LABOUR IN THOSE YEARS

Rise and Fall of a Workers` Cooperative: The Saga of Kerala Dinesh Beedi


Babu P. Remesh is Associate Fellow, V.V. Giri National Labour Institute, and Coordinator, Integrated Labour History Research Programme & Archives of Indian Labour. Email: neetbabu@rediffmail.com. (Babu P. Remesh)

The Genesis

In the history of the workers` movement in India, 15 February 1969 is a memorable date. On this day, production commenced in Kerala Dinesh Beedi (KDB) Workers` Cooperative Society located in Kannur, a small city in the Malabar region of Kerala. The KDB Workers` Cooperative Society emerged out of the backdrop of the struggle against decentralization and the shift of beedi production from the Malabar region to low-cost areas. KDB has had an exemplary track record in industrial democracy.

 

The story of the origins of KDB is worth recounting. In northern Kerala, the socialists, and later the communists, led the freedom struggle; class struggle was part of the freedom movement. In this process, the beedi workers of Malabar developed an activist and democratic consciousness. As early as 1934, a trade union of beedi workers, the Kannur Beedi Thozhilali Union, was formed. A critical event was the General Strike of 1937 called by the union to press for a charter of demands for beedi workers. The strike was withdrawn after 38 days with very little gain to the workers. However, it was an important step in raising the consciousness and political awareness of the workers. It was also remarkable for the solidarity provided by the peasants to the industrial workers. One of the demands of the union was that the workers be allowed to read when they are not actually at work. It became a practice (one that continued at KDB) for workers to take turns at reading newspapers and books aloud to their co-workers. Another turning point was the strike of 1946, which led to a visible restructuring of the industry.

 

In 1966, due to the constant struggles of beedi workers in the region, led by the veteran communist and trade union leader, A.K. Gopalan, the central government passed the Beedi and Cigar Workers` Conditions of Employment Act. This was certainly a milestone in the working class struggle in India. The firm commitment of the communist government in Kerala, which returned to power in 1967, to implement the welfare provisions of the Act and to support beedi workers resulted in a large-scale shift of privately owned beedi production units to Karnataka. This included the closure of all production operations of Mangalore Ganesh Beedi, a major firm in the region, leaving more than 12,000 workers jobless. To overcome this crisis, the workers led by the Communist Party mobilised Re 1 from each unemployed worker to form a workers` cooperative society called Kerala Dinesh Beedi, which came into existence in February 1969. The then government of Kerala, led by E.M.S. Namboothiripad, invested Rs 1.35 million as share capital and sanctioned a working capital loan of Rs 7,00,000. It was a peculiar situation of workers themselves becoming the owners of the industry. The major aim of the Workers` Cooperative Society was to give employment to thousands of workers who were jobless at that time. The next 25 years saw a phenomenal expansion, making KDB the fourth-largest beedi firm in India.

 

The Golden Age and Achievements

The period from 1969 to 1990 was the golden age of KDB. During this period, it grew to a major and model cooperative venture, employing nearly 42,000 workers. Unlike the private sector beedi workers elsewhere in India, who are among the most exploited of workers, the employees of KDB received superior wages and working conditions. The wages of the KDB workers was substantially greater than those set by the Kerala State Minimum Wages Committee. Initially, a worker used to get less than Rs 4 for rolling 1,000 beedis a day. This increased to about Rs 80 for rolling 900 beedis a day. Workers were given substantial amounts of surplus in the form of benefits, including an annual bonus that reached 17 per cent in 1995. 

 

The superior terms of work at KDB also included: the option for working in flexible schedule (workers could work 7:00 to 4:00 or 8:00 to 5:00); guaranteed lunch and tea breaks; healthy and comfortable seating arrangements; clean, ventilated and properly lighted work area; more free space to move around; sanitary, water-sealed latrines; and arrangements for cleaning themselves at the end of the working day. Besides, the workers enjoyed holidays, leave, pension benefits, maternity leave, etc., as in any public enterprise. Further, at KDB, the workers could borrow from the cooperative`s own `thrift fund` at no interest, with repayment being automatically deducted from their pay over an extended period.

 

Epitome of Industrial Democracy

 KDB represents one of the world`s largest and most successful experiments in industrial democracy. It has been operating as a federated structure with 22 primary societies spread across Kannur, Kasargode and Kozhikode districts, which operate 200 beedi centres. It has a central management unit that does the raw materials purchase, marketing and financial services. Workers directly elect one representative from each production cooperative to the General Body, which elects 5 of the 7 directors of the Central Cooperative. The State government appoints the other two directors. Elections are held every two years; one worker has one vote - no matter how many shares. Only KDB workers can own shares and every worker must own at least one share. Owing to these measures, most of the worker-elected directors are experienced shop-floor beedi rollers themselves. 

 

Workers in each of the 22 primary cooperatives elect a 7-member board of directors from among their own ranks. These directors take decisions on the day-to-day operations of the cooperative. The worker-elected director board negotiates benefits with KDB`s trade unions. There were several unions among beedi workers with different political affiliations. When KDB was formed, it brought together workers from different unions, and the success of KDB showed that union differences could be overcome to achieve a concrete developmental task. Team spirit and worker solidarity were stronger than political rivalry. 

 

KDB workers have also made significant advances towards genuine workplace democracy, by following a creative mix of workplace empowerment and workplace supervision.  Supervisors are mostly drawn from shop floor workers. They are paid only slightly more than the workers they supervise. They are subject to effective union grievance procedures and are themselves under the supervision of directors elected by the workers they supervise. The directors receive pay slightly below that of shop floor workers, and some directors continue to roll beedis as their main source of income. Further, in place of the fines and fraud of the private sector, KDB has evolved a system of prizes, and has limited wage inequality to engender sufficient supervision to maintain an adequate amount of shop floor discipline.

 

The Crisis and the Struggle for Revival

The KDB Workers` Cooperative Society is currently in doldrums. After 37 years of existence, the cooperative faces a severe crisis due to multiple reasons. On the one hand, while the production costs of Dinesh beedi are mounting, there is a visible dip in the sales front. Fake Dinesh beedis and other cheap brands from neighbouring states have captured a significant proportion of the domestic beedi market. The cooperative is also facing stiff competition from low-cost filter cigarettes and other cheap brands of beedis especially those from the unorganised sector in the Kasargode-Mangalore region. The escalations in exercise duty have been another burden for KDB. Yet another set of factors that underlined the decline is the reduced demand for beedis, since the 1990s. The health awareness campaign against smoking, the impact of the anti-tobacco legislation and the ban on smoking in public have led to the decline in number of smokers, especially those belonging to the younger generation.

 

The mounting crisis in the beedi market has forced the management to diversify its product base, initially to pickles, umbrellas and processed food. Currently, the KDB management runs or plans to run hypermarkets, IT hubs and high-end professional colleges and so on, to weather the crisis. However, all these efforts have not brought much results and the management, in the recent past, resorted to the introduction of austerity measures such as job cuts and a freeze on gratuity and bonus.

 

The revival of KDB from its present crisis is extremely relevant as it has strong lessons that proclaim the strength of worker solidarity and industrial democracy. More stringent action against trade mark violations; state support for diversification programmes; the implementation of uniform zonal wages; and exemptions for the cooperatives from excise duty can contribute to the rejuvenation of one of the most remarkable workers` cooperative experiments in the country. The present government of Kerala has allocated Rs 4 crores in the current year`s budget for KDB`s new diversification plans and has shown interest in preparing and implementing a package to restructure KDB. These positive gestures are welcome steps towards rejuvenating KDB.

 

(Courtesy: T.M. Thomas Isaac, Richard W. Franke and Pyaralal Raghavan (1998): Democracy at Work in an Indian Industrial Cooperative: The Story of Kerala Dinesh Beedi Cornell University Press, Ithaca and London)

Author Name: Babu P. Remesh
Title of the Article: Rise and Fall of a Workers` Cooperative: The Saga of Kerala Dinesh Beedi
Name of the Journal: Labour File
Volume & Issue: 4 , 1
Year of Publication: 2006
Month of Publication: January - February
Page numbers in Printed version: Labour File, Vol.4-No.1, One Hundred Days of Work (Labour in Those Days - Rise and Fall of a Workers` Cooperative: The Saga of Kerala Dinesh Beedi - pp 38 - 40)
Weblink : https://www.labourfile.com:443/section-detail.php?aid=307

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