Bloomberg – India’s Shipbreakers Risk Death at $2.40 a Day as Economy Booms

(Written by Anand Krishnamoorthy)

10 July 2006 - On a debris-strewn beach in western India’s Gujarat state, Kamlesh Kumar braves 105-degree heat as he pries steel from the hull of the disused ferry Ajman Liner. Torn rubber boots, a loose yellow helmet and sunglasses are his only protection against the flames shooting from his blowtorch.

“Risks and danger aren’t as bad as hunger and poverty,” says Kumar, one of more than 4,000 workers at the Alang shipbreaking yard. Kumar, who has four years of education, relies on his daily wage of 110 rupees ($2.38) to feed his wife and six children, who live in a farming village 1,000 miles away.

In India, where half the 1.1 billion people earn less than $2 a day, unskilled workers such as Kumar still make up the backbone of the economy — even as the burgeoning software and services industries spawn a growing middle class. Cheap labor is crucial to sustaining an 8 percent economic growth rate, the fastest behind China among Asia’s major economies.

Lacking the education to work at software companies or call centers, most of India’s workers are confined to menial jobs such as farming, shipbreaking and construction, often toiling under conditions that are illegal in most Western countries. The scene at Alang is a contrast to the glass-walled office parks in cities such as Bangalore, where Intel Corp. and International Business Machines Corp. have their Indian headquarters.

“India is being projected now as a booming place,” says Jean Dreze, 47, a professor at the Delhi School of Economics and co-author with Nobel Prize winner Amartya Sen of “India: Development and Participation” (Oxford University Press, 2002). “That’s true in certain segments of the economy, but if you go to the remote districts it’s a completely different picture. People think India is much more prosperous than it actually is.”

`Informal’ Workers

Some 93 percent of India’s 400 million workers are unskilled “informal” employees whose monthly wages average 3,090 rupees, according to India’s Labor Ministry. Informal workers have no written contracts and typically receive no benefits.

India’s minimum-wage laws and worker-safety regulations are rarely enforced in industries such as shipbreaking that rely on informal workers, Dreze says.

By contrast, customer-service representatives at Indian call centers run by companies such as Dell Inc. earn median wages of 12,250 rupees a month, according to a study by the National Association of Software and Service Companies and Hewitt Associates Inc.

That discrepancy is clear at Alang, where more than 200 workers have died in job-related accidents in the past 10 years, according to government figures. Most of the yard’s workers, the majority migrants from poorer provinces, live in mud-and-tin huts their employers provide behind the shipbreaking plots that line the beach.

Mud Huts

During a June lunch break, six men eat roti flatbread with lentils on the floor of their hut — four mud walls with a sheet- metal roof. They sleep on the floor and share an outdoor bathroom with several other shacks.

The men work from 8 a.m. to 5 p.m. six days a week on a 10- kilometer stretch of beachfront littered with ship debris and oil.

Disused vessels — ranging from oil tankers and military ships to ferries and cruise liners — are driven onto the beach at high tide, then workers haul them beyond the water line with winches and chains.

Laborers cut metal from the ships and load it onto trucks for sale to scrap brokers, who sell most of it to local construction companies. Others strip the interiors of engines, sofas, cooking utensils and anything else that can be sold by vendors whose shops line the road to Alang.

`No Other Choice’

Kumar went to work at Alang eight years ago after leaving his village in the state of Uttar Pradesh because there wasn’t enough farm work to support his family. He sends most of his wages home.

“I’ve got no other choice but to suffer through this,” says Kumar, wearing a thin cotton shirt and pants perforated with tiny holes from sparks that fly off the metal he cuts.

While India has grabbed international attention as a technology hub, only 1.29 million people worked in computers, software and related areas such as call centers in the year ended March 31, according to the software association.

Prime Minister Manmohan Singh’s target of boosting economic growth to 10 percent in coming years will be difficult to achieve unless India expands service industries such as retailing to create higher-paid jobs for the least-skilled workers, says Song Seng Wun, a regional economist at CIMB-GK Securities in Singapore.

“Without creating opportunities for the people at the bottom of the ladder to move up to a different skill level, India can’t achieve longer-term sustainable growth,” Song says.

While India’s per-capita income has doubled in the past nine years, the middle and upper classes are reaping most of the gains.

More Millionaires

The number of Indian households earning an annual income of at least $10,000 is rising more than 20 percent a year, McKinsey & Co. said in a study published last year. The number stood at 1.2 million as of March 2004, still a small fraction of the nation’s 191 million households, according to McKinsey.

India was home to an estimated 83,510 millionaires — people with financial assets of at least $1 million — at the end of 2005, up 37 percent from two years earlier, according to the 2006 World Wealth Report published June 20 by Merrill Lynch & Co. and Cap Gemini SA.

While the rural poor aren’t advancing as fast, they have made gains in recent years. The share of the population living below the poverty line fell to 26 percent in the year ended in March 2000 from 36 percent six years earlier, according to an October 2005 report by Deutsche Bank AG economist Sanjeev Sanyal. In the 1990s, India’s poverty rate fell at its fastest pace ever.

China, Bangladesh, Pakistan

Alang, which opened in 1982, generates 300,000 tons of scrap steel a year, less than 1 percent of India’s annual steel production of 38 million tons, says Vippin Aggarwal, general secretary of the Gujarat Ship Breakers Association. It vies with yards in China, Bangladesh and Pakistan to win ships for breaking.

The yard is crucial to creating jobs and bolstering the economy of Gujarat state, says H.K. Dash, chief executive officer of the Gujarat Maritime Board, the government agency that owns the yard and leases 173 plots to brokers who buy disused ships and hire workers to break them. Alang reclaims 20 billion rupees a year of scrap metal and other materials, he says.

“We are a good source of recycling, generating raw material and jobs,” Dash says at his office in Gandhinagar, the state capital, about 300 kilometers from Alang.

India controls 21 percent of the world’s shipbreaking market, placing it second behind Bangladesh at 67 percent, according to 2005 figures from London-based Clarkson Research Service. China is No. 3 at 8.5 percent and Pakistan ranks fourth with 2 percent.

Worker Deaths

India’s shipbreaking industry, the world’s biggest a decade ago, is shrinking as companies such as Rotterdam-based Mittal Steel Co. and South Korea’s Posco build modern steel mills in the country, reducing demand for the low-quality scrap generated by shipbreaking. The number of workers at Alang has fallen about 90 percent since 1999, when the yard employed some 30,000 people. Its scrap metal output has dropped 90 percent.

Shipbreaking is in decline worldwide as surging freight rates prompt shipping companies to delay replacing vessels. About 70 oil tankers totaling 3.5 million deadweight tons are scheduled to be scrapped this year, down 52 percent from 2004, according to London-based Drewry Shipping Consultants Ltd.

As many as 230 workers have died at Alang in the past decade in fires and other accidents, according to data from the Gujarat Maritime Board. A billboard stating “Safety Is Our Motto” greets visitors at the yard’s entrance.

The real death tally is probably higher, says T. Dyavadheenam, the South Asia representative of the International Metalworkers’ Federation, which is trying to form Alang’s first workers’ union.

“Alang is a painful example of worker oppression,” Dyavadheenam says. “There’s no question that we need the jobs there, but we want dignified labor.”

Clemenceau, Blue Lady

Workers at Alang receive inadequate protection against toxic materials, according to a January 2006 report by the Amsterdam- based environmental group Greenpeace.

Greenpeace this year petitioned India’s Supreme Court to block France’s plan to send the aircraft carrier Clemenceau to Alang for breaking, saying the ship was contaminated with asbestos. French President Jacques Chirac dropped the plan in February as popular opposition mounted in India.

The Supreme Court on June 5 permitted Blue Lady, a Norwegian ship that Greenpeace says carries asbestos and other toxic materials, to enter Indian waters for breaking at Alang.

The Gujarat Maritime Board’s Dash says working conditions at the yard are acceptable.

“We have enough concern for workers and have taken a lot of steps to improve their lives,” he says. “In fact our standards are better than elsewhere in the world.” The board has invested 620 million rupees in the past three years to improve water supply, training and medical care for Alang’s workers, he says.

It’s not surprising that Indian workers endure jobs such as those at Alang, where wages are as four times higher than what they can earn in farming villages, Dreze says.

“There is very little work in rural areas, especially poorer districts,” he says. “It’s like a graveyard.”