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Child Labour in the Diamond Industry

	Introduction
	Press Release
	Background Report
	Child Labour in Diamond and Gemstones in India
		English
		Français
		Español
	Unique Agreement on Violations of Trade Union Rights Agreement on Code of Conduct between the Norwegian Confederation of Trade Unions and the Norwegian Goldsmiths' Association

INTRODUCTION

This campaign was made possible by the co-operation between UADW and this project.

The co-operation included research and network building in India, the actual visit to India by UADW officials and a professional video team, and production of the campaign. To this last part, the ICFTU also contributed its know-how as well as financial resources.

Other elements in the co-operation between the project and UADW are a global seminar on child labour in the diamond and gemstone sector (Tel Aviv May 1997) and a photo exhibition on child labour at the Oslo Conference on child labour (October 27 - 30 1997).

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PRESS RELEASE

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BACKGROUND REPORT

INDIA AND CHILD LABOUR

The widespread existence of child labour in India is well documented, despite the existence of provisions in the Indian Constitution and in law prohibiting child labour. Various legislative and judicial initiatives in recent years have given further force to these provisions. However, notwithstanding these good intentions, child labour is flourishing, and makes a major contribution to India’s Gross Domestic Product.

Estimates of the numbers of working children in India vary between 20 million and up to100 million. Due to the clandestine nature of much child labour, accurate figures are hard to obtain. Over the last ten years the government has outlined policies, drafted legislation and created programmes to deal with child labour, but despite all this, child labour is on the increase. Evidence from projects supported by the International Labour Organisation, by trade unions and by non-government organisations has shown that the problem can be tackled effectively, and in the state of Kerala, where the state government has put a high priority on education, the incidence of child labour is only a fraction of the level in neighbouring states.

The nature of child labour is changing, with increasing numbers of children in urban areas working. There is clear evidence that, as industries such as the gemstone and diamond industry have grown, they have acted as a magnet for poor rural families to move into cities, and often whole families end up working, particularly where schooling is inadequate.

India is the world's biggest diamond and gemstone cutting centre, with the biggest centres for this at Mumbai, and Surat. The gem and jewellery industry has seen a dramatic rise in recent years, growing from 1 % of India's exports in 1960 to 17% of exports in 1994/5, and is now, alongside agriculture, the country’s biggest export earner. The gem and jewellery trade consists of importing, polishing and cutting (or otherwise treating) and then exporting diamonds, gold jewellery, coloured gemstones, pearls, non gold jewellery, synthetic stones and fashion jewellery. Because of their greater individual value, diamonds contribute between 85 - 88% of the total export value of gems and jewellery.

Part of the explosive growth in this industry can be directly attributed to the exploitation of cheap labour, including child labour, as it is difficult to form unions for the reasons given below. Many are forced to supplement their income by sending their children to work instead of school. Evidence from the gem processing industry in India has shown that providing several hours per day of education to working children, while it did have some positive effects, is no substitute for full-time education. Working children, particularly girls who have extra domestic work at home, were simply too tired to get the best out of the hours of schooling provided.

Nevertheless, finding a job cutting and polishing diamonds and gems is often seen as the best available option for poverty-stricken families. The enormous potential of the industry to provide lasting benefits to local communities is still largely untapped. This is exacerbated by the way in which many employers use artificial arrangements to avoid labour laws and tax, depriving the local and national governments of tens of millions of dollars in much-needed revenues which could be used to pay for schools and other social programmes.

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DIAMONDS

Diamonds are fascinating, both in their ability to catch the light, and in their ability to fetch high prices. However, what is as fascinating as the diamond itself and the prices it fetches, is the way in which the diamond industry works.

The industry has three main stages.

1. mining,
2. cutting and polishing of raw or "rough" diamonds; and,
3. trading and retailing

These processes can happen within countries - some diamonds are mined and processed in the same country, or as in the case of most diamonds, mined in one country and cut and polished in a second country.

While there are 19 countries where diamonds are mined, the major producers are Australia, Zaire, Botswana, Russia, South Africa, Angola and Namibia, and a number of lesser producers such as Sierra Leone and Zimbabwe. As competition intensifies in the diamond industry, the major diamond mining companies are actively seeking to mine deposits in places such as Canada and in the north of the Nordic countries.

The ‘big four' diamond cutting centres are Antwerp, (Belgium), New York, (US),

Ramat Gan (Israel) and Mumbai (India), but there are additional smaller centres in Thailand, Sri Lanka, China and Russia. The 'big four' cutting centres are also the main diamond trading stations, with the addition of Hong Kong, which services buyers in Asia.

In general, the diamond trade has continued to generate increasing profits, with most markets stable or growing, although sales in Asia, particularly in Japan, are sluggish.

The majority of the world’s diamonds are traded through the Central Selling Organisation (CSO), the marketing arm of De Beers, based in London. De Beers is the biggest player in the world diamond trade controlling the sale of most of the world’s diamonds. The CSO traces its origins to efforts by De Beers in the 1920’s to organise and regulate the diamond trade, and it has since that time lived up to its name, virtually controlling the trade in diamonds.

An important exception to this is the large Argyle Diamond mine in Western Australia, which withdrew from the CSO in mid-1996 to market its own product, consisting mainly of industrial diamonds, lower priced gem diamonds and some very expensive "pink" diamonds which fetch huge prices on international markets. Argyle is controlled by Rio Tinto Ltd through its 60% holding in the Argyle joint venture. Rio Tinto is the Australian arm of UK-based mining company Rio Tinto PLC. The remaining 40% of the Argyle joint venture is owned by Ashton Mining Ltd, one of the world’s major diamond mining companies. Argyle is the main supplier of rough diamonds to the Indian processing industry, and is thought to keep over half of the estimated 5,500 Indian processors busy.

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Diamond processing in India

The major supplier of diamonds into the Indian market is the Rio Tinto-controlled Argyle mine in Western Australia, followed by De Beers/CSO diamonds and a small but growing illicit trade in diamonds smuggled out of Russia. While De Beers now admit that there is a child labour problem in the sector in India, they claim that they do not use cutters who exploit child labour. During recent Parliamentary hearings in South Africa, De Beers pointed to the Rio Tinto-controlled Argyle mine as "supplying many of the Indian cutters" (Mail and Guardian, South Africa, 22 August 1997).

Diamond cutting and polishing is concentrated in Western India - in Mumbai, Surat, Navsari, Bhavnagar, Ahmedabad, and has recently spread to parts of Southern India. Mumbai is the primary centre for diamond imports and exports, including some diamond factories which are operating in the Santacruz Electronics Export Processing Zone (SEEPZ). While the sale and production of diamonds is monitored through Mumbai, 60% of the cut and polished diamonds exported from India are handled in and around Surat. There a multitude of subcontractors, organised on a pyramid structure, process vast quantities of diamonds.

In 1995, India imported 92 million carats worth of diamonds to be cut. India cuts and polishes 70% and 40% of the global diamond yield in terms of weight and value, and because of this has the world's largest workforce involved in the trade, with about 800,000 people engaged in diamond cutting and polishing, and as many as 700,000 involved in other aspects of the diamond trade. Wages equal just 1 % (or less) of the wholesale price for which each diamond is sold, and most workers do not receive any social benefits. The vast majority of the workforce - some estimates are as high as 95% - is not organised into any union, and workers’ incomes often depend on whatever the employer or middle-man decides to pay them. In many cases, workers trying to organise or join unions have been dismissed and even threatened with guns. Because of its reliance on traditional labour intensive methods, the Indian diamond cutting industry has concentrated on small diamonds with low value and low risks.

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Working Conditions in the Diamond Industry

Diamond cutting and polishing is done in large sub-divided factories and in tiny cottage-based artisan shops. Factories which employ more than 10 workers at one premise have to be registered under the Factories Act and the Shops and Establishment Acts, which would help to regulate working conditions. However, it is extremely common for owners to divide ownership among family members on paper to avoid having to come under the provision of these acts. In many cases, a number of small companies divided into different 'ownership" in this way operate under one roof, as the filmed evidence of the UADW showed.

In Mumbai, about 28 - 30% of the total workforce is female, and the majority are aged 15 - 40, while in diamond factories in Southern India, females account for a much higher percentage of the workforce. There is a clear gender-based division of labour, as the more highly skilled jobs are allotted to men, while the lower skilled jobs are allotted to young women.

The workers learn to work the diamonds by training as apprentices, and they often have to pay fees for the training period. After an initial training period - which can vary from six months to three years, depending on the region - they are paid a stipend. Because it is a very labour intensive industry this system of apprenticeship means that employers can employ a worker for a very low wage during the 'training period', which is usually much longer than is actually learn the skills.

The industry operates a piece-rate system of pay, so the average day can be as long as 12 -14 hours, without overtime or weekly holidays. Relatively speaking, workers early more than that of workers in other industries, and so the average wage of an unskilled adult is between 25 - 50 rupees per day, for semi-skilled it is 75 - 85 rupees per day, and for highly skilled workers it is between 135 - 150 rupees a day. Because many of the workers come from drought-prone areas, where they have witnessed the opportunities for agriculture dry up in the last few years, diamond cutting is seen as a good trade to be in.

Despite this, workplace condition are generally bad, being congested and poorly lit and ventilated, and over half of the industry's workforce suffer from work-related ailments such as kidney dysfunction, tuberculosis, lung disease, stomach problems, wheezing, pains in their joints and eye sores. These are all ailments which could be prevented if measures were taken to control occupational health hazards. Due to the difficulties in organising unions in the industry in order to improve wages and conditions, many parents are forced to send their children to work in order for the family to survive.

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Prevalence of Child Labour in the Diamond Industry

In correspondence with the UADW, De Beers maintain that the prevalence of child labour in Indian diamond cutting is slightly over 3% of the total workforce (this would mean around 24,000 children), mainly in the "traditional" rather than "modern sector of the industry. Trade union officials in Surat City, where the problem is most serious, estimate a much higher level in that city, as high as 25%. Other estimates put the prevalence at 10% (with an average age of 12 years old) and 20%.

Whatever the actual figures, it appears that even on the most conservative estimates, over 20,000 children are working in diamond processing in India. Much useful information on the situation of these children was obtained by the Indian Government in 1996 through surveys involving 1,851 children working in the diamond industry and their families. In these families, an average of 40% of the children were workers. The families interviewed tended to fall below the poverty line, from which it is clear is that one of the main reasons for child labour in the diamond industry is poverty. As the children are drawn into the industry and do not go to school, the cycle of poverty is perpetuated.

A researcher from the Universal Alliance of Diamond Workers visited families in Surat in June 1996, and parents of child workers explained that their earnings largely depended on the regularity of the power supply to the industry, and so on the number of days they were able to work each month. Many of the parents saw little prospects for their children to get a good education, and hope that the entry of their children into the diamond industry will enable the children to eventually escape from poverty, which they realise they themselves will never be able to escape.

According to trade unions and NG0s in Surat there is another category of children in Surat who live in the workshops themselves, and start working at an early age. These children usually accompany the adult workers who migrate to the city, and stay within the workshop.

The average age of the children was 12 years old, and they work for 12 hours a day, without an employment card or pay slip. They are paid on a piece rate basis, which is 60 - 70% of the adult workers, once they have served an apprenticeship and acquired the same skills.

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GEMSTONES

The term 'coloured gem stones' covers precious, semi-precious and synthetic stones. Besides diamonds, precious stones include emerald, sapphire and ruby, and semi-precious stones include lapis lazuli, turquoise, onyx, amethyst and topaz.

India supplies 95% of the processed and export emeralds in the world market, 85% of rubies and 65% of sapphires.

After diamonds, coloured gem stones comprise the next most important category in the total exports of gems and jewellery from India, and contributed 3% of total exports in 1994 - 5. It is a fast-growing industry, and increased by 42% in value between 1993 and 1994/5. The city of Jaipur is the main centre for the gemstone industry. In 1994/5 Jaipur contributed US$115 million to the total exports of coloured gem stones of US$141.46 million.

The USA is the single largest importer of gems and jewellery from India (29% of total gems and jewellery exports in 1994/5), followed by Hong Kong, Belgium and Japan. Total imports of precious and semi-precious stones other than diamonds into the European Community in 1989 amounted to US$600million, 10% of all imports in this field.

Gem stones are an important industry for India in terms of foreign exchange and for employment. The main competitors are Switzerland, Israel and Hong Kong.

Gemstone working is largely an informal sector activity, as many workshops are located in the homes of the master craftsmen, or in little verandas and small workshops. It is highly labour intensive because of the special features of the work - raw coloured gemstones, such as emeralds are relatively soft stones which could break up if worked by automatic machines, so the tools used in Jaipur have changed little over the last two centuries.

The gem industry does not come under any labour laws, whether it be the minimum Wages Act, the Factories Act or the Child labour Act. This may be because the informality of the employment structure means that it is difficult to say who is working for whom, and although many of the manufacturers have their own permanent employees, who have been working there for several years, they do not have permanent status in a legal sense, and so are not paid if they are sick or when demand falls. Nor are they entitled to any benefits under the Factories Act because these work units are deliberately kept small in order to escape being classified as a factory.

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Adult wages and working conditions

The wages of adult workers are generally slightly above the legal minimum wage, which makes the industry attractive for poor families, which see the industry as a way for upward mobility, especially for their children. Employers and contractors find child labour cheap and therefore economically attractive, and many parents let their children work because it is one way of supplementing the meagre family income.

Because the majority of manufacturing units are situated on small verandahs at the side of the street or inside the home, they are often very congested, and lack facilities, water and toilets. Many units are lit only by daylight, so when the sun goes down, work stops. This also means that at the back of the unit, it is often very dark, causing eye strain, and older workers constantly complain about their eyesight.

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Child labour

While children have often learnt the craft of gemstone working from their parents, the sudden increased international demand for gem stones has led to the growth of the industry which in turn has led to the rise in the employment of children under 14 years of age. Many of these new gemstone working units are located in areas inhabited by poor Muslim families, where (principally non-Muslim) unit owners can take advantage of the large reservoir of child labour close by. In addition, many of these Muslim families are disillusioned with the education system in Jaipur, particularly when the schools are run by non-Muslim teachers, and prefer to send their children to work, rather than to have them hanging around in the streets. As with the diamond trade, some parents also want their children to learn the gemstone trade, in the hope that they will be able to work their way out of their poverty. Unfortunately, as the children do not learn to read, write or calculate, it proves impossible for them to break out of the cycle of exploitation and poverty.

In Jaipur, Rajasthan, where 95% of the exported gem stones in India are cut, shaped and polished, there are around 20,000 children among the 200,000 gem workers, of which between 85-95% are Muslim, and the remaining 5 -15% are Hindu. In Trichy, Tamil Nadu, where the remaining 5% of gem polishing takes place, there are 10,000 children out of the total workforce of 60,000.

The children, like the adults, work 8 to 10 hours a day, but earn a small part of what their adult colleagues earn. In general the children are given the work of 'joining', preshaping, and polishing the stones. Children in this industry are engaged as "apprentices" for as long as five to seven years, and during their first two years do not get paid a wage except for occasional small sums for example on festival days. After two years, the child is paid around 50 rupees a month, when s/he is doing work of the value of 250-300 rupees a month, and by the time the child is 14 or 15 years old, and has acquired the skill of gem polishing, s/he will earn 150 - 200 rupees a month, whereas an adult gets 500 - 600 rupees for the identical work. In a few cases, small wage increases for the children have done little to improve their circumstances, but have had the effect of drawing even more children into the workshops.

Muslim girls who work are doubly burdened: because of the "purdah" system, they are not allowed to work outside the house so work full time on the gem trade at home, while combining this with helping their mothers to run the home.

The working conditions in this industry were poor, and children suffer from damaged finger tops, caused by blistering, followed by constantly dipping their hands in dirty water as part of the process. They also suffer from, backache due to sitting in the same cramped position for 8 - 1 0 hours each day, and fever from keeping their hand continually in cold water.

Nearly 50% of the child labour force consists of children whose parents either have an uncertain income, or live in abject poverty. Some of the parents feel that they prefer their children to become gem workers, rather than to go to school (where schools exist), as schools are severely under-resourced and unable to offer a relevant education. Interviews with working children showed that virtually all would rather go to school than work, and that they wanted to "become a policeman to catch thieves and save the world" (Sabir, a boy aged 9) or "become a doctor to cure people or prevent them from illness, free of charge" (Sabina, a girl aged ten).

There also appears to be an element of bonded labour in the industry. It was accepted that the parents of about 80% of the children who worked full time had taken loans against their children's labour, but these loans did not generally exceed 500 Rupees.

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PROBLEMS IN THE DIAMOND INDUSTRY IN SIERRA LEONE

While this report has laid some of the blame for the problems in the diamond industry at the countries involved, it is also clear that the business community must do a great deal more to ensure that children are not exploited and that basic labour rights are not violated. Too often, the social impacts of business activity are ignored or set aside in the name of profit, and when governments try to improve the situation, companies simply move to a country where they can carry on as before.

Sierra Leone is a country at war, and fighting has caused the displacement of nearly half of the 4.4 million people. Over these 2 million people who have fled their homes, nearly 400,000 have fled over the border into Liberia and Guinea.

Sierra Leone is one of the diamond producing countries where economic interests are one of the driving forces behind the outrageous violence which has become the norm. Children are amongst the principal victims of the violence, and increasingly, are drawn in as perpetrators of violence themselves. While the civilian population lacks the most basic forms of security, mercenaries are assisting the government in securing or recapturing the rich mineral areas. Dealers in Antwerp, and other intemational centres are importing, often through illegal channels, diamonds worth millions of US dollars.

Diamonds are the country's principal export, and these mineral resources ensure that foreign interests maintain a close involvement. The USA, the UK, and Belgium-Luxembourg are the main destinations for diamond exports, but now most of the production has been diverted to the informal market, and the warring factions aim at capturing the mineral rich areas, in order to finance their military operations.

There is evidence that inadequacies in the current regulations concerning the importation of diamonds into the world's biggest diamond markets, allow diamond dealers in Sierra Leone to profit from the current chaos in the country, as the products of illegal mining operations easily find their way into the markets in Belgium and other countries.

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GEMSTONE TREATMENT IN THAILAND

The existence of substantial numbers of child workers, particularly girls, in several sectors of the Thai economy is well documented, along with widespread violations of basic labour standards in industries such a toy production and garment production. Commercial sexual exploitation of children in Thailand has also been the focus of considerable attention, particularly in recent years.

Studies on the incidence of child labour in Thai manufacturing industries (including gem polishing), have produced aggregated data on the prevalence of child labour, however dis-aggregated data for the gem polishing industry is difficult to obtain. Reports from trade union sources have pointed to the existence of child labour in the sector, however recent (anecdotal) reports point to a significant decline in the exploitation of child labour in Thai gem polishing following initiatives taken by the government in 1991.

Adult wages in the sector are generally low, and while unions have been successful in organising workers in a number of workshops, employer hostility to unions and the subcontract nature of much of the production has served to stop wages from increasing. Working conditions are often very poor, with unsafe electrical installations, repetitive work, poor ventilation and lighting and unsafe machines all contributing to high levels of industrial illness and disease.

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THE SOLUTIONS

The diamond and gemstone industries are extremely important to the economies of several countries where mining and processing takes place, most particularly in India where it where they have become a mainstay of the economy. The findings of reports commissioned by unions, ngo’s, governments and even employers indicate that there are nevertheless serious problems in the industry, including tens of thousands of children working full-time and large-scale avoidance of taxation and labour law. These industries could make a far greater positive contribution to the development process, rather than exploiting children and paying poverty wages if all sides in the industry, and the governments concerned, work to eliminate the gross exploitation which occurs daily and to ensure respect for basic international labour standards.

Governments which take concrete action to tackle child labour and other labour rights violations often have reason to fear that the companies which profit from exploitation will simply re-locate to another country where they can continue to violate basic standards. This problem can only be resolved through comprehensive global rules, set through cooperation between the ILO and the World Trade Organisation and based on core ILO standards. Such a multilateral approach is all the more important given recent government initiatives in major importing countries (such as the USA and in the European Union), including laws to stop imports of goods made by forced and child labour.

The trade union movement proposes the following main elements of a comprehensive strategy:

• the large multinational corporations which dominate the industry should, as a minimum, respect the core international labour standards covering child labour, forced labour, discrimination and union rights throughout their operations, and should also ensure that their local business partners do the same;
• those businesses which profit from child labour and other breaches of labour law should be penalised, and should be made to pay compensation to those who have been exploited;
• the governments concerned should ensure that labour laws, in line with international labour standards, are fully applied and enforced, and should ensure that companies in this sector pay their fair share of tax;
• governments should also follow the lead of the many developing countries which have made education a high priority and allocated adequate finances to ensure a decent, compulsory education for every child, providing the basis for sustainable and equitable development; and,
• the expertise of the International Labour Organisation should be used to help prevent child labour and to rehabilitate working children and get them into school. Increased tax revenues from proper application of company tax laws could help pay for this, supplemented by financial support from the industry and development aid funds.

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SOURCES:

The principal sources for this document include reports prepared for the UADW and documents obtained from the World Wide Web and commercial databases. Further information on the source material may be obtained on request from the ICFTU, Bd Emile Jacqmain 155, B1210 Brussels Belgium, telefax 322 201 5815.

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