Independent Research and Policy Advocacy

Marginal Employers and Migrant Workers: Self-employed in Mumbai’s Informal Manufacturing and Recycling Industries – Interview with Representatives of Aajeevika Bureau

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The interviewees* are affiliated with Aajeevika Bureau in various capacities.

1. Could you tell us a little bit about Aajeevika Bureau and your work?

Aajeevika Bureau is a nonprofit organisation working with seasonal, circular, and semi-settled migrant workers in Rajasthan, Gujarat, and Maharashtra. We support workers’ collectives and unions, run programs for legal aid, financial and health services, skill training, and conduct primary research alongside our praxis. Our aim is to ensure that internal migration is safe, secure, and dignified, and that workers receive legally mandated entitlements to wages and worksite safety.

In Mumbai, Aajeevika supports a workers’ collective called Kaamgar Sahayata Samiti (KSS), comprising workers from UP, Bihar, and Rajasthan working in the city’s informal manufacturing, recycling, and construction sectors. Migrant workers in the industrial-cum-residential neighbourhood we work in, manufacture garments, automobile parts, metal moulds and pipes, stationery, and recycle discarded electronics, commercial waste, etc. Most work and live among hazardous machines in units as small as 20×20 square feet that are poorly ventilated and are pose constant fire risks. Their employers are often former workers themselves who have worked in their respective trades for decades. Both the worker and employer operate at the lowest ends of global value chains on survivalist incomes and margins.

KSS provides a discursive space for workers with heterogeneous backgrounds and lived experiences of the city and worksite to discuss crucial issues related to migration, occupational safety, urban governance, and informality. Through these discussions, workers shape Aajeevika’s praxis agenda, which, in the recent past, has included conducting fire safety trainings for those living and working in micro units, creating local bank accounts, and continuing mediation and litigation for cases of wage theft and worksite accidents.

2. Could you tell us about the self-employed workers whom you interact? What in your opinion are the most prominent risks that these workers and their households face?

Khairani Road and Tilak Nagar (Sakinaka), the industrial suburbs we work in, provide an opportunity to unpack the idea of self-employment as both a formal state category with metrics, as well as a reality for workers otherwise seen as ‘waged’ or ‘salaried.’

Over the five years of working in this industrial suburb in Mumbai, we have begun to refer to those who run/own micro units as ‘worker-employers’ or ‘marginal employers.’ As mentioned above, these are former migrant workers themselves, who were recruited a few years or often decades ago to perform manual labour on hazardous machines: including stitching machines, larger Lathe machines, and power-presses. Years later, they transition from worker to employer by building a small amount of capital, savings, and market connections. For some, the management of the industrial unit has been passed down from the previous generation. Most enterprises are informally operated and are unregistered under either the Udyog Aadhar or Shops and Establishments Act—the latter modified in 2019 to make it voluntary for units employing less than 10 workers to register. Marginal employers often hire workers through social networks and receive work orders from informal connections (pehchaan) with wholesalers, suppliers, and retailers. In addition to this managerial work, however, they perform manual labour on the shopfloor themselves—inspecting pieces for defects, cutting the loose ends of garments—to save on labour and operation costs. Despite this, most units have been operating on margins as low as INR 1-2 for several decades, while annual revenues for a unit might range from INR 5-20 lakh depending on output. Recent shocks to the market, including demonetisation, GST, and the SARS-CoV-2 lockdown, have placed further pressure on these units.

In addition to marginal employers, thousands of workers in the Sakinaka area are treated as self-employed. In garment manufacturing units, for instance, most workers are paid on a piece-rate basis rather than being having fixed wages or salaries independent of output. Aajeevika’s experience with legal mediation for wage theft suggests that the most challenging obstacle to retrieving denied wages is establishing a clear employer-employee relationship. Marginal employers in Sakinaka do not—and in most cases, cannot—provide social security or even consistent waged employment to their workers because of their survivalist margins and market fluctuations in demand. Workers in such micro units are ‘employed’ to the extent that the marginal employer provides them with access to capital, a living and working space, as well as informal social protections as discussed below. Such workers earn between INR 5-12,000 per month, on average.

3. What do you see as the driver for the choice to take up self-employment? What can we learn from, say, MNREGA uptake on demand for work versus self-employment as a viable livelihood option?

In most cases, self-employment as a marginal employer provides a greater aggregate income, and an opportunity to move beyond largely stagnant or marginally increasing wages as a piece-rate worker. Some manufacturing units have been run by the same family for two generations—so current employers would have take over the operations from their parents.

Having said this, marginal employers have often reported, especially during the recession of the last two years: “It is much easier to be a worker, because there is no stress of rent, dealing with suppliers, electricity bills, and everything else.” This points to the emotional and mental burdens that employers take on, which is a tradeoff for the marginally greater income they might have. In our experience, employers must not only maintain strong working relationships with their landlords and suppliers, but must also be prepared for surprise inspections by the BMC for ‘violations.’

4. Could you also comment on unpaid labour within the household that some self-employed/home-based workers may be performing?

Workers employed in survivalist units perform the upkeep and general maintenance of the shop floor since they also serve as living spaces. For those manufacturing products that are not flammable, they cook and clean utensils in the same area.

We also know anecdotally that marginal employers outsource labour intensive tasks to another category of self-employed workers: home-based workers in the Khairani Road/Tilak Nagar area. We do not work directly with home-based workers, but here is an article featured on Aajeevika’s blog that highlights the gendered burdens of working at the lowest ends of value chains.

5. What government run/provided social security measures do self-employed workers most use? Why are these measures inadequate?

While most units in Khairani Road/Tilak Nagar are unregistered, a handful of marginal employers have acquired an Udyog Aadhar or a Shops and Establishments Act license to register their unit with the state. These are steps towards formalising the unit and serve as potential protections against BMC checks on establishments in the area (which are infrequent), but have no economic or social return. After the announcement of special loans for MSME enterprises, an employer approached a private bank to apply, but was told that his Udyog Aadhar was insufficient documentation to be eligible.

In addition to enterprise-related social security, marginal employers who have remained in Mumbai for multiple generations might have ration cards to access subsidised food from Fair Price Shops in the area.

Some marginal employers and migrant workers have access to Jan Dhan accounts in the city. For the latter, when Aajeevika approached banks in the area, most asked for proof of domicile status to open an account in the city—which migrant workers struggle to acquire. When workers asked their employers for copies of the worksite’s electricity bill, they were refused, possibly because that document might establish a clear employer-employee relationship.

For the few that did end up creating bank accounts, we encouraged them to apply for the Pradhan Mantri Suraksha Bima Yojana (PMSBY) and Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) insurance programs. However, the lack of clear employer-employee relationships would make identifying the site of accident and liable employer—and hence the insurance claim—difficult.

6. Aajeevika Bureau has consistently taken the view that it is not enough for the government to support workers, but there should also be support from employers. Could you tell us how employers’ support could work in the case of workers who are often just one part of the supply chain, but are treated as self-employed? Who can/should be made accountable for the employers’ duties for social security?

The products being manufactured and recycled in Khairani Road’s survivalist units are parts of larger, often global, value chains. While the largest number of products we have seen end up in local or regional markets, we have encountered units manufacturing products for sale in informal markets as far as Sudan and Nigeria. Rather than placing all liability on the marginal employer, we believe that further research needs to be done linking large brands and corporations to these units to which they outsource their work. In fact, litigating against marginal employers, while not addressing the structural inequality of the value chain, is not strategic as they often have limited capacities to pay better wages or invest in safer worksites. Along with holding these principal employers liable for labour law violations, we believe in a redistribution of profits along the value chain to ensure that claim making from marginal employers becomes a viable option.

7. On this point, do you see situations where employers in smaller establishments may be unable to pay (adequate) wages? What is the alternative arrangement that can be made here? What informal mechanisms for social protection do you see here?

Employers in the Khairani Road area are marginal—see above—and often unable to invest in any social security or protection. Both marginal employers and self-employed piece rate workers, however, deploy informal mechanisms to keep themselves—and each other—safe.

Workers have reported that they make minor changes to machines and their work environments (jugaads) in order to increase productivity—and therefore increase the aggregate piece-rate wages for the day. In a handful of cases, this might protect the worker from a faulty, old or second-hand machine. This includes strategically placing wood blocks into machines to stabilize shaky parts and introducing barriers onto parts that produce electric sparks or excessive heat.

Marginal employers also reported that without the margins to invest in better machines, they ensure that newer workers are not placed onto hazardous machines for the first few months at their jobs. In a lot of cases, workers and employers are related by blood or through rural networks, so an informal economy of care underlies the manufacturing process in this neighbourhood.

Workers also rely on marginal employers for advance payments in case they wish to travel home for festivals or important occasions. However, this payment system is not entirely benevolent—the ‘advance’ might actually consist of wages that have been withheld from the worker until then. Nonetheless, informally negotiated lumpsum amounts might help workers during times of need. Before new workers are recruited to work in such units, older or seasoned workers will advise them about the payment habits of the marginal employer and caution them in case he has a history of delayed payments, overworking his workers, etc.

During the pandemic, several informal networks emerged in the Khairani Road area to help both workers and marginal employers survive the lockdown. Marginal employers pooled resources together to set up community kitchens in industrial compounds, workers relied on non-labour institutions including mosques for cooked meals, and workers and employers relied on relatives and neighbours for credit.

8. Can you also comment on “preventive,” as opposed to simply compensatory social protection?

As mentioned earlier, the fear of accidents and occupational risk is already negotiated through informal preventive steps: including minor adjustments to machines, placing workers on machines based on their experience and seniority. However, these are not comprehensive, and accidents still occur—warranting research into structural reforms for safe work.

Given that a large number of manufacturing is performed for larger value chains, there must be a redistribution of profits to the lowest end. At current survivalist margins, employers cannot invest in better safety and living conditions, and collective demand making might not yield results. Such units pose complex challenges for regularisation or formalisation, for even if their work was deemed hazardous and made to comply with, for instance, Factory Act safety and social security standards, the burden would fall upon marginal employers, not the larger players up the value chain.

9. Finally, what do you see as the most urgent reform to social security for self-employed workers in the informal sector?

While more specific gaps in existing social security have been highlighted above, there are two broader concepts necessary for imagining social security going forward.

First, the state must learn from informality rather than delegitimising or criminalising it. Informal relationships of care and protection are deeply embedded in existing industrial and kinship networks, and provide insights into coping mechanisms. Practitioners and policymakers must understand these systems because they derive from the logics of survival of important stakeholders – in this case, migrant workers and marginal employers. These relationships and logics of survival are also dynamic: varying not only among workers, but also across time.

Second, in the context of social security, labour governance cannot be divorced from urban governance. Migrant workers and marginal employers are urban citizens and subsidize urban growth, but they have inadequate and inconsistent access to housing, water, sanitation, and food. The true benefit of living wages, for instance, cannot be achieved without simultaneously demanding universal access to the Public Distribution System (PDS), without which, workers will continue to spend over half their incomes on food in urban areas. Similarly, without access to housing solutions that work with their logics, migrant workers will continue to live on their worksites among dangerous machines and fire hazards.

*Deepak Paradkar is a development practitioner at Aajeevika, and leads advocacy with local stakeholders in an industrial suburb of Mumbai. He conducts programs on occupational safety and legal literacy with migrant workers in informal manufacturing units. He has a BA from Mumbai University.

Maansi Parpiani is a Senior Consultant at Aajeevika, where she works on research projects on informality, migration and occupational safety. In 2019 she completed her PhD in South Asian Studies from University of Copenhagen.

Raghav Mehrotra is a researcher at Aajeevika, where he has studied urban governance, occupational safety, and indebtedness in migrant households. He has a BA (Hons) in History from Stanford University.

This is part of a series of guest posts on social security for self-employed workers in the informal economy organised by the Social Protection Initiative at Dvara Research. All views are those of the author and do not necessarily reflect those of Dvara Research.

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