Liberalization and labour: The fate of retrenched workers in the cotton textile industry in India

Abstract

In 1991 the Indian government began to tread seriously the path of liberalization. It started to open up the economy, discuss the privatization of the public sector, invite foreign investment and reform the labour market. Liberalization has proved to be highly controversial. While there has been considerable debate about the consequences for labour, there have been few empirical studies of the effects so far. This paper intends to address this lacuna by focusing on the case of retrenched workers in the cotton textile industry. Our argument is fourfold. First, it cannot be assumed that the informal sector can readily absorb a sudden localized surge in unemployment. Second, even where retrenched workers have found employment in the informal sector, their conditions of employment in terms of wages, working hours, health and safety and representation are likely to be worse. Third, the National Renewal Fund has not been effective as a social safety‐net for retrenched workers nor as a mechanism for regenerating industry. Finally, it cannot be assumed that the trade unions will be able to negotiate a satisfactory deal for redundant workers. These points are explored through an investigation into retrenched workers in the cotton textile mills of Ahmedabad, Gujarat state.