Special Exploitation Zone

At Cochin's Special Economic Zone, independence is a forgotten ideal.
Here, as in other SEZs, the government has long treated native soil as
territorial possessions of foreign nations, exempt from taxes, rules and
safeguards that apply elsewhere. The only losers are the workers. P N
Venugopal reports that now this charade is being expanded.

17 August 2005 - Spread over 103* acres of land and fortified by high
walls, the Cochin Special Economic Zone is an imposing presence in the
vicinity of the headquarters of Ernakulam district, Kerala. The public
has no free access to the SEZ; entry into the Zone is perhaps more
difficult than to the restricted areas of the Southern Naval Command,
also in Cochin. The Zone has its own water supply system, power supply
and effluence-treatment plant. It has 79 factories manufacturing
ready-made garments, rubber gloves, electronic items, software,
hardware, food items and jewellery. More than 7000 people work in these
factories.

In 1965* the first Special Export Processing Zone was set up in Kandla.
Seven more began functioning in the subsequent years at Mumbai, Chennai,
Surat, Falta, Kochi, Noida and Visakhapatnam. The primary objectives of
the Special Zones are earning of foreign exchange and employment
generation. These zones are foreign territories in India as far as
Indian customs and excise duties are concerned. The units set up in the
Zones are exempt from these duties and import duties. An import licence
is not required for importing raw materials or components. Customs
examinations are kept to the bare minimum, and self-certification is
sufficient. Income tax exemption is also allowed for the first ten
years. The Central and State sales taxes and service taxes too are not
applicable to these units. Supplies from the the rest of the country are
treated as exports, and domestic suppliers are eligible for
export-related benefits.

These zones are foreign territories in India as far as Indian customs
and excise are concerned. The units here are exempt from duties, and
import licensing for raw materials and components is not needed.

The only condition imposed on the units is that they have to be 100%
export oriented, and should become Net Foreign exchange Earning (NFE)
units within three years. In 2000, these zones were renamed Special
Economic Zones. The change in the name was not just cosmetic; the
dropping of the word 'processing' was significant. Now even trading
units could find space in the zones and enjoy all the above benefits. An
added attraction is that the labour comes cheap and the zones are more
or less free of trade unions.

Cochin's SEZ is the smallest one, and according to trade union sources
has comparatively better working conditions than the others. And about
60% are women, indicating that there is labour to be had for both sexes.
But while there is plenty of work to go around, these aren't jobs to be
envied. Approximately 55% of the total workforce is made up of contact
workers, who do not enjoy any of the benefits and privileges that
regular employees do. The Contract Labour (Regulation & Abolition) Act
1970 specifically prohibits employing contract workers in activities
which are "permanent and perpetual" in nature. Almost all the activities
conducted by the units in the CSEZ are permanent and perpetual in nature
and yet the practice of employing contract workers goes unabated.
Workers are paid as low as Rs. 35 to 75 a day, and are often made to
work more than the stipulated eight hours for no extra payment; the
rules of the Minimum Wages Act offer no protection to contract workers.
Worse, they have to part with anything between Rs. 10 to 15 daily to the
contractor as his commission. Recruiting agencies get paid for the
contracted amount from the companies in the Zone. It is they who then
make the payments to the workers on a monthly basis after deducting
their commission.

The workers, once they enter the premises do not have any contact with
the outside world. The work atmosphere is oppressive; the eerie
stillness of work is only occasionally broken by a woman asking for
permission to use the toilet. "There are restrictions even in going to
the toilet. The supervisor will shout if we take more than a few
minutes," says Sajitha, a semi-skilled worker in a ready made garment
unit. "How much ever hard we work, we are scolded and shouted at in
front of others. There are very few days when I've not cried." The
workers are reluctant to talk, and are afraid of being quoted. Sajitha
[not her real name] and other women workers who spoke about the
intimidating atmosphere in the Cochin zone insisted on changing their
names when quoted.

Most of the women workers come from far away places and are often the
only bread winners of their families. Groups of five or six of them rent
a room and live together with very limited facilities. A frugal meal of
rice and a curry cooked once in a day is shared among them as breakfast,
lunch and supper. "We took up this employment with great hopes, but now
feel trapped," says Seena who has been working in a garment factory for
the last five years. "We cannot give up and go back as our families are
totally dependant on us and there are very few alternatives." Despite
employing more than 3500 women, the zone does not provide accommodation
facilities nor are there any crèches. Transportation facilities are
inadequate. The workers are taken by vehicles to the factories for the
morning shift, but they are left in the lurch once the shift is over.
"After the night shift, we are taken in a vehicle and all of us are
forced out in front of the first house where some among us stay. All the
rest run for their life in the dead of the night," says 25-year-old
Mallika working in a ceramic unit. The lofty ideals of each zone
developing into townships catering to all the needs of the work force
including housing, education, medicare remain only on paper.

Often the shifts run 10-12 hours a day to achieve production targets,
without the workers receiving any overtime allowances. "My health is
ruined working continuously to complete the stipulated number of pieces.
They won't allow me to take a day's leave to go to the doctor," mourns
Mini john, a contract worker in a glove-making unit.

Exploitation is not limited to the blue collar jobs; even the
sophisticated Information Technology jobs here come with a millstone
around the employees' necks, in the form of 'traineeships'. Employees
are appointed as trainees for eleven months on meagre wages, and then
their employment is terminated. They are then reappointed again as
trainees after a reasonable lapse of time and the trainee cycle
continues for any period of time you are willing to let yourself be
'trained'.

The lot of permanent employees is also not much better. Although the
Minimum Wages Act does apply to permanent work, only those industries
that are brought under its purview by the government can be thus
regulated, and so far the IT and Readymade Garment sectors have been
left out. Thus the majority of workers in the Cochin Zone receive no
effective protection under the Act. Many workers complain that the
Provident Fund and Employees State Insurance contributions collected
from them are not being remitted.

In order to 'facilitate the smooth functioning' of the zones and to stop
'outside interference' the powers of the labour department were
transferred two years ago to the Development Commissioners, who are in
charge of the administration of the zones. With that the last resort for
redressal of grievances of workers has been taken away. The
administration is vested in a Development Commissioner and a fairly
large beaurocracy. The administration admits without qualms that their
responsibility is only to see that the units function without any
interruptions. "We cannot bother about the conditions under which the
employees work nor about the contract labourers," says TV Chandran, one
of the Assistant Development Commissioners of the Cochin Zone.

Not every employer in the CEZ, though, appears to be exploiting the
workers; there are a few companies which pay their employees a decent
salary. Tyco Eletronics Tools India (the Indian subsidiary of Tyco
International, a US based multinational) is reportedly one among them.
But, Mr Mazood Basha, the Unit Head of the firm which manufactures
precision tools and employs highly skilled workers, declined to reveal
the minimum or average level of emoluments. "If I reveal the exact
figures there are chances of my competitors grabbing my trained
personnel," he says.

Even though, Kerala has a tradition of militant trade unionism, the
unions have not ben able to effectively protect the rights of workers in
the zone, union leaders admit. Only about 1500 of the total workforce of
7000 are members of any trade union. There are trade unions in only 21
of the 79 units functioning in the Cochin Zone, the majority of them
being led by the Centre for Indian Trade Unions (CITU). "Attempts to
organize the contract workers have not born any fruit," admits Nasser,
Joint Secretary of the CSEZ Workers Association (CITU) "They are afraid.
They fear retribution from managements and contractors", he adds. The
women workers also allege that they were tutored on what to say to the
State Women's Commission and The Labour commission when they visited the
Zone. They confess that they always abide by the management's
instructions, for fear of reprisals, as also from apprehension that the
company itself might close down, if they revealed the truth. "The work
culture of the Zones is akin to that which existed during the Industrial
Revolution in Europe; mindless exploitation," comments advocate Shiny,
President of the Workers Union, an independent trade union.

With the SEZ ACT 2005 getting the President's assent on June 23, and
permission given to establish as many as 45 new zones in the private and
joint sector, it is quite apparent that the future industrialisation of
the country will be closely interlinked to and concentrated in the
Special Economic Zones. A cost-benefit analysis of this approach is
therefore imperative. But there is very little data available to conduct
this study; neither the government nor the Zones themselves are
conducting such an assessment. The Cochin Zone administration could
provide only two figures: the government has spent Rs.96 crores so far
on infrastructure development, and the total exports from the Zone were
Rs.463 crores for the year 2004-05. The value of their imports, or the
revenues lost by providing tax concessions and exemptions to units
operating in the CEZ were not available with them.

However, some indicators are available from a study conducted by
International Confederation of Free Trade Unions (ICFTU). The foreign
exchange earned by all the 811 units in the 8 Zones put together came to
only Rs 18,309 crores, (4.08 billion dollars) a mere 5% of India's
exports during the fiscal 2004-05. but what of the quality of the jobs
and at what enormous cost? As much as two-thirds of this is used by them
for imports of raw materials and components. (See Box). Add to that the
profits transferred from the country by wholly owned foreign companies,
the revenue loss from tax concessions, and the hidden costs of the
natural resources used up by the Zones - and the SEZs actually appear to
be a net drain on the economy. That 100,650 people have gained
employment may be cited as a saving grace, but this is also of a suspect
nature, with workers exploited the way they are.

It's not clear, then, why the SEZs should be 'special' in any way, but
that's a question no one is asking seriously. Like much else in the
'development' of the country, the theories behind the economic decisions
have been embraced only to make those decisions; whether they have any
merit at all is a question - and a burden - left to the workers. (Quest
Features and Footage) ⊕

P N Venugopal
17 Aug 2005

P N Venugopal is an independent journalist based in Kochi, working for
The Quest Features & Footage.

The International Scenario
The first Special Zone which bears any semblance to the present-day ones
was set up in Spain in 1929 with the intention of increasing exports by
value addition to the raw materials available in that country. It was
also the time when an unprecedented depression was stalking the
economies of the West. Skillful technicians were employed and they were
a privileged class. But the International Monitory Fund and the World
Bank highjacked the idea in the 1960s. They saw the Special Zones as a
tool for penetrating the third world economies, and ever since the
scenario changed.

Exploitation of labour in the Special Economic Zones is an international
phenomenon and the International Confederation of Free Trade Unions
(ICFTU) corroborates this. The Kenya Human Rights Commission recently
launched a book "The Manufacturers of Poverty: The Untold Story of EPZs
in Kenya", that has this to say: "jobs that pay poverty wages do not
significantly improve the lot of workers, nor raise their economic
status. They reflect the worst effects of globalisation and contrary to
their objective of empowerment, end up becoming factories for the
manufacture of poverty".

The interviews we had with the women workers of the Cochin SEZ are
almost verbatim reproductions of the words of Grace Nyaeko, working in a
SEZ in Kenya. She says "I've developed tuberculosis as a result of
breathing in the dust that emanates from the garments I stitch. I've
been suffering for three years now and the management does not care.
They are only interested in the number of clothes I sew per day". Time
off for medical check-ups has been denied, Nyaeko adds, as have overtime
allowance for the occasions she stayed on at work in an effort to meet
production dead lines.

Labour Notes South Asia points out how violations of the human rights of
skilled workers is rampant in garment factories at EPZ Karachi. "These
workers are paid ridiculously low wages. They have no job security. No
medical treatment is provided". Whenever a foreign delegation visits the
zone, the management conjures up false papers depicting an exaggerated
salary structure. If a labourer reveals the truth, he loses his job, say
the Notes.

The ICFTU speaks of a typical Special Zone in Nicaragua: "The metal
covered buildings lie under a leaden sky. Nothing in their appearance
suggests there are human beings inside. They look like giant warehouses.
Inside the only sound is the noise of machines. There is not a single
human sound. From time to time, someone gets up and asks for permission
to go to the toilet. The workers are only allowed to go once during
their ten or twelve hour shift and even then their time is strictly
limited. If they are absent for more than three minutes, the supervisor
shouts for them to come back to work. Once the women have entered the
building, the doors are locked. Nobody can leave or have any contact
with the outside world".

The All China Federation of Trade Unions, the official trade union of
China confirm the practice of low wages often below the legal minimum
and just falls short saying that exploitation is the rule.

Regarding the exploitation of women, the ICFTU says they are used to
allow for excessive "flexibility" reminiscent of the manufacturing
methods of the second half of the 19th century in European towns. "Most
women are confined to repetitive tasks in production while men move on
fairly quickly to better paid supervisory jobs". It's pertinent to
recall that the women workers of the Cochin SEZ complain of forever
remaining 'helpers' even as their male counterparts move on to become
'operators'.

The International Labour Organisation (ILO) has over the years made many
recommendations towards the improvement of the working of the SEZs.
Surprisingly, countries like Dominican Republic and Nicaragua have
implemented at least some of the suggestions, while India has not even
made any attempts. On the contrary, the recently passed SEZ bill too had
a clause in it which gave powers to the state governments to pass a bill
bringing the Zones outside the purview of privileges like trade union
rights, gratuity, bonus, maternity leave etc, which are conferred to
workers as per the existing state laws. It was the stiff resistance of
the Left parties that saw the removal of this clause.

A cost-benefit analysis is underway in most of the countries. These are
some of the observations of the ILO in this regard: Investment has been
narrowly concentrated in the electronic and clothing and footwear
sector. Investors usually locate only simple processing tasks, thus
limiting technology and skill transfer. Most of the jobs are low wage,
low-skill jobs. Very little of the foreign exchange generated stays in
the country. The foreign investment is not secure and could leave
easily. The investors often import all their requirements procuring
little from the local market.

An ICFTU study of six Asian countries including India reveals that
almost two thirds of the foreign exchange earned through the SEZs is
used up by these same Zones for import of raw materials and assembly
parts. In a particular year the total foreign exchange earned by
Srilanka through Special Zone export was 250 million dollars, while the
imports they made accounted for 174 million dollars. The ICFTU states
that it is very difficult to obtain import figurines from the
governments while they trumpet the export earnings.

http://www.indiatogether.org/2005/aug/eco-sezone.htm