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Kerala Dinesh Beedi:
The Dynamics of Work and
Democracy in an Indian
Industrial Cooperative
by Richard W. Franke
Professor of Anthropology
Montclair State University
Upper Montclair NJ 07043
USA
FAX: 201-655-7031 or 201-655-5455
e-mail: franke@saturn.montclair.edu
Presented at the
1997 Socialist Scholars Conference
Radical Alternatives on the Eve of the Millennium
Panel 119: Workers' Cooperatives Today
Borough of Manhattan Community College
30 March 1997
Text available at
http://www.chss.montclair.edu/anthro/kerala.html
Kerala Dinesh Beedi:
The Dynamics of Work and Democracy
in an Indian Industrial Cooperative
by Richard W. Franke
Kerala State is located in the far Southwest corner of India.
In 1969 in and around the city of Kannur (Cannanore) in the
Kerala District of Malabar there has developed an important ex-
periment in industrial democracy: The Kerala Dinesh Beedi
Workers' Cooperative. This paper is a summary of some of the
main points in our forthcoming book about this experiment, Kerala
Dinesh Beedi: The Dynamics of Work and Democracy in an Indian
Industrial Cooperative. The book is co-authored by Dr. T. M.
Thomas Isaac, Dr. Pyaralal Raghavan of the Centre for Develop-
ment Studies in Kerala, and me. Inspired in part by the Whytes'
study of Mondragon it will be published later this year by Cornell
University Press.
Workers at Kerala Dinesh Beedi manufacture beedis, or poor
people's cigarettes. The main work is rolling beedis, which
engages 95% of the work force. The rollers cut wrapper leaves
for 2-3 hours in the morning, and then roll into each leaf a pinch
of tobacco, push in the ends, and bundle the beedis for the
packing and shipping departments. An average worker rolls 900
beedis per day. The work is boring, repetitive, and traditionally
low-paid though highly skilled.
India's 1.5 million private sector beedi workers are among the
most exploited workers in India. Desperately poor and mostly
unorganized, they are subject to low wages and fraudulent ex-
actions from contractors who can claim almost any percent of the
beedis are below quality and refuse to pay for them. Beedi
workers across India work in filthy, disease-causing conditions,
breathing in tobacco fumes, often assisted by child workers who
must be paid by the adult workers they help. Asthma, bronchi-
tis, and tuberculosis are widely reported. More than 50% of beedi
workers are women. Many roll beedis with infants on their laps,
both mother and child smeared with tobacco and breathing in
tobacco fumes. Many are subjected to sexual harassment and
abuse by the mostly male contractors. Many beedi workers accept
putting out work in their homes, subjecting the entire family to
tobacco fumes and working all hours of the day and night to fill
the contractors' demands. At about age 45, the skin on their
finger tips begins to thin and they can no longer roll beedis
effectively. Thousands end up as beggars.
Benefits of KDB
At Kerala Dinesh Beedi, workers also roll and package beedis.
They cut wrapper leaves for two or three hours in the morning,
then shift to rolling and tying. KDB workers have a one hour
flexible schedule: they can work 7:00 to 4:00 or 8:00 to 5:00.
Lunch and tea breaks are guaranteed. Unlike workers at most
other beedi establishments, they sit on bamboo benches with
cement backrests. Their work sites are clean and recently paint-
ed, fluorescent lamps light the work area fairly well, and they
have more free space to move around without bumping neighbor
workers. Just outside the work shed are sanitary, water sealed
latrines. At the end of the day, KDB workers can wash up at
faucets located at the work sites, cleaning themselves of the smell
of tobacco and putting on fresh clothes to greet their children in.
The children have been in school, not working to assist beedi
rollers.
KDB's wages are set by a Kerala-State minimum wages commit-
tee and are therefore officially the same as for private sector
beedi workers. In reality, KDB workers receive wages and
benefits substantially greater. The beedi rollers at KDB do not
suffer from unethical deductions. The "maistry," or immediate
supervisor, cannot falsify the amount of tobacco, nor can he
deduct from alleged defective beedis. If defects are claimed, he
must show them to the worker and assign another worker to help
him or her upgrade skills. If the worker is not satisfied with the
procedures, he or she can take the matter up with the trade
union committee. This committee has real power to prevent
abuses. KDB's workers are much less likely to be in debt to
money lenders than other beedi workers in India. At KDB,
workers can borrow from the cooperative's own "thrift fund" at
no interest, with repayment automatically deducted from their pay
over an extended period.
KDB workers get Sunday off with pay and can take an addi-
tional paid personal leave day for each twenty days of work.
They also have off fifteen paid national and local holidays. KDB
workers and their families are protected by a death benefit of Rs
5,000 to be paid to the family if the worker dies while still at
working age. If the worker works on to age 58, and has 12
years employment, he or she can take a lump-sum pension of Rs
3,000. Otherwise, the worker can choose to retire at age 55 and
receive a lifetime monthly pension of Rs 150, enough to cover
costs of food if living with one of the children. KDB's female
workers can be pregnant without fear of loss of employment.
They are entitled to three months leave with a one-time payment
of Rs 400 to Rs 600 and the right to return to their jobs after
taking pregnancy leave. KDB workers do not, however, have
day care centers at their work sites.
Why are conditions so much better at Kerala Dinesh Beedi?
KDB's 32,000 workers and 14,000 retirees own and manage the
company themselves with a small government role. Twenty-two
production cooperatives are united in a federated structure with a
central management cooperative that performs raw materials
purchase, marketing, and financial services. The production
cooperatives contain from 340 to 3,116 workers. Workers in each
of the 22 production cooperatives elect a 7-member board of direc-
tors from among their own ranks. These directors hire technical
staff as needed for day-to-day operations.
Workers also directly elect one representative from each pro-
duction cooperative to the General Body which elects 5 of the 7
directors of the Central Cooperative. Elections are held every 2
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. All 5 current worker-elected directors are
experienced shop-floor beedi rollers and union activists. The
state government appoints the other two directors.
The worker-elected director board negotiates benefits with
KDB's trade unions. KDB's wages are set by the state govern-
ment, but the directors have been able to distribute substantial
amounts of surplus in the form of benefits, including an annual
bonus that reached 17% in 1995. Unlike private beedi producers,
KDB has sought to expand employment at high wages. Contrary
to the Vanek self-extinction hypothesis and to other theoretical
predictions that worker ownership leads to a rapid dispersal of
the surplus, a consequent lack of investment capital, and a
short-term management orientation, KDB's worker directors have
kept the cooperative in profit in all but 4 of its 28 years of
existence. Today, KDB is a major employment-generating insti-
tution on the Malabar economic scene and has indirectly pushed
up wages even in the private sector. The coop's 46,000 members
have improved their material lives immensely.
Empowerment and Supervision
KDB workers have also made significant advances towards
genuine workplace democracy. In economics, the degeneration
hypothesis predicts that worker-owned businesses in a capitalist
economy have an inherent tendency to degenerate into capitalist-
like companies no matter what their intentions. In sociology, a
companion theory predicts that "goal displacement" or the "iron
law of oligarchy" will reassert capitalist style hierarchy after a
few years or a single generation of radical or utopian worker
management and egalitarianism.
KDB has so far outflanked degeneration tendencies through a
creative mix of workplace empowerment and workplace super-
vision. Supervisors mostly emerge from among shop floor work-
ers. They are paid only slightly more than the workers they
supervise. They are subject to effective union grievance pro-
cedures 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.) Manage-
ment might thus seem too circumscribed to be effective.
In place of the fines and fraud of the private sector, KDB has
evolved a system of prizes and limited wage inequality to en-
gender sufficient supervision to maintain an adequate amount of
shop floor discipline. In addition, a radical workers' culture that
developed in the union movement that led to KDB's founding,
limits corruption and instills a community and company spirit that
makes workers proud to be part of KDB and mostly eager to work
as team members.
Problems and Challenges for the Future
KDB's remarkable successes face two major challenges at pres-
ent: the integration of female workers and the need to diversify
out of tobacco production. In the mid-1980s, KDB became a
female-majority workforce. It might be the largest woman-owned
cooperative in the world. Despite its pathbreaking introduction
of maternity leave, KDB has not developed day care, and faces
problems in maintaining productivity among women workers who
are more likely than men to arrive late, leave early, or take days
off for sick children. With 60% female workers in 1995, the coop
had only 10% female representation on the director boards. KDB
recognizes the need to improve conditions for female workers, but
has not moved rapidly in this area.
Diversification also poses problems for KDB. Health awareness
of the dangers of tobacco is beginning to spread in India --
paradoxically along with the rapid introduction of Western style
cigarettes -- to threaten future sales of beedis. KDB has con-
ducted extensive research into the possibilities of shifting into
agro-processing. Current plans are to shift 25% of the workers
into nontobacco production over the next 10 years. Already the
coop has invested some of its substantial financial reserves into
training workers in the manufacture of curry sauces. Meetings
have been held in the production cooperatives where lists of
volunteers were drawn up among workers willing to shift out of
beedi production. Many details remain to be worked out, but it
can be said that KDB is attempting a humane and democratic shift
away from tobacco while maintaining the incomes of its workers.
No one will be laid off.
How did KDB emerge in this faraway corner of India? What
historical developments led to its founding? How did it survive
the hostility of private sector competition? How did the workers
manage to fashion their creative mix of empowerment and super-
vision? How does KDB's story impact on theories of cooperatives,
including some not mentioned above? I'm afraid my 20 minutes
have elapsed, but you can find all the answers in our forthcoming
book.
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Thomas Isaac, T. M., Richard W. Franke, and Pyaralal Ragha-
van. 1997 or 1998. Kerala Dinesh Beedi: The Dynamics of Work
and Democracy in an Indian Industrial Cooperative. Ithaca.
Cornell University Press.
Cornell University Press
Sage House, 512 East State Street
Ithaca, New York 14850
Fax: 607-277-2374
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