karthik janakiraman

Bottom of the Pyramid Paradox: India’s Sweatshops

This post first appeared on the Acumen Fund Fellows blog.

In the past 7 months, I have had the opportunity to visit several industrial parks in the two most industrialized and entrepreneurial states in India, namely Gujarat and Maharashtra. I would like to share some of my observations with you.

Most of the industrial parks house small manufacturing units that employ anywhere from 15 to a 100 people. All sorts of plastic and mechanical components are manufactured here which eventually are sold in domestic and international markets.

There are three types of employees, adult men, adult women and teenagers. The men tend to do the work that requires more brawn, like lifting heavy parts or working near furnaces and the women and young teenagers are mostly involved in finishing operations like cleaning and packaging.

The machines used to manufacture these components are often semi-automatic, much like an automobile line. Workers are needed to load and unload product at frequent intervals. The employees are semi-skilled and for their efforts they receive approximately Rs. 100 to Rs. 150 a day for men and Rs. 80 to Rs. 100 for women. That’s approximately $2 to $3 per day. There are 2 shifts, each lasting 12 hours with two ten minute breaks for tea and 30 minutes for lunch. There are four off-days a month. Some of the workers are migrants from the more impoverished states of India and often sleep in the same factories where they work.

Most of the units are covered with a layer of black grime, a combination of dust, oil and some unknown substance. Chemicals are strewn all over the place and the air in these factories feels heavy with fumes from machines.

This is not a scene from a Dickens novel, but is in fact the real status of a majority of small scale manufacturing sector in India.

I asked some of the workers how they manage to work for such long hours in these conditions. Their response is often a shy smile, a nod of the head with their fingers pointing towards their stomach. Yes, we all have to eat, an unfortunate necessity for existence. Many of the migrant workers are happy to have a job where they can earn enough to support their families that are left in their home states. They save assiduously and send home anywhere from Rs. 1000 ($20) to Rs. 1500 ($30) per month, critical funds that are needed to provide food and other essentials for their families.

The factory owners claim that they need to control costs in order to compete with cheap imports from China and that they cannot afford to clean up their factories or offer higher wages.

Sure, the workers could organize and demand better wages and conditions, but most of them are temporary workers and often do not have the wherewithal to launch a coordinated effort. Labor laws and workplace safety laws exist, but enforcement is a huge challenge mainly due to corruption and a shortage of labor inspectors in a country that has millions of such units.

Intellectuals are of the view that this is a part of industrial development and that every country goes through the sweatshop stage. They argue that businesses need to grow and gain profits that will enable them to pay more and maintain cleaner factories. Furthermore, a job today is much more valuable than none. I have been told that I must not apply my “first world” concepts at this point in time of India’s development.

What should we (i.e., the development community) do about all this? Should we stick to our mandate of selling valuable products and services to the BoP and just ignore this? Can we try to influence governments? Can we insist that the products our social enterprises produce have to be manufactured in clean factories where labor laws are followed?

What are your thoughts?