Indian workers remain alive to the class struggle despite decades of neoliberal onslaught

A new dossier by the Tricontinental Institute for Social Research examines the impact of years of neoliberal policies on the Indian working class and the long struggle by workers across sectors to protect their basic rights

May 03, 2023 by Tanupriya Singh
Indian labor Tricon dossier
(Photo: Ravi Kaushal/Newsclick)

In September 2020, India’s central government was asked in parliament whether thousands of migrant workers had lost their lives due to the sudden countrywide lockdown declared by Prime Minister Narendra Modi just a few months prior on March 24. The government’s response would become its line of choice whenever it was asked to account for the devastating conditions facing much of India’s working class and farmers—no data available. 

Even though there was no ‘official’ death toll, the severity of the crisis was hard to miss after report after report emerged showing exhausted workers dying on roads and railway tracks as they were forced to walk thousands of kilometers back to their villages. 

Read the dossier: The condition of the Indian working class

Data from the Centre for Monitoring Indian Economy (CMIE) shows that 122 million jobs in rural and urban areas were lost in April 2020. Much like in other parts of the world, the COVID-19 pandemic revealed the deep fractures in India’s economy and health sector, which left workers—not only already poor, but increasingly hungry and unhoused—to face a deadly disease.  

A dossier published by the Tricontinental Institute for Social Research examines the decades of neoliberal policies that have produced this present “fragility of the Indian working class.” 

Following independence from British colonial rule in 1947, the Indian government’s initial industrial and trade policy was informed closely by private-sector industrialists. In the absence of a redistributive program, through measures such as land reforms or the guaranteeing of workers’ rights, most of the gains made in these early years were concentrated in the hands of the bourgeoisie. 

“Unlike in socialist countries, the public sector in India was built for a limited purpose– to facilitate the growth and accumulation of the private sector,” the dossier states. “The raison d’etre of the Indian public sector was not to maximize profits, but to provide a sustainable ecosystem for private industry.” 

As the government was investing in infrastructure and industrial inputs, workers’ movements strove to build trade unions to ensure that key legislation related to wages, benefits, and collective bargaining was put in place. 

The dossier identifies three reasons why public-sector workers were able to succeed: a) a capital-intensive public sector with workers concentrated in large factories meant that strikes could cause major damage to profits, b) the largely unde-reducated and undernourished population that colonialism had produced meant that a reserve army of labor, which could be used to undermine the struggles of public sector workers, was not always available, and c) public sector workers themselves had high levels of class consciousness

While the trade union movement was able to win some crucial rights, the nature of the Indian public sector—a capital-intensive industry whose workers comprised a small proportion of the labor force—meant that only a fraction of Indian workers were able to directly access these rights. 

83% of India’s workforce still remains in the informal sector. Moreover, even within the formal sector, a significant share of the work is informal in nature, through sub-contractualization for instance. This brings the share of Indian workers who are informally employed to over 90%. 

Liberalization and labor market reform 

In the years following independence, while workers in India would remain underpaid and underfed, what changed is that a large section of the workforce became literate. By the 1980s, a technically-skilled workforce would emerge, only to find that there was no employment. 

“It was this large army of underpaid, underfed labor, accustomed to working in what are likely some of the worst working conditions in the world, but now with new aspirations and literacy, that awaited the exploitation of international capital on the eve of liberalization,” the dossier notes. 

In 1991, the Indian government reached an agreement with the International Monetary Fund (IMF) to liberalize the economy in exchange for temporary financial assistance, ending the era of partial protectionism post-1947. 

Corporations were joined by academic and policy institutions in pushing for “flexibility,” which really meant rolling back the hard-won employment and wage protections for workers, to attract foreign investment. This would supposedly boost the technological level of industry, increase labor productivity, and ultimately increase both growth rates and wages in the long term. 

As public-workers fiercely resisted this move towards “flexibility,” the government “moved towards a comprehensive solution not to fight the unions factory by factory, but to change the law in its favor, assisted, since 1991, by a judiciary aligned with the neoliberal agenda.” 

As the higher judiciary’s approach to workplace disputes shifted in favor of “market principles and the sanctity of the contract,” efforts by workers to assert their collective rights, including through industrial action, were painted as acts of criminality, which sometimes even attracted the use of draconian anti-terror legislation. 

In 2003, the Indian Supreme Court sided with the government of Tamil Nadu State in its dismissal of 170,000 employees for embarking on an “illegal strike.” The Court concluded that “there is no question of [government employees] having any fundamental, legal, or equitable right to go on strike.” 

Meanwhile, Industrial zones, which are celebrated for promoting “ease of doing business” and where theories of labor flexibility are often realized, have been sites of severe violence not just against union organizers, but also for workers in the aftermath of industrial actions. 

The reality is that these theories have failed to deliver on their promise of equitable growth. What has emerged instead is a workforce that has “increasingly shifted to a model of short-term contracts with minimal regulatory oversight and benefits.” While the share of profits in gross value added (or GVA, which is the total of wages, profits, interest paid, rent, and depreciation) rose from 17% in 1999-2000 to 48% in 2018, wages actually decreased from 33% to 26%. 

‘Hierarchies of exploitation’

Economic and industrial growth have remained low in India, and this is not just because of a lack of investment, but the suppressed demand of the country’s population. This, in turn, is a result of poor wages and neoliberal austerity, particularly in the agrarian sector. 

While the official unemployment rate stands at around 8%, some estimates place the figure much higher. The rate of work participation is approximately only 40%, with the income of a median worker being around Rs. 10,000, which is below the minimum wage. 

While India did witness two periods of growth after 1991, neither was attributable to labor market reforms. Growth from 2003-2008 was driven by credit-fueled demand from US consumers, and from 2009-2011 by credit-fueled spending by Indian corporations. 

While private corporations have continued to borrow from public-sector banks, they have done so to fund acquisitions, instead of creating jobs—employing no more than 2% of India’s workforce and no more than 5% of the non-agricultural workforce. 

This has left the majority of Indian workers to seek employment in small, scattered enterprises in almost entirely unregulated sectors with poor working conditions. The informal sector consists mostly of service workers who are either employed by small businesses or are “self-employed.” 

A significant share of the informal sector also includes workers who sell their labor to consumers directly, such as domestic workers, electricians, and road sweepers. Not only do many of these workers hold multiple jobs, there is also a “continuum between rural and urban spaces” as workers in urban areas often travel back to their villages during sowing and harvest seasons to either work on their family farms or as hired agricultural workers. 

The “perpetual circulation of desperate workers,” made possible by the development of road networks, has created a massive reserve army of labor for the informal sector, which is made up of workers from the most disenfranchised and oppressed castes of rural India. 

With industrial production concentrated in India’s peninsular and mining regions, migrant workers travel huge distances to these areas, where they may be “alienated culturally and linguistically” and find themselves living in temporary dwellings. This alienation also works to undermine the ability of workers to organize to demand better wages and work conditions. 

Mounting a united struggle

In 2022, approximately 200 million workers across the formal and informal sectors participated in a historic general strike. The mass mobilization was two decades in the making, as struggles over issues including permanency of tenure and wage contracts united workers across sections. 

Despite its clear failure, the idea of labor market flexibility is alive in the four labor codes that the Modi government forced through parliament in 2020, but has not been able to implement in the face of resolute resistance by workers. 

Women, especially in the care sector, have been at the forefront of these struggles, fighting to have their labor recognized as work, and to gain access to social security benefits and a guaranteed wage. Meanwhile, trade unions have also taken up broader issues affecting the social and community well-being of workers, including access to water and education. 

India’s trade unions are also contending with the rise of far-right Hindu extremism, which has found “fertile ground in the socioeconomic conditions generated by neoliberal capitalism.” 

However, the “potential of working class and peasant resistance to this kind of neofascist agenda” has been evident, as witnessed during the historic farmers’ struggle of 2020-21 and, most recently, with the Mazdoor Kisan Sangharsh Rally held in capital Delhi that united workers, farmers, and daily wage agricultural workers from across the country to confront the Indian government’s pro-business, anti-poor ‘Corporate-Sectarian nexus’.