REVIEW OF LITERATURE AND METHODOLOQY

1.1 INTRODUCTION

A study of any society will show the systematic handling of means and
ends, so one of the most important factors which determines the social status of
any individual or a community relates is its economic condition. Generally, in
a society where caste distinction is rigidly observed, there would be professions
based on castes. Though clearly defined, these various caste based professions
are not completely exclusive. The economic organization is based mainly on
the occupational and functional specialization and interdependence. Formerly,
tradition had assigned to each caste, a definite occupation with a definite
economic function, which was the major source of livelihood for that particular
group in well-known terms caste.

In India, traditionally various occupations have been associated with

specific castes. This is more so in the case of leather (footwear) artisans.
Specifically, leather work in rural areas has been mainly in the hands of the so
called "untouchables" because of factors like bad odor emanating from the skin
of dead animals and their dealings associated with leather industry. The group
of traditional leather artisans engaged in flaying the carcass recovery, tanning
of the of footwear and manufacture leather goods, mostly belonging to the
Harijan ( ~ a l i t )community who are still sadly among the most socially and
economically backward sections of our society. In spite of possessing inherent
skills on one side and a host of socio-economic measures introduced by the
successive governments for their uplift on the other side, the progress achieved
so far, both in their economic and social fronts is not on the expected lines.
With the passage of time and all round changes taking place, there has been a
substantial impact on the life of the people. The leather footwear industry is no
exception to this. Owing to the technological, political and religious
developments taking place in the world in general and the Indian society in
particular, these changes reflected on the leather footwear industry as well.
While leather artisans who were once confined to the cottage, household,
village and tiny sectors a few decades ago, are now seen engaged in small,
medium and large scale sectors utilizing modern technology. The introduction
of modem technology and advent of highly organized sectors in the leather
footwear industry have brought about a host of changes in the way of life of the
leather footwear manufactures.

The leather footwear manufacturers still using traditional skills, tools

and techniques are found both in rural and urban areas and are lnostly
self-employed. These are very small units employing a small number of
workers producing footwear for the local market in the informal sector. The
study of social and economic conditions of these footwear manufacturers of
informal sector has revealed certain significant social changes that have been
constantly taking place in this industry.

A case study among the small scale leather shoe manufacturing units in
Agra conducted by Waardenburg mainly deals with the problems of the
differentiation of production units according to marketing channels and size of
production. The study critically analyses the survival prospects or "efficiency"
of these different units, their employment effects, their functioning in relation
to poverty situations, the impact of government measures on them and finally
their social and human dimensions. While analyzing these aspects, a sample of
88 production units was drawn from eight groups viz., exporters via State
Trading Corporation of India (STC), units supplying to Directorate General of
Supplies and Disposals (DGSD), units working on contract with Bata, Carona,
Swastik, Flex and those supplying to Uttar Pradesh State Leather Development
and Marketing Corporation (UPSLDMC now called LAMCO), Bharatiya
Charmodyog Sangh (BCS) enterprises supplying to wholesale dealers and
those not counted by any of the organizations.
 The general impressions brought out by this study are the small local
suppliers who supply the footwear 'to the wholesale dealers constitute an
exceptionally labour intensive category, and the exporting units through STC,
the units supplying to Bata, Carona and all units supplying to state marketing
outlets are exceptionally capital intensive. The manufacturing units supplying
to wholesale.dealers and in turn catering to the domestic market have high
employment capital ratio compared to the exporting units and sub-contracting
units catering to Bata and Carona.

The social transformation attributed by the study reveals that the

Scheduled Caste Cobblers Community 'Jatavs' have started to sending their
children for education by dissociating themselves from the traditional
occupation of shoe making. On the other hand, people from other social groups
have started moving into the shoe making occupation not only in the managing
and trading jobs but also into the actual manufacturing process and who do not
conceive themselves as labourers. However, the problems arising with labour
are found in the units supplying to Bata and to outside suppliers as the
employees are tending to become more independent in a situation similar to the
emerging capitalism. Finally, the workers in the export category units hardly
create problems as they are the envied labour elite with stable employment with
relatively higher wages1.

The sectoral study carried out in West Java reveals that the dynamics of
the "Ciomas Footwear Industry" are marked by sub-contracting relations
between the workshops and the wholesale dealers. Besides these, similar
contracting relations are found between small and larger workshops and
between workshops and large factories. The relations among producers are
characterized by the job work practices.

Footwear production in Ciomas generally involves workshop owners

aad their family members besides engaging hired workers on piece rate basis.
The partial specialization of footwear production in the workshop comprises of
three operations viz., pattern making, upper preparation and sole cutting and
finishing, which are attended on division of labour basis. The total production
pertaining to these operations not only done in the workshop but is also given
out to other units in pairs of 20 each as piece meal jobs. Boys with an age of
10 of 12years are taken as apprentices and are paid very low. With regard to
external relational relations and marketing, the entire production of these units
is based on commercial sub-contracting In the sub-contract system, the
principal wholesale traders like P.T, Bata and small scale footwear business
houses place orders to the production units2.

The case study on small scale footwear industries in CIBADUTUT of

West Java highlights that the producers can be distinguished as follows:

1. Large workshops employing wage workers (> 15).

2. Small workshops employing wage workers (<15).
3. A small number of surviving artisanal producers.
4. Wage workers in the workshops.
5. Large number ofjob workers working at home on piece rate basis.
6. Apprentices attached to workers and
7. Paid and unpaid family helpers.

The study observes that the industry in this town has witnessed a
transformation of individual and household self-employed producers
employing wage labourers. On the other hand, many former artisan producers
have transformed into job workers. It has been reported that the traditional
household enterprises y e targeted by the small scale industries. These
enterprises work on sub-contracting basis and cannot make their own
independent decisions on designs, raw materials, marketing and such other
related issues.
 The piece rate payments f~llowedalways leads to long working hours.
Hired workers in workshops, work for 9-10 hours a day and home-based job
workers work for 12 hours a day. A very interesting finding is that the labour
earnings in the traditional small scale informal sector are more when compared
to those in the modem footwear industry?'.

A large socio-economic survey was conducted by Jayalakshmi Indiresan

and Shiela Gill among the leather workers in both organized and unorganized
sectors in Tamil Nadu. One of the inajor findings that emerged was that the
leather industry is no more the exclusive. monopoly of the erstwhile
untouchables, especially in the organized sector.

A differential pattern was observed in the income, occupational position

and educational achievements of the workers belonging to the traditibnal caste
workers and the non-traditional caste workers.

This survey was covered leather workers in both the organized and
unorganized sectors. The workers in the organized sector are mainly engaged
in tanning and footwear. These units are located in Ranipet, Ambur,
Vaniambadi, Pernampet, Vellore and Madras. The sample of workers from the
unorganized sector was taken from three centres, Minnur, Kaspa and Saidapet
all fall in North Arcot District of Tamil Nadu.

The caste composition of the sample on workers in the organized sectors

was also covered in this study. Hindus, Muslims, Christians and Buddhist were
all represented in this sample. It is interesting to note that only 155 (24per cent)
of the workers came from traditional leather working communities like
Chamars, Flayers and Tanners. The other 485 i.e., 76 per cent of workers came
from non-traditional communities ranging from Brahnins to Buddihists as well.
 Among the Hindu workers, three upper caste communities, Brahmin,
Chettiar and Mudaliar constituted 26per cent of the total sample. The
Brahmins accounted for the highest percentage (1 1 per cent) followed by 8per
cent of Mudaliars 7 per cent of Chettiars and 5 per cent of each of the backward
communities of Yadav and Weavers are represented in this sample.

There are four per cent from each of the Fisherman and Dhobi
communities who are also classified as Scheduled Castes. The scavenger
community is also belonging to the Scheduled Castes constitutes 7 per cent of
the sample and are referred to here as Harijans.

The Christians, mostly converts from the Harijan communities represent

six per cent of the sample. These workers are referred to as Harijan Christians
to distinguish them from the Hindu Harijans in the sample. Both the Muslim
Sunnis (5 per cent) and Shias (6 per cent) are represented in the sample. The
Neo-Buddhist accounting for 6 per cent of the sample are also mainly converts
from the lower caste Hindus.

Among the traditional workers from the Scheduled Castes, the Tanners
constitute 10 per cent, Chamars 9 per cent and Flayers 6 per cent. It is most
interesting to note that one single community which has the highest percentage
of representation is the Brahmin community which accounts for eleven per
cent.

As observed in the earlier studies, it was seen too that leather work is no
longer the exclusive profession of the untouchables especially in the organized
sector. The mechanization and technological development in the organized
sector coupled along with the economic pressures has made this profession like
any other profession acceptable to other castes by breaking the caste barrier in
the organised sector. This is' a strong indication that, the heredity base of
occupation is slowly breaking down and the traditional caste system based on
occupation does not hold good any more. The untouchablity and stigma aspects
that hitherto were associated with leather profession would also weaken
because of the large number of non-traditional workers join the leather
industry.

In contrast, it is noticed that 100 per cent of the workers in the

unorganized sector belong to the traditional Scheduled Caste communities of
tanners, flayers and Chamars. The implication of this finding is that it seems
organized sector of wage employment can break the caste barriers even in
traditional occupations like leather fobtwear which in unorganized sector is still
the exclusive domain of traditional castes4.

The study on social changes among leather artisans in organized and

unorganized sectors in Tamil Nadu highlights on the migration as follows. In
the sample of 640 workers in the organized sector, only 24 per cent of the
people belong to the traditional leather work communities of Chamars, flayers
and Tanners, while the rest of the 76 per cent are fiom other non-traditional
communities like agriculture other wise. It can be said that 76 per cent of the
workers can be considered migrants to this leather occupation.

One major observation that seems to stand out is that traditional leather
workers industry has sizeable number of non-traditional leather workers
consequent to continuous infiltration into this profession. It would be of great
value to find out the rtasons therefore:

P Is it because of the employment opportunities that are better in this

industry?

P Is it because of the mechanization and technological development which

has 'cleansed' the leather industry?

9 Is it because the workers from non-traditional communities are finding it

difficult to gain employment in other professions?
2, Is it due to lack of qualified and trained people in traditional communities to
meet the demands of the technologically advancing and fast expanding
leather industry?

k Is it because the non-traditional community workers are basically more

capable, having greater initiative, easily trainable, than the employers prefer
these people to the traditional workers?

2, Are the traditional workers getting displaced at all? If so, are they leaving
the profession by choice? Are they being pushed out by other community
workers?

P If the traditional workers are being displaced, where are they going?

P Are the traditional workers leaving the industry because of social stigma?

Answers to these questions would help in assessing the problems of the

traditional workers and help the authorities in planning to uplift the quality of
life of the traditional workers5.

K.S.Singh has studied about the communities engaged in skin and hide
work in the book Anthropological Survey of India. According to him:

Originally 134 communities were traditionally engaged in skin and hide

work. The following are important among them: Jinger, Arundhatiyar:
Madiga, CharnarMochi, Muchi of Andhra Pradesh; Chamar Muchi of Assam;
Meghwal, Mochi of Gujarat; Chamar of Haryana, Tripura, Uttar Pradesh, Goa
et al; Hali of Himachal Pradesh; Ganz, Megh of Jammu and Kashmir; Adi-
Andhra, Dhor, Samagrara, Mahar of Karnataka; Parayan, Madiga of Kerala;
Kuril, Charnar Mochi of Madhya Pradesh, Punjab and Orissa; Bhambi, Dhor,
Holar, Madiga of Maharashtra; Madiga, Chakkilian of Tamil Nadu; certain
Naga groups of Nagaland; Gangte of Manipur; Muchi of West Bengal;
Kuravan of Pondicheny and Chamar Regar of Rajasthan.
 There has been a fall in thq number of communities working in skin and
hide. The 34 communities abandoned their traditional occupation of skin and
hide work. The following are important among them:

Dakkala, Jaggali, Pambala of Andhra Pradesh; Koli-DhorIKolcha, Nodia

of Gujarat; Hali, Sippi of Himachal Pradesh; Cheintz, Magh of Jarnmu and
Kashmir; Bhambi, Asadaru, Jingar of Karnataka; JingerlJingar of Maharashtra;
Naga Sangatam of Nagaland; Kanjar, Kupalta of Uttar Pradesh;
KatkariIKathodi of Dadra and Nagai. Haveli; Adi-Dharmim, Khatik of Delhi
and Hudi of Daman and Diu.

As many as 114 communities still follow this occupation.

The communities engaged in this occupation are distributed in all the states and
union territories except Lakshadweep, Mizoram, Amnachal' Pradesh,
Meghalaya, Sikkim and Daman and Diu. 'These communities belong to the
Scheduled Castes (73), other communities (33) and Scheduled Tribes (8).
They follow various religions except Jainism. They are found in a high
proportion in the rural (55) and rural urban (45) areas. The 13 urban
communities with segments also in rural areas that are engaged in skin and hide
work are Adi-Andhra, Adi Andhra Christian of Karnataka; Charnar-
RegarIRaigar of Punjab and Rajasthan; Vettiyan of Tamil Nadu; Iraqi of Uttar
Pradesh; Chinese of West Bengal; Andhra/Telugus of the Andamans and the
Nicobar Islands; GiarahIKanjar, Bazigar, Naribhat, Chamar-RegarIRaigar of
Delhi; Madar of ~ o a ~ .

The survey conducted by the Gokhale Institute of Politics and

Economics in 1996, to study the export potential of Indian Leather and Leather
products has suggested in its conclusion the following steps: Since livestock is
the natural resource, identifying its presence, tracing the different methods and
levels to develop this natural resource is of prime concern. It also pays to
mobilize forces to extract maximum economic returns from such important
resource, and also taking care to see that this very important natural resource,
though renewable, are not depleted by excessive human interference.

In this process, the study of leather and leather product industry which is
mainly export oriented is a step in the right direction in understanding the ideas
resource base for leather export under different heads like livestock and its
products like hides and skins in our country as well as other parts of the world
and the characteristic feature of hides and skins with a further break-up of cow
and buffalo hides, sheep and goat skins, skins of pigs etc., with a special
reference to their availability to Indian Leather industry7.

N.Kandaswamy and VRajagopalan pointed out that leather industry in

India has been playing a vital role in the national economy, employment
generation and export earnings. It has, thus, made an impact on rural
development as also socio-economic growth during the last 50 years. But of
late, especially during the past couple of years, it has encountered major
hurdles which have adversely affected its level of performance.

The authors have appreciated the co-ordinated efforts of the Government

and the various organizations and trade related bodies formed to assist the
industry in its efforts to overcome the various challenges. The leather industry
is poised for a reasonable growth in the coming years. These agencies and
organizations should not rest till a market share of 14 per cent in the global
trade is achieved by the year 2010 or until the export performance exceeds
Rs. 18,000 croress.

According to B a a in the household based production, boys are given

training in the primary skilled function whereas girls are trained in the
preparatory functions. In the case of individual producers, the skills are passed
from one generation to the next, among persons of the same sex by job training.
 Generally, these systems. of organizing the production process are
known as piece system, bond system .and assembly/ group system. Under piece
system, the entire product is made by one person; Under the bond system, each
worker carries out one operation serially so that the product takes the final
shape at the end in the assembly/group system, group of workers works on
different parts till the work is crtmpleted. In small scale production, where men
and women work, there is usually a clear gender difference in the type of jobs
canied out. Men tend to carry out the main skilled operations and women and
children carry out the preparatory and finishing operations9.

Harris finds that the entrepreneurs / producers setting up in small scale

manufacturing units come from different social backgrounds. The first category
includes those with an industrial or financial background. The second category
includes 'technician entrepreneurs' and a third category includes producers
who have their skill and work on a hereditary basis of family and/or caste
background.

The registered workshops are owned mainly by those with either

managerial, professional or business background. Workshops which are not
registered are more likely to be owned by workers or artisans. Industrial
producers have either a hereditary background in the type of production they
carryout, or have moved from agricultural background manufacturing of
footwear. Their access to financial resources and raw materials on credit basis
is usually very uncertain''.

In his study of small scale industries in 12 countries, Liedholm and

Mead used employment as a criterion and classified the enterprises with fewer
than fiRy workers as small scale. At the lowest end of the size scale, a further
category of micro-enterprise is often distinguished. In India, this category is
called 'tiny' enterprise which has less than Rs.1.00 lakh invested capital (upper
limits raised frequently). Employment litnits range from number of hired
workers to a maximum of 10 workers. Alternatively, this type of enterprise is
called cottage industry or handicraft or household industryi'.

In the study of Sethurarnan, in Africa, both formal and informal sectors

are the part of the same urban labour market. Hence, their interrelationships
have paramount importance in the labour market. They possess both
competitive and complementary relationship. There are significant linkages
between these two sectors. Informal sector units have forward linkages mainly
with individuals, households and with other informal sector enterprises.
Forward linkages within the formal sector are weak because of the pattern of
goods and services and the inability of the informal sector enterprises to reach
formal sector customers or to turnout high quality goods'2.

John Breman identified there was certain degree of correlation between

well-paid, highly esteemed and qualified work and membership of high caste
on the one hand and poorly paid, low prestige, unskilled work with
membership of a low caste on the other. Even in self-employment, ethnic
relations counted in malung it easy to set up a petty trade and in acting as
informal signs in inhibiting entry of others into those commodity trades.
Employers also relied on various proxy indicators like place of origin, ethnic,
kinship, caste affiliation in recruitment of the workersi3.

The origin of the informal sector is attributed to a massive outflow of

surplus labour from the countryside and inability of the industrial sector to
absorb this surplus labour. Relatives and friends were important in providing
information about jobs and in securing jobs in the informal sector. Relatively a
few migrants came to the city with jobs fixed either by relatives or friends,
others came to the city in search of employment and secured jobs after some
period of time. Some migrants started as self-employed immediately after their
amval. Many of the independent workers had worked for some duration before
they set up their own establishments. Men constituted a relatively larger
proportion of the total migrants.
 Social relations played a dominant role in the process'of migration and
securing of jobs. Particularistic tendkncies like caste, religion or region helped
the migrants in search of employment in the labour marketI4.

Differences in earnings of men and women were also found in the

informal sector. Women workers are paid less 'than men. The surveys reported
that migrants entered the urban labour market at a range of wages rates above
and below minimum. The labour seekers those who move around in search of
employment have their families in their native villages and work for wages just
enough to cover their immediate daily needs rather than for a daily wage.

Workers in the informal sector do not have any workers' organizations.

Even if they exist, they are weak and ineffective in protecting their rights like
employment, increase in wages or improving their working konditions.
It could be considered as the most important reason for the earning differences
between the two ~ectors'~.

Working conditions in the informal sector are comparatively highly

unfavorable with those in the modem sector establishments. The legislative and
organizational protection is generally not available to them for alleviation of
their working conditions. Workers in the artisan business, hotels, trades and
shops have the advantage of more continuous employment while casual
workers have irregul~rwork. Causal workers try to diminish the insecurity of
their employment by establishing dependency relations with employers in the
informal sector and labour contractors. It was as well found that the labourers
sold their labour on credit showing the degree of insecurity of casual workers.
In most cases, the working time was longer than the statutory hours and wages
paid were very much lower disproportionate to their hard work.

Labour mobility is an important variable that affects productivity and

earnings in the informal sector. The informal sector is marked by significant
labour mobility. The labour mobility seems to be largely confined to the
informal sector rather than towards the formal sector occupations. Lack of
appropriate skills among the workers and barriers to skill acquisition have
acted as hindrance to labour mobility towards the formal sector. Labour
mobility is highest in the construction activity. Temporary and casual
employment and low wages would discourage the attachment of workers to an
individual firm. With regard to domestic servants, practically there is no
mobilityi6.

Difficulties in obtaining raw materials are frequently referred to in the

literature in Small Scale Industries in India. Problems that arise in accessibility
for the raw materials that are seen as bottlenecks in the growth of small
producers is particularly emphasized by Gerry in his work on petty production
in Dkar, Senegal. He found that in shoe production the small producers had to
switchover from the use of leather to synthetic materials, since a multinational
shoe company was bale to achieve a virtual monopoly in the purchase of
finished leather and had received considerable government protection. The
main importer of synthetic materials into Senegal then tried to 'reorganise' the
small producers using his own capital and marketing outlets albeit without
succe~s'~.

According to Holmstrom, the entrepreneurslproducers working in small

scale manufacturing came from different social backgrounds. A fust category
includes, those with an industrial or financial backgrounds. This means that
their families are already involved in industrial production and that their initial
capital comes from their family and they borrow from government agencies
only when their firms have already been setup. A second category includes
'technical entrepreneurs' i.e., people who have spent years working in large
factories as skilled workers before setting up their own businesses. A third
category includes producers .who have derived their skills and work on a
hereditary basis of family andlor caste background1'.
 Scott observed that in Lima, self-employed manufacturers found it
increasingly difficult to serve as independent producers and come out as
workers or sub-contractors. Sub-contracting is the common feature in the
footwear and clothing industry although it has been too found in some other
product lines. The existence of this putting out system leads into a chain of
sub-contracting between out workers. For example, a shoe maker who makes
shoes for a small workshop which itself does sub-contract work to the
multinational firm "BATA"'~.

Teszler proposes a combination of criteria for classifying informal sector

industries. The criteria he uses in addition to number of employees are: (i) the
level of technology and (ii) the type of entrepreneurship. Three categories of
micro-enterprises are derived from these criteria:

(i) Individual self-employment

(ii) Collection of group self-employment and
(iii) House-based enterprises employing fewer than ten people

The two categories of small scale enterprises are:

1) SSE's using traditional technology, are increasingly switching over to
modem technology;
2) SSE's using modem technologies and'increasingly linking up with the
rest of the economy and that too with the large industry in particular.

As described by Teszler, the first two types of micro-enterprises concern

about producers who may have a set of tools and skills but very little visible
'enterprise' (in contrast to a great deal of entrepreneurships)20.

According to Elson, the difference between the formal and the informal
sectors lies in the degree of emphasis given to particular factors. For example,
the role of technology, institutional intervention viz., unions, labour legislation,
market fragmentation like capital and financial markets, consumer goods
markets and the supply of labour.
 However, leaving aside the differences in explanations and evaluations
of the basic characterization of "fonnal" and "informal" employment in most
researchers material especially in Latin America and Asia, has remained
remarkably stable over the years. For the most part, the paradigm assumes that
there is broad correspondence between scale of production, employment
categories and labour markets. Production is polarized between large and small
enterprises, whereas employment in the former is mainly based on wage and
salaried labour, the latter consists of self-employment, family labour and quasi-
wage workers such as apprentices, out-source (contract workers) and unpaid
family labour. Within this structure, the 'formal' sector is defined as the labour
market most associated with self-labour-intensive enterprises and consists of
low-paid, low-skilled, causal workers with very few career prospects2'.

Informal sector in developing countries comprises of a large number of

self-employed people who are engaged in small scale, labour-intensive work
such as repairing, petty trading etc. People engaged in these activities are often
regarded as unemployed or under-employed as they cannot be included in the
collection and enumeration of national employment statistics, although they are
highly productive and contribute significantly to the national income.
In general, their work is characterized by a low capital-output and capital-
labour ratios. The informal sector is described here as small-scale and labour-
intensive method of production in the absence of protection and regulation by
the state2'.

Merrick considered social security contribution as a main factor to

distinguish the formal and informal sectors. According to the Bolo Horizonte
survey conducted by him, the "fonnal sector" includes (a) those contributing to
social security institutions, (b) the liberal professions, (c) establishments
involving more than five workers and (d) all workers within the public sector.
The "informal sector" covers (a) all those who do not contribute to social
security institutions and (b) the domestic workersz3.
 M. Santos makes a distiction between the upper circuit, a direct
consequence of technological progress represented by monopolies and the
lower circuit, which groups small-scale activities meant almost exclusively for
the poor.

He describes that the "upper circuit" ineets the requirements of the

capital intensive production and the "lower circuit" is created by the
consumption demand.

Some aspects of the "lower circuits" complementing the informal sector

characteristics as described in the 1972 report are:

(i) Though the technology is labour intensive, indigenous and adopted

to local conditions, it often has considerable potential for innovation.
(ii) Activities are based on cash transactions or on direct and personal
credit.
(iii) Employment is insecure and not permanent. Number of people
employed by each unit is small but as there are numerous such units,
the total number of employees is quite substantial.
(iv) Capital accumulation and reinvestment is low. The first and foremost
objective is to assure daily subsistence of the unit and if possible to
have access to durable consumption goods such as radios, watch,
cycle etc.
(v) Numerous middlemen operate between the initial supplier and the
final buyer, thereby reducing the profit of the former but enabling
many to earn an income.
(vi) Exchanges are made in small quantities as inventories are limited
and working capital is too low and
(vii) In most cases the units do not keep regular accounts.
 Santos concludes that the "lower circuit" should not be maintained in its
present form, though it provides employment and means of subsistence to large
majority. Yet, he does not list out the ways and means of transforming the
"Lower

The International Labour Organization Mission to Kenya makes a sharp

distinction between the informal and formal sectors. The characteristics of the
'informal sector' activities are:
1. Ease of entry
2. Reliance on locally available resources.
3. Small scale operations.
4. Family ownership of enterprises.
5. Adoption of highly labour intensive techniques.
6. Acquiring of skills through and on -job training.
7. Operation in unregulated and competitive markets and
8. Establishment and development without state intervention.

The formal sector presents reverse characteristics viz.,

1. Difficulty in entry.
2. Reliance on imported raw materials and machinery.
3. Large scale operations.
4. Corporate ownership.
5. Capital intensive nature of production with imported technology.
6. Qualification and skills acquired through vocational training and
7. Protected and regulated markets2'.

The Survey carried out in the town of Bonake (Ivory Coast) used the
following five criteria to define the traditional sector, viz.,
(i) the enterprises employing not more than two workers,
(ii) the receipts of enterprises do not exceed a specific amount per
month,
 (iii) the equipment used js rudimentary,
(iv) the labour productivity is low; and
(v) the entrepreneur is not aotively receiving more customers.

According to Atreye Mazumdar, any enterprise that satisfies at least two

of the above criteria was considered to be the part of the traditional secto?'.

In less developed countries, slow growth of wage-eaming employment

has been accompanied by a rapid growth of output, which could be attributed to
the existence of large number of small urban establishments. It has been
recognized by the development policies to concentrate on the poorest sections
of the informal sector. Consequently, International Labour Organization
(ILO)/ United Nations Development Programme (UNDP) and Employment
mission to Kenya adopted the term informal-formal dichotomy mbdels like
"modem-traditional". These are regarded as "non-dynamic" as they make no
significant contribution to the provision of goods, but, the informal-formal
dichotomy would not pre-judge the un-enumerated small scale sector as non-
dynamic2'.

A different view put forth by John Weeks stressed the factors which
were external to the characteristics of the enterprise. He laid down specific
emphasis on the role of the state and based his two sector distinctions on "The
organizational characteristics of exchange relationships and the position of
economic activity vis-a-vis the state". Weeks claimed that the formal sector's
growth was itself pestered by government measures like tariff and quota
protection for import substitution industries, import tax rebates on capital and
intermediate goods, tax holidays, low interest rates, selective monitory controls
and licensing measures which protected the formal sector. He, however,
maintained that this did not 'make the informal sector static in any sense'.
 Operations in the "informal sector are characterized by an absence of
such benefits". ecause of its limited access to resources and the freely
competitive nature of its products and factor markers, it is characterized by
small scale operations, labour intensive techniques, often low income levels
and indigenous ownership28.

The significant question was to identify the structural conditions under

which the dynamic change was "involutionary or evolutionary" in nature.
Involutionary development reflected a static or a slowly growing output per
head and capital accumulation and evolutionary where they were rapid. He
found that a dynamic and evolving informal sector was beneficial in many
ways. Further, he implicitly assumed that the linkages between the two sectors
were benign and therefore, needed to be promoted f~rther*~.

Souza and Tokman, through their survey in Latin America defined the
informal sector as all persons whose income is below a certain minimum level
(usually the legal minimum wage) they assumed that the typical low
productivity activities of the informal sector also contribute to low income".

Harold Lubell says that the informal sector consists of the residual
labour market as the last resort, wherein people enter as self-employed, low
income producers of marginal goods and services for lack of any other means
of earnings3'.

While distinguishing the large and small scale sectors, Roberts describes
the large scale sector as firms having financial and professional services with a
large network of retail and wholesale establishments and also transport
'

facilities connecting the markets and possessing substantial amounts of capital

equipment. He differentiates the small scale sector as units attending to craft
workshops, repair shops, petty traders, self-employed artisans and the activities
which are not carried out by the large scale sector. The small scale sector is
non-traditional either in the tools and techniques it uses or in its type of
activitq2.

Schmitz quotes that the extenral relations of micro and small scale
enterprises often are serious sources of constraint on growth. External relations
include financing systems, relations with taw material and technology
suppliers, marketing channels and sub-contracting arrangements. From the
point of view of micro and small scale producers, the extent to which they can
influence external relations is very important for the continuous maintenance of
production33.

According to Watnabe, sub-contracting is a type of relationship where

they are used or sold by the contractor. Such a relationship includes a contract,
verbal or written, setting out the specification of the order. The €wo major
types of sub-contracting found in manufacturing are commercial sub-
contracting, in which a completed product is delivered by the sub-contractor
and sold by the contractor; and industrial sub-contracting (in various forms) in
which a part of the production process is carried out and used as input by the
c~tracto?~.

Grown and Sebstad have indicated important indications in the

motivation of producers at changing levels of poverty. For the poorest people,
survival is the goal. Since production must meet the immediate needs,
investment is minimal (or borrowed) and realization of income is on the
shortest term basis possible35.

"Dalia-Walahs" are shoe makers in Agra who produce and sell shoes on
a daily basis in the local Hing-ki-Mandi Market. They get their raw material
on daily credit basis and sell the finished shoes on the same day. In fact, this
group corresponds to the category of 'dependent' producers in the continuum
of casual labour relations depicted bjr Brumley and Geny in 1 9 7 9 ~ ~ .
 Income levels in the informal sector received greater attention in all the
surveys. There was a continuum of wage rates from one end of the spectrum to
the other. Wage rates not only varied between formal and informal sectors but
also within the informal sector and even in the case of the labour of comparable
quality with similar work responsibility. It is noticeable that earnings were
relatively lower in many occupations in the informal sector. Incomes from
domestic services were also considerably lower. Occupations requiring a
certain amount of skill like those of watch repairers, carpenters, automobile
mechanics, having a higher scarcity value than others had more potential for
earnings. Gross earnings of the informal sector entrepreneurs were around four
times the monthly earnings of tradesmen to whom they were considered
comparable. These tradesmen, in turn, earned about 50 per cent more than the
prevailing minimum wages3'.

Kalpagam recapitulates that informal sector includes both rural and

urban sectors and would encompass the categories of self-employed and wage
workers in both manufacturing and services activities that are characterized by
ease of entry, reliance on indigenous sources, family ownership of enterprises
small scale operation, labour intensive and adopted technology, skills acquired
outside the formal school of system and unregulated and competitive market.
Thus, it would include workers in household production working directly or
under some form of putting out system and small workshops and factories
including labour in the formal sector, as well as those engaged in petty
occupations and all other forms of casual labour in rural and urban areas3'.

While observing the problems of leather industry, Santappa (1981)

states that till now leather industry is oriented towards catering to the
requirements of foreign, mainly western countries. The technology in vogue is
based on foreign know-how: In this context, the need for research and
development activity has greater significance. In developing countries,
national institutions like Central Leather Research Institute (CLRI) have to take
up the responsibility and induce the industry to sponsor research and participate
in collaborative programmes with a view to develop the necessary technology
and improvements thereon to suit the changing trends in fashion39.

Sargunar (1981) observes that Indian tanners have to face severe

competition in the world markets. The best' and correct way to compete
successfully is by making Indian leathers competitive. This could be achieved
by pushing down the cost of production as well as by lowering the margin of
profits. The motto of leather industry should be "less margin and large
turnover" and not the reverse. If we are able to do this, no other country could
compete with us in the world market4'.

The general awareness towards protection of environment in the country

started only in the beginning of 1980's with the establishment of ;2 separate
ministry of environment and forest by the Government of India and its
counterpart ministries in the State Government. SimuItaneously, various State
Governments started setting up Pollution Control Boards for establishing
norms and enforcing these on various industries. Tamil Nadu Pollution Control
Board (T.N.P.C.B) was set up in 1982. TNPCB became active in the area of
pollution control right fiom the start and all industries including the tanning
industry were directed to conform to the norms specified with regard to the
discharge of treated effluent. In the early years, the tanners neither had the
knowledge or the resource how to tackle this problem. Besides treatment of
effluents, much technological advancement has taken place in reducing the
quantity of water and chemicals in processing and recycling of liquors,
recovery and reuse of chromium, better exhaustion of chrome and chemicals
etc. Here again most of the existing units suffer for want of space and proper
layout to adopt the modem techniques, which are important in minimizing
pollution load. The relocation of tanneries to a new place on the out skirts of a
city or town (not very far fiom the existing location) within 3 to 5 km radius of
the green belt area seems to be only ready solution for solving the pollution
problem and ensuring the growth and prosperity of this industry4'.

According to Dr. K.Elangovan, Executive Director, Council for Leather

Exports (CLE), no specific relief package has been announced in the union
Budget 2008-09 for the leather industry, which has been adversely affected on
account of Rupee Appreciation. The Council had earlier sought various relief
measures from the Government in its pre-budget proposals. Some of these
proposals were as following:

1) To Exempt footwear, footwear components, machinery and equipments

from Central Excise duty.
2) Reduction in Central Excise duty on inputs required in the manufacture of
footwear components.
3) Enhancement of duty free facility for import of chemical inputs for leather
products and leather garments exporters from 3 per cent to 5 per cent,
implementation of a 3 per cent duty free import scheme for finished
leather exporters &
4) Certain duty concessions for the safety footwear sector.

As the above proposals of the Council have not been considered in the
Budget, the Council intends to submit suitable post-budget memorandum to the
Government for consideration and implementation of the' Council's
suggestions4*.

The Indian leather industry, especially the footwear segment, is making

a mark globally even as China, dominating the low-cost segment, struggles to
keep production costs under control.

American buyers are .now looking at India, as traditional Chinese

suppliers witness a major increase in input costs, said representatives of the
Indian Footwear Components Mpufacturers' Association (IFCOMA) at the
launch of the Footwear Machinery and Technology exhibition.

According to them, India's leather goods export, especially of the

footwear segment is increasing. Although the second largest producer of
footwear in the world, it lags far behind China in exports.

"The total export of leather goods stands at $2,982 million during

2007-08 in comparison to a meager,$290 million in 1956-57, says Michael
Duck, Senior vice-president of the Asia Pacific Leather Fair Ltd.

In comparison to China's 900 million pairs, India exports just 100

million pairs to earn $1.210 million, but it is looking forward at doubling the
exports in the next five years to come.

According to Duck, India accounts for 2.65 per cent of the world trade
in leather and leather goods. But with the government setting an export target
of $7 billion for the year 2010-1 1 the country is all set to a gear to emerging as
a major player in the world, he said 43.

The footwear sector has set a record. The annual production has crossed
2,095.3 lakh pairs, which has been the highest since 2003. The strong overseas
demand resulted in the impressive surge during 2006-07.

Maintaining its upward trend for the seventh consecutive year, the
leather footwear sector rose by 6.4 per cent during the year ended March 2007.
Rubber footwear made a recovery rising by 12.4 per cent fall registered during
the last year. Indian Shoe Federations, a body representing footwear exporters,
executive director V Alexander said that southern states accounted for a
whopping 40-50 per cent of the total footwear production in the country, while
the north came a close second. The domestic demand is yet to be explored to its
full potential. The demand has been shifting from low-priced footwear to the
medium and high range. ,
 For the quarter end March 31, 2007, the segment has continued to
register a strong sales momentum. This is reflected by the aggregate sales of
five footwear companies, that have seen a 15.6 per cent spurt over the previous
quarter. Among the top footwear brands are Bata India, Liberty Shoes, Mirza
International and Sarup Tanneries.

Efforts by footwear majors to restructure their retail infrastructure have

also shown positive results. Bata India has reported a 14.5 per cent growth in
the net profit during March quarter. The company began its restructuring
exercise in February 2007, which included a Rs. 3.7 crore initiative.

Several footwear firms are on the tie-up mode. Bata India is in talks with
Reliance Retail for a business arrangement. India is also witnessing as influx of
low-priced footwear from Malaysia, Vietnam, Indonesia and Nepal. After the
anti-dumping duties of 47 per cent to 67 per cent on Chinese footwear, imports
from the Chinese mainland have started going down44.

1.2 SIGNIFICANCE OF THE STUDY

During the last four decades, the Indian Leather Footwear Industry has
undergone remarkable structural changes: bulk of the production activity has
been shifted from the rural to urban centres due to migration of artisans from
countryside to the urban areas in search of employment and liveliliood. Several
new units have sprung up in the urban centres for the fabrication of open type
footwear, full shoes and footwear components for exports resulting in the
opening up of new avenues of employment to the younger generation. The
individual cobblers mustering the support of their family members have also
setup numerous household units in several urban peripheral areas to meet both
the domestic demand for fo~twearand also to supply to the export agencies.

With the influx of leather and non-leather footwear (rubber, plastic and
PVC), the consumption pattern among the rural population has tilted in its
favour. Footwear in different styles, fashions and designs which are made
available by the urban units are fast becoming popular in the rural markets too
as they would meet the tastes and needs of different income groups of gents
and ladies. The fill-fledged sales outlets stocked with large variety of products
in different price ranges coupled with the marketing efficiency, quality
~ promoted their sales in contrast to their
standards, continuity of s u p p l ~have
competitors. The traditional artisan though possessing rich skills can produce
only very few types of footwear which are acceptable only to a small segment
of rural population. Neither can the; produce footwear with different types of
material nor can they innovate designs to meet the changing consumer's tastes
and demand. To maintain a full-fledged footwear shop neither the artisan has
financial resources nor his production level permits him to stock and sell to all
income groups in different designs, prices, ages and sex-wise cliente!e.

It seems that 60 per cent of the consumers are looking for low/medium
priced footwear and as such the country has better scope in this segment of
market, provided sufficient comfort, adequate quality and proper delivery
schedules are maintained

Non-leather materials has also been extensively introduced into

footwear production to supplement/minimize/substitute(to some extent) the
use of leather, which is costlier.

Inspite of its multi-lateral growth and of its national importance, the

industry suffers woefully from the non-availability of authentic and
comprehensive information and database on various facets of production,
inputs and other source of supply (with the exception of export data). Reliable
information is not available in general and more particularly on the status of the
decentralized and small scale sectors or on their problems and prospects, extent
of complementarily competition from non-leather footwear (sector wise). It has
been well recognized by the industry, trade and government agencies, that
reliable information and data base of different production aspects of footwear is
essential and this study is proposed to cover in detail all the aspects relating to
the informal sector of the leather footwear industry.

Inspite of the structural, organizational and technological developments

coupled with favourable government policies towards the export oriented
footwear industry, the home based footwear production centres located in
different urban areas withstood the competition from the mechanized units on
account of their strong traditional skills immensely supported by the vast
domestic market. Hence, it was felt necessary to have an indepth study of the
socio-economic conditions of the leather footwear manufacturers in formal
sector. Chittoor District of Andhra Pradesh has been chosen for the field
survey and intensive analysis.

1.3 SAMPLING DESIGN

The study is restricted to Chittoor District of Andhra Pradesh. This is
mainly because of the objective of intensive study of the problem Chittoor
District consists of three revenue divisions namely Tirupati, Chittoor and
Madanapalli. In all, there are 11 towns and 66 mandals in these three revenue
divisions.

The total number of household units is 381 according to the field survey.
Among them, 191 were in rural and 190 were in urban areas. Among the rural
areas 50 per cent of the available mandals have been selected at random. All
the shops in the selected mandals are included in the study, Using stratified
random sampling with proportionate allocation the following sampling scheme
has been derived:
Total available units 1 Total sample
Rural = 191 Rural = 120
Urban = .I90 Urban = 120
Total = 381 Total =; 240
Source: Primary Data
 Division wise rural sample

Chittoor division 33 out of 53

Timpati division 30 out of 47
Madanapalli division 57out of 91
Total . 120 191

Division wise urban sample

Sampling Scheme

Tirupati Division I Madanapalli Division I

Rural 33+30+57=120
240
*Units are covered until the requirement is fulfilled
1.3 DATA COLLECTION
The research investigator approached the respondents individually at
their residences and at shops. The purpose of the survey and importance of
their role in it were revealed clearly to them. AAer establishing proper rapport
between them and the researcher before the schedule was administered to them.

1.4 OBJECTIVES OF THE STUDY

The following are the specific objectives of the study:

1. To study the present status of the informal sector of footwear industry.

2. To study the employment pattern and wage structure in this sector.

3. To study the cost of production of different types of footwear in the

informal sector.

4, To examine the socio-economic conditions of sample households.

5. To study the factors contributing for the migration of rural artisans to the
urban centres and

6. To identify the problems in acquiring various raw material inputs.

1.5 HYPOTHESES
The following hypotheses were formulated for the present study keeping
in view of the above objectives:

1. There is no significant difference in the wages earned by the footwear

artisans'of informal sector of the footwear units.

2. There is no significant change in the production practices and materials

used in the informal sector of the footwear units.

3. No factor is contributing significant for the migration of rural artisans.

4. The problems in acquiring various raw material inputs do not have

significant importance in the informal sector of the footwear units.
1.6 DATABASE
The secondary data were compiled from the various official records like
the Census Reports, KVIC, Hand Book of Statistics, Chittoor District. Report
of Nationwide survey on Leather product Units in India 1997, Central Leather
Research Institute, Chennai. The data availed within the reports of the Council
for leather Exports, Chennai, the publications on footwear manufacturers by
International labour organization. The Internet, Indian leather 2010,
Newspapers, and the articles published in various leather journals. The primary
data have been collected through a well designed schedule for the year 2007-08
under reference.

1.7 TOOLS OF ANALYSIS

A comprehensive schedule covering all the dimensions of the research
problem is constructed and canvassed among all the sample household units
that were selected for detailed investigation. Data are analyzed using
percentage, cross tabulations, chi-square tests, and analysis of variance i.e., F
test.

1.8 LIMITATIONS OF THE STUDY

The contribution of the present study lies in providing process analysis
of social economic conditions of leather footwear manufactures in informal
sector. As this study is limited to 240 units, it may not be possible to generalize
the findings of this study for the entire state of Andhra Pradesh but the process
of analysis undoubtedly. holds a understanding of the broader features of the
stages of message before its adoption or rejection.

The study confined mainly for the leather and mixed leather footwear
producing units of the informal sector. However, as and when required the
relevant non-leather footwear information has also been referred to make the
analysis more realistic.
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