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Labour contractors, unfree labour and global capitalism

by Tom Barnes on June 24, 2015

‘To think one word alerted the world. Qatar.’ So wrote The Australian’s Patrick Smith recently, in response to the global crisis in world football. At the heart of the controversy surrounding FIFA’s decision to award the 2022 World Cup to Qatar is its appalling record of worker safety and exploitation, leading to thousands of deaths in the construction of World Cup venues. Qatar operates a variety of the kafala, a system of state-sponsored labour migration which binds migrants (mostly from South and Southeast Asia) to individual employers across the Gulf.

Qatar is just the most widely-publicised case in a renewed focus on the global problem of bonded, forced or ‘unfree’ labour. Yet there is debate about how to define and respond to this problem. One may draw a broad distinction between archaic forms of chattel slavery, including legally-mandated ownership of slaves, and contemporary forms of bondage. These include non-consensual forms, in which individuals are deceived or physically-coerced, such as sexual slavery, people trafficking and some forms of child labour. They also include consensual forms, in which individuals agree to provide their labour under particular conditions, as Kevin Bales argues in Disposable People: New Slaves in the Global Economy. This commonly involves some form of wage advance which locks the worker into a debt obligation they must honour before they are ‘free’ to terminate their employment. The ‘unfree labour’ debate tends to focus on these consensual forms in which restrictions on individual freedom are primarily economic in character.

Some, like the Perth-based Walk Free Foundation, backed by Australian mining magnate, Andrew Forrest, conflate these forms into a notion of ‘modern day slavery’ which is framed as bad for business and human rights. Slavery is thus framed as a modern-day aberration that can be eradicated through (more) ethical business practices. Linked to this, there is ongoing debate among scholars about the role of bonded labour under capitalism which focuses upon the role of intermediaries who link the demands of employers for cheap flexible labour with the need of workers to survive.

These intermediaries between capital and labour take on many forms, including formal varieties like labour-hire firms and temp agencies, and informal varities. Stephanie Barrientos groups these into labour agents who receive fees for placing workers with employers, quasi-labour agents, who also deduct fees from workers’ wages, and labour contractors, who directly pay and supervise workers on behalf of employers. The role of capital-labour intermediation also takes specific forms in the case of international migration as workers are usually employed as non-citizens in foreign countries, although most labour contracting seems to occur within countries and regions.

BanajiIn many cases, workers recruited by labour contractors can be described as unfree, including internal migrant workers who are not paid regularly or on-time or those who take a wage advance from their labour contractor. Tom Brass is the clearest in arguing that any worker who enters such a debt relationship is unfree and, thus, ‘deproletarianised’. Others are deeply critical of this view, including Jairus Banaji, who suggests that coercion is a normal feature of ‘free labour’ under capitalism. Others prefer to articulate degrees of ‘unfreedom’ as part of a continuum of labour relations. For Jens Lerche, ‘unfreedom is simply one of many ways of controlling labour while lowering wages below the going rate’.

Lerche’s point is significant: forms of unfree labour are perfectly consistent with capitalist social relations and with the ongoing expansion of the global working class. If so, ‘unfreedom’ is not some kind of historical throwback or aberration—something alien to normal business practices—but an entrenched feature of modern capitalism. A further implication of this view is that the majority of workers classified as unfree have a shared class interest with all wage workers.

With my co-authors, Krishna Shekhar Lal Das and Surendra Pratap, I try to explore these questions in the latest issue of The Journal of Development Studies, using a case study of the automotive industry in India. Based on interviews with dozens of workers, employers, labour contractors and trade unionists in the New Delhi and the nearby cities of Gurgaon and Faridabad in 2011-2013, we try to show that there is an entrenched regional contract labour system. We chose this case study for three reasons. First, labour contractors play a massive role in India, where they go by various local names (thekedar, mukadam, etc.). Second, the auto industry is historically renowned for providing relatively decent jobs with decent pay across the world. While labour contracting dominates industries like construction and rice processing, the majority of Indian auto workers are also hired in this way. Third, we argue that labour contractors demonstrate a role for capital-labour intermediation that is much broader than the debate about ‘unfreedom’.

The regional contract labour system helps to keep wages low, increases firms’ flexibility, offloads the burden of monitoring and controlling workers and has been very effective at undermining trade unions. In our sample of nine firms, an average of 75 per cent of workers were hired by labour contractors which typically charged 5-8 per cent commission, usually taken from workers’ wages. Most employers preferred to use several labour contractors—in our sample, the average was five per firm, although some of the giant car and motorcycle companies like Suzuki and Honda have been known to use 20 or more. We also found labour contractors often acted as brokers between migrant workers and local landlords, providing short-term accommodation and modest wage advances.

13IN_MARUTI_SUZUKI_807404fThis raised the question of coercion and debt bondage. However, we found that there were limits to the coercive powers of labour contractors due to the abundance of manufacturing jobs in the region. In fact, labour contractors tended to plan for a minority of workers leaving their employer before their ‘contract’ expired and factored this into their costs. Significantly, the contract labour system encouraged enormous wage inequality between contract workers and directly-hired, regular workers. This has led to some enormous industrial conflicts in recent years, above all the Maruti Suzuki strike in Manesar, near Gurgaon, which lasted for over a year (2011-12) and involved several lockouts and factory occupations. Workers were savagely repressed after a violent confrontation in July 2012, in which an HR manager died. This led to thousands of sackings and the jailing (without conviction) of 147 workers, of which about half remain in jail to this day.

What is also interesting about this outcome is that Maruti Suzuki responded by significantly increasing wages and moving away from the contract labour system towards the direct hiring of ‘company casuals’. Despite the shift, we found that the regional contract labour system remains intact and continues to expose problems with the (non) implementation of Indian labour laws and trade union rights. Others have come to similar conclusions in different regions of India.

My hope is that our article contributes something new to the discussion about capital-labour intermediaries and, in turn, to the ongoing discussion about critical responses to ‘unfreedom’ and coercion in the global labour movement. Indeed, the response of the Maruti Suzuki workers (and others in the industry) showcases a ‘labour movement response’ to this problem which emphasizes unity between different categories of workers, whether relatively ‘free’ or ‘unfree’.

Tom Barnes
Tom Barnes is an economic sociologist and ARC DECRA fellow at Australian Catholic University (ACU). His research primarily focuses on insecure, precarious and informal work in Asia (especially India) and Australia. He is involved in two current ARC-funded projects which focus on the demise of Australian automotive manufacturing and the impact on workers and communities in closure-affected regions. He completed his PhD in political economy at the University of Sydney in 2011. He has written two books, Informal Labour in Urban India: Three Cities, Three Journeys (Routledge, 2015) and Making Cars in the New India: Industry, Precarity & Informality (Cambridge University Press, 2018). He is currently formulating a new project on labour movements and global warehousing/logistics.

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