Income Pattern of Migrant Labours at Alang Ship Breaking Yard

Hrudanand Misra

Institute of Management, Nirma University, Ahmedabad, Gujarat, India

Keywords: Income, Migrant Labour, Ship Breaking, India.

Abstract: Migration is the process which is as old as human history. People move from one place to another due to

economic factors dominate the decision to migrate. The decision to migrate is also influenced by income

differential at the place of origin and place of destination. Individuals belonging to lower income have a

greater propensity to migrate than others. Alang ship breaking yard employs 90 percent of migrant labours

and they are largely from backward states of U.P, Bihar, Orissa and Jharkhand. Only a small fraction around

5-10 percent originates from Gujarat state. In the study of migration income plays important role, which

decide the decision to migrate. The income of the labour determined by varies factors such as skill level,

experience, age, education etc. The aim of the present paper is focus on the change of income pattern among

the migrants employed at Alang ship breaking yard. The results show that workers present income is three to

four time higher than previous income shown by pair t-test. The regression result also shows that skill level

and experience of the migrants are important factors in present income.

1 INTRODUCTION

The process of breaking ships for the extraction of

steel scrap for supply to the steel rolling mills has led

to the beginning of an industrial activity. Ship

breaking is the process of dismantling an obsolete

vessel’s structure for scrap. The process includes

wide range of activities from removing all gear and

equipment to cutting down as well as recycling the

ship’s structure. On average a ship has an active life

span of 25 to 30 years. After it fails to meet the safety

requirement, it is sent for breaking. The ship is sold

through international broker or via cash buyers. Until

1960’s, ship breaking activities was highly

mechanized and concentrated in industrialized

countries like United States, the United Kingdom,

Germany and Italy. The United Kingdom accounted

for 45 percent of ship breaking industry. During

1960’s and 1970’s ship breaking activities shifted to

semi-industrialized countries, such as Spain, Turkey

and Taiwan mainly because of availability of cheaper

labour and also the existence of re-rolling mills in

these countries. About 79 countries were involved in

ship breaking activity. Asian yards come into

existence during 1980’s. Despite their late

establishment, at present this region account for over

95 percent of the industry. Alang ship breaking yard

of India has become eminent industry holding first

position in Asia and also in world market. Bangladesh

holds second position after India.

At present, India has large share in ship breaking

industry (OCED, 2001) and most of the activity is

concentrated in Alang and Sosiya, the two villages

situated in the coast of Arabian Sea in the district of

Bhavnagar in Gujarat.

Alang is a small coastal village as the district of

Bhavnagar in Gujarat, dominated by a small

population of fishermen and farmers. Presently, it has

turned out to be one of the largest ship breaking yard

not only in India but in the world. The yard stretches

over 15 Km and actually covers two yards (Alang and

Sosiya). The Alang ship breaking yards have the

capacity to break VLCCs and ULCCs vessels, a

facility not available to any other ship breaking

countries in the world. Furthermore, unlike other

countries where the ship breaking activities is capital

intensive in India it is labour intensive. Being a labour

surplus country labour is available in plenty and that

too at competitive rate. Alang ship breaking yard

provides large number of employment opportunities

to number of skilled and unskilled labours. Moreover,

there are many other activities and industries which

are directly and indirectly dependent on Alang ship

breaking yard, and the number of such workers

directly and indirectly employed is estimated to be in

between 1.5 to 1.6 lakhs (International Federation of

Human Rights, 2000: 56). This also includes the

downstream industries generated by the ship breaking

708

Misra, H.

Income Pattern of Migrant Labours at Alang Ship Breaking Yard.

DOI: 10.5220/0012501800003792

Paper published under CC license (CC BY-NC-ND 4.0)

In Proceedings of the 1st Pamir Transboundary Conference for Sustainable Societies (PAMIR 2023), pages 708-711

ISBN: 978-989-758-687-3

industry such as re-rolling mills, foundries, oxygen

plants, local scrap store, transportation companies

and other small local businessmen and upstream

activity such as brokers, service sectors etc. A survey

conducted by the International Federation of Human

Rights (FIDH) found that 100 re-rolling mills are

functioning in the area and each generally employs

between 80-120 and thus employing about 8,000-

10,000 workers.

It is found that a large proportion of labours

employed at Alang ship breaking yard are migrants

from different states. They are largely from backward

states of Uttar Pradesh, Bihar, Orissa and Jharkhand.

Only a small proportion of workers are from Gujarat

state i.e. 5-10 percent. Large proposition of the

workers are originate from the backward or most

backward districts of these states. Out of 18 districts

from which respondents originate 4 are developed, 3

are industrially backward, 8 are backward and 3 are

most backward as classified by planning commission.

The next section focus on the various factors affects

the income of the migrants employed at Alang.

2 PAYMENTS AND WA GES

Various occupations are covered by the Central

Government and the State Government for the

implementation of Minimum wages Act. For the

payment of Minimum wages, labours are divided into

three categories as per their skill however all labours

are covered under skilled or unskilled category. The

minimum wages paid to the labour constitutes the

basic wage and special allowance. The special

allowances is linked with the cost of living index and

revised twice in a year. Hence, minimum wages of

labours are revised at an interval of every six months.

But the wages of the labours are fixed either on the

basis of time or piece rate. According to contractors

that piece rate is not revised with the revision of the

special allowance of minimum wages at the interval

of six months. It is found that in many industries that

contractors do not pay wages according to the

provision of Minimum Wages Act. Contractors seem

to recognize only the basic wage component of

minimum wages.

There are various studies conducted by

researchers on the payments and wages to the labour

in Indian industries. The researchers cover wide range

of industries viz, Carpet weaving, Glassware, Beedi

industry, Construction, Brassware wherein labour

face exploitative conditions. These industries also

cover length and breadth of India. Various studies on

construction industry analysed the Minimum Wages

legislation. The analysis of the Minimum Wages with

respect to employment in the construction or building

operation is on the basis of the recommendation of

Labour Commissioner The average wage rate

prevailing in construction industry in most cases far

below the Minimum Wages fixed under the Act

(Subrahmanian, Veena and Parikh 1982: 137-141). In

Alang ship breaking yard wage rates especially for

unskilled workers are found to be below the

Minimum wages as mentioned in the Minimum

Wages Act. According to data available on minimum

wages by Gujarat Government, the minimum wage

fixed in April 2002 for skilled workers at Rs.89 and

for unskilled workers at Rs.79 per day. The results of

the survey suggest that wages at Alang ship breaking

yard are higher than those earned by workers at their

native place, but labours are receiving wages less than

the prescribed minimum wages. Infact, section 13 of

the Inter-State Migrant Workmen Act, 1979 provides

that the wage rates of the inter-state migrant workmen

should be same as those applicable to such other

workmen and also the inter-state migrant workmen

should not be paid less than the wages fixed under the

Minimum Wages Act.

At Alang ship breaking yard many workers do not

know even their wage rate because they never asked

the muqadams or labour contractors due to fear of

being fired from the job. Some workers reported to

the researcher that they would not know their exact

wage rate until they get the money in their hand. This

practice violates the article 7 of the Payment of

Wages Act, 1936 which states that there are no

deductions from the wage except in very precise

circumstances. Thus, such practices are contrary to

article 21 of the Contract Labour Act which states that

in case the contractor fails to make payment of wages

within the prescribed time period or make short

payment then the principal employer is responsible to

make payment of wages in full or the unpaid balance.

In Alang ship breaking yard wages of the workers

are paid on the basis of a daily rate but paid monthly.

Each and every worker is handed with an attendance

card at the start of the each month. Everyday Workers

have to get the card filled with arrival and of departure

details from the plot. The payment is either on the

basis of task or piece rate. For instance, loaders whose

work is to load and unload gas cylinders on the truck

are paid between Rs.5 to 5.50 per cylinder. The wages

ranges from Rs.60 to 70 a day for helpers and Rs.150

to 170 for experienced gas cutters. As compared to

other labours, muqadams are paid approximately Rs

300 per day and pay slip is given to them but not to

others.

Table 1 presents the average monthly incomes of

the respondents in Alang ship breaking yard. Average

present income of the respondents is Rs. 2888.88

which is three times higher than the average previous

income of respondents (i.e. Rs 843.00). The previous

Income Pattern of Migrant Labours at Alang Ship Breaking Yard

709

income of the respondents in the present study refers

to the income from the last occupation. In all the

categories of workers wages earned are three times or

higher than the previous income with the exception of

skilled workers. Previous income of the workers is

significantly lower than the workers present earning

in Alang. To test this hypothesis the study uses paired

t-test. The average present income is significantly

higher than previous income of the workers and is

significant at 1 percent critical level.

Table 1: Nature of Work and Income of the Respondent per

month.

Nature of

Work

Average

Income

Average

Present

income

Paired t-

test

Manual 760.47 2866.51 24.487

Semi-

Skille

730.41 2566.62 22.284

Skille

916.98 2853.11 23.105

Highly

Skille

1066.18 3758.35 17.985

t-test is significant at 1% level

3 PRESENT INCOME:

DETERMINANTS

There can be many factors determining the income of

the respondents. To understand their significance an

income function would be great help. To estimate the

income function regression technique is made use of.

Various alternative models are fitted using both

qualitative and quantitative variables. The present

income of the respondents is determined by diverse

factors such as skill of the individual, previous

experience, age, education of the respondents. The

present exercise uses the relevant variables to

estimate the income function. Though, many

variables are included in the model but it is found that

some variables do not explain variations in income

function significantly. Therefore, for the analysis of

the income of the respondents bivariate and

multivariate regression functions have been fitted.

The following income function was considered for

explaining variation in income.

Present Income = f (Years of Experience, Previous

Income, Skill, Work at Ship/Yard, Experience

)

Out of the explanatory variables skill and work at

ship/yard are qualitative dummy variables and other

variables are quantitative in nature. To explain the

relation three equations are fitted and the results are

presented in table 2. The models are

Present Income = f (Years of Experience,

Experience

) --------------- (1)

Present Income = f (Years of Experience,

Previous Income, Skill) --- (2)

Present Income= f (Years of Experience, Previous

Income, Skill, Work at Ship/Yard, Experience

) (3)

It was found that for the sample data the income

function is best explained through the variables such

as years of experience and skill. In Model-1 years of

experience and years of experience square are the

explanatory variable. This model explains 9 percent

of variations in the dependent variable. To test a

model for its explanatory R

is not a confirmation test.

To test whether the independent variables explain the

variations in the dependent variables significantly, F-

test is made use of. The coefficients of years of

experience and years of experience square have

expected sign in the model. In view of the fact that

there exists a tendency that the income of respondent

increases with the increase in years of experience at a

diminishing rate which is explained through negative

sign of the years of experience square but the

coefficient is not statistically significant. A study

conducted by Banerjee on Delhi city found that the

years of experience have significant positive but

diminishing effect on earning (Banerjee, 1986: 198-

199).

In Model-2, previous income, experience and

skill, a dummy variable are the explanatory variables.

From model 1 to model 2 the result improves

marginally. All the three independent variables

including one dummy variable show positive sign but

two variables are statistically significant as indicated

by their t-values. Years of experience explain

variations in present income significantly and the skill

of the respondent’s leads to higher income and has a

positive coefficient and is statistically significant. The

model is a good fit as the F-ratio is statistically

significant at 5 level.

A study done by Mehta found that earning

function shows the importance of workers skill as

income determinant (Mehta, 1990: 150-159).

Therefore, it can be concluded that in the present

study income is significantly higher for the

respondents who have more years of experience and

are skilled. In this model previous income of the

respondents is not statistically significant, which

show that the income of respondents are lower before

opting present occupation at Alang ship breaking

yard. Model 3 includes five explanatory variables

and it is found that four of them have positive

coefficient and experience square has a negative

coefficient but it is not statistically significant. Years

of experience are the most significant explanatory

variable as it is significant at 1 percent level. The skill

of the respondent leads to higher income on an

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710

average and is statistically significant at 5 percent

level. The respondent’s work on ship leads to

relatively higher income; however it is not

significantly higher. The model explains the variation

in present income significantly as the F-ratio is

statistically significant at 5 percent level. Combining

the three models it can be concluded that years of

experience and skill level are the most important

determinants of present income.

Table 2: Regression Result of Respondents’ Income at

Alang Ship Breaking Yard.

Variable Model 1 Model 2 Model 3

Constant 2528.544 2432.513 2444.099

Years of

Experience

41.8897

(5.461)**

35.0603

(4.479)**

34.7619

(4.398)***

Ship/Yard

119.3687

(0.986)

Income

0.03218

(0.405)

0.0357

(0.447)

Skill

242.8937

(2.929)*

233.798

(2.792)**

Experience

-0.2194

(-0.466)

-0.2914

(-0.623)

N 300 300 300

0.091 0.119 0.122

F-Ratio (14.917)** (13.294)** (8.206)**

Dependent Variable: Present Income

Significant at 10%

Significant at 5%

***

Significant at 1%

Note:

Figures in bracket are t-value

Ship/Yard = 1 workers working inside ship

otherwise 0 if workers working in yard.

Skill = 1 for skilled workers otherwise 0

4 CONCLUSION

The study shows that the economic factors dominate

the decision to migrate. The decision to migrate is

also influenced by the difference in income at the

place of origin and place of destination. Individuals

belonging to lower income have a greater propensity

to migrate than others. The present study shows that

the previous income of the respondents is

significantly much lower as compared to present

earnings at Alang, which is shown by Pair t-test. The

overall average present income of the respondents is

higher (i.e. Rs. 2888.88) as compared to their

previous income (Rs. 843.00). The regression

analysis shows that the skill and years of experience

are the important variables determining the income

level of the migrants at Alang ship breaking yard.

The ship breaking industry after functioning for

more than 20 years, workers are still getting wages

less than prescribed minimum wages. Wage structure

of the workers at Alang is very well known to

employers as well as Government, but both the

players are still silent and nobody is taking initiative

to improve or revised wage system in ship breaking

industry of Alang.

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