LABOR, DEMOCRATIZATION AND DEVELOPMENT IN INDIA AND PAKISTAN In this first comparative study of organized labor in India and Pakistan, the author analyses the impact and role of organized labor in democratization and development. The study provides a unique comparative history of Indian and Pakistani labor politics. It begins in the early twentieth century, when permanent unions first formed in the South Asian Subcontinent. Additionally, it offers an analysis of changes in conditions of work and terms of service in India and Pakistan and of organized labor’s response. The conclusions shed new light on the influence of organized labor in national politics, economic policy, economic welfare and at the workplace. It is demonstrated that the protection of workers has desirable outcomes not only for those workers covered but also for democratic practice and for economic development. Labor organizations that are based on labor rights affect economic per- formance and political practices in desirable ways. Rights-based labor organizations strengthen democratic governments, public investment, and conversion of wealth into wellbeing. Organized workers help to ensure that benefits of growth are shared. Worker solidarity is essential for democracy and development. Christopher Candland is Associate Professor, Department of Political Science and Co-Director of South Asia Studies at Wellesley College, USA. He has served as an advisor on international labor affairs and trade to Democratic Party leadership in the US House of Representatives’ Subcommittee on Trade and to a federal advisory committee reporting to the US Secretary of State. ROUTLEDGE CONTEMPORARY SOUTH ASIA SERIES PAKISTAN Social and cultural transformations in a Muslim nation Mohammad A. Qadeer LABOR, DEMOCRATIZATION AND DEVELOPMENTININDIAANDPAKISTAN Christopher Candland CHINA–INDIA RELATIONS Contemporary Dynamics Amardeep Athwal MADRASAS IN SOUTH ASIA Teaching Terror? Jamal Malik LABOR, DEMOCRATIZATION AND DEVELOPMENT IN INDIA AND PAKISTAN Christopher Candland First published 2007 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN Simultaneously published in the USA and Canada by Routledge 270 Madison Ave, New York, NY 10016 This edition published in the Taylor & Francis e-Library, 2007. “To purchase your own copy of this or any of Taylor & Francis or Routledge’s collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk.” Routledge is an imprint of the Taylor & Francis Group, an informa business # 2007 Christopher Candland All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data Candland, Christopher. Labor, democratization and development in India and Pakistan / Christopher Candland. p. cm. – (Routledge contemporary South Asia series ; 2) Includes bibliographical references and index. 1. Industrial relations–India. 2. Labor unions–India. 3. Democratization–India. 4. Industrial relations–Pakistan. 5. Labor unions–Pakistan. 6. Democratization–Pakistan. 7. Comparative industrial relations. I. Title. HD8686.5.C36 2007 331.0954–dc22 2006100804 ISBN 0-203-94675-8 Mastere-bookISBN ISBN 978-0-415-42820-0 (hbk) ISBN 978-0-203-94675-6 (ebk) CONTENTS List of Maps, Figures, and Tables vii Acknowledgments viii Introduction: wealth, wellbeing, and social institutions 1 1 Organized labor and democratic consolidation 14 2 The state and economic development 55 3 Organized labor and economic reform 90 4 Reorganizing industry, disorganizing workers 124 5 Organized labor, democracy, and development 152 Notes 167 Bibliography 190 Index 206 v MAPS, FIGURES, AND TABLES Maps Map 0.1 India and Pakistan: major industrial cities 4 Map 3.1 World: countries having undertaken IMF structural adjustment 93 Figures Figure 1.1 Colonial India: union and membership growth, 1927–47 26 Figure 1.2 India: industrial disputes, workdays lost, and workers involved, 1947–2000 31 Figure 1.3 Pakistan: industrial disputes, workdays lost, and workers involved, 1947–2003 35 Figure 1.4 India and Pakistan: unions, 1947–1998 51 Figure 1.5 India and Pakistan: union members, 1947–1993 52 Figure 1.6 India and Pakistan: members per union, 1947–1993 53 Figure 4.1 India: general unemployment and unemployment rate, 1985–2002 127 Figure 4.2 Pakistan: general unemployment and unemployment rate, 1985–2002 129 Figure 4.3 India: workdays lost in strikes and lockouts, 1961–2003 132 Figure 4.4 Pakistan: employment in textile manufacturing, 1992–2001 150 Tables Table 0.1 India and Pakistan: basic wealth indicators 2 Table 0.2 India and Pakistan: basic wellbeing indicators 3 Table 1.1 India: trade union centers and political party affiliations 30 Table 1.2 India: claimed and verified membership of trade union centers, 1980 33 Table 1.3 Pakistan: membership of leading trade union federations, 1990 37 Table 2.1 India and Pakistan: distribution of gross domestic product by sector, 2002 59 Table 4.1 India: labor force data, 1999–2003 126 Table 4.2 India: employment growth by sector, 1993–2004 127 Table 4.3 Pakistan: labor force data, 1997–2003 128 Table 4.4 Pakistan: employment growth by sector, 1994–2001 129 vii ACKNOWLEDGMENTS Hard-won insights of workers and organizers made this study possible. Hundreds of workers, labor organizers, labor scholars, managers, employers, and government officials were generous in speaking with me. Few are named here or in the text or footnotes below. I am grateful to each none- theless for sharing valuable time, experiences, and thoughts. I am especially grateful to Nabi Ahmed, Karamat Ali, Colin Gonsalvez, Sujata Gothoskar, Riffat Hussain, B. M. Kutty, N. P. Samy, Arvind Shrouti, Damodar Thankappan, and Girish Vaidya. I am also grateful to Khurshid Ahmed, Zahoor Awan, Khuda Bakhsh, Usman Baloch, Eijaz Beig, R. K. Bhakt, Qadir Broih, Gulzar Ahmad Chudhary, Homi Daji, Raju Damle, Arun Daur, Usman Ghani, Syed Khalil Hussain, Mohammad Ishaque, G. R. Khanolkar, S. P. Lodhi, H. Mahadevan, Babu Mathew, Vasant Nayam- pally, S. N. Rao, Gul Rehman, and Balgaram Tulpule for explaining to me the history and present challenges workers in India and Pakistan. For sharing research and perspectives I thank Charles Amjad Ali, Subashini Ali, Tariq Banuri, Kaiser Bengali, Praful Bidwai, B. N. Datar, L. K. Desh- pande, Roza Deshpande, R. Ganapathy, M. R. Ganapathy Rao, Ajit Ghosh, Syed Hameduddin, A. R. Kemal, Noor Khan, Omar Ashgar Khan, Klaus Klennert, Khalid Mahmood, Ajit Mathur, and Sundipto Mundle. I am grateful to Philip Oldenburg, for generous and skillful advice from the start of the project. I am thankful to Prabat Patnaik and Aly Ercelawn, my sponsors at Jawaharlal Nehru’s Centre for Economic Studies and Plan- ning and the University of Karachi’s Applied Economic Research Centre. Karamat Ali, Pranab Bardhan, Usman Baloch, Fatima Burney, Ainslie Embree, Mark Kesselman, Joel Krieger, Tarini Mohan, Craig Murphy, Richard Nelson, George Rosen, Barnett Rubin, Margery Sabin, Saba Sulaiman, and Erisha Suwal read all or part of drafts of the manuscript and gave valuable comments. I also greatly appreciate the generous support from the Fulbright Program in India, the American Institute of Indian Studies, the American Institute of Pakistan Studies, the Center for Institutional Research and Informal Sector, the National Council of Applied Economic Research, the East-West Center, and the Council of Overseas Research Centers and from Sharada Nayak, Pradeep Mahendiratta, Peter Dodd, Mancur Olson, Rakesh Mohan, and Charles Morrison. viii Introduction WEALTH, WELLBEING, AND SOCIAL INSTITUTIONS The central problem in the theory of economic development is to understand the process by which a community which was previously saving and investing 4 or 5 per cent of its national income, converts itself into an economy where voluntary saving is running at about 12 to 15 per cent. of national income.1 W. Arthur Lewis The claim that economic growth is the surest way to combat poverty has fallen into disrepute. Some economies have grown very rapidly but have failed to convert that wealth into wellbeing. Other economies have grown less rapidly but provided more opportunity for people to escape poverty. How to achieve growth has long overshadowed how to transform wealth into wellbeing.2 The question of how economic growth is transformed into general wellbeing – into health, and education and literacy, employment – needs greater attention. The argument made here is that strong labor organizations and institu- tions play a central role in distributing the benefits of economic growth and in promoting human development. How and whether governments allow workers to organize has great influence on how well wealth can be con- verted into wellbeing. Unions and other working class organizations are the keys to building solidarity and breaking cycles of exclusion and under- development. Unions promote decent jobs and fundamental rights at work and elsewhere.3 In turn, decent jobs and rights at work are the foundations of democracy and broad-based human development around the world. Unions and other working class organizations have been active in promot- ing and defending democracy, often through prolonged popular