SEZ : Boon or bane for IT employees?

In the past few years India has witnessed the mushrooming of many Special Economic Zones (SEZs) in every nook and corner of our cities. These alien lands within state boundaries have been trumpeted for being mascots of ‘development’, more so for the IT sector than any other sectors. States in India are competing with each other to say, “My SEZs are bigger than yours”.

But beneath the glitter and gloss, there is a darker side to the story of SEZs.

Special Economic Zones (SEZs) are specifically delineated duty free enclaves and are deemed to be foreign territories within state boundaries for the purpose of trade operations, duties and tariffs. A scheme of setting up the SEZs in India was announced in the Export and Import (EXIM) Policy in March 2000. But the implementation of this policy and the task of setting up SEZs on a large scale has gathered momentum only recently after the rules and regulations were clearly laid and amendments wherever required, duly made.

The dominant theme of the current world order is the widening gap between haves and have-nots resulting from the increasing exploitation of labor class by dominant classes and the appropriation of the wealth of third world countries by rich countries. India is not an exception to this trend. Structural adjustment programs in tune with the “Export or Die” requirements of Globalization favors a relaxation of labour laws in order to maintain a competitive investor climate and benefit the big business houses here. The SEZ model perfectly fits into this strategy.

SEZ act 2005 made no changes in labour laws of the country. But by introducing a provision to categorize the units operating in SEZs as “Public Utility Service”, it effectively denies the workers of these organizations the rights that the workers in similar organizations outside the SEZ periphery normally have. A Public Utility Service is defined to be a service that is of great value to the society, and the lack of provision of which can affect the life of everyone. Employees in a public utility service have limited rights as compared to other organizations. For example they have to give a 14-day notice before going on strike. Additionally, employees in SEZs don’t have protection in the form of a notice period or compensation against retrenchment. So these employees are reluctant to raise a voice against their employers when the need arises. Moreover, employers in SEZs have the right to change the terms and conditions of service at any point of time.

While it is widely accepted that labour laws are poorly implemented in contemporary India, the envisioned labour regime in SEZs has been consciously structured to ensure the non-implementation of these laws. Industrial lobbies wished for the labour environment in India to be along the same lines as that of China. This influence is evident on a cursory reading of the original SEZ Bill that contained provisions that deny workers even their basic human rights. Revisiting the parliamentary debates surrounding the Bill, one gains an insight into the intention of the state to cast away established labour rights, in an eager attempt to encourage big businesses to invest and assure that it gains super profits through institutionalized exploitation of labour.

By retaining general labour laws applicable to SEZ, a window was left open for the Ministry of commerce to employ the defence that all labour laws still continue to exist in SEZs. Nevertheless the availing of labour entitlements was made extremely arduous. Therefore what was required by businesses to generate super profits was surreptitiously provided by the state, in terms of a systemic breakdown of the protection available to employees in these zones.

As per the Industrial Disputes Act, 1947, the labour commissioner, who is an officer of state government, was responsible for settling disputes between employees and employers.It was a third party institution which could keep some objectivity on the issues. In SEZ, a development commissioner, appointed by central government who should not be below the rank of Deputy Secretary to the Government of India is responsible for overall operations of SEZ. As her/his primary focus will be the growth of SEZ, the bias towards investors will be more and may end up ignoring labour interests.

The process of facilitating business houses continues with a favorable restructuring of governance pertaining to SEZs to benefit capital and in turn exploit labour. Under subsection (3) of Section 12 of the SEZ Act 2005, the Development Commissioner or his or her office is responsible for the administrative control of a Zone. Chapter 2 Clause 5(g) of the SEZ

Rules 2006 hands over the power to the Development Commissioner to declare the SEZ as a “Public Utitlity Service”. Rule 5(5)(g) of SEZ Rules 2006 asks state government to endeavor in the declaration of the Special Economic Zone as a Public Utility Serv'ice. In broad terms workers employed by public utilities have restricted rights under the Industrial Disputes Act of 1947. Rule 5(5)(f) delegates power to the development commissioner to handle workman employee relations. All these have made labour laws practically ineffective in SEZs. ; the way he/she desires.

SEZs engender endanger labour security and violate labour rights. According to estimates provided by the Ministry of Commerce, 4 million jobs will be created through SEZs by December 2009. However, about 60 per cent of the approved SEZs are in the IT sector. It appears that SEZs only facilitate the displacement of labour into ‘safe zones` for those who clamor for flexible and pliant labour. When agriculturalists, farmers, sharecroppers and others were displaced, they had dreams of jobs in the SEZs. The few who got employment found that from being landowners, they were now unskilled labourers. And this, after selling their valuable land for much below the commercial prices!

The studies available on SEZs have several lacunae, and detailed case studies on SEZs and its impact on labour have been very rarely looked at!

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