Think Twice:
Lessons for #MakeInIndia, from Cadbury’s move to Poland
The novelist and journalist James Meek has an interesting long-form article in the current edition of the London Review of Books. It follows, in some detail, one of the hundreds of factory relocations which took place in the early 21st century, from Western countries to lower-wage destinations. This particular article follows a Cadbury facility, in Somerland in the UK, which moved to Skarbimierz, in Poland, over the period between 2007 and 2010.
As Meek’s articles often do, this one ranges widely, taking in some of the history of both regions, the history of Cadbury itself (and the influence of Quaker businesses in the UK), and some of the history of what we in India call the Export Promotion Zone concept — which Poland seems to have taken to mastery level.
What is oftopical interest, it also draws some pretty direct lines, from seemingly rational business decisions such as this factory move, straight to some current anti-globalisation movements. These include Brexit, the Trump victory, and the rising popularity of the Eurosceptic Law and Justice Party in Poland.
Brexit, Trump and Euroscepticism can seem irrational, to many bemused observers like us, in India and other developing countries. To us, it may not seem that the UK is at breaking point from non-white migrants, as Brexit posters claimed, because of its EU membership. Nor does it seem self-evident that the US is ravaged, as President Trump claimed in his inaugural address, by mothers and children trapped in poverty, rusted factories scattered like tombstones, or crime and gangs and drugs throughout the country. But of course, what do we non-Americans know?
As for Poland turning Eurosceptic — Poland, be it noted, has benefited more than any other country, from EU membership. It has received, as its own Finance Ministry website acknowledges, over $150 billion (over Rs 1000 lakh crores) in development funds, subsidies and transfers; its GDP has more than doubled since its accession to EU membership; and its people take up jobs legally and freely throughout the EU — so much so that a few years ago the Poles took out advertisements reassuring the rest of Europe (tongue-in-cheek) that Polish plumbers and nurses did in fact stay in Poland.
This, for aspiring Indians, seems like a dream. [As an aside, imagine India receiving that much money from the EU; and its citizens having the right to travel to the UK, France, or Germany and seek jobs legally. Not gonna happen, but just imagine it!]
And yet Poland, many of its politicians, and its current governing party — like many Brexiteers and Trump voters — remain un-embarrassedly Eurosceptic, anti-immigrant, and sometimes blatantly racist.
I’m no expert, but I think much of Meek’s research in this article is relevant to India today. The parallels include our obsession with #MakeInIndia, and the extent to which our government’s ideas about transforming the economy seem like a “lite” version of what Poland has already accomplished. The thing is, Poland seems to be turning away from that model now.
Most Indians would agree with the broad principle, that we need some massive transformational program (maybe even with a hashtag) to create jobs for the lakhs of Indians entering the job market each year. But it is not clear that the manufacturing sector today creates decent jobs in those numbers. It used to — as Meek’s look-back at Somerdale confirms — but not any more. Modern manufacturing is no longer labour-intensive, and it is becoming less and less so with new developments in the field. Manufacturing is becoming automated and capital-intensive, with increasingly sophisticated (and expensive) production methods.
And many of the manufacturing jobs that do remain are more and more prone to “casualisation”. They are relatively low-skilled, and are doled out on short-term contracts, or through manpower agencies, which are incentivised to act as intermediaries rather than employers.
Meek has written extensively on industrial restructuring before. He writes with some understanding of the technical issues, combined with a compassionate eye for the human narrative (He is, after all, a novelist, as well as a journalist; and it shows in his writing). The big picture his articles paint, that the era of decent manufacturing jobs with good benefits and pensions has given way entirely to a Brave New World of short-term, low-wage gigs, with no long-term prospects, should make us pause.
Is this what our Finance and Commerce Ministries are promising, to the investors we are attempting to lure to India? There is much in Meek’s article, about the dystopian experience of Polish wage-earners in Skarbimierz , that sounds ominously like what is happening in India. The riots at the Maruti factory at Manesar in 2012 were at least partly a reaction to similar denial of “permanent” employment benefits (although the violence and murder remain indefensible).
[Another aside: If this indeed is what is going to happen to the private sector in India, one likely consequence is an even more massive lemming-like rush for government jobs. Their protections, assured increments, lifelong employment and pension, and decennial Pay Commission-driven raises will come to seem more and more attractive; when set against the private sector’s performance-related pay, hire-and-fire approach, and at best defined-contribution pension schemes.]
At the end of the day, I would argue that we in India do need to Make In India — for reasons beyond the microeconomics of firms. We are too big, and too populous a country, to lose all ability to make our own stuff to Bangladesh, Cambodia or Viet Nam, with complete equanimity. We like gadgets, and have an instinctive respect for engineering. We need to make some of what we and the world use, even if a lot of it is not particularly high-tech. As long as we can maintain quality, institutionalise processes, and incidentally, pay our own way (which many of our public sector manufacturing units never did), it will stand us in good stead. The experts at the Ministries and at NITI Aayog, we must hope, are devising policies to make sure it all happens.
But are we being naive, or in some other way inexpert, to still hope, that our manufacturing sector is not reduced to the kind of hellish fog, of EPZ subsidies, low-skilled shift work, and virtually no benefits, that Meek describes so chillingly in “Somerland to Skarbimierz”?
