Why India needs to look to China

This also limits us from taking the benefits of globalisation to the working classes and farmers. Deficiencies in our industrial revenue policies as well as labour policies are responsible for this. It is therefore important to carefully look at Chinese policies. It could offer clues for Indian employers, employees, trade unions and government to grow blue collar jobs and also put a sharper focus on productivity on the shop floor.

A closer look reveals there are several factors responsible for China’s success but China’s imaginative utilisation of its rural workers in its industry is its human core. Another fact should provoke us to act fast to stimulate our manufacturing sector. Multinationals and other large business groups in the world seem to be rethinking their overdependence on China for sourcing merchandise or set up their own manufacturing in China. Some of them are looking to us as a counterweight to China.

There is a belief here that labour in China is cheap and authorities allow its workers to be exploited by companies making them work long hours. But visits to factories in China and interaction with a few China experts tell a different story. A study of the new Chinese Labour Laws enacted in 1994 is educative. They are created “to solve farmers’ problems and encourage farmers to work in cities, decreasing population in agriculture, increasing farmers’ incomes, and improving farmers’ living conditions”.

In China, the majority of the workers in factories located in urban areas are people from the villages in the province. These ‘Migrant Workers’ are temporary residents of the place or city they work. They leave their families back home in the villages. Each has an ID card issued by village authorities. Besides they are given a migrant worker’s pass. Every migrant worker must have an ID card and work pass.

Applying for a temporary residence identity card is, however, simple and cheap. Legal working hours are 44 hours a week with one rest day per week. Employers may extend the working hours but they must pay higher hourly wages. It is obligatory for employers to provide free dormitory accommodation to all migrant employees and also pay for three daily meals in addition to monthly wages. When an employer needs to cut employment due to difficulties in its production or business operation, he can do so. Cost per worker including overtime is almost Rs 10,000 per month in SEZ. State control over the situation is through the local trade unions, all of which are affiliated to All China Federation of Trade Union. Company workers are not allowed to go on strike.

ACFTU disapproves of strikes. SEZs are designed as China’s “windows to the world”. The idea is to create “investor-friendly environment” facilitated by low wages, tax breaks and a lack of strikes. Several features of this policy can be relevant in India without hurting democratic principles.

Imposing discipline on employers and employees has huge benefits. Efficient manufacturing needs better infrastructure than export of services and discipline is a catalyst for higher productivity. The employers too have greater responsibilities towards the workers while cultivating the essential authority to impose discipline. China ensures this, carefully realising the importance of manufacturing value addition as the real wealth. Trading merely rotates money to multiply it and creates an illusion of wealth.

The writer is former chairman, Electronics Commission