Location &multiple Wage Determination:

The Case of Informal Industries in West Bengal

Sukanta Saha* 1
[This paper is to be presented in the 54th Annual Conference of the Indian Society of Labour Economics, 20-22 Dec.
2012, held at Benaras Hindu University, Benaras, Uttar Pradesh]
Key words: Agglomeration, Location, Core-Periphery, Increasing Returns, Labour Mobility, Wage-loss.
JEL Classification: J31, J61, R11, R12, R23.

I.INTRODUCTION
The wage determination in the formal set up and fixation of wages in the mainstream mechanism
arenotvery old phenomenain India.There was very few effective machinery until 2ndworld war
for settlement of disputesfor wage determination.After independence, industrial relations
become a major issue and therewas phenomena increase in industrial dispute mostly over
wages, leading tosubstantial loss of production.[N1] The Government of India appointed in 1949,
a tripartite committee on fair wages to determine the principles on which fair wages should be
fixed.[N2]
However, this is not the case for majority of the informal sector activities in India. Wages often
are formulated outside the formal institutional frame. Wages and wage structure also become
differentiated across spaces. To analyze wage determination in the informal sector activities and
to explain spatial wage dispersion across locations,several attempts have been approached in
different socio-economic surveys. Significance has been appliedto the locations of these
footloose economic activities.These analyses assess the empirical relevance in favourof the
impact of variations in spaces. Such variations are often reflected in wage determination and
wage structure across clusters of production units within the same industry. It is, therefore,
relevant to observe whether and how the theoretical models may be tested to explain such
variations in wages.[N3]
The theoretical models used by the spatial development economists often approach a keen
insight into the geographical dimension of production units[Barro and Sala-i-Martin (1995),
Martin and Sunley (1996), Clark (1998),Brulhart (1998), Redding and Venables (2000),Hanson
(2000), Hallet (2000)]. In this stream of analysis, insufficient size of the local market of a region
is considered as one of the major determinant of development (and underdevelopment)
[Rosenstein-Rodan(1943)]. An individual firm’s incentive usually becomes insufficient to
expand its production level sufficiently to overcome the lack of increasing returns to scale at the
firm level. The solution is referred to a co-ordinated (often government-led) expansion of
investment which enables firms to reap the benefits of internal and external economies of scale,
thereby promoting industrialization (hence big push) [Myrdal (1957), Hirschman (1958), Dicken
and Lloyd (1990)].
This paper is an attempt to study how the process of wage determination and forms of wages
vary across locations in case of informal industries. The study is confined to the empirical
analysis of the Gold &Jewellerysector in West Bengal. The analysis attempts to detect intra-
industry wage variation in different locations and the reason for such spatial wage dispersion.
The wage determination often is outside the conventional institutional frame of the mainstream

*The author is a Part-time Lecturer in Economics in Umeschandra College, Kolkata.

1
market, collective bargaining or influences of trade unions. Several locational factors become
apparent here such as labour mobility, skill formation, knowledge spillover [N4]and increasing
returns, thereby affecting labour productivity and labour market flexibility.Sometimes space-
specific characters also influence wage rate determination. Therefore, multiple modes of wage
payments are observed as a vital consequence. The sector exhibits a unique mode of wage
payment in the form of wage-loss.
II. THE SECTOR
II.I. THE GOLD AND JEWELLERY SECTOR IN INDIA
The Gems and jewellery sector in India encompasses various kinds of jewels including gold,
coloured gemstones, costume jewelleries, platinum and diamonds. The sector is expected to
register a compound annual growth rate (CAGR) of 13 per cent during 2011-13, according to a
report “Indian Gems and Jewellery Market Forecast to 2013”, by a research firm RNCOS
[Research and Consultancy Solution, 2010]. The decade before Globalization in India has
reported a CAGR of 5-10 per cent,as reported by the GJEPC [Gold &Jewellery Export
Promotion Council]. The domestic jewellery market was worth US$ 16-18 billion during 2010,
as these reports convey. As far as exports are concerned, this sector constitutes more than 12 per
cent of the total exported products at present. The estimate is that by the year 2015 the gems and
jewellery sector in India will earn about US$ 25-35 billion in form of export revenue.
About 80 per cent of the gems and jewellery industry in India is dominated by gold and the rest
is controlled by diamond and gemstone industry. In 2007 gold had a market share of US$ 12.24
billion (Rs 550 crores), while diamond had a market share of US$ 2.56 billion (Rs. 115
crores).People now prefer to invest their money in gold as a future recourse to counter tough
times.In the year 2008, India had a gold consumption rate of 24 per cent, (RNCOS report). This
has made the country a leader among the gold consuming nations with the consumption
amounting to about 16,000 tons - the other key markets being Japan, China, Turkey, Italy, USA
and UK.
Besides this, India has evolved as a great place for diamond processing also.Presently India is the
major polishing and cutting hub for diamonds. India is the third largest consumer of polished
diamonds. The high pace of urbanization and rapidly growing middle class income group in
India has led Indian consumerism to new heights, particularly in the growth of the diamond
jewellery sector. About 91.67 per cent diamonds sold around the world are processed in India
regardless of the place they are mined.
II.II.THE GOLD AND JEWELLERY SECTOR IN WEST BENGAL
The production in the Gold and Jewellery sector in West Bengal is location-based. Cluster-based
production is a significant character in case of Gold and Jewellery production in West Bengal.
The production is mainly concentrated in Bowbazar and nearby regions of Kolkata, the other
locations are centered in the state in different districts, mainly at Domjur in Howrah, Daspur in
Midnapore, and Sinthi in North 24 Paraganas. The Kolkata market has appeared as the ‘core’ and
others as the peripheries to the core. The peripheries inherit strong linkage(s) with the core,
particularly in terms of supply of raw materials, labour, and skill. The production in the
peripheries in distant locations is mainly local demand based. Urbanization and rapid change in
socio-economic conditions for the upper milieu of the society are two significant factors that
have contributed towardsthe growth of the suburban gold ornament markets. Since 2006, the

2
operation in Manikanchan near Rajarhatat Salt Lake (the first Special Economic Zone for
production and export in Gold and Jewellery sectorin India) has given this sector in West Bengal
a new height.

In West Bengal, the production in this trade in India is mainly fragmented as about 96 percent of
total business comes from the informal sector. The formal counterpart of the sector constitutes
the ‘core’ in the industry, which bypass its main production activities to the informal peripheral
sector. The informal sector makes it possible to produce the product at low cost, thereby
increased profitability attracts more investment in this growing sector. The producer reduces the
influence of market uncertainties that appear with abrupt increase and decrease in market
demand. Another important contribution of the informal sector to its formal counterpart in this
industry appears in the form of supply of skill and labour where the skill is acquired in the
informal sector. In this way, a strong formal-informal linkage exists in this sector, which
supplements high growth of the sector.

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III. BACKGROUND OF THE STUDY
The study is based on primary survey conducted in various clusters of the Gold and Jewellery
industry in West Bengal. The survey has been conducted in Domjur Block of Howrah district,
Sinthi in North 24 Paraganas district, Daspur in West Midnapore district, Manikanchan at
Rajarhat, and Bowbazar, Barabazar, Garanhata, Ankurhati, and Bhwanipurin Kolkata.A
qualitative sample survey procedure has been approachedon the basis of a semi-structured
questionnaire with indirect interview method. The survey hasbeen conducted in two parts:
household survey and production unit survey. The workers along with their family members,
owners and contractors, and community members have been approached.Sometimes an
ethnographic study has been continued during the survey process in order to lift out more
insightful picture about the area covered under the proposed study.
Sample Design:
Location Sample size

Bowbazar(Kolkata) 30
Domjur (Howrah) 20
Sinthi (North 24 Paraganas) 20
Daspur (West Midnapore) 20
Manikanchan(Rajarhat, Kolkata) 10

IV. LOCATION-WISE DISPERSION IN WAGE DETERMINATION

IV.I. LOCATION I: BOWBAZAR (KOLKATA)
It is almost 150 years ago when the market for Gold and Jewellerywas developed in the nearby
region of Bowbazar. Roughly 70-80 years ago, the Bowbazar gold market was transformed to an
almost oligopolistic market structure. Other big houses have made their entry later. The Bengalee
traders hold about 90-95 per cent of the business, the rest of 5-10 per cent by non-Bengalee
community, mostly clustered at Park Street region. They supply mainly coloured and stone-based
heavy ornaments of gold, diamond and platinum in contrast to the demands of gold ornaments
produced by the Bengalee companies of Bowbazar in Kolkata.

4
There is an export market from long years back. The major exporters are P. C. Chandra, B. C.
Sen and others. Export is primarily to middle-east countries like Dubai through Maharastra or
Mumbai in particular. To have a command on the export market, quality of labour becomes
important. Bengalee workers are highly regarded in the market for their skill, innovativeness and
efficiency in production of fine ornamental work.
The labour market of Kolkata encompasses both formal and informal counterpart. The large
operators in the market (like P. C. Chandra, Tanishq, AnjaliJewellers etc.) provide regular
monthly formal wage including social security benefits to their skilled personnel. However, they
usually carry out a large part of their production from the informal labour market of Barabazar,
Bowbazar, Ankurhati, and even from Domjur of Howrah where no formal wage is paid. Wage
here is determined from within the informal labour market outside the formal mainstream wage
determination process, collective bargaining, or institutional trade union(s). The informal wage
is determined from within the informal labour market set up. The existing wages are explained
by the informal characteristics of the market.
The wage rate is positively related with skill. The demand and supply forces have some
influences on the wage rate determination and fluctuations.Since supply of skilled labour is
comparatively low and demand for such skilled labourers is much higher – wage of skilled
labour is high (usually above Rs. 6,000-8,000). The supply of unskilled labour is also increasing
due to migration from neighboring districts because of lack of alternative occupations there. This
increasing supply and absence of trade unions are being reflected on the declining tendency of
the real wages of semi-skilled and unskilled workers.

TABLE 1: AGE-WAGE DISTRIBUTION, BOWBAZAR

AGE < 12 12-14 14-18 18-35 35-55 55+ TOTAL

INCOME
(Rs.)
< 4000 01 01 02 - - - 04 (13.3%)
4000-6000 - - 02 01 - - 03 (10.0%)
6000-8000 - - 01 04 03 - 08 (26.67%)
8000-15000 - - - 04 04 01 09 (30.0%)
15000 + - - - 01 02 03 06 (20.0%)
TOTAL 01 (3.3%) 01 (3.3%) 05 (16.7%) 10 (33.3%) 09 (30.0%) 04 (13.3%) 30 (100%)
Source: Field survey.

5
 INCOME

To consider the income profile of the workers, if we consider the age-wise distribution of the
workforce, about 63 per cent of the workers belong to the 18-55 age-group. About 33 per cent of
them are middle-aged. This simply conveys the preference of the recruiters at the time of
recruitment towards middle-aged people since they possess some training and experiences,
which is reflected to their innovativeness and productivity. 23 per cent of the workers are below
18 years who are unskilled and are in the process to acquire the training necessary to enter in the
semi-skilled and skilled labour market. The younger generation prefers to enter into the sector
due to its high wage potentiality. Age and wages usually reflect a positive correlation since age
of the worker and his skill are positively related and higher skill means higher bargaining power
and higher wages in the informal labour market.
A few of the senior workers (above 55 age-groups) become owner of small showrooms. They
work with 3-4 hired workers and sometimes become small individual entrepreneurs (about 13
per cent). This clearly refers a vertical mobility of labourers –from unskilled labourers to semi-
skilled and skilled workers. A few of the skilled workers even appear as independent
entrepreneurs. In this way, skill, along with experiences and risk-bearing capacity influence the
wage-profit share of the market in favour of capital.

A SPECIALFORM OF WAGE: THEWAGE-LOSS

A typical form of wage payment in the Bowbazar location appears in the form of wage-loss (or
loss-wage). While working in gold jewellery there is always a natural loss of the metal.
Ornaments arecarved out of gold in hands with the help of simple tools. This causes loss of gold
particles (or gold dust) which amounts to roughly 4-8 per cent of the raw material. The gold
particles are mostly collected by the workers who claim a natural right over it. This loss cannot
be prevented. Every producer has to accept and bear this cost. When this cost is passed on to the
labourer, as it is in Bowbazar, it takes the form of wage. This wage is not declared or announced,
assuming that the loss of gold for the producer is gain for the labourer. Here the wage-loss (or
loss-wage) is provided to the worker on the finished product.
The producer pays this wage-loss to the worker at 4-8 per cent of the product (locally called
‘unit’). The rate varies from producer to producer and is fixed through a pre-assigned contract
between the worker and the producer. The contract is finalized after a tough negotiation between
the two parties. Such a bargaining appears in this market beyond the mainstream demand-supply

6
interaction. Skill, social capital possession and personal contacts of the labourer become vital in
the negotiation process here. These variables are positively correlated with the rate of wage-loss.
However, it often becomes tough even for a skilled worker to extract a wage-loss above 6 per
cent rate. Here the worker becomes a strategic player in the labour market to achieve a higher
rate of wage-loss, whereas the producer’s strategic behavior is to pay the labour a lower rate of
wage-loss. Since the actual rate rarely cross 6 per cent level in reality, the producer holds a
comparative command in this bilateral bargaining mechanism. The producer’s strategy is to pay
a lower wage-loss to the worker.
However, the producer has to pay a higher wage to the labourer in case of wage-loss payment
than in monthly payment. The producer, therefore, tries to bypass this loss to the consumer
through another agreement with the customer in the final product market. This contract is
undersigned completely in money terms. The percentage of this money wage-loss varies
between roughly 8-15 per cent. Quantity, quality,variety (type of the ornament) and market
price of the finished jewellery are the major determinants of the monetary wage-loss. To explain
this side of wage loss, let us consider an example. Consider afinal consumer gives an order to
producer B. The cost ofproduction of the product is worth Rs. 40,000. Let us assume the money
wage-loss rate is 12 per cent. Then the producer extracts Rs. 4,800 as labour cost (mazuri) form
the consumer.
Producer B gives the order to labourC with the contract that B will pay a 5 per cent wage-loss.
The wage is counted on the finished product. It is calculated on production unit basis. Let the
labour gets 10 units (gm. or ml. gm.). A 5per cent wage-loss means(0.05*10) = 0.5 units (gm. or
ml. gm. gold) is received by the labourer. The actual money wage is calculated by multiplying
this unit wage by the current market price of gold in the local market. In this way, the wage
becomes related with the changes in the market conditions and fluctuations in the market prices.
The producer now pays this wage in monetary form in the hand of the labourer. If we consider
market price of gold to be Rs. 35,000, this wage-loss in monetary terms becomes (35,000*0.5) =
Rs. 17,500. Since division of labour exists in the production sector, this Rs. 17,500 is distributed
between the labourers engaged in the production activity. The exact percentage of the wage- loss
depends on the quality of the worker – whether the labour is skilled, semi-skilled or unskilled,
type of work, and the quantity of work done. A skilled labour exhibits larger bargaining power in
the labour market and earns higher rate of wage-loss from the producer. The gap between the
wage-loss1 (the money wage-loss) and wage-loss2 (the unit wage-loss) is acquired by the
producer.
Therefore, the producer wants to pay the labourer a lower rate of wage, thereby achieving a net
profit gain. However, it is a net wage loss for the labourer in his wage component. The worker
targets to extract a higher wage from the producer through proper bargaining in order to achieve
a net wage gain. It is, then, actually a wage-loss profit-gain model. The producer agrees to pay
higher wage-loss rate if the worker ensures larger number of orders of production contracts for
the producer through his personal contacts in the market. In this way, both of the parties want to
compensate their probable loss appearing in the bargaining process.

Producer

7
 Labour Consumer

Quantity, quality and variety (type of the ornament) of the finished jewellery are the three
major determinants of the wage loss. The amount of wage loss varies in the same direction in
relation with the quantity of production – higher is the level of production, higher is the wage
loss provided by the producer to the worker. Division of labour exists in the production of
jewellery items and such division of labour is reflected in the recruitment of labourers of
differentiated skill at various stages of production. However, the percentage of wage loss
declines in case of bulk production. If a labourer produces in a large quantity under the same
owner, the owner offers a lower rate of wage loss. In this case, the percentage of wage loss
declines from 6 per cent to 5.5-5.8 per cent.
This form of wage payment in the form of wage loss is becoming popular among the artisans in
the Bowbazar region. The labourersnow preferthis form of wage since it provides them
opportunity to earn higher wages than regular monthly money wage payment. The producers are
agreeing to pay wage loss at the time of contract made with the labourer. Otherwise they will
face a deficiency of skilled labour at the workplace. Though the workers are not organized and
unionized, they are making the contract in the labour market in favour of them since the supply
of skilled labour is deficient and the producers are preventing the tendency of physical out-
migration of skilled labourers to make the location lucrative for labour employment.
TABLE 2: AGE-WAGE DISTRIBUTION IN CASE OF WAGE-LOSS, BOWBAZAR

AGE < 18 18-25 25-35 35-45 45-55 55+ TOTAL

INCOME
(Rs.)
< 4000 - - - - - - -
4000-6000 - 01 - - - - 01 (04.3%)
6000-8000 - 01 03 02 01 - 07 (30.5%)
8000-15000 - 01 03 02 02 01 09 (39.1%)
15000 + - - 01 01 01 03 06 (26.1%)
TOTAL - 03 (13.0%) 07 (30.5%) 05 (21.7%) 04 (17.4%) 04 (17.4%) 23 (100%)
Source: Field survey.

8
Another form of wage comes from the ‘niharwalas’ who collect the dust of gold after production
from the production units. They are comparable with the road jharudars(sweepers). They sell the
collected dust in the dust market and earn their income. Usually middle-aged women from Bihar
and Uttar Pradesh are engaged in this job. Sometimes they only collect the dust and the collected
dust is sold in the market by their son(s) of 18-28 age-groups.
IV.II. LOCATION II: DOMJUR (HOWRAH)
The traditional gold and jewellery market in Howrah has been set up as somewhat parallel to the
Bowbazar market in Kolkata. The Gold and Jewellery industry in this sector is operating roughly
for the last 100 years. The market acquires well-developed transport coverage – Domjur is
connected with NH 117 and improved railway connection – the road distance between Howrah
and Domjur is just 5.94 miles. The market is well-known for producing diamond jewellery –
however, brass metal jewellery production is also becoming popular nowadays. The producers of
diamond jewellery are mainly order suppliers. They produce ornaments as per orders delivered to
them either by the contractors from Bowbazar or by the local customers. The diamonds required
for production are being imported, the raw goldis supplied by the contractor and other raw
materials are purchased by the producer mainly from the local market. Self-enterprise production
is observed in case of the brass metal production.
The Howrah market plays as the back-office center for the Bowbazar market – both in terms of
product and labour. In the product market, orders are prepared by semi-skilled karigarsof
Howrah, which gets afinishing touch by skilled workers of Bowbazar and is ready for sale. In the
labour market, labours get the required training in the Howrah market to acquire skills and
experiences necessary to enter in the skilled labour market in Kolkata.The labourers in the
Domjur market come from the districts of Howrah, Hooghly and West Midnapore.
TABLE 3: AGE-WAGE DISTRIBUTION, DOMJUR

AGE < 12 12-14 14-18 18-35 35-55 55+ TOTAL

INCOME
(Rs.)
< 4000 - 01 02 - - - 03 (15.0%)
4000-6000 - - 01 01 - - 02 (10.0%)

9
 6000-8000 - - - 04 03 - 07 (35.0%)
8000-15000 - - - 02 02 01 05 (25.0%)
15000 + - - - - 01 02 03 (15.0%)
TOTAL - 01 (5.0%) 03 (15.0%) 07 (35.0%) 06 (30.0%) 03(15.0%) 20 (100%)
Source: Field survey.

The workers often are trained in the local informal market. After completion of this training
procedure most of the workers become semi-skilled. They either work for higher wages in the
local market or move for other destinations including Kolkata. In this way they try to find out
market for their skill. [N5] The semi-skilled workers make their skill marketable by finding out
new physical location even. They usually accept costs and risks of physical migration if their
probable income becomes higher than their earnings at the local market. This cost-benefit
calculation at the micro level makes horizontal mobility a reality. [N6]
Sometimes workers of Howrah directly move to the formal market of other cities in India like
Surat, Mumbai, Delhi, Hyderabad and Chennai, and even to middle-east Asian countries from
the local market. The Bengaleelabourers are much popular in the markets of Maharastra,
Gujratand South India due to their skill and innovativeness. The already migrants work as the
‘bridgeheads’ in case of such physical mobility and supply the necessary social capital [N7]
required. The higher is the skill acquired, higher is the probability of mobility in this sector.
Higher skill means higher probability for inter-state and international migration, thereby
enhancing higher income earnings. The already migrants form higher expectation at their origin
through provision of information, remittance, feedback and higher standard of living for their
family members. This simply increases the incentives to further migration among the community
members at origin (the chain migration). [N8] International migration gives the worker of the
informal market of villages and small towns to become a global worker. Such a global worker
earns much higher income than the local market. It is a common phenomenon for the workers in
Domjurthat they had started their life with an monthly earning of Rs. 4,000-5,000 in the local
market, have migrated to Dubai, Bahrin etc. with an earning of Rs. 20,000-22,000 per month,
have returned back and have become independent entrepreneurs with an earnings of Rs. 35,000
or even more.
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Such workers may invest their savings and long years’ experience in order to become small
entrepreneurs at their middle ages (35-45 years of their life). A vertical mobility appears where
experienced workers invest their savings, skill, experiences and innovativeness to become
individual entrepreneurs. Spatial mobility plays a key role here to make this vertical mobility
effective in reality. Such entrepreneur employs labourers from the local informal market. In this
way more employment is generated in the local market.
25 per cent of the workforce earns less than Rs. 6000. 40 per cent of the workers earn more than
Rs. 8000. This is a significant observation. A large proportion of the labourers in Domjur earn
this higher income, out of them some of them become individual entrepreneur at their late years
of life. This probability is highest in Domjur among all locations. 20 per cent of the workforce is
of teen age trainee workers. This proportion is also high in this location. 45 per cent of the
workers are of above 35 age-groups. The higher probability of higher earning at the middle age
makes this occupation an attractive employment opportunity to the younger generation of the
community in this location. This tendency is also high in comparison to other locations.
Therefore, the workers in the Domjur market are mainly paid on monthly basis. Skill formation
plays a major role in case of wage determination. Higher is the skill, higher is the wages, higher
skill is also significant for spatial and vertical mobility of labour. Higher is the skill, higher is
the probability of labour mobility. The trend of vertical mobility of the labourers is the highest in
Domjur than any other location. This is due to the higher successful national and international
migration through already established migration chains or networks. This high vertical mobility
of labour is also influencing the wage-profit ratio much in favour of the profit-earners.
IV.III. LOCATION III: SINTHI (NORTH 24 PARAGANAS)
Theup growing Sinthi market is developed in the last three decades. The market is situated near
Kolkata (about 30 minutes from Bowbazar).The location is near Dumdum railway junction and
metro railway (only 10-15 minutes by roadways). This locational advantage is accrued by strong
exchange relationship with the Bowbazar location. Recently the Sinthi market has become an
attractive location for semi-skilled and skilled workers. About one lakh or more labourers are
operating here. The semi-skilled labourers come from Howrah, Hooghly, West Midnapore and
other parts of North 24 Paraganas. Often they migrate to Mumbai and Kathmandu (Nepal) and
return back to Sinthi. In this way, circular migration becomes a common feature here.
About two thousands production units are operating in this location. The production in this
market is mostly export-oriented. The production is majorly based on self-enterprises. Most of
the producers have own production houses. The producers purchase raw gold from Bowbazar
and other raw materials from local market and from Barabazar and Garanhata. The producers in
this location are specialized in the production of heavy-weight jewellery and diamond jewellery.
Usually producers are prone to use modern technology in order to increase productivity.
TABLE 4: AGE-WAGE DISTRIBUTION, SINTHI
AGE < 12 12-14 14-18 18-35 35-55 55+ TOTAL
INCOME
(Rs.)
< 4000 - - - 04 01 - 05 (25.0%)
4000-6000 - - - 07 03 - 10 (50.0%)

11
 6000-8000 - - - 01 02 - 03 (15.0%)
8000-15000 - - - - 02 - 02 (10.0%)
15000 + - - - - - - -
TOTAL - - - 12 (60.0%) 08 (40.0%) - 20 (100%)
Source: Field survey.

Use of capital is a significant character of this market, thereby promoting high capital-labour
ratio than any other location. This high capital intensity is reflected in high skilled labour
absorption ratio. Such skilled labourers possess the knowhow about the latest technology.
Machine-based production technology improves productivity, which helps in faster growth of the
market by offering variety of products at low cost. After finishing the production, the producers
often export their finished products directly or via Kolkata to large cities of other states in India
like Mumbai, Pune, Chennai, Hyderabad etc., and even to other countries, especially to the
middle-East Asian countries and Nepal.
Usually labourers are paid on monthly based. 75 per cent of the workers are earning less than
Rs. 6000. Only 10 per cent of them earn more than Rs. 8000. About 60 per cent of the workers
are of middle ages. One of the causes may be the fact that majority of the workers in this location
come for work after receiving training and skill form other peripheral locations. Since skill
generation requires time and the workers enter the Sinthi market after they become skilled or
semi-skilled, most of the labourers are middle-aged. However, it is evident that skill does not get
sufficient wageremuneration as compared to other locations. Since Sinthi is appearing as an
uprising market, the labourers are compensating themselves considering the future prospect of
the market. This high growth of the market makes this market as an attractive location for
labourers with positive future aspirations even if the wage rate is comparatively lower for skilled
and semi-skilled labourers.
IV.IV. LOCATION IV: DASPUR (WEST MIDNAPORE)
TheDaspur market is situated near Panskura (about 50 minutes by train). The location is
renowned for silver-basedjewellery production for long years back. A unique feature of this
location lies in family labour participation. Such family labour participation is common in other
informal sector activities such Zari& Embroidery work, Handicraft production etc. - but in the
12
Gold and Jewellery production, extensive family labour participation is observed in Daspur
location only. Another corollary of family labour participationis participation of female labour.
Such female workers either assist their male family members in order to make timely delivery of
the finished product or they work as paid labourers. The female workers of Daspur are renowned
for fitting small stones in the ornaments (locally called gatha). The finished silver ornaments are
mainly delivered to and order comes from the Garanhata market in Kolkata. However, gold
ornaments production is also becoming higher in volume in Daspur in recent times due to sharp
fall in the demand of silver ornaments day by day.
Wages are often paid on piece-rate basis by the contractors and local producers. Women
workers often participate in the work to assist their male family members to have faster delivery
of the finished product in order to earn higher volume of family wages. Such female workers
often remain unpaid, hence become invisible component in the workforce. Even if they are paid,
division of labour appears in the production sphere and this division of labour is reflected in the
male-female wage differentiation. The female paid labourers usually receive lower wages than
the male workers since the female workers have to carry production of silver jewellery after
completion of their domestic work.
TABLE 5: AGE-WAGE DISTRIBUTION, DASPUR
AGE < 12 12-14 14-18 18-35 35-55 55+ TOTAL
INCOME
(Rs.)
< 4000 - - 02 04 02 - 08 (40.0%)
4000-6000 - - - 05 03 - 08 (40.0%)
6000-8000 - - - 01 02 - 03 (15.0%)
8000-15000 - - - - 01 - 01 (05.0%)
15000 + - - - - - - -
TOTAL - - 02 (10.0%) 10 (50.0%) 08 (40.0%) - 20 (100%)
Source: Field survey.

The table does not decompose male-female distribution. The female workers earn less than Rs.
6000. A clear gender wise wage inequality exists there. Out of the total workforce, about 80 per

13
cent of the workers earn less than Rs. 6000. Piece-rate wage payment by the producers generates
lower wages for the laboures as compared to other forms of wage payments in other locations.
Most of the workers are above 35 age groups. For the teen age female workers, production of
silver jewellery provides lucrative opportunity to earn money wage.
Ghatal region, situated nearby Daspur (only 25-30 minutes by road distance), is popular for
supply of semi-skilled and skilled workers in gold jewellery production. Though production units
do not appear in large numbers in Ghatal, it has become a popular location for supplying skilled
labour to Kolkata and Sinthi market, and even to other states in India such as Maharastra,
Gujarat, and Orissa. The workers receive their required training in the production units of Ghatal
and Daspur. When they become semi-skilled, they make spatial mobility in order to make
higher wages. A market for skilled labourers exists in the markets of Bowbazar and Sinthi where
such skilled workers of Ghatal are highly demanded and hence easily absorbed at higher
remuneration.
IV.V. LOCATION V: MANIKANCHAN SEZ (RAJARHAT, KOLKATA)
Manikanchanthe Gem and Jewellery SEZ,promoted by West Bengal Industrial Development
Corporation (WBIDC), started its operation since 2006. The important forces behind the
formation ofManikanchanisexport promotion, create regular employment opportunities for the
skilled craftsmen of the sector, offer a regular wage structure for them, and thereby to reduce
migration outside the state.. Export from Manikanchanin 2006-07 was Rs. 1018 crores, it
became Rs. 8125 crores in 2010-11 [www.wbidc.com/about_wb/manikanchan.htm]. About 12
per cent of total export of India in the Gold and Jewellery sector has come from Manikanchanin
the year 2010-11. The SEZ comprises two Standard Design Factories (SDFs) and a Common
Facility Building (CFB). [N9]The operators are Senco Gold, Shree Ganesh, Rohit Export, Zenith
International, Suman Jewelry, FarinniJewellery Private Limited, Mizan& Company, Exotica
International and The Ray Incorporated.
Actually it is an offshore unit with financial and non-financial benefits. It enjoys a foreign
territory status and a duty free zone.Itaccrues large locational advantage since it is situated on the
Rajarhat Bypass in Salt Lake Sector V (also strategically connected via two different highways),
only 12 km away from the Kolkata International Airport. The production units within this SEZ
enjoy exemptions from Customs and Central Excise Duty on the procurement of capital goods,
raw materials etc., Central Sales Tax, Service Tax, 100 per cent Income Tax exemption under
section 10A for the first five years and 50 per cent for five years thereafter.
The exports appear mostly to the Arabian countries, Singapore, Hong Kong, UK and others. No
production appears for local market sale. The raw gold is mainly imported from Switzerland,
apart from some local market procurements. The producers are free to choose their own
production methods and labour. They have also the freedom to produce outside the SEZ set up
and may have individual local market sales outside this set up. The production within the SEZ
set up is for export only. The operational and promotional costs are primarily borne by the
WBIDC, ensuring high level of profitability for the producers.
The labour composition varies with the need of the production units. The labourers are both
local craftsmen and migrant labourers. The labourers are paid in accordance with the Labour
Laws and Regulations by the Government of India. Their wages are paid by the production
units following the labour laws. The labourers also enjoy other benefits such as social
insurances, pensions, bonus, maternity benefits up to two live births etc. The WBIDC is

14
committed to protect labour interests. The WBIDC ensures compliance of extant labour law
through an agreement with the production units. If any labour lodges any complaint regarding
violation of any labour law, the WBIDC takes stringent action against the particular production
unit. Other facilities include budget canteen, crèche, health care facilities etc. In its phase II
planning, WBIDC is going to allow selected private partnership under the PPP modelto set up a
training center over 5,50,000 square feet for the training of selected craftsmen.

V. CONCLUSION
There is no uniform wage rate appearing in the Gold and Jewellery sector in West Bengal.
Different wage rates and various forms of wages exist within a single market. Piece-
ratepayment, monthly wages, wage-loss are some of them. However, the market wage
determination process does not follow the mechanism of formal institutional demand-supply
interaction. The characteristics of the informal sector influence the mechanism of wage
determination. Several determinants appear behind the formation of the wage rate besides supply
and demand forces. Such determinants also vary from location to location, depending on the
location-specific factors.
The simple age-wage distribution cannot illustrate the actual picture of the Gold and Jewellery
sector in West Bengal. Such distributions across locations depicts that the mean wage lies
between Rs. 6000-8000 at Domjur, above Rs. 8000 in Kolkata, and below Rs. 6000 in Sinthi and
Daspur market. This location-wise wage dispersion may be explained by some of the spatial
determinants. The core-periphery pattern of development influences form of wages across
locations. Distant locations from the core exhibit informal form of wage payment, whereas the
core location (the Kolkata market) depicts unique forms of wage(s). The explanation for the
existence of such location-specific wages and wage structure comes from within the factors
influencing the formation and continuation of cluster of jewellery production in that specific
location. This spatial wage formation and variation of wages and wage structure over spaces are
crucial characters in the labour market in the Gold and Jewellery sector in West Bengal.
The study reveals a few observations.
1. No uniform wage rate existsin this sector. Three modes of wage payments are found in
the Gold and Jewellery sector in West Bengal.
(a) The formal sector exhibits wage payment maintaining Labour Laws and Regulations of
the Government of India along with the coverage social security benefits such as social
insurances, pensions, bonus, maternity benefits up to two live births etc. The government
sector of ManikanchanSEZ follows this type of wage structure.
(b) The informal sector inherits informal mode of wage payments such as piece-rate
payment, monthly wages, deferred or delayed payment, payment in both cash and kind
etc. Skill and age of the labourer, location of the production cluster become significant
factors in these informal labour markets of Domjur, Daspur, and Sinthi. Spatial variation
becomes apparent here. High vertical mobility of labour is influencing the wage-profit
ratio in favour of the profit-earners in Domjur. Extensive use of capital has led to high
capital-labour ratio in the uprising and export-oriented Sinthi market. The specialization
in silver-based jewellery production in Daspur exhibits extensive family labour
participation with male-female wage differentiation due to gender-wise division of
labour in production sector (even female labourers become invisible in production if they
remain unpaid).

15
 (c) Formal sector that depend on informal kind of production depicts special form of wage
payment(s). Bowbazar Gold and Jewellery sector shows a unique form of wage payment
in the form of wage-loss (or loss wage). Skill, social capital possession and personal
contacts of the labourer become vital in the bargaining process during the formation of
the wage. Actually it is a triangular wage-loss profit-gain model of strategic game played
between the producer and labour in the informal labour market. Quantity and quality of
the labour, type of work, division of labourinproduction, and price fluctuations in the
gold market are the major determinants of this wage. The rate of wage-loss declines in
case of bulk production if the producer wishes to extract economies of scale advantage.
2. A formal-informal linkage appears in the product and labour market in the Gold and
Jewellery sector in West Bengal. The linkage becomes visible while studying multiple
wage determination in the sector.
3. Location and mobility of labour become crucial contributors. While Manikanchan
cannot thrive despite Special Economic Zone advantages, Domjur and Ghatal near
Daspur have become clusters of out-migration. The location of Bowbazarhas become the
‘core’ of the industry through the formation of formal-informal linkages.
Acknowledgements
I acknowledge to Dr. Swati Ghosh, The Head of the Department, The Department of Economics, RabindraBharati
University, for her deliberate guidance. I am also grateful to Sri SouvikKunduand Sri IndranilBiswas for theirsincere
support at the time of data collection.
Notes
1.Since industrial peace is essential for progress on industrial as well as overall economic point of
view, the Central Government convened in 1947, and a tripartite conference consisting of representatives of
employers, labour and government. The Government of India formulated industrial policy resolution in 1948 where
it has mentioned to items which have bearing on wages statutory fixation of minimum wages promotion of fair
wages.
2 . Wages and salary incomes in India are fixed through several institutions. These are: 1. Collective bargaining, 2.
Industrial wage bound, 3. Govt. appointed pay commissions, and 4. Adjudication by courts & tribunals.
3. In this regard, concentration, specialization and agglomeration are distinguished though all these deal with the
location of economic activity. Concentration analyzes location across space of a few well-defined sectors or
industries, whereas agglomeration analyzes the location across space of a much larger part of economic activity, e.g.
the manufacturing sector as a whole, [Brulhart 1998], and specialization deals with the question of whether the share
of a location in production is relatively large compared to the share of the other locations or not [Hallet 2000].
4. Knowledge spillover appears between firms within the same industry and local monopoly is suited than
competition.In case of Porter externality, thepreferred market structure asks for local competition.The Jacobs
externality considers that the existing spillover is between firms of different industries under local competition. In
the dynamic or growth context, the distinction between urbanization and localization externalities is referred to in
the distinction between Jacobs externalities and Marshall-Arrow-Romer (MAR) externalities.
5. This goes in the realm of the Marshallian ‘Patronage of a Court’.The richer people assembled in the urban centers
make a demand for goods of especially high quality. This attracts skilled workers from distance areas. Localized
industries get large advantage since it offers a constant market for skill.
6. TheHarris-Todaro model of migration explains the apparently contradictory phenomenon of continuous rural-
urban labour migration in the developing economies despite rising unemployment in the urban centre. This is due to
the simple expected wage differential adjusted for the probability to find a job in the urban sector [also Heinemeijer
et al 1977, Adler 1981, Penninx 1982, Papademetriou 1985, Tisdell 1988, Borjas 1989, 1990, Hayes 1991, Bertram
1999 and cost-benefit literature of King and Schneider 1991, Schwartz and Notini 1994, Skeldon 1998, Bauer and
Zimmermann 1998].
7.The terminology of ‘social capital’ refers social organization, such as trust, norms (or reciprocity), and networks
that can improve society’s efficiency by facilitating co-ordinated actions [Putnam, Leonardi and Nanetti, 1993,
World Bank, 2000]. In particular, the idea of social capital is about the value of social networks and bonding similar

16
group of people with certain norms of reciprocity [Jovanovic and Rob 1989, Platteau 1994, Platteau and Moore
1994, Jovanovic and Nyarko 1995, Woolcock 1998, Glaeser 1999, Dekkar and Uslaner 2001, Uslaner 2001].
8. The formulation of the Network Theory in the Migration literature considers labour mobility facilitating
information flow back from destination to origin, thereby contributing to later mobility [Lee 1966]. The already
settled migrants function as “bridgeheads” and reduce material-psychological costs and risks of later migrants
through the formation of the migrant community [Appleyard 1992, Bocker 1994, Massey 1999, Bocker 1994,
Waldorf 1998]. Once such “network migration” or “chain migration” brings network connections at a critical level
at origin, labour mobility appears to be self-perpetuating [Massey 1999, Appleyard 1992, Waldorf 1998].
9. The SDFs comprise a seven storied building with modules of 165 and 465 square meter including canteen, health
center and crèche facilities. The CFB includes the office of Customs, courier, freight forwarding and trading agency,
banking facility with ATM, hallmarking center (MMTC), free exhibition and conference hall facility etc. The
infrastructural facility also includes security, power and water supply, fire detection, parking coverage, elevators and
telephone facilities.

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