Intensification of degree of exploitation of workers in manufacturing

The total value produced by labour (GDP) during 2007/08 was Rs.40.4 lakh crore, according to the National Accounts Statistics (NSA). The working class received wages of Rs.13.1 lakh crore in 2007/08. Toiling peasants and other small producers received Rs.12.5 lakh crore as their net income. The bourgeois class, which does no work, earned income in the form of profit, interest and rent of Rs.14.9 lakh crore, or 37% of the total value produced in 2007/08.


The degree of exploitation of workers has increased in past 25 years, during the course of the implementation of program of modernisation and globalisation through privatisation and liberalisation. Below, we deal with the situation in the manufacturing sector.

The latest figures available from Annual Survey of Industries (ASI) pertaining to 2007-08 from a sample of nearly 1.5lakh large factories in India shows that the bourgeoisie made colossal profits by super exploiting the workers. These factories employed about 82lakh workers. The ASI covers registered industrial units. The type of industries include basic metals, coke, petroleum products and nuclear fuel, chemicals, food products, non metallic mineral products, machinery, motor vehicles, textiles, electrical machinery, fabricated metal products, rubber and plastic industry, transport equipment, radio, TV and communications equipment, furniture, tobacco, paper and paper products, publishing and printing, medical, precision and optical instruments, office and computing machinery, wood and wood products, agricultural machinery, leather and products, electricity and gas, and so on.

The data shows that the annual value created by the toil of workers in these factories rose from
Rs.27,000 crores in 1985/86 to nearly Rs. 551,000 crores in 2007/08. The portion pocketed by the owners of capital in the form of profits, interest and rent (together called surplus value), rose much faster than what was paid to the workers as wages and salaries (called labour income).

The surplus value extracted by capital, as a ratio of the labour income paid to the workers, the degree of exploitation of labour, rose phenomenally between 1985 and 2007 from 114% to 340% in the units covered by the Annual Survey of Industries. This means, that in 1985-86, if we take a working week of 48 hours, an average worker in an average large manufacturing unit worked 22.5 hours for earning his or her wages, and 25.5 hours “free” to produce profits for the capitalist class. In 2007-2008, taking the same average working week of 48 hours, the worker worked 11 hours for earning his or her wages and 37 hours “free” to produce profits for the capitalist class. Or in other words, what this means is that in 2007-08, for every 1000 rupee paid to the worker, the capitalist class extracted as profit Rs 3,500!

Wages of workers

According to the ASI data for 2007-2008, the average monthly wages of all workers in these units was

Within this, if the workers working in factories employing more than 1000 workers are calculated, the average monthly wages was Rs 7.280. There were 2,334 such factories, employing a total of 22.5 lakh workers.

There were 59.45 lakh workers working in units employing less than 1000 workers. Their average monthly wages were Rs 4,395.

Organic composition of capital

During this period the organic composition of capital, i.e, the ratio of constant capital to variable capital shifted in favour of the former as can be expected with technical advancements in production in the factory sector. It increased from 733% in 1985-86 to 1780% in 2007-08.

In other words, if a capitalist invested 1000 rupees in 1985-86, he would be spending on average 120 Rupees on wages and rest on machinery, raw materials, energy, and other means of production. In 2007-2008, in a total investment of Rupees 1000, he would be spending Rupees 53 only on wages, and Rs 947 as constant capital — on machinery, raw materials, etc!

Average rate of profit

The rate of profit is the ratio of surplus value extracted by the capitalist to the total capital employed. The total capital is the sum of the variable capital (the wages paid to workers) and the constant capital (that invested in form of machinery, buildings, raw materials, energy, etc). With development of industry, in general, the proportion of constant capital in the total capital deployed tends to increase, as shown above. This leads to the tendency of the rate of profit to fall, as profit is made only from the surplus value extracted from living labour, and not from the portion of capital invested which is constant capital.

However, capitalist class finds out various ways to get out of this situation to keep their rate of profit from falling. Using their monopoly situation and by super exploiting the workers, the capitalists maintained their average rate of profit.

The south-east Asian crisis, the dotcom bubble and the recent global meltdown, did not dent the profits made by the bourgeoisie. As the graph below shows, the rate of profit, i.e., surplus value/(constant + variable capital) increased from 14% in 1985-86 to 19% in 1995-96, the height of capitalist reforms, and still remained at 18% in 2007-08.

The capitalist class has been able to maintain and even increase the rate of profit in this period, primarily by intensifying the degree of exploitation of workers. This has been achieved by increasing the length of the working week, beyond 48 hours to 60 and more, by increasing resort to contract labour, and by keeping the wages of workers depressed using the threat of retrenchment. In many of the manufacturing units, the capitalist class has been able to prevent the formation of trade unions by workers. The policy of the Central and state governments has been to turn a blind eye to the violation of all labour laws, formulated to allegedly protect workers from super exploitation. On the contrary, the state machinery has been used directly to crush workers struggles, with the justification that what is good for the capitalist class is good for the country as a whole. In the past few years, militant struggles have broken out in manufacturing units in different parts of the country precisely over the question of forming unions to protect the rights of workers.

The major trade union centres of our country have been ineffective in organising the workers against the capitalist offensive in this period. The situation demands a powerful united struggle in defence of the rights of workers. The Communist Ghadar Party of India calls on all trade union activists to unite firmly against the anti-worker offensive of the bourgeoisie and its governments!


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capital    wages    trade    charts    profit    economy    Jun 1-15 2010    Political-Economy    Economy    


Election manifesto of a CGPI supported candidate for Lok Sabha


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