At least 3 lakh Surat diamond workers sent on ‘vacation’, but reality isn’t as sparkly as it sounds

Surat's diamond industry hit by global slowdown, unrest, and floods in Africa, from where raw diamonds are sourced. Workers union says 20% companies have halted operations.

A small diamond-polishing unit in Surat | Monami Gogoi | ThePrint

Surat: On the streets of Surat — the hub of India’s diamond business — the word “mandi” echoes in every corner. Several companies manufacturing, processing and polishing the precious gemstone have sent their workers on a two-week “vacation” starting the second week of May.

Here “mandi” — a homonym of “mandi” meaning market, but pronounced with a soft ‘d’ sound — has an ominous overtone. It means “bad markets” or “loss”. And “Vacation” here is a euphemism for companies sending workers on unpaid leave.

This, however, is not unusual in Surat. The workers are used to these “vacations” during Diwali and summer breaks. The leave during Diwali is between 15 days and a month, while the summer break lasts for a week or 10 days.

“The leaves during summer and Diwali would coincide with school vacation so that workers can spend time with family. Some companies also send workers on vacation when the market is down,” Damjibhai G. Mavani, secretary, Surat Diamond Association (SDA), told ThePrint Thursday.

But the worrying factor this time is the number of units going on “vacation” has shot up.

“Vacation isn’t a new thing… The only difference this time is that the number of companies that have given vacation is more compared to other years,” Surat District Collector Aayush Oak told ThePrint Wednesday.

According to news reports, the Surat diamond industry is one of the largest in the world, accounting for about 90 per cent of India’s diamond exports and 80 per cent of the world’s polished diamonds. However, it has been facing several challenges in recent years due to global factors such as trade wars, currency fluctuations, environmental issues and geopolitical tensions.

The SDA represents 5,600 companies and, according to the workers’ union of the district, these firms employ approximately 7.5 lakh workers. However, the SDA didn’t have an exact number on how many companies have been briefly shut down or the number of workers impacted by it. 

The Gujarat Diamond Workers’ Union (GDWU) vice-president Bhavesh Tank, estimates that around 20 per cent of diamond companies in Surat — a ballpark figure of a minimum of 200 firms — might have halted operations, and at least 3 lakh workers have been impacted.

According to media reports, the workers, who mostly belong to low-income groups and migrant communities, are struggling to cope with the uncertainty and hardship caused by these frequent “vacations” and lack of social security. The government and the industry associations have been trying to provide some relief and support to them.

Ratnadeep Kaushalya Vardhan Yojana, a skill-development scheme for unemployed diamond workers, was one such scheme launched by the Gujarat government in 2009 during the global economic downturn.

Speaking to ThePrint Wednesday, a government source said that SDA has said the companies will resume work on time, but the larger concern is not for those employed by these companies. The brunt is likely to be faced by third-party units that deliver services like cutting or polishing to bigger establishments. 

“The diamond industry is completely dependent on external vagaries as it has no domestic market and is 100 per cent an export-oriented business. The variables are not in their control,” the source said.

Reasons behind ‘vacation’

Diamond company owners summarised the slump in the market as a cumulation of several significant factors, including, global economic slowdown, especially in China (one of India’s biggest diamond exports market), which has impacted demand; and the outbreak of the Russia-Ukraine war, which has put a stop to import of rough diamonds from Russia. 

Jatin Patel, who operates a small diamond unit of 40 workers, hasn’t shut shop. He pinned the “vacation” on three reasons.

“Africa has been experiencing floods for the last one-and-half to two months. Most of the diamonds come from there. The stones from Russia are banned. The supply is slow. Moreover, there is no global demand at the moment. Every year, there are two to three lean months, especially during summer,” he said, unfazed by the current development. 

According to diamond company owners who spoke to ThePrint, the supply crunch was also exacerbated by the crashing of banks in the US around March, further crushing the situation in Gujarat given that the US is a big buyer of diamonds.

This forced many companies to send workers on “vacation” last week, said the industry sources ThePrint spoke to.

“There are so many diamond companies here, so nobody keeps a count of which ones have sent their workers on vacation,” SDA’s Mavani said, explaining that the market determines how companies opt to send their workers on leave, adding that some of them receive half their salaries during this period.

Meanwhile, the GDWU has intensified its voice and demanded full salary for workers during the vacation. 

Speaking to ThePrint, GDWU’s Tank said Monday, through a document submitted to District Collector Oak, that the union demanded the state government relaunch Ratnadeep Kaushalya Vardhan Yojana for unemployed diamond workers and provide assistance to families of workers who have died by suicide. 

Oak told ThePrint that the memorandum has already been forwarded to the labour department, which will follow it up with the concerned companies. 

A worker’s struggle

Vijay Malvi, a 28-year-old whose work involves planning the shape of diamonds, was informed a week in advance about the two-week “vacation” by his manager.

“In order to survive this period, you have to do something. For now, I have borrowed money from a friend to manage. This is how we get by during most vacations. Some colleagues who have ancestral land return to their villages, but not everyone has that option,” said Malvi, whose family of four includes two children. 

He has lived through vacations before, but with the winds of an economic recession looming large, worry is writ large on his face. He wonders if they will be asked to come back this time.

A January Economic Times report had quoted Tank as saying that in December last year, nearly 20,000 diamond workers in Surat had lost their jobs.

For now, Malvi hopes the vacation period will be over by the end of this week, as assured by his manager. “We have been told to call first and check if work has resumed before going to the company,” he told ThePrint.

(Edited by Richa Mishra)