In the second half of the 19th century, two major modern factory-based industries emerged in India, producing cotton and jute textiles. What wages and working conditions would they need to offer to motivate workers to move from nearby rural areas to the city? A typical analysis of migration (say, the famous Lewis model) would take the wage or living conditions in rural India as the benchmark, or “reservation wage.” The urban industrial employer would then need to pay a bit more (W. Arthur Lewis’s guess was 30 per cent) to persuade the worker to migrate. However, it appears that a “dual labour market,” with wages substantially higher in the factory sector than in nearby rural areas, began to emerge in the colonial period. Susan Wolcott finds that the ratio of the Bombay cotton mills’ wage to the nearby agricultural wage was always above 2 from 1920 until 1938.
A similar ratio for jute varies between roughly 2.5 and slightly more than 1 but is usually above 1.5. These figures cannot be easily interpreted as differentials in living standards because rural and urban areas varied in terms of other “disamenities” – poor housing, disease, and caste oppression – but it is not obvious that the urban areas come off worse in these nonwage comparisons. And it is striking to note that in cotton textiles, real wages in both Bombay and Ahmedabad more than doubled from 1900-1904 to 1940-44 at a time when agricultural wages were flat. Real wages in jute, on the other hand, show a much smaller increase of about 1 per cent in the same period. Thus, it appears that a dual labor market was emerging, at least in some locations. What was the role of legislation?
The modern factory was a British import to India (the machinery and technical knowledge and supervisory staff were imported from Britain). It was inevitable that a range of issues that had arisen in the British context – child labour, women’s work, safety, and working hours – would need to be addressed in India as well. Missionaries, humanitarians, and nationalists pushed for better treatment of workers. Perhaps the most prominent supporter of factory legislation was Mary Carpenter, a Bristol-born social Christian social worker, who first visited India in 1866. She supported and influenced Sasipada Banerjee, who is considered the first Bengali bhadralok (“respectable” middle-class) advocate of factory legislation. But, compared to plantation-related legislation, there was an additional factor at play now. Both jute and cotton had rivals in Britain: Indian jute was eating into the market share of Dundee, whereas Indian cotton’s competition was the more formidable Lancashire. Both Dundee and Lancashire were threatened by lower labor costs in Indian industry and favored worker protections that would raise these costs. For the same reason, the India-based industrialists, Indian and British, opposed such legislation.
The legislative process appears to have begun with a question posed in the House of Commons in 1875. The secretary of state was asked whether he was aware that women and children were being worked sixteen hours a day in factories in India, and whether “the Indian government will adopt some such Factory Legislation as we have in this country for the prevention of such evils, before they attain greater proportions.” In response to this question, which raised humanitarian concerns, the secretary of state asked the government of Bombay to investigate the matter, following which a commission of enquiry was set up. However, the interests of British industry were part of the discussion from the very beginning.
The Earl of Shaftesbury, though a social reformer and philanthropist in the British context, argued in an address before the House of Commons in 1875: “There is also a commercial view of this question. We must bear in mind that India has the raw material and the cheap labor and if we allow the manufacturers there to work their operatives 16 or 17 hours and put them under no restrictions, we are giving them a very unfair advantage against the manufacturers of our own country, and we might be undersold, even in Manchester itself, by manufactured goods imported from the East.”
The Bombay Commission voted against passing legislation, but the lobbying continued. A Bombay-based Parsi businessman and philanthropist, Sorabjee Shapoorjee Bengallee, drafted a factory bill in 1878 and sent one hundred copies to an influential friend, John Croft, in Manchester. The issue was then taken up by the London Times. Mill owners in Bombay and elsewhere strongly opposed the legislation. A modest Factory Act was eventually passed in 1881, focusing on working hours for women and children and some safety provisions to prevent work injury. But the provisions were steadily strengthened in factory acts and amendments in 1891, 1911, 1922, 1923, 1923, 1926, 1931, and 1934, which reduced hours for women and children, placed limits on the working hours for men, and provided for breaks during work, and holidays.
The trend toward increasing worker protection was reinforced by the Washington Convention of the ILO in 1919, which established international standards. Because India was one of the larger industrial producers in the world, the government of India was under some pressure to meet these standards. A Workmen’s Compensation Act was introduced in 1923. The Royal Commission on Labour in India (1931), whose perspective has been described as “reformist,” produced a thorough and massively documented report recommending further modifications to legislation and also better means for implementation. Its recommendations influenced the last of the colonial-era factory acts, that of 1934. The royal commission’s tone and commentary are worth discussing, for the “model” of economic development that was implicit. The commission did not take the rural wage as a benchmark for the factory wage. On the contrary, for the commission, industry would grow only if workers were treated well: “But, in the experience of India, there is abundant evidence to show that a generous policy in respect of labour is a wise policy in respect of industry…. In the views submitted to us, the suggestion that cheap labour is a national asset was seldom made. On the contrary, there is widespread recognition of the fact that industrial activity finds its strength and much of its justification in the prosperity of all who contribute to it.” This is what we might call an efficiency wage model – well-paid workers are more productive and therefore, in effective terms, cheaper.
We might be tempted to believe that the legislation that emerged from this thinking helped create a special category of well-protected industrial workers. But that might be true if it had been enforced. The government of India’s (1946) report on labor conditions showed that while many of the larger factories were obeying the provisions of the Factory Act, overall, enforcement was weak.67 The report provided data on the number of inspections, cases filed, and prosecutions of employers. In 1939, 19 per cent of factories in Bengal were never inspected and half were inspected only once. Also, the fines were fairly small, so it was profitable to break the law and absorb the fine as a cost of doing business.
A different criticism of the impact of factory legislation focuses on the type of information collected by the government of Bengal, arguing that it shared the employers’ interest in an adequate supply of labor, rather than the welfare of workers. So, with respect to health, it was primarily concerned with epidemics, not with chronic nutritional deficiencies. Dipesh Chakrabarty describes the findings of an investigation into the health of women mill workers in 1931-32, ordered by the Royal Commission on Labour in India. The investigating doctor found that women and children were suffering diseases such as rickets and venereal disease which the mill doctors who accompanied them were unaware of. On the whole, it seems factory legislation provided the workers modest benefits.
A different explanation for the relatively high status of the factory workers, compared to their rural counterparts, is their bargaining strength, in particular the ability to strike. Between 1921 and 1938, the cotton and woolen textile industry in India lost 10.5 days per worker per year due to strikes. The corresponding figure for jute mill workers was 3.5. In contrast, in the same period the textile industry in the UK lost 1.75 days per worker per year. Worker militancy in Bombay seems to have begun even earlier. While the royal commission claimed that strikes were “rare” before 1918-19, Morris David Morris notes that they had occurred at least since 1874 and quotes an official report to the effect that by the early 1890s strikes were a “frequent occurrence in every one of the mills in this city.” In 1919, a general strike broke out in Bombay cotton mills, and there were seven other general strikes up to 1940. It seems plausible that the high wage gains of Bombay workers were a consequence of their bargaining power. What was the role of legislation? Did it facilitate or undermine the bargaining power of labor?
The evidence on this is ambiguous. In 1926 the Indian Trade Unions Act was passed. The act allowed seven workers to form a registered union and provided protections to them from criminal and civil prosecution. In particular, a civil suit could not be brought, in the context of a trade dispute, “on the ground only that such act induces some other person to break a contract of employment, or that it is interference with the trade, business or employment of some other person or with the right of some other person to dispose of his capital or of his labour as he wills.”
On the one hand, legalization of trade union activity could have facilitated labor organization. On the other hand, Indian workers appear to have often had a loose relationship with their unions – they might be active during a strike but drift away subsequently. They paid dues irregularly. The Indian Trade Unions Act appears to have been a response to worker militancy, part of a broader effort to create a more predictable and reliable labor force. The Royal Commission on Labour spelled out this perspective: “Some form of organization is inevitable, since the need is acute and is bound to evoke a response. If that response does not take the form of a properly organized trade union movement, it may assume a more dangerous form. Some employers have already suffered from the lack of responsible trade unions.” Legislation was also passed to limit workers’ militancy. The Trade Disputes Act (1929) made “lightning” strikes illegal in public utilities. Thus, the Raj’s legislative efforts were aimed at regulating the labor force and making its behavior more predictable, rather than strengthening its bargaining power.
Excerpted with permission from Law and the Economy in India: Before Independence and After, Tirthankar Roy and Anand V Swamy, HarperCollins India.
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