When things fall apart

The Surat diamond cutting and polishing industry is facing a crisis. The cost of roughs has gone up, demand is low, wage cuts and retrench...

The Surat diamond cutting and polishing industry is facing a crisis. The cost of roughs has gone up, demand is low, wage cuts and retrenchments have brought workers out on the streets. For almost a month now, workers have been turning violent, stoning diamond works, setting their employersacirc;euro;trade; vehicles on fire, on occasion even taking on the police.

Ninety per cent of the worldacirc;euro;trade;s diamonds are cut and polished in Surat. The industry employs over 8 lakh workers in some 10,000 units and brings in about 8 billion in foreign exchange. With such revenue, diamond units have been liberal with pay: despite the cuts against which workers are agitating, wages are well above the legal minimum. Since salaries have been linked to performance, cutters and polishers on average take home Rs 10,000 every month. Skilled ones could earn up to Rs 20,000 monthly.

But these scales were touched about 15 years ago, when the annual growth rate for the industry was between 15 and 20 per cent. For two-and-half years now, a shortage of roughs and the recession in East Asia have taken the sparkle out of Surat. acirc;euro;tilde;acirc;euro;tilde;Japan, Hong Kong, Thailand, and Singapore, big buyers once, are no longer buying or placing orders for job works in previous volumes,acirc;euro;trade;acirc;euro;trade; says Chandrakant Sanghvi, regional convenor of the Gems and Jewellery Export Promotion Council.

The shortage of roughs, and the consequent price rise, has worsened the situation for the industry. Says Pravin Nanavati, vice-president of the Surat Diamond Manufacturers Association SDMA: acirc;euro;tilde;acirc;euro;tilde;In the last two years, every month premium on the roughs has gone up by 15 to 20 per cent.acirc;euro;trade;acirc;euro;trade; Adds Jeevraj Dharukawala, a former SDMA president: acirc;euro;tilde;acirc;euro;tilde;Credit was usually given for up to 60 days. Now we are forced to extend it to 120, even 180 days. And sometimes, products are returned unsold.acirc;euro;trade;acirc;euro;trade;

So money has remained tied up, and unsold diamonds have piled up. Unit owners say they have had to sell diamonds at throwaway prices only to pay wages and keep their workers. acirc;euro;tilde;acirc;euro;tilde;But many units went bankrupt,acirc;euro;trade;acirc;euro;trade; says Dinesh Navadia, SDMA secretary. acirc;euro;tilde;acirc;euro;tilde;If we had not cut down on production, shed jobs, and cut wages before September, the situation would have been worse than what we face today.acirc;euro;trade;acirc;euro;trade;

The result was, more than 20,000 workers lost jobs. But the situation in the cityacirc;euro;trade;s Varachha area where people from the Saurashtra region, which provides most of the labour to the industry, live has been volatile. The drought in Saurashtra has worsened things: almost every family in Varachha has been burdened with relatives driven by drought. At least 80,000 people have come from Saurashtra in the hope of finding jobs.

And workers do not agree with the industrialists. Says Harish Thummar, secretary of the Surat Ratnakalakar Sangh, a workers organisation: acirc;euro;tilde;acirc;euro;tilde;Recession has not hit the industry as hard as unit owners say. Many are taking advantage of the situation to cut wages. They are uncomfortable about the fact that workers are progressing. Some of us have our own houses, two-wheelers, and even cars.acirc;euro;trade;acirc;euro;trade;

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He says that wages are cut down to such extent by some units that it has come at par with the rate prevailing a decade back. acirc;euro;tilde;acirc;euro;tilde;As the industry progressed, the wages which used to be around Rs 20 per stone cutting had reached Rs 35. It has now fallen to Rs 20,acirc;euro;trade;acirc;euro;trade; says Manji Patel, a diamond worker. acirc;euro;tilde;acirc;euro;tilde;Workers who were earning around Rs 8,000 monthly, are now unable to run their own homes. Earlier, they could even send money to parents in Saurashtra,acirc;euro;trade;acirc;euro;trade; says Purshottam Das, a former diamond trader.

Navadia and another SDMA office-bearer Chunibhai Gajera said many workers have accepted the wage agreed on at a recent meeting with the Sangh. acirc;euro;tilde;acirc;euro;tilde;They do not wish that units be closed down, for then they will not be able even to send their children to schools. If the minimum wage of Rs 18 per stone worked on were implemented strictly by the industry, there wouldnacirc;euro;trade;t have been any trouble,acirc;euro;trade;acirc;euro;trade; said Gajera.

Deputy Labour Commissioner D.K. Patel said the issue had been thrashed out by the units and the workers without involving the Labour Department. Since the minimum wage law is not broken, and since workers arenacirc;euro;trade;t taking their complaints to the department, it cannot intervene.

The other problem is that very few units are registered under factory law. acirc;euro;tilde;acirc;euro;tilde;Most of them are registered as shops, which are not under our jurisdiction,acirc;euro;trade;acirc;euro;trade; said Patel. According to him, even though around 3,000 cases have been filed against diamond units for not issuing indentity cards or keeping muster rolls, the Labour Department hasnacirc;euro;trade;t been able to do much. acirc;euro;tilde;acirc;euro;tilde;When we start acting, there is political pressure,acirc;euro;trade;acirc;euro;trade; he said.