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WORK, LIVELIHOODS AND ECONOMIC SECURITY IN THE 21ST

CENTURY: COMPARING INDIA AND SOUTH AFRICA.

A CONCEPT PAPER PREPARED FOR THE 2ND

ICDD RESEARCH

CLUSTER (4.1) WORKSHOP, TATA INSTITUTE, MUMBAI

COMPARING AND CONNECTING INDIA AND SOUTH AFRICA: A CONCEPT PAPER ON ECONOMIC

SECURITY

INTRODUCTION

The aim of this concept paper is three-fold;

firstly, to develop, drawing on the work of Karl Polanyi, a Southern perspective towards economic security. In developing our argument we will draw on our first workshop in Kassel, Germany, in April 2010.

Secondly, to provide a rationale for studying work and livelihoods in India and South Africa through what we will call a contextual comparison.

Thirdly to identify the research aims and strategies we intend to pursue in this research cluster over the next six to eighteen months. Hopefully by the end of the workshop we will have agreed on a timetable and a division of labour.

1. ECONOMIC SECURITY: A SOUTHERN PERSPECTIVE

We live in an age of insecurity. As the late Tony Judd recently wrote: “We have entered the age of insecurity – economic insecurity, physical insecurity, political insecurity. The fact that we are largely unaware of this is small comfort: few in 1914 predicted the utter collapse of their world and the economic and political catastrophes that followed. Insecurity breeds fear and fear –fear of change, fear of decline, fear of strangers and an unfamiliar world – is corroding the trust and interdependence on which civil society rests. The choice will no longer be between the state and the market, but between two sorts of state. It is thus incumbent upon us to reconceive the role of government. If we do not others will. (Ill Fares the land, 2010. Penguin).

Indeed this is the theme of Guy Standing’s latest book, Work After Globalization; Building Occupational Citizenship. He argues that the restructuring of the global market economy has created a new class, what he calls the precariat “They flit between jobs, unsure of their occupational title with little labour security, few enterprise benefits and tenuous access to state benefits. They include the most fortunate of the vast informal economy … the precariat is the group that has grown the most… (it) comprises a disparate group in non-regular statuses, including casual workers , outworkers and agency workers“ ( Standing, 2009:109-110) But , argues Standing , ‘the political consequences of a globalizing labour market based on insecurity and inequality are frightening. Much of the remnants of the industrial working class in rich countries have drifted into the precariat some have fallen into the detached albumenized stratum. As they have done so , they have turned politically to the right …….(deserting ) traditional parties of the left” (Standing, 2009 :239).

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Faced with insecurity , persons tend to retreat into the familiar – their country , their neighbourhood , their homes, their family, and their religion – and sometimes their ‘race’. Indeed , at times when the world faced similar levels of insecurity , we saw the rise of some of the worst atrocities of human history. One author who reflected on such times was Karl Polanyi , who wrote his major work at the end of the Second World War. At the forefront of his mind was the rise of fascism . Why do people turn to fascist leaders , and under what conditions does fascism become salient as a political ideology? It is no wonder that people are returning to Polanyi in order to make sense of current times of insecurity.

In his classic study of the industrial revolution, or what he called the Great Transformation , Polanyi ( 2001) showed how society took measures to protect itself against the disruptive impact of unregulated commoditization. He conceptualized this as the ‘double movement’ whereby ever-wider extensions of free market principles generated counter-movements to protect society. Against an economic system that dislocates the very fabric of society , the social counter –movement , he argued, is based on the varying support of those most immediately affected by the deleterious action of the market – primarily but not exclusively , the working and the landed classes – and using protective legislation , restrictive associations , and other instruments as its methods” (Polanyi, 2001:138-139) The ‘double movement’ is illustrated in the figure below.

Source: Kallenberg, 2009.

It has been argued ( Webster, Lambert and Bezuidenhout, 2008) that the world is in the grip of a Second Great Transformation , a neoliberal project that has been the dominant policy paradigm in the national affairs of the three countries

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examined, Korea, Australia and South Africa. But , just as Polanyi anticipated that the pendulum would swing against unregulated markets, the authors expected a similar swing from market fundamentalism towards the need to protect society and the environment against an unregulated market. However, in all three sites in the three countries studied the overwhelming response to rapid marketisation has been adaptation , with few exceptions, the most innovative being an unsuccessful experiment in globalising the struggle of Electrolux workers in Orange, Australia.

These modest responses (summarized in Table 10.1, GG:215) do not , by any stretch of the imagination , amount to a global counter movement. Instead the Second Great Transformation, or what Burawoy prefers to call Third Wave Marketization, is proceeding apace , all over the world, ,most visibly in the semi-periphery in countries such as South Africa, China, India, Brazil where the commoditisation of nature, through the expropriation of land , is having a dramatic impact on survival. . For Burawoy this intensification of commoditisation is undermining the basis of any counter movement. “ The choice may no longer be limited to ’socialism or barbarism’ , but be extended to socialism, barbarism or death. Optimism today has to be countered by an uncompromising pessimism, not an alarmism but a careful and detailed analysis of the way capitalism combines the commoditisation of nature , money and labour, and thereby destroys the very ground upon which a ‘counter-movement’ could be built” ( Burawoy, 2010:312).

While there is alarming evidence of intensified commoditisation in the global South , especially in India (Ramachandran and Vikas Rawal, 2010), the Indian state has been remarkably active in terms of legislation and new programmes in regard to informal or ‘unorganised ‘ labour in the period since the launch of economic reforms in 1991. There have been four ambitious social security programmes for unorganised workers : the National Social Programme (1995); the Janashree Bima Yojana ( 2000), a social insurance scheme; the National Social Security Scheme for Unorganised Workers (2004); and the Universal Health Insurance Scheme . ( Dev, 2008).The most significant intervention is the passing of the National Rural Employment Guarantee Act (NREGA) in 2006 which provides rural households with a legal right to 100 days of employment in public works in one year. (Frontline, 2009).

A further development in India was the establishment in 2004 of the National Commission for Enterprises in the Unorganised Sector( NCEUS). Although the focus on ‘enterprises’ in the title of the Commission suggests an assumption that the solution to poverty lies in the entrepreneurial spirit of the poor , in practice Bowles argues, members of the Commission have engaged substantially with the problems of unorganised workers” ( Bowles, 2010:7). Furthermore they prepared two draft bills on unorganised workers, which, although they were watered down and substituted by a single bill, the Unorganised Sector Workers bill, it was passed into law in December 2008. ( Harriss-White 2010)

Criticisms of these initiatives from the left has been widespread ; it has been argues that there is a lack of awareness of the social security schemes and severe limitations in their coverage ( Dev, 2008:328-33); that welfare schemes for

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unorganised sector workers have been introduced without making any financial commitment or setting out any time frame ( Harriss-White, 2010); that it is not compulsory of employers to register making the regulation of employment impossible ( Hensman, 2010:120). But , in spite of these criticisms, Harris argues, “the sheer fact of so much official policy interest in the unorganised sector is remarkable , and seems to show how far the Indian state has been pushed away from the neo-liberal model”.( Harriss, 2010;8). India , he concludes, is experiencing a counter movement from above, a series of state interventions designed to protect society . ( Harriss, 2010;9-10).

South Africa has experienced a similar shift from a narrow focus on global integration and competiveness to an acknowledgement that the state will have to redistribute resources actively in an effort to overcome the social crisis caused by poverty. This new thinking is organised around the concept of ‘two economies’, according to which the first (formal) and the second (informal) are distinct entities . The “second economy, it is suggested , is structurally disconnected from the “first economy” and is incapable of self-generating growth and development (Webster, 2005)

While this shift in discourse was welcomed by the left, it was argued that the discourse of two economies can be misleading as most economic activities in the periphery are dependent on markets created by formal economic activities. It was argued that the government’s public works programmes are “unlikely to provide a new economic momentum in marginalised areas of society. “ (Von Holdt, and Webster 2005:36)1 “The short-term nature of the jobs provided”, it was argued, “ means that those who work on them will not form the kind of stable market which could generate new business activities. Nor is it likely that the infrastructure they create would provide the basis for sustainable new economic activities by overcoming the constraints described above. (i.e. the fact that most of the economic activities in the periphery are dependent on markets created by formal economic activities) ( Von Holdt and Webster: 2005:36).

The introduction of a regular and predictable guarantee of employment in South Africa through the Community Work Programme (CWP) raises the question of whether such a scheme would have a great impact on economic activities and social relations at the local government level. Our point of departure is that workers in the Global South have, since the seventies, become the architects of

their own futures. (Lambert, 2010) No longer willing to accept their designation as either victims or as a labour elite, they took control of their lives, went out on strike and started to struggle for democratic trade unions in countries such as Brazil, Korea and South Africa While the ILO was debating their ‘discovery” of the informal sector in Kenya in 1972, Ela Bhatt had begun to organise these workers into a union, the Self employed Women’s Association (SEWA). By successfully organising the self-employed in India, she transformed the way we think about trade unions as well as the household. The home is not, for these

1 A year after this was written the government launched an ambitious public works programme , the Expanded Public Works Programme ( EPWP) , which created over one million jobs over a five year period but the jobs remained temporary and , then in 2007, the Community Work Programme ( CWP)..

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women, simply a site of reproduction; it is also a sight of production, a workplace and a source of income. It was Ella Bhatt and the SEWA that helped pioneer the ILO convention on homework, a crucial feminist advance for working class women in the Third World. (Bhatt, 2006: Webster, 2010b)

But it would be quite wrong to see this as a case of Indian exceptionalism. Throughout the developing world informal workers are beginning to find a voice, sometimes incorporating informal workers into existing unions, sometimes forming their own or coalitions with existing informal organisations (Bhowmik 2009: Liddell 2010) Of course there are many more failures than there are successes as workers search for the appropriate organisational form, not unlike English workers who, at the beginning of the nineteenth century, experimented with a variety of responses – Luddties, the Chartist movement, co-operatives and trade unions. In the event it was only the trade union that was to endure as a permanent voice for workers in the workplace. (Thompson, 1963)

This attempt at imagining an alternative development path is not some way out revolutionary adventure, titling at windmills as it were. Instead it is swimming very much with the current by grounding political innovations in successful social policy initiatives in countries such as Brazil (Bolsa Familia), India (NREGA) and South Africa (EPWP ,social grants) and now CWP (Bhowmik and Kumar, 2010; Sideman; 2010; Webster and Fakier, 2010; Fakier and Masondo, 2010)

These emerging welfare regimes are different from the European Welfare State that was constructed around the equal contribution of three pillars: permanent full time employment , a strong professional public service and the nuclear family. Instead the emerging welfare regimes of the Global South – what Ian Gough calls informal security welfare regimes – rely on informal work as well as a variety of livelihood strategies such as street trading , the extended family and the villages or communities within which they are embedded. (Gough, 2004: Savant, 2010: Saha, 2010) As Sarah Mosoetsa describes in her pioneering book Eating from the same Pot these households and community networks provide a form of social protection , what she calls a form of fragile stability. ( Mosoetsa , forthcoming;) Similarly, Khayaat Fakier has demonstrated how the class-based nature of social reproduction in migrant households is carried disproportionately by what she describes as marginalised households. ( Fakier, 2010)

The different forms and combinations of social security provided by Southern states and the ways in which individual workers, households and communities provide the beginnings of a social floor for decent work and development. The crucial point in constructing this social floor is that social security is seen as an investment; it generates growth by increasing aggregate demand . In times of economic crisis it maintains aggregate demand through providing temporary short time employment. It is an automatic stabilizer.

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To suggest that this social floor will provide a disincentive to work , as neo-liberals do, is disingenuous as it

targets the non-active population it is self selecting 30-40% of the unemployed are long term unemployed. (Hoffer, 2010)

But building a social floor is only the first step along the road to progressively realising decent work. In the medium term governments will need to develop economic strategies that prioritize meeting domestic and regional markets , rather than the export of manufactured goods to fuel over consumption in the North. These strategies should focus on labour intensive manufacturing, green jobs and agro-processing, as well as economic activities that improve core physical and social infrastructure. (Cock, 2009)The aim should be to reduce the cost of living for working people through cheaper food, public transport and public health care. Resources should be mobilised domestically to fund priority investments , not short run inflows of capital through the stock and bond markets. It will also require a more strategic engagement of labour in the decision-making process, and a greater willingness of employers and government to engage in genuine social dialogue .

2. INDIA AND SOUTH AFRICA: A CONTEXTUAL COMPARISON

In South Africa and India, as with many other developing countries, the first ‘Great Transformation’ took a colonial form, and was accompanied by the destruction of many aspects of indigenous society, land dispossession and racial oppression. Likewise, the ‘Second Great Transformation’ takes place under specific conditions in the post-colonial world. While Polanyi argued that the counter-movement entailed the ‘protection’ of society, this presupposes the social cohesion, historically established, of the global North. However, in societies that that are still ravaged by the dislocating effects of colonialism, such as South Africa , the challenge is to construct a new democratic social order in the face of neoliberal globalisation.

The proposed framing of this research proposal with the theoretical work of Karl Polanyi has two implications.

Firstly, it allows us to deploy a productive set of concepts for investigating the destruction of society and its current fragility and fragmentation, and the countermovement to construct a new cohesive social order based on sustainable livelihoods and development.

Secondly, it allows us to engage in a theoretical reconstruction of Polanyi which situates his work within the experience of South Africa and India, and the Global South more broadly, and challenges the hegemonic northern interpretations of his theory.

Polanyi is useful for a third reason as well. His work is rich with implications for policy, and that is how many scholars and analysts are using his work across the globe (for example, Stiglitz 2001). This will facilitate the policy implications of the proposed research, and connect it to policy innovation in the rest of the world.

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In spite of historic similarities between India and South Africa there has been , until recently, very little comparative scholarship. . Fortunately this is changing and a number of studies on South Africa and India is providing an alternative body of comparative studies ( Hofmeyr and Williams, 11). “Beyond the obvious similarities that India and South Africa share such as common histories of British imperialism , iconic liberation movements , successful democratic consolidation in two heterogeneous societies and two of the most remarkable leaders of the 20th century ( Mahatma Gandhi and Nelson Mandela ), scholars are also exploring the less obvious comparisons “( Hofmeyr and Williams, 11) A suggestive example is the pattern of labour migrancy and urbanisation . In both India and South Africa , the dominant pattern was of migration by single males, leaving their families in villages , returning there periodically, and generally leaving the city when jobs ended through dismissal or old age .

“ Like Bombay’, Bonner writes, “ (Johannesburg) was the most ethnically/ regionally heterogeneous urban centre in South Africa. Like Bombay, migrancy and more settled urban life existed side by side. Like Bombay, Calcutta and other Indian cities , a measure of ethnic occupational clustering occurred among its black population”. (Bonner, 2010. 88)

But here the similarity ends. As Sumit Sakar argues, “survival was much more difficult in South Africa, because ( unlike India, except to some extent in the European tea plantations in the then under-populated province of Assam ) so much of the better land was ruthlessly grabbed by Boer and British farmers. The African rural population was pushed back into over-populated ‘homelands’. The bulk of the countryside in India remained firmly indigenous , with only a thin scattering of European officials who would return to England after their Indian careers were over” ( Sakar, 2007:182). Indeed the contrasts become quite striking when you probe further into these two very different experiences of colonialism.

To explain these differences it is necessary to examine the socio-political context in which labour markets are embedded. This approach, what could be called a ‘contextual comparison’, differs from the conventional political science method of ‘matched comparisons’, which compares countries with similar histories facing similar global challenges ( comparing apples with apples). Instead, contextual comparisons encourage comparison between different challenges across different countries. This is a difficult task as, to pursue the metaphor, it involves comparing apples with oranges (Locke and Thelen, 1995:38 cited in Webster, Lambert and Bezuidenhout, 2008:20). Such a task, we believe, requires an examination of the historical evolution of labour markets in India and South Africa .

The most obvious difference was the much higher level of both legal and extra-legal coercion deployed to create an African underclass in white-dominated cities – this includes the pass laws first introduced on the mines in 1896, the labour tax in the Glen Grey Act, and the Land Act of 1913 which froze African land ownership at a mere 13% of the total land area. (Webster, 1978:10) In India , however Sakar argues, this blatant use of force and legal coercion was generally

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absent , with the exception of recruitment for plantations on an indentured basis, in Assam and overseas. ( Sakar, 2007:182). The result was that Indian migrants were able to sustain a rural base as late as the 1960s in the village that provided “an invaluable security in times of unemployment, severe economic distress, old age and the like” ( quoted from Patel (1963:37) in Bonner, 2010;77). Put differently, a low-wage migrant labour system evolved and reproduced itself in the Indian context without the benefit of the institutional apparatus of influx control evident in South Africa.

A second difference , writes Bonner, is that “residential segregation , which with few exceptions was the rule for 20th century South Africa , was largely absent in Indian cities; a difference that reflected the different places in the colonial order occupied by India and South Africa . In contrast to India, South Africa was a colony of white settlement….. South African governments always saw the cities as likely sites for the subversion of white supremacy , either through racial mixing in slums or so-called black ‘detribalisation’. (Bonner, 2010;78-79). The presence of a settler society with a large number of poor whites imposed radically different constraints on and opportunities for the processes of vibrancy and immigration to that experienced in an Indian context. In particular it led to a highly regulated ,and segmented labour market with whites , and to a less extent “coloureds” and Indians , in the primary labour market , with Africans in casual jobs without any security ( Webster, 1985:195-216) In addition to this racially defined job protection , Coloured, Indians and Africans were excluded from participation in a range of economic activities , thus restricting the development of an informal economy.

There is a third and quite fundamental difference in the pattern of migrancy in these two countries. Although male migrancy was equally pronounced in both countries, in South Africa migrancy is credited with causing chronic family instability and a host of associated social ills, whereas in India family life survived relatively intact (Bonner, 2010: 83-88). “ The overwhelmingly majority of the wives of Indian male migrants to the towns”, writes Bonner, “ remained firmly in the bosom of their joint families and rooted in rural homes.” (Bonner, 2010;84)2.

The result of this history is two striking differences between the structure of the labour market in India and South Africa. The first is that in South Africa, unlike India, the informal sector does not provide an easy entry point for self-employment or into the informal sector. As Kate Philips argues:

“Most manufactured goods or processed goods bought by poor people are mass produced in the core economy, and are easily accessible in even the most remote spaza shops . This limits the opportunities for small-scale manufacturing of products targeting poor consumers – which is the typical target market for

2 Amita Sen has challenged the unstated assumption that women remained rooted in their rural homes because of brahminical prescriptions about the seclusion of women to domestic space ( purdah) , child marriage, an insistence on chastity and related recoil from pollution and a prohibition on widow remarriage” Sen cited in Bonner: page 85

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entry-level enterprise. The lack of opportunities in small-scale manufacturing contributes to the strong bias towards trading in South Africa’s informal sector” (Philip, 2010:3)

Secondly, the limited access of black people in South Africa to land has deprived them of the kind of economic ‘sponge’ that rural Indians have . Rural areas in South Africa are unable to provide a level of subsistence for large numbers of people who cannot find other employment.

‘In South Africa ‘, Philip concludes,” two of the most important avenues through which poor people typically engage in economic activity and enter into markets are severely constrained. This makes poor people unusually dependent on wage remittances or social grants. This dependence is structural. it is not a state of mind or a function of a lack of entrepreneurship – but it certainly contributes to the lack of economic dynamism and to the levels of economic desperation that characterizes many of South Africa’s poorest areas” (Philip, 2010: 3-4).

In sum, a striking difference between India and South Africa lies in the structure of the labour market. South Africa has an official unemployment rate of 26,5% (Stats SA , 2009) . However when the discouraged work seekers are included in the official unemployment rate, then the rate increases to 38,3%, with only an estimated 2 million in the informal economy (15% ). In India, however, the reverse applies. India has a relatively low unemployment rate (of 7.8%) with 93% of the workforce in the informal economy ( ILO 2007:6).

Our aim will be to identify difference as well as similarity as India and South Africa appear to have divergent decent work and development discourses. In South Africa there seems to be a general acceptance of the decent work agenda across the spectrum, including organised labour the ruling Alliance and the government , although employers are more ambigious. However in India , despite the current agreement in which government , business and labour commit themselves to decent work, there seems to be a subtle rejection of decent work as a Eurocentric concept that seeks to undermine their competitive advantage , i.e, their cheap labour. ( Bowles, 2010)

Indeed, there is a widespread view that the concept of decent work has no relevance to developing societies. With its large scale unemployment and even larger informal economy, most workers it is believed are happy to have any source of income. Better a bad job, they argue, than no job at all!! After all, it is argued, is it not on the back of labour exploitation, including child labour, that the North industrialized. Indeed, some argue rhetorically, is the demand for decent work not a form of non-tariff protection?

3. AIMS AND RESEARCH STRATEGY :REVERSING THE DECENT WORK DEFICIT

Our aim is to deepen our understanding of the structure of the labour market and local government in India and South Africa in order to identify ways in which the pattern of economic insecurity and the decent work deficit can be reversed. At a theoretical level, our research raises the question of whether “the

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counter movement from above “identified by Harriss, can become part of a “counter -movement from below” through the opportunities created by the legislative and programmatic reforms introduced by the governments of India and South Africa over the past six years.

There are two components of the research project: work and livelihoods , and the impact of the employment guarantee, comparing NREGA and CWP.

A. WORK AND LIVELIHOODS

The aim of the first component of the research project is to identify the forms of work and livelihood strategies that are emerging in India and South Africa. Two workshop sessions have been put aside to report on on-going and completed research on this theme.

The first session will include the final report on our study on how the divide between formal and informal workers is being bridged in nine different countries, with a specific focus on clothing and textile workers in Mumbai and Johannesburg. ( Closing the representational Gap in micro, small and medium enterprises)

The second session on this theme in the workshop will focus on struggles over urban space, in particular amongst street traders in Mumbai and Johannesburg

Our aim is to expand our research on the informal economy by undertaking a comparative examination of the response of trade unions to informalisation in the auto sector and in banking. A potential PHD student interested in examining the Global Production Networks (GPNs) in the auto industry in India and South Africa has been identified. A key challenge in promoting decent work is how to improve the position of both firms and workers. (Barrientos and Gereffi, 2009) This can be achieved through a combination of economic and social upgrading. The link between economic upgrading and social upgrading involves analysis of two dimensions of labour; workers as a factor of production and as social actors with rights. By combining economic and social upgrading , it is possible to contribute to more sustainable development.

We also aim to expand our research on the response of trade unions to the informalisation of the banking sector. In 2006 the Standard Bank of South Africa outsourced its IT testing to WIPRO in India at a cost of 2 million rand a day. In September 2010 they announced that they would be retrenching two thousand workers. Our aim is to develop a joint project on banking in India and South Africa.

Our tentative hypotheses is that the growing inadequacy of traditional trade unions in defending workers’ rights and in resolving new issues emerging in workplaces has created both the space and the need for new actors to fill the gap. New understandings of the labour movement are necessary in order to properly document and theorize the contribution of labour NGOs and other non-

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traditional labour movement organisations to that movement ( Ford, 2005) The emerging role of these new actors is clearest in the successful organisation of self –employed workers in India through the Self Employed Women’s Association ( SEWA) and labour NGOs such as LEARN. Mahhila Kamgaar Sanghatana (LEARN Women Workers Union) in Mumbai. We aim to extend our research into a study of the response of traditional trade unions to the growing informalisation of work. A particular focus will be the role of labour NGOs and their potential role .

B. IMPACT OF THE EMPLOYMENT GUARANTEE – COMPARING NREGA WITH THE CWP..

The second component of our research is to analyse how governments are responding to economic insecurity through public employment schemes in India and South Africa. What economic and social impact does the regular and predictable nature of employment have on the individual, the household and the community? Could a dramatically up-scaled NREGA and CWP be the catalyst for an alternative local development path in India and South Africa?

We will employ a range of research techniques in one site in India and one site in South Africa. This will include a survey, interviews with key actors including government , employers and trade unions , in-depth interviews with participants in the programmes , focus groups, and a variety of ethnographic methods. The aim will be to gather information on the impact of the employment guarantee on economic activity and levels of trust and social cohesion.

Our tentative hypothesis is that impact of the CWP in South Africa will be different from NREGA in India because, in the Community Work Programme , the community identifies ‘useful work’ and then , with the assistance of non-profit NGOs , implements the work plans identified by the community. The result is that the majority of participants are women who focus on social issues, in particular Home Based Care and Early Child Development (ECD). This will have a significant impact on social cohesion at the community level, including an increase in trust, social networks, reciprocity and social solidarity. However both programmes, NREGA and CWP are likely to lead to the development of alternative representational institutions that could create new forms of accountability and deepen democracy at the local level.

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