A Financial Analysis of Ludhiana s Migrant Labour

Article A Financial Analysis of Ludhiana s Migrant Labour Social Change 47(1) 81 93 CSD 2017 SAGE Publications sagepub.in/home.nav DOI: 10.1177/0049085716683108 http://sch.sagepub.com Shruti Mehra 1 Abstract This study focuses overall on the financial health of industrial migrant labour working in the industrial units of Ludhiana city in terms of their income, consumption, expenditure, savings and remittance. Our survey reveals that the average annual income of these labourers was `35,112 while their average annual saving was `7,548 and their average annual remittance was `5,786. About twothirds of the total industrial migrant labour surveyed remitted their entire savings. The meagre amount of their savings highlights the plight of this labour and their families back home. Indebtedness was identified as the most common reason for the remittance of money. But compared to their local counterparts, it seems that migrants experienced an improvement in their standards of living after they migrated. Keywords Industrial migrant labour, financial health of migrant labour, labour in Ludhiana, Manchester of India Introduction In an era of growing globalisation, migration has recently assumed a special significance for society making it a vital issue for many developed and developing countries. Differences in historical, social and economic conditions such as disparities in income, agrarian distress, inadequate employment generation and the vast growth of informal economy have all collectively led to waves of migration: from rural to urban areas; within urban areas and from backward to comparatively advanced regions, all occurring in the most appalling conditions. In some cases, as living conditions and opportunities have improved in urban areas the scale of rural to urban migration has also increased (Taylor, 1999). 1 Department of Economics and Sociology, Punjab Agricultural University, Ludhiana, Punjab. Corresponding author: Shruti Mehra, Department of Economics and Sociology, Punjab Agricultural University, Ludhiana 141004, Punjab, India. E-mail: shrutibhogal@gmail.com

82 Social Change 47(1) The high level of human migration in India is something that is widely acknowledged. The abject proportion of land man ratio in the country, the impact of increasing population has the shifted focus to the non-agricultural sector as a means for survival, encouraging waves of rural to urban migration (Sudan, 1991). The Indian experience of rural to urban migration shows that from 1961 1971 to 2001 2011 the rate of growth of urban population declined from 59 per cent in 1991 2001 to 44 per cent in 2001 2011, whereas the estimated rate of rural to urban migration increased from 21 per cent in 1991 2001 to 24 per cent in 2001 2011 (Indian Institute for Human Settlement, 2011). Empirical evidence has shown that the process of migration is influenced by social, cultural and economic factors, with the latter assuming prime importance (de Haan & Rogaly, 2002). Reducing poverty and accessing higher welfare benefits available in urban areas are the most common determinants influencing migration (Wenk & Hardesty, 1993). Additionally, people who migrate from rural areas to urban areas do better economically than their non-migrant counterparts and thus, migrants migrate to economically well-off areas (Long & Heltman, 1975). The pull factors of some regions, especially industrialised regions, act as strong factors behind the shift in a workforce. Initially, the majority of migrants get engaged in the informal sector due to the lack of labour market information at the place of destination and slowly shifting later to the formal sector (Santhapparaj, 1996). It is migrants who are unskilled, with less educational and technical qualifications, who typically become part of the informal sector. Most of this labour is casual or temporary and receives low wages. Usually, such migrant labour in this sector earns less than its local counterparts (Duraisamy, 1997). At the mercy of their employers for determining their wages, they are exploited and overworked. Though an important pillar for the growth of any region or sector, this section is deprived of basic social and physical needs since they are economically weak. A study by Mukherjee, Bino Paul and Pathan (2014) shows that these migrants are deprived of primary amenities such as social security and other factors that sustain human development. Despite these obvious hardships, they still continue to migrate since they manage to get higher wages as compared to what they received from their place of origin. The amount of money a migrant earns in his chosen place of destination helps in deciding whether he will settle down here or migrate even further as the amount of income received is what determines economic satisfaction or dissatisfaction. The amount of remittance back home depends on levels of savings which are further dependent on income and expenditure. Since economic reasons play a vital role in influencing migration (Sensarma, 1997), the amount of income that one earns helps in justifying reasons to migrate. Since the propensity to migrate depends upon economic factors (Bisht & Tiwari, 1997), hence, the study of these factors like income, savings and remittances and so on become important. This present compendious research paper highlights the migration of labour to industries in Ludhiana, a city in the north Indian state of Punjab and sometimes referred to as the Manchester of India. More specifically, the study examines the financial status of the industrial migrant labour especially with regard to their income, expenditure, savings and remittance at the individual level and relative to their local counterparts.

Mehra 83 Research Methodology A total of 18 small-scale and 5 large and medium-scale industrial units from the hosiery and knitwear industry, and 22 small-scale and 5 large and medium-scale industrial units from cycle and cycle parts industry were selected for this study. The primary data were collected during 2008 2009 from a total of 500 industrial migrant labour of which 390 were working in small-scale industrial units and 110 in large and medium-scale industrial units. A personal interview method was used via a specially structured questionnaire. Various statistical tools like averages, percentages, chi-square, z-test and t-test were used to get a detailed insight of various issues at hand for the study. Results and Discussion Income from Present Job Table 1 illustrates the distribution of industrial migrant labour according to the income it was earning at the present place of work. It was found that the average monthly and annual income of the total industrial migrant labour that was working in small-scale industrial units was `2,930.51 and `35,166.15, respectively, and that from large and medium-scale industrial units was `2,910 and `34,920, respectively. Of the total migrants working in small-scale units and large and mediumscale units, a majority earned an income ranging between `2,701 and 3,000. The migrant labour coming to Ludhiana was mostly unskilled or semi-skilled. Due to the abundant supply of such labour and the demand supply principle, no significant difference was found overall in the average income of industrial migrant labour from the small-scale and large and medium-scale industrial units. Benefits Other than Wages Apart from income, other benefits earned by individuals provided further motivation to work harder. Other benefits included an allowance for uniforms, free refreshments, production incentives, festival bonus and so on. The chi-square value of 10.86 in Table 2 indicates a significant association between the size of industrial units and uniform allowance received as more of the labour working in the large and medium-scale units received the same allowances as these units seemed to follow a greater work discipline and higher standards of work. This differentiates them from small-scale units though without any significant difference in wages. However, there were other extra benefits seen in the small-scale industrial units as they focused more on production and gave benefits related to the scale of production. Consumption Expenditure Industrial migrant labour, though not experiencing the best economic conditions, did show an improvement in its consumption expenditure after migration which is an indicator of a better standard of living. Table 3 shows a change in the

Table 1. Distribution of Industrial Migrant Labour According to Income from Present Job Small Large/Medium Total t-value Income (`) No. Percentage No. Percentage No. Percentage Small vs. Large/Medium Up to 2,700 49 12.56 14 12.73 63 12.60 0.72 2,701 3,000 157 40.26 46 41.82 203 40.60 3,001 3,300 133 34.10 40 36.36 173 34.60 >3,300 51 13.08 10 9.09 61 12.20 Average Monthly Income 2,930.51 2,910.00 2,926.00 Average Annual Income 35,166.15 34,920.00 35,112.00 Table 2. Distribution of Industrial Migrant Labour According to Benefits Received other than Wages Description Small Large/Medium Total Chi-square Value No. Percentage No. Percentage No. Percentage Small vs. Large/Medium (i) Uniform Allowance Yes 100 25.64 46 41.82 146 29.20 10.86*** No 29 74.36 64 58.18 354 70.80 (ii) Other Extra Benefits Yes 261 66.92 70 66.64 331 66.20 0.41 No 129 33.08 40 36.36 169 33.80 Note: *Significant at 10 per cent; ***Significant at 1 per cent.

Mehra 85 Table 3. Distribution of Industrial Migrant Labour According to Change in Pattern of Consumption Budget (percentage share) Item of Expenditure Percentage Share of Budget Status Pre-migration Post-migration t-test Non-durables 78.24 76.19 1.44 Food grains 37.10 29.98 4.41*** Milk and milk 3.60 4.51 3.75*** products Sugar and sugarrelated 4.06 4.93 2.57** products Edible oils 8.28 9.60 2.45** Vegetables 2.25 2.90 1.99** Fruits 1.13 1.44 1.16 Condiments and 0.73 0.87 1.23 spices Pickles/Jams/Juices 1.20 0.84 1.85* Tea 1.47 1.61 1.24 Non-vegetarian food 0.36 0.57 2.01** Refreshment 0.54 0.68 1.21 Intoxicants 1.79 1.45 1.52 Fuel and light 3.35 3.68 1.61 Clothing and 4.70 4.99 1.07 bedding Footwear 4.01 4.29 1.14 Toiletries 3.70 3.90 0.12 Durables 9.23 10.26 2.16** House construction, 1.23 1.30 0.54 addition of rooms, major repairs T.V./radio 1.15 1.36 0.39 Watches/clocks 0.97 1.15 1.08 Electric fans 1.21 1.37 1.19 Sewing machines 0.91 0.98 0.72 Cots 1.15 1.30 0.68 Utensils 1.33 1.45 0.92 Bicycle 1.31 1.37 0.13 Services 8.07 8.84 2.27** Education 1.56 1.69 0.99 Healthcare 1.68 1.91 1.37 Conveyance 2.64 2.74 0.94 Entertainment 2.20 2.51 1.27 Communication 0.03 0.04 0.07 Socio-religious 4.34 4.71 1.89* ceremonies Marriages 1.42 1.94 2.13** Other social 2.11 1.98 1.27 ceremonies Religious ceremonies 0.94 0.79 1.31 Total 100.00 100.00

86 Social Change 47(1) percentage share of different items of consumption and the consumption pattern of the industrial migrant labour, both pre-migration and post-migration. During the study it was found that the percentage share of all non-durable items, put together in a total consumption budget before migration, was 78.24 which decreased to 76.19 after migration. But the percentage share of durables of the total budget underwent an increase after migration from 9.23 to 10.26. Due to better income levels, and after meeting the desired non-durable item expenditure, it showed that migrants had some additional income that they could spare on comforts. The share of services as a part of the total budget was 8.07 per cent before migration which increased to 8.84 per cent after migration. Similarly, the expenditure on socio-religious ceremonies as a part of the total budget of industrial migrant labourers, after migration also increased, from 4.34 per cent to 4.71 per cent. In other words, industrial migrant labour from all industrial units of Ludhiana city reported that there was an improvement in the consumption expenditure pattern after migration and they were better off than before. Saving Levels The saving levels of individuals indicate their financial status and security. It should be noted that not all migrants migrate with their entire family and thus saving money and remitting it back home becomes important. Table 4 shows the distribution of industrial migrant labour according to their monthly savings in the city. It was observed that the average monthly saving of the industrial migrant labour working in small-scale industrial units was `648.72 as compared to `559.09 of those working in large and medium-scale industrial units. The average annual savings of labour working in their respective units was `7,784.62 and `6,709.09. The t-value of 2.39 indicates a significant association between the size of industrial units and the amount of average saving. However, 21.03 per cent and 38 per cent of the total industrial migrant labour from the small-scale and large and medium-scale industrial units did not save at all. The explanation why labour from large and medium-scale industrial units saved less was that they had migrated with their entire family to the city which they found more satisfactory than the place of their origin and with higher expenditure they had less savings. Remittance Levels A majority of people migrate to a new place mainly to earn and remit money back home. However, the amount and regularity of remittance levels depends on the earnings and expenditure of individuals in their new destinations. Table 5 shows the distribution of industrial migrant labour according to their amount of remittances. It was observed that 67.69 per cent of the industrial migrant labour from small-scale units and 55.45 per cent from large and medium-scale industrial units remitted money. The chi-square value of 5.65 indicates a significant association between the size of industrial units and amount of remittances. The average amount of annual remittances was `5,947 for industrial migrant labour from small-scale industrial units and `5,216 for those from large and mediumscale industrial units. Of the 264 industrial migrant labourers from small-scale

Table 4. Distribution of Industrial Migrant Labour According to Monthly Savings (in `) Small Large/medium Total t-value Description No. Percentage No. Percentage No. Percentage Small vs. Large/Medium Nil 82 21.03 42 38.18 124 24.80 2.39** Up to 500 49 12.56 12 10.91 61 12.20 501 1,000 189 48.46 35 31.82 224 44.80 1,001 1,500 47 12.05 9 8.18 56 11.20 >1,500 23 5.90 12 10.91 35 7.00 Average Monthly Savings 648.72 559.09 629.00 Average Annual Savings 7784.62 6709.09 7548.00 Notes: ** Significant at 5 per cent; *** Significant at 1 per cent. Table 5. Distribution of Industrial Migrant Labour According to Remittances and Proportion of Remittances Status Small Large/Medium Total Chi-square Value No. Percentage No. Percentage No. Percentage Small vs. Large/Medium (i) Remit Money Yes 264 67.69 61 55.45 325 65.00 5.65** No 126 32.31 49 44.55 175 35.00 (ii) Proportion and Amount of Remittance Total Savings 187 70.83 27 44.26 214 65.85 15.56*** Less than Total Savings 77 29.17 34 55.74 111 34.15 Annual Remittance (`) 5,947 5,216 5,786 Notes: ** Significant at 5 per cent; *** Significant at 1 per cent.

88 Social Change 47(1) industrial units that remitted money to their families back home, 70.83 per cent remitted their total savings, while 29.17 per cent remitted less than their total savings. Of the total industrial migrant labourers from large and medium-scale industrial units, 44.26 per cent remitted total savings, and 55.74 per cent remitted less than total savings. The chi-square value of 15.56 indicates a significant relationship between the size of industrial units and the amount of remittances. It was seen that a majority of the industrial migrant labourers from small-scale industrial units remitted money as compared to those from large and mediumscale industrial units, indicating the former s ability to save and also the level of financial support required by their families back home. Purpose of Remittances There are various purposes for which industrial migrant labour remits money back home. Table 6 shows that of the 264 and 61 industrial migrant labour from small-scale and large/medium-scale industrial units who remitted money, a majority (88.64 per cent and 86.89 per cent, respectively) remitted money for repaying debts, followed by 79.55 per cent and 78.69 per cent remitted for routine consumption needs of their family members. For constructing houses in their place of origin, 22.35 per cent of the industrial migrant labourers from small-scale industrial units and 37.70 per cent from large and medium-scale units remitted money. As much as 26 per cent and 31 per cent of industrial migrant labourers from small-scale and large and medium-scale industrial units remitted money for the education of their children, while approximately 30 per cent and 31 per cent of these labourers from respective units remitted money to be spent for religious ceremonies. As much as 27.65 per cent of the industrial migrant labour from small-scale units and 42.62 per cent from large and medium-scale industrial units remitted money to be spent on social ceremonies. Maintenance of house and property, buying of cattle and farming implements, medical treatment and purchasing domestic articles were also cited as reasons for remittance. The purpose of repayment of debts was perhaps the prime reason for which industrial migrant labour remits money indicating that indebtedness was the most important factor for an individual to migrate and that industrial migrant labour was always working towards reducing this burden (Sensarma, 1997). Remitting money for consumption by family members indicates less income of the family back home and reflects the need for migrant labour to support them. It also speaks about the poverty in their place of origin and justifies poverty as a major factor for an individual to migrate. Comparison of Migrant and Local Labour s Financial Status A comparison of the industrial migrant labour with their local counterparts becomes an important indicator of the economic status of migrants helping in understanding the reasons behind their migration. As many as 15.80 per cent of industrial migrant labourers owned houses as compared to 99.50 per cent of the industrial local labourers (Table 7). The difference between these two sections,

Table 6. Distribution of Industrial Migrant Labour According to Purposes of Remittances (Multiple Responses) Sl. No. Purpose Small Large/Medium Total No. (N = 264) Percentage No. (N = 61) Percentage No. (N = 325) Percentage 1 Consumption 210 79.55 48 78.69 258 79.38 2 2 House Construction 59 22.35 23 37.70 82 25.23 7 3 Repaying Debts 234 88.64 53 86.89 287 88.31 1 4 Education of Children 68 25.76 19 31.15 87 26.77 6 5 Religious Ceremonies 78 29.55 19 31.15 97 29.85 5 6 Social Ceremonies 73 27.65 26 42.62 99 30.46 4 7 Maintenance of Property 73 27.65 27 44.26 100 30.77 3 8 Buying Land 62 23.48 20 32.79 82 25.23 7 9 Buying Cattle and Implements 44 16.67 15 24.59 59 18.15 8 10 Medical Treatment 72 27.27 15 24.59 87 26.77 6 11 Buying Durable Domestic Articles 82 31.06 17 27.87 99 30.46 4 Overall Rank

90 Social Change 47(1) Table 7. Distribution of Industrial Migrant and Industrial Local Labour According to Comparison of Economic Status Migrant Labourers Local Labourers Status No. Percentage No. Percentage Significance Ownership of House Z-value Yes 79 15.80 199 99.50 20.45*** No 421 84.20 1 0.50 Provision of Electricity in House Chi-square Yes 431 86.20 193 96.50 15.66*** No 69 13.80 7 3.50 Provision of Bathroom/Toilet at House Chi-square Yes 411 82.20 192 96.00 14.01*** No 89 17.80 8 4.00 Provision of Water Supply at House Chi-square Yes 471 94.20 193 96.50 1.55 No 29 5.80 7 3.50 Ownership of Cattle/Livestock Z-value Yes 2 0.40 41 20.50 10.01*** No 498 99.60 159 79.50 Under Debt Chi-square Yes 186 37.20 42 21.00 17.07*** No 314 62.80 158 79.00 Purpose of Debt Z-value Education of 0 0.00 0 0.00 NA Children Consumption 23 12.37 5 11.90 0.08 Construction 21 11.29 9 21.43 1.76* and Maintenance of Houses Social and 40 21.50 4 9.52 1.94* Religious Ceremonies Others 102 54.84 24 57.15 0.27 Saving (`) t-value Nil 124 24.80 97 48.50 Up to 500 61 12.20 21 10.50 501 1,000 224 44.80 59 29.50 1001 1,500 56 11.20 11 5.50 More than 1,500 35 7.00 12 6.00 Average Monthly 629.00 418.00 5.31 Saving Average Annual Saving 7,548.00 5,016.00 Notes: *Significant at 10 per cent; **Significant at 5 per cent; ***Significant at 1 per cent.

Mehra 91 the ones that owned a house and one which did not, was significant as can be seen by the z-value of 20.45. A lesser percentage of migrants not owning a house could be explained by the fact that these people did not intend to settle forever in the place they were currently working and kept their options open for further migration. But a proportion of labourers who had been residing in the city for a long period of time and planned to settle here, owned houses. As many as 86.20 per cent and 96.50 per cent of the industrial migrants and local labourers, respectively, working in various industrial units of Ludhiana city, had the provision of electricity at their houses which were either owned or rented. The chi-square value of 15.66 indicates a significant relationship between the two types of industrial labour and the provision of facility of electricity in their houses. Also, as many as 82.20 per cent of the industrial migrant labour had the provision of facility of a bathroom or toilet in their house while the percentage of industrial local labour that had the same provision was at 96 per cent. The chi-square value of 14.01 indicates a significant association between the type of labour and provision of facility of bathroom and toilet at place of their residence in Ludhiana city. The chi-square value of 1.55 indicates a non-significant relationship between the type of labour and the provision of facility of water supply at the place of residence in Ludhiana city. These factors highlight the level of living which was lower for the industrial migrant labour relative to locals. The percentage of industrial local labourers who owned cattle or any livestock were 20.50 per cent, while only 0.40 per cent of industrial migrant labourers possessed cattle and livestock. The difference between the two types of labour was found to be significant as indicated by the z-value of 10.01. This coincides with the fact that since the majority of migrants did not own a house they did not have adequate space to keep any cattle and livestock. Indebtedness is one of the significant economic indicators that reflects the standard of living of an individual. It was observed that as much as 37.20 per cent and 21 per cent of the industrial migrant labour and local labour, respectively, were indebted. There was a significant association between the type of labour and the situation of indebtedness as indicated by the chi-square value of 17.07. The percentage of industrial migrants and local labourers who did not save at all was 24.80 per cent and 48.50 per cent, respectively. An individual earns not only present consumption but also to save for future contingencies. The savings of an individual indicates a financially secure future. The individuals who save are the ones who are financially aware. However, savings depend not only on the will to save but income and expenditure. The reasons for lower savings on the part of the industrial local labour can be explained by the fact that they incurred more expenses, given the larger size of families who living together; a higher standard of living and their consumption was better than migrant labourers plus there was no need to save to send remittances back home unlike the migrants. Conclusion Industrial migrant labourers are an important asset for any economy. The labourers studied play a vital role in the industrial development of Ludhiana, as it is a

92 Social Change 47(1) source of cheap labour and is also willing to work in any given circumstances. The study of income, savings and remittances of this labour working in the industrial units of Ludhiana becomes important to understand their economic status. Income or earning is one of the most important deciding factors for an individual to leave a job and shift to a new one. It was observed that majority of the industrial migrant labourers were earning incomes varying between `2,700 and 3,000 per month approximately and the average annual income was `35,112. The industrial labour is entitled to benefits other than wages like provident fund, uniform allowance, festival bonus, production incentive and so on. However, a majority of the industrial migrant labour did not receive uniform allowance. Though the economic conditions of the migrants in the city were not great but they still experienced an improvement in their consumption expenditure after migration which is attributed to the fact that higher income and better socio-cultural environment helped them improve their standards of living. However, the meagre amount of monthly saving highlights the financially insecure future of these labourers and their families back home which were dependent upon small remittance amounts. Most savings being remitted back home indicate that the money earned and saved was being used to improve various economic aspects of the migrant and his family which they believed would not have improved otherwise due to the low levels of income or poverty in their place of origin. Saving for contingencies is important for any economically conscious individual. It becomes even more important for industrial migrant labourers as many provide financial support to their families back home and also to establish themselves in the new place of destination. However, one-fourth of the industrial migrant labour did not save at all. Of the total industrial migrant labourers who saved, a majority saved an amount varying from `500 to `1,000 approximately. A majority of the industrial migrant labour needed to support their families back home for their daily consumption or other economic needs and hence, they remitted money. Of the total industrial migrant labour, a majority remitted their entire savings. Repayment of debt was identified as the most common reason for remitting money followed by daily expenditure by their family, maintenance of property, social ceremonies, buying domestic articles, religious ceremonies, medical treatment, education of children, buying land, construction and repair of homes and buying cattle and implements. In other words, migration has helped migrants to cater to various financial needs, and the migrants experienced an improvement in their overall financial status after migration. However, their level of living is still lower than their local counterparts. Migrants who usually can adapt to any kind of socio-cultural and work environment, need to have their financial situation examined more closely to make on par with their local counterparts and drive them further along on the path of economic development. References Bisht, B.S., & Tiwari, P.C. (1997). Occupational pattern and trend of rural out-migration: A study of Gomti watershed in Uttar Pradesh Himalaya. Journal of Rural Development, 16(2), 329 339.

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