Labour on the move: The challenge of finance

Migration from rural areas, due to limited livelihood opportunities, inadequate returns on subsistence farming, or natural shocks, is a widespread phenomenon across India.

In the southern Rajasthan districts of Udaipur, Rajsamund and Dungarpur, nearly 65% of all rural households have at least one member of the family migrating to Gujarat and Maharashtra in search of work. Although Ahmedabad and Surat are the most sought-after destinations, some migrants travel as far as Bangalore, Chennai, Mumbai and Hyderabad.

There is a definite pattern in the migration and subsequent employment, and migrants usually encounter a wide range of inter-related problems. Aajeevika Bureau, a Rajasthan-based NGO supported by IFMR Trust, understands these problems well and is working on a variety of solutions.

IFMR Trust is specifically supporting efforts to devise useful financial products and services for migrants. There have been a number of challenges, and initial efforts in this direction have met with mixed success, indicating the complexity of the issue.

Migration and employment patterns
Migration from South Rajasthan to Gujarat has been taking place for generations; indeed, some older-generation migrants consider Gujarat their home as they have been migrating to the state for 30-40 years.

Typically, migrants have meagre land resources and few options for local employment. While migration is observed across all social groups, people who belong to scheduled caste and tribal groups generally find only low-value, extremely vulnerable employment opportunities.

Apart from the economic factors, migration is also driven by the attractions of city life. Many migrants as young as 16 leave school and join the burgeoning labour force in cities in the hope of making it big there.

Kamlesh Nathulal, 21, from Rayki, Aspur block, Dungarpur district, Rajasthan, has been working in Ahmedabad for the last three years. He admits: “We see people driving cars and using mobile phones, and our outlook towards life changes. We want all those things.”

Many males from rural Rajasthan work as porters in in Ahmedabad. Almost all of them have left their families behind in the village.

Migrants are engaged in a variety of professions in the city. Construction, which includes plumbing, carpentry, masonry, and painting, employs the largest number of migrants. Brick kilns and mines are other major sources of employment, apart from hotels and restaurants, factories, markets, and cotton farms. 

According to Aajeevika Bureau, there are some clear intra-regional patterns in employment. “Factory workers in plastic, steel and chemical industries are usually migrants from Bhilwara and Raipur blocks, in Bhilwara district,” explains Rajiv Khandelwal, Director, Aajeevika Bureau. “Those working in the hotel industry are usually from Dungarpur, Aspur, Salumbar, Nadwara, Pali and Sirohi districts.”

In Ahmedabad, many Rajasthani migrants work as ‘headloaders’ (porters) in Kalupura, Madhupura, and Jamaalpur markets. Others are domestic workers, assistants in grocery shops, and delivery boys. A few run small tea and snack stalls. In Surat, over 8,000-10,000 migrants work in textile trading units. In Saira village, Gogunda block, Udaipur district, Rajasthan, there are more buses to Surat than to Udaipur, which is just 35 km away!

A small proportion of the migrant population, particularly from the Moghias tribe in Udaipur district’s Gogunda block, moves with their families. “In 98% of cases only the males migrate, leaving their families behind in the village,” says Rajendra Sharma, Associate Coordinator at Aajeevika Bureau’s Gogunda centre.

Problems faced by migrant workers
Mostly illiterate and poor, migrants are easy targets for abuse and exploitation. They are usually hired from nakas or city squares where they assemble every morning in the hope that a contractor (thekedar) will pick them up for work. There are nine nakas in Udaipur city from where nearly 500 workers are hired every day. A worker is usually able to get work only for 15-20 days in a month.

Wage rates are decided by the thekedars and workers, but there is no legal contract binding on the former. Nor is there a wage component for overtime or extra work. If a worker decides to switch to another thekedar, his dues are held back.

According to the central government’s Inter State Migrant Workers’ Act 1979, workers’ travel expenses must be borne by the contractors. But this rarely happens. Workers from Rajasthan headed for Gujarat usually take loans to travel in groups. If they want to return home at some point, they ask the thekedar for an advance.

Living conditions at work destinations are generally abysmal. Usually, 4-6 workers share a tiny room and a common bathroom. Workers on construction sites live at the site itself, braving inclement weather and sleeping on hard surfaces. There is usually no drinking water or toilet facilities at the worksite.

Migrants are often subjected to harassment by the police and landlords. Owners who rent out rooms to migrant workers are particular about the number of people who stay in the rooms. If it exceeds a pre-decided number, workers are asked to vacate the room without any notice. “Some owners check the number of residents by counting the footwear kept outside the room every night!” says Samarveer Singh, Health Coordinator at Aajeevika Bureau, Ahmedabad.

Without a proper place to stay, forced to consume unhealthy food, and without access to adequate healthcare, migrant workers frequently fall ill and face the prospect of losing their jobs. They are also exposed to all kinds of risks at the workplace.

If an accident occurs at the worksite, the thekedar usually takes the victim to hospital and makes sure he receives medical treatment. But workers have to pay for treatment, and, on days they are absent from work their wages are cut. If workers cannot afford to pay for treatment they take an advance from the thekedar; theamount is subsequently deducted from their salary.

Many migrant workers prefer to return to their villages if they fall seriously ill. They are intimidated by big city hospitals, and treatment of course is very expensive.

Challenges of working with migrants
Alleviating the problems faced by migrant workers poses a huge challenge. 

Migrant workers are usually afraid to talk freely to people outside their community. Says Pannalal Meghwal, a former migrant who now works as a field worker at Aajeevika Bureau: “If I try to talk to people from Bhilwara they refuse to open up to me as I am from Gogunda.”

Migrant workers are especially wary about giving away personal details, Meghwal adds. “Often, people give us the wrong address of their house in the village.”

The migrants’ fear is understandable. Apart from the hostility and non-cooperation they face from local people at their work destination, the general attitude of government officials towards migrant labour too is one of indifference.

Mahesh Gajera, Aajeevika Bureau’s Programme Coordinator in Ahmedabad, says: “When we spoke to municipal councils in Gujarat they said that they weren’t aware of any migrants coming into the state! There are 15 lakh migrant workers in Gujarat. How can they not be aware of this?”

Organising migrant workers at their work destination is a risky proposition. Gajera says: “We are not even allowed to put up banners of our organisation when we hold awareness camps.”

The living and financial status of migrant workers is further crippled by limited access to subsidised items like foodgrain, under the public distribution system, or cooking gas. Without proof of address you cannot get a gas connection, and transfer of ration cards across states is a cumbersome process. Migrant workers are forced to buy foodgrain in the open market, at high prices.

Banks are reluctant to allow migrant workers to open up accounts. The standard response is: Why can’t accounts be opened at source? “It took us a full year of lobbying to convince some banks to allow accounts at the work destination,” says Gajera.

One practical problem NGOs like Aajeevika Bureau face is that migrant workers live at a considerable distance from one another in their destination cities. Often, their employer lives close by making it difficult to speak to the workers even after working hours.

Aajeevika Bureau services
Aajeevika Bureau, based in Udaipur, addresses some of the myriad problems migrant workers and their families face. Set up in 2004, the organisation provides support and services to rural migrants from South Rajasthan who leave their villages in large numbers to find work in neighbouring states.

Besides specific services to migrant workers, the Bureau conducts research and also does advocacy. “We are striving to change people’s attitudes towards migrants and create a more positive environment for them,” says Rajeev Khandelwal.

The Bureau works both in ‘source’ areas of migration in South Rajasthan as well as in selected, high-intensity migration destinations. Currently, it has centres in Udaipur, Gogunda and Salumbar (Udaipur district) and Kelwara and Railmagra (Rajsamund district) in Rajasthan, and Idar and Ahmedabad in Gujarat. The Bureau is also active in Jaipur, a high-migration destination.

Aajeevika Bureau classifies its operations into financial and non-financial services. It provides non-financial services through a wing called Shramik Sahayata Evam Sandarbh Kendra (3SK), and financial services through the Rajasthan Shram Sarathi Association (RSSA).

Identity
The first basic service offered to migrant workers is legal identity. Workers who register with Aajeevika Bureau are given an identity card with a photograph. In the case of workers from Rajasthan, the card has the stamp of the panchayat as well as the state’s labour commissioner. Indeed, the labour commissioner’s stamp represents a huge victory in Aajeevika Bureau’s struggle for greater government focus on the problems of migrant workers.

Identity cards, which are valid for two years, enable migrants to open bank accounts, and also vote. As of January 2009, 25,671 migrant workers had registered with Aajeevika Bureau.

Training
Workers with ID cards are eligible for training courses developed by the Bureau, to help them upgrade their skills and improve their chances of finding better employment. Part-time courses, of 1-3 months duration, are conducted at all centres of the organisation. Up to January 31, 2009, 821 workers had received training.

Skills chosen for imparting training are based on the types of services that are in demand in cities and sometimes in the village itself. The Bureau also receives suggestions from young workers in youth clubs that are organised by field workers as part of an outreach initiative.

“Skills that are most in demand from trainees are plumbing, electrical wiring, tiling, welding, masonry and driving,” says Sanjay Chittora, Skills Training Coordinator in Udaipur. “For workers who are more educated, we provide training in retail marketing and salesmanship.” Around 100 women have been trained to become beauticians.

The training programme enjoys support from other organisations like Vidya Bhavan Polytechnic in Udaipur, the state government’s ITI, Raj Mission on Livelihoods, Vedanta, and the CSR wing of Hindustan Zinc.

The Bureau has also started a placement service for youth it has trained, for openings in companies and with contractors.

Other services
Aajeevika Bureau provides support services to migrants’ families, such as assistance in keeping in touch with migrant bread-earners, links with government schemes, and emergency help.

Legal aid and counselling is another service offered by 3SK, to help resolve issues such as non-payment of wages, abuse and harassment. Workshops on workers’ legal and labour rights are regularly held at the Bureau’s block-level centres.

3SK also carries out research to build knowledge and influence policy in relation to migration, particularly in the southern parts of Rajasthan.

Finance initiative
Rajasthan Shram Sarathi Association (RSSA) was set up by Aajeevika Bureau in collaboration with IFMR Trust in 2006, as a Section 25 company, to exclusively address the financial needs of migrant workers and their families back in the villages.

RSSA began its operations in August 2007, in Gogunda block, Udaipur district. It has since expanded its work to Rajsamund district, in Kelwara and Railmagra blocks.

The initiative is a response to three specific problems faced by migrants:

• Families who stay behind find it difficult to meet household consumption needs. Explains Nitin Madan, COO of RSSA: “We observed that families don’t always receive money on time from male members who have migrated to work in cities. As a result, most families borrow from moneylenders who charge high rates of interest -- anywhere between 2% and 60% per month. Moreover, if a family asks for a loan of INR 1,000, they are given a loan of INR 900 and INR 100 is considered processing fee. Interest, however, is charged on INR 1,000.” At the destination too, in the initial few months, migrants face difficulties in meeting their accommodation and food expenses.
• Lack of access to affordable and timely credit forces migrant workers to borrow money from moneylenders or contractors. Although workers have to be paid on a daily, weekly or monthly basis, in practice, payments are rarely made on time. While workers wait for payment they run up debts for basic needs such as food and accommodation. When they are finally paid, contractors promptly deduct the amount they have borrowed from the payment, leaving them with very little money.
• Lack of safe remittance facilities. Workers send money to their families through relatives and friends, which is not always a safe method. Sometimes, they themselves go back to their villages to deliver the money, resulting in loss of pay at work.

Another common problem is that many migrant workers and their families do not have bank accounts. Workers usually keep their savings with the thekedar. When they claim their money, they are often cheated.

Migrants also rarely have access to insurance and pension schemes.

Loan products
After gaining a thorough understanding of the various kinds of problems faced by migrant workers, Aajeevika Bureau and IFMR Trust decided to start by offering loans structured to meet the following four needs of migrant workers and their families:

• Loans to enable migration, so that workers have enough money to reach their destination and/or make immediate arrangements for accommodation.
• Loans for health and consumption expenditure by workers and their families back in the villages.
• Capability enhancement loans to help workers set up small businesses like tea and snack stalls, and repay old debts, particularly to moneylenders.
• Loans for emergencies.
• Loans to cover the fees of training programmes offered by Aajeevika Bureau or any other agency.

When a worker takes a loan, his wife/family must give their consent; they are required to stand as guarantors. The spouse or a relative has to be present at the centre at the time of disbursement. S/he is given a dependant ID card which enables her/him to borrow money again in case there is an emergency whilst the worker is away.

A passbook is provided at the time of disbursement, with the repayment date recorded in it. Loan disbursements are made in public. “This ensures greater social accountability of those who are taking loans,” explains Rajeev Khandelwal.

Potential borrowers learn about these financial services through the Bureau’s campaigns. After the coordinators are satisfied with the genuineness of need for the loan, and the applicant’s ability to repay, a loan application form is filled in and sent to the Bureau’s headquarters in Udaipur.

Borrower families have to bring a guarantor who is a registered member of the Bureau. If a borrower needs a loan to buy work tools, he has to first present a quotation.

Notwithstanding all these formalities, the loans are much-sought-after and extremely useful. Till December 2008, 399 loans were advanced for a total of INR 13,47,000.

Booralal Meghwal, 40, a mason in Gogunda block, Udaipur, borrowed INR 5,000 to buy tools for his work. Earning INR 150 a day, Meghwal says he faced no difficulties in repaying the loan at an interest rate of 2.5% per month.

Practical difficulties
Though serving key needs, the loan products encountered a number of practical difficulties. The main problem was in collections. Borrowers who were contacted regularly were prompt in repayment, but those who weren’t contacted regularly did not make an effort to repay their loans.

It is not easy to stay in close touch with every migrant worker who borrows a loan. When a worker migrates from the village in search of work, he is often not sure when he will return. He is not even sure about his final destination: some workers first migrate to one city, like Ahmedabad, and then move on to another city in search of better prospects.

Collection at the source village is not feasible as Aajeevika Bureau registers workers at its centres, irrespective of the source village. Many borrowers are from districts where the Bureau does not have a centre.

With these problems in mind, the Bureau changed its collection practices. Collection agents from communities of workers were appointed to keep track of borrowers’ movements and repayments. Only the interest amount is collected from a borrower or his family every month; collection of the principal component is done once in three months. Collection agents also make non-borrowers aware of the financial services offered by the Bureau.

Other products
Apart from loans, RSSA offers insurance products like LIC’s Janshri Bima Yojana and Birla Sunlife’s Bima Kavach Yojana and pension products. It also provides training in financial literacy and helps link workers with formal financial institutions.

The Bureau has enrolled around 1,000 families in the state government’s Vishwa Karma pension scheme which offers a return of 8% per annum.  

Looking ahead
While the modified loan system is currently in operation, the entire design of the financial model is under review and new products and services are expected to be launched soon. IFMR Trust seeks to develop this project within a ‘wealth management’ framework, which would essentially mean catering to the entire range of financial needs of the migrant worker, and providing expert advice. This calls for considerable investments in technology, training, and product development. Planning for this next stage is underway.

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