suffered much. The investment in small and cottage industries has gone up from Rs. 43 crores in the First Plan to Rs. 264 crores in the Third. The increasing investment is itself a recognition of the role of this sector in (i) economising use of scarce capital and managerial and supervisory skill, (ii) absorbing profitably a large mass of unemployed workers, (iii) training unskilled workers and transforming them into self-employed entrepreneurs. Owing to shortage of raw materials, under-utilisation of installed capacity has been reported in the last three years, but we expect that this temporary set-back will be overcome soon.
29.31 Our Survey.óData on conditions of labour in small enterprises could at best be considered deficient. Our special inquiries1 in this area reveal the following interesting features:
(1) The relationship between workers and
1 Rapid Survey of labour conditions in small-scale industries conducted on behalf of the National Commission on Labour by Education Officers, Central Board of Workers' Education.
owners is largely personal. Effective operations and better efficiency depend largely upon adequate recognition of this factor. (2) Though the Factories Act and Industrial Disputes Act apply to several units, their enforcement leaves much to be desired. The procedures laid down in the laws are cumbersome according to employees and are reported to be unhelpful to labour. For an employer, they involve several complicated administrative formalities to be complied with. A small entrepreneur is manager, salesman, accountant and supervisor rolled into one; he cannot afford to employ specialised staff to ensure compliance with such legislation. Labour too is not well organised for the purpose. (3) Recruitment practices do not differ from those prevailing in large establishments. Direct and indirect recruitment is usually resorted to except in very small establishments which are run by family workers and relatives. Skilled workers gain experience and move towards large undertakings for seeking higher wages and continuity of employment or establish on their own. (4) Working Conditions in their several aspects leave much to be desired, even the bare requirements are not provided. The State inspectorates are no deterrent to them because of infrequency of inspections. All this creates hazards for workers but there is no evidence to suggest that the rate of accident is necessarily higher. (5) The entrepreneurs split up larger units into small ones to evade law. Sign-boards dividing a unit into two or more parts even within the same premises are not unusual, particularly in hand-loom and powerloom factories. Quite often the entrepreneur is helpless against the middleman who supplies raw materials and markets the finished product and usually gets the cream of the joint effort of the small-scale owner and his employees. (6) The Payment of Wages Act, 1936, may be technically observed but weighment of the product or measurement of work will require a greater measure of vigilance on workers' side. It is here that an employer or his shop floor agent has opportunities to secure undue advantage. (7) The attempt at forming a union as an outlet for grievances of labour is sporadic. The interest shown by a union organiser is as transitory as that of workers who approach the organiser. A feature of trade union activity has been the emphasis on acquiring legal expertise by organisers. The older type of union leadership with its broad social sympathies is being replaced by one with a mere legal background. Unions in small units cannot afford to engage lawyers; lawyers get nominated on the union executive. Such leadership, barring exceptions, is unable to cope with the increasingly onerous task of organising workers diffused in small units. The result of such ephemeral unionisation is described in one of the reports prepared for us as follows:
"Strikes are frequently resorted to and the extreme result of strike is either dissolution of the union in the unit or closing down of the factory. In one of the units a 20-day strike fizzled out, the workers returned to work unconditionally and the union in the unit subsequently withdrew. Since then the unit works satisfactorily and peacefully, it is claimed. Another unit was closed down because of frequent victorious strikes conducted by the union securing increased facilities like leave with wages, holidays with pay, double wages for the overtime work, etc. In either case workers have lost."
29.32 In the visits paid by some of us to centres of small-scale industry and to units working in the bigger industrial centres, several of these conclusions were borne out. Many unfair labour practices have developed in the wake of rapid expansion of small industries. Here again the strength of the labour inspectorate and its efficient functioning can only be inferior remedies. More devoted leadership from among the ranks of workers, if possible, and outsiders, if necessary, can be the answer. But this is bound to take time.
29.33 In cases where the cost of the improvement of working conditions cannot be borne by the enterprise, alternative solutions which will not put the entire financial burden on the owners of the enterprises require to be explored. One line of action has been the establishment by the Government or private corporations or industrial estates on which workshops and other buildings of satisfactory standards are constructed and provided with water, power, compressed air, drainage and transport facilities. While encouraging development of small industries, such estates should enable the small employer to provide a satisfactory working environment, without requiring him to undertake heavy capital expenditure. A number of such industrial estates have already been established. In many cases the financial working of these estates has encountered difficulties because of paucity of raw materials. But for labour, even in the units which do not have such difficulties, the standards are not encouraging.
29.34 There is conflicting evidence in regard to the effect of wage regulation on the fortunes of such undertakings. Very often the nature of
awards and the nature of employer-employee relationship which is built up at the unit is the main determinant of the effectiveness of such regulation rather than the enforcement machinery which the State can provide. In any case the latter will be ineffective in a situation where labour is willing to 'contract out' of its legal benefits.
29.35 As two typical instances of small industries, we propose to refer to handloom/ powerloom industry and bidi/cigar industry. In terms of employment, both these account for a major portion of employment in small industries.