We use cookies for site personalization and analytics. You can opt out of third party cookies. More info in our privacy policy.   Got it

Invest in New Internationalist, become a co-owner and help  Save our stories

Contracting Out

United Kingdom
Trade Unions

new internationalist
issue 172 - June 1987

Contracting out
Unilever has steadily been replacing permanent
employees by workers hired on temporary contracts -
such people get paid less and must put up with insecurity
and poor working conditions. Anjum Rajabali
describes what is happening in India.

'If it is from Hindustan Lever, it must be a high quality product' is what the consumer has come to believe. Hindustan Lever is a household name in the cities of India - particularly so in the cities - Bombay, Delhi, Calcutta and Madras. Rich townspeople are loyal to its consumer products - detergents, soaps, talcum powder, toothpastes, cosmetics. With its innovative marketing techniques and aggressive advertising Hindustan Lever (HL) has a huge chunk of the consumer market.

Standing up against Hindustan Lever - India's richest multinational.
Photo: Anjum Rajabali

What happens behind the impressive fences and imposing gates of HL's numerous sprawling factories and laboratories does not meet the innocent eyes of the consumer. Nine thousand men are employed in HL factories, laboratories and offices all over India. In Bombay, HL has two factories and one research centre. HL's biggest manufacturing establishment is in Sewree, a central suburb of Bombay, which makes soaps, detergents, toothpastes and cosmetics.

The Sewree plant employs 4,000 workmen: including 3,000 hourly-rated skilled and unskilled permanent employees, 200 loaders, 200 transport workers (drivers and their assistants), 200 clerical functionaries and 400 contract workers. Women are not recruited by HL. At the Sewree plant, for instance, the last new woman to be recruited was in 1952. Currently, of its 4,000 strong workforce, only 80 are women. 'And all of them are above 55 years of age,' points out a worker. 'Employing women means having to maintain creches, provisions for maternity leave, less flexibility in allotting shift timings ... why should the company bother with all that when there are enough men clamouring for jobs?'

There is a strong independent trade union for the permanent employees at the plant the Hindustan Lever Employees Union (HLEU). And as a consequence the wages are the highest among all of HL's factories. Not surprisingly the management has been slowly but steadily transferring its workers from the Sewree plant to other sites. Over the past seven years about 500 workmen have been shifted on one pretext or another.

Permanent workers are those that have a letter of appointment, are assigned a fixed job, placed on an appropriate grade of increments and paid a monthly salary. These workers are usually able to unionize themselves quite easily and therefore can protest in a well-organized manner. Under normal circumstances it is very difficult for a company to dismiss any of its permanent employees.

Contract workers face utterly different treatment. The company employs them on a fixed daily wage or an assignment contract with a lump sum to be paid on completion of the assignment. Given the uncertain nature of their employment, they are unable to join existing unions or organize effective unions, with the result that they cannot protest collectively. Government authorities have been largely ineffectual in protecting their rights although such workers are covered under the Contract Labour Regulation and Abolition Act

Needless to say, companies take full advantage of this vague state of affairs, and HL is no exception. The company seems to be obsessed with 'contractization' says the General Secretary of the Mazdoor Sabha, the union at the HL Head Office in Bombay.

At the Sewree plant itself, there are 400 contract workers. They are paid 25 rupees per day which is 30 per cent of the average wage of the permanent worker. Contract workers at HL have been working there for anything between six months to 15 years! According to the Contract Labour Act, 25 rupees is the minimum wage that an industrial worker should be paid. 'And it is only for the last two years that the union has been able to extract from the management a settlement of 25 rupees per day for these contract workers,' says Franklin D'Souza, a HL worker of 20 years. 'Before that some of them were being paid seven or eight Rupees (50c) per day.'

But even this otherwise successful union is unable to obtain for these 400 workers the status of permanent employees even though their jobs include work that is permanently needed. Contract work involves fitting, welding, cleaning, and even substituting for permanent employees when they are on leave.

'When the first signs of rebellion among the contract workers began showing in 1981, 270 of them were summarily suspended for three months on charges of go-slow tactics. In 1982 again, 130 of them were suspended - 100 for two months and 30 for 18 months. Even though all of them were reinstated after a settlement between the management and the union, the dismissal threat had effectively silenced everybody,' recalls D'Souza ruefully. 'We cannot afford to rely on the industrial courts or even the union's strength for this,' affirms a contract worker. 'Our wages are on the line.'

Even more telling is the state of affairs at the Hindustan Lever Research Centre at Andheri, Bombay's largest western suburb.

Touted as one of India's 'premier industrial research centres', it has 355 employees, of which 125 are contract workers. The 230 permanent employees include 100 scientific research assistants and clerical staff, 100 lab assistants and 30 manual labourers. The contract workers are the gardeners, canteen staff, sweepers, electricians, agricultural research helpers and security staff. At the research centre too, an independent union exists which was smart enough to have struck a settlement with the management. It states: 'Whatever wages and other benefits are applicable to the Sewree factory permanent employees should be applicable to the research centre employees.' But here too, the case of the contract workers is pitiable. The contract labourers managed to form a union - the Contract and Laghu Udyog Kamgar Union (Contract and Small Scale Industry Workers Union) in December 1985. Until they were unionized these workers were paid six to seven rupees a day (most of them had begun at two rupees per day with a yearly increment of 25 paise - less than one cent - per day!)

In January 1986 the union filed an application in the Contract Labour Board's office asking for permanent employee status for all the 125 workers. The management then began harassing the workers. The most common tactic was to assign the workers jobs which were not in their contracts and then to suspend them if they refused to perform them.

In panic the union rushed to the industrial court asking for a 'staying order' to stop all suspensions until the Contract Labour Board gave its judgement on the status of these workers. The court's decision was that there was 'no need for a stay order,' but gave the union the 'liberty to apply for one if the situation demanded'. Six days after the judgement, 19 security personnel were dismissed. (See box). In despair the union rushed to the court crying for a stay order. 'The court was kind enough to grant one on any further dismissals but was powerless to reinstate the 19 dismissed men. The damage was done. Thereafter the union at the research centre had to keep a low profile,' says Rajaram Desai, research assistant and union leader, who has been with the Research Centre for nine years.

'I refuse to join any union,' asserts the current security gateman, a contract worker. 'It is better for me to live with the uncertainty of my job than the certainty of no job. It is all a case of supply and demand. The supply of job seekers is more than the demand for them.' And no one knows that better than Hindustan Lever.

Ramanathan feels that the contractization is the management's defence against worker's collective organization. This could also explain why HL has begun to sub-contract some of its products to smaller private units. It has already sub-contracted all its godowns (warehouses) to some private agencies who in turn hire cheap contract labour. 'Contract work is the biggest threat that we are facing. The unions must realize this and formulate an intelligent long-term strategy to prevent this trend from growing. If we are not effective in curtailing this, soon our power - even that of striking - will be rendered useless. For the company will proceed to have its products manufactured at these outside units whenever its employees strike,' says Ramanathan.

Ramanathan's union's aim is to unite the unions at all the company's various establishments into one federation. 'Look at TOMCO (The Tata Oil Mills Company) which is HL's nearest competitor in the consumer goods market. Our turnover is three times that of TOMCO, employee strength almost double, profits ten times higher and per-employee profitability nearly five times that of TOMCO. And yet our salaries are lower than those of our counterparts there. This is because TOMCO employees have a single unified federation as a combined union to fight for its rights. Same is the case with Philips (another multinational corporation in India).'

But the HL management is keenly aware of these discrepancies. Why else does it go to such lengths to avoid signing a simultaneous settlement with all the unions in its different units? 'HL is a British company and seems to have inherited the divide-and-rule policy,' Ramanathan laughs.

Anjum Rajabali works for the Centre for Development, Bombay, India.

DOREEN, Contract Cook

Doreen has worked 14 years for a Unilever subsidiary in the UK. Last year she started working for a Unilever contractor. Same job, but less money. And more work. Here she explains why she changed employer to Steve Percy.

'I work the early and late shifts in the factory canteen. A year ago a chap came in for a cup of tea and said: 'The old place isn't the same, is it? In five years' time you won't know it. The whole plant will be a distribution centre with contractors everywhere.' I had no idea what was going on - but he was right! Now our canteen and cleaning has gone out to contractors, the warehouse is up in the air.

'We only hear about it through the pipeline. For a whole year we had this hanging over us - that contractors might come in. Many a day I've gone to the toilet and cried. Because I was the girls' shoulder to cry on they'd be on at me all the time from the moment they came in: "What's going to happen?" I just didn't know!"

'When the contractor did take over our canteen some girls took early retirement and some were fitted onto the shop-floor. But that left four with nothing to do. They're getting so fed up with just sitting around all day that they're thinking of leaving - which is what the company wants.

'The company offered me a shop-floor job but I'm too old to work the shift hours. Then they offered me part-time work. But part-time money is nothing to me because my husband is out of work and I'm the bread-winner. So with some of the others I pulled out of the company and came back into the job with the contractor.

'When the canteen went over, some girls who'd worked three years were devastated. But you know, you pick up the paper and read this and that, so it's always in your mind: "Is it going to happen to me?" When it did, I thought I'd do the next best thing and join the contractor. At least this way I know I'm safe for a little longer. If I'd stayed with Unilever, I could be out the gate next year - who's to say?

'But with the change I lost £47($75) a week. Now with the contractor, my money is only £106 ($168) per week. When the contractors come in they change the work too - a lot of the skill goes out of the jobs. With contractors you get no benefits. None at all - no sickness, holiday, or maternity pay, and no pension. Our union will discuss these points with them. But I cannot fault this contractor - they're a good lot to work for. Other contractors will boot you out when you've nearly done two years because then you get some rights. The girls in this factory worry about losing their jobs.

'There were 53 of us in the canteen but the contractor brought it down to 21. The girls have to work harder now. And kitchen work is heavy going, I tell you. We had two nasty accidents. One girl slipped when emptying the fryers and boiling hot oil went all over her. Another was told to put six meat puddings in the steamer stacked on top of each other. One shot out and went all down her front. That was 15 months ago when we were with Unilever and she's still waiting for her compensation claim to come through. That's why everyone should be in the union because otherwise you don't have a leg to stand on.

'It's not just us. A lot of the men have taken early retirement. Even some managers are losing their jobs. Now it seems everyone on the site, builders and that, is with a contractor. Just before Christmas, word went round that contractors were coming into the warehouse. Men who have mortgages, up to their eyes in debt, don't know which way to twist or turn. The old atmosphere is totally gone. You used to get men who had a real laugh and joke with you. But now everybody is just despondent.

'If the company were straight with us from the start it would be better. They've always looked after their people, but you can't stop this kind of thing. It's so common now, isn't it? I don't know whether to blame Mrs Thatcher. My husband was made redundant for the third time in 1982. Would you believe it, the foreman phoned him up and asked if he'd go back temporary for six months with no holiday pay, nothing! Three of my sons, and they're grown up men, have temporary work packing vegetables. Even working long overtime until ten at night, they only bring home £90 ($144) odd a week. And they could be sent home tomorrow. It's murder!'

RAVI, Contract Worker

Ravi is one of the contract workers sacked by Hindustan Lever for fighting for decent conditions and pay. Steve Percy and Harriet Lamb describe his courage.

[image, unknown]
Photo: Mike Hall / Steve Percy

Outside the Bombay Research Centre 20 contract workers defiantly hold their red flags. Their banner proclaims: 'We are the security workmen of Hindustan Lever who have been thrown on the streets. The only crime we have committed is that we have asked the company to implement the Minimum Wages Act.' Refusing to bow to the company axe the workers are digging in for a long struggle.

Ravi is one of those demanding his job back. At the gates he told his story: 'I started here as a security guard when the centre opened in 1968. I've seen the growth of the centre and our downfall. I've worked here 19 years without being made permanent. Now I'm 52 - where will I get work? Losing a job at this age when you have to support a family is like losing everything in life.'

But working for Hindustan Lever, Unilever's main subsidiary in India, has always been tough. Weekdays Ravi worked a 12 hour shift and then right through from Saturday noon to Monday morning - with no holidays. For this he took home 13 Rupees ($1) a day, less than the legal minimum wage. Like other workers brought in by outside labour contractors, he had none of the benefits and rights of permanent company employees - despite years of loyal service. He even had to pay for his own uniform. 'Management said that with so many foreigners visiting, they'd sack us if we came with torn uniforms. Don't they think it'd look even better if they paid their workers well?'

Last July Ravi and the 100 other contract labourers at the research centre won the minimum wage. But only after they had formed a union and filed a complaint with the Government. The company soon cracked down on them. Ravi describes: 'It was early on Sunday morning when no-one else was at the centre. The Personnel Manager came with vans of police and a new security contractor. They forcibly removed us all - gardeners, sweepers, canteen staff and other contract workers.'

It's not the first time Hindustan Lever has victimized workers for forming a union and demanding their basic rights. Ravi's union has charged Hindustan Lever with unfair dismissal. 'This is a test case for contract labourers' right to unionize,' says their lawyer. The union has also claimed in court that contract labourers are employees of the company. But cases often drag on for years and they may have to settle out of court.

To keep up pressure on the company, Ravi and the other guards demonstrate outside the gates every day. Life is difficult: 'Our children cannot attend school since we can't pay for their fees or uniforms. Once shopkeepers found we'd lost our jobs they stopped giving us anything on credit.' But Ravi is determined not to give in. 'If the situation continues,' he says, 'we'll bring our families to the gate and go on hunger strike.'

Hindustan Lever's management, meanwhile, have just doubled their own annual salaries. Their monthly petrol allowance alone is three times higher than the guards' wages. Profit rates are double those of Europe and climbing. Many unionists resent the foreign ownership and control. 'Their main aim,' one unionist commented, 'is how to get the cheapest labour and to drain out the most money.'

Throughout the company the exploitation of contract labour is rife and is increasing. 'Over the years you can see how they are systematically contracting out the jobs,' says their union leader. 'Routine maintenance jobs are also going out to contract - and that's illegal! Even if you want to put in that fuse, it'll be given to a contractor!'

Ravi's struggle has the full support of permanent workers at the centre and elsewhere. Indeed he can take heart from past successes at other plants. Prolonged agitations at a Bombay soap factory won permanent employment and fair wages for more than 300 contract workers. Security guards there now take home more than Rupees 65 ($5) a day.

Last November 600 workers from different Hindustan Lever factories massed at the centre to demonstrate against the company's abuse of contract labour. Since then 20 policemen and three officers have kept Ravi company every day. 'It seems,' said one worker, 'management cannot run the company without the police.'

Ravi and the other guards are being kept well out of sight by the police. A black limousine slides past the gates. Inside sits the Duke of Kent, President of the British Overseas Trade Board. Unseen, Ravi points to his banner: 'What is our crime? . Is this the way multinational companies are going to do business in our country?'

last page choose another issue go to the contents page [image, unknown] next page


Save our stories: become a co-owner
Invest in journalism with integrity and heart. Join us as a co-owner today.

Count me in »

Subscribe   Ethical Shop