India’s growing informal coal workforce complicates energy transition

Despite rising coal production in India, job losses loom over the sector as mines are closed. The most vulnerable people in India’s energy transition are the growing numbers of informal workers and their families.

A man sorting through coal in Mysore in southern India. Image: Adam Cohn/Flickr

India’s coal sector will remain in expansion mode for another decade. About 48 gigawatts (GW) of thermal power capacity is estimated to be added to the existing coal-based thermal power base of 211 GW by 2032.

This growth, however, brings little cheer to India’s huge coal sector workforce. 

Kalimuddin Ansari, a coal miner in his late 40s in the eastern Indian state of West Bengal, one of the country’s major coal-producing states where some of the oldest mines are located, is worried that he and many of his colleagues may have to accept early retirement. They do not see any alternative income opportunity when these mines are depleted. 

Ansari is an employee of Eastern Coalfields (ECL), a subsidiary of Coal India (CIL), a public sector company that is the world’s largest producer of coal. CIL alone produces around 83 per cent of the country’s entire coal output. CIL and its subsidiaries are on a workforce downsizing drive and are closing down unprofitable mines. 

“Old and loss-making mines will be closed, permanent workers will be offered various retirement schemes or be temporarily shifted to other mines, and there shall be nothing for the contractual workers,” Ansari said. “The coal sector is going through a transition and the government does not seem concerned about redundant workers.”

Between 2015 and 2022, India opened 22 new coal mines and has another 93 proposed coal projects, of which 78 are new mines, the rest being extensions or expansions of existing mines. Of the 311 new projects proposed in the world, 78 are in India. According to United States-based nonprofit Global Energy Monitor (GEM), CIL, with an operating capacity of 658.2 metric tonnes per annum (MTPA), has a proposed capacity of another 221 MTPA. 

But a greater number of mines have been closed than opened. In 2020, CIL had 352 mines. By September 2023, the company had 295 mines. ECL, which operates in West Bengal and Jharkhand states, saw its workforce steadily fall from 81,128 in 2011 to 66,238 in 2016 to 54,866 in 2021. 

According to Ansari, the government has a plan to close the majority of the loss-making mines, convert some of the underground ones to open cast systems, increasingly automate operations and carry out a “gradual phasing out” of manual operations. 

In the second week of October, GEM predicted over 73,000 job losses from CIL by 2050 due to the closure of existing mines. It added that previous studies have suggested there are four informal or contractual employees (without social security benefits) for every one formal employee in India’s coal sector. This makes the potential impact of job losses much greater. 

India is the world’s second-largest coal producer, after China, and the coal belt of eastern India produces the bulk of the country’s thermal-grade coal for power generation. But India’s coal belt of West Bengal and Jharkhand also has the highest number of underground mines, which are at the greatest risk of closure due to unprofitability. 

Srestha Banerjee, director of just transition at the New Delhi-based think tank International Forum for Environment, Sustainability & Technology (iFOREST), an independent non-profit research organisation, said the increase in coal production quantity does not contradict the need for planning a just energy transition. 

She said that there are old mines that are exhausted or soon will be, and closing these mines will not change the country’s energy demands and need for energy security. Therefore, just transition planning can start with old mines and power plants, and green industries can be developed in these regions to replace the lost jobs and government revenue. 

“The old mining belts will undergo a transition irrespective of the increase in India’s coal production. We need to have a mechanism in place to decide how we engage these workers. New industries and new economic activities for those regions must be planned,” she told Eco-Business.

Notably, India’s renewable energy expansion has mostly happened in regions with little or no coal economy. 

Rising informality 

According to the independent non-profit National Foundation of India (NFI)’s November 2021 reportSocio-economic Impacts of Coal Transitions in India, given that India has a net-zero emission target for 2070 and is pushing for clean technology, the big and mid-sized mines which account for 85 per cent of coal production will likely be the ones running for the next 20-30 years. 

Most underground mines will likely be shut down in this decade, it warned. 

The coal belt of West Bengal and Jharkhand has traditionally been pockmarked with dozens of mines of less than 1 MTPA to 2 MTPA capacity, many of them underground. But 12 of 16 upcoming mines developed by CIL subsidiary Central Coalfield Ltd (CCL) in Jharkhand, scheduled to be commissioned by 2026, have more than 10 MTPA capacity. 

These big mines are highly automated and require a smaller workforce.  

While most of the underground mines each produce less than 1 MT of coal, they employ about 300-400 workers. In contrast, the upcoming 20 MT Sanghamitra open cast mine in Jharkhand is expected to be staffed by only 1,516 direct and indirect employees.

Under Central Coalfields, which had 36 mines operational in Jharkhand as of September 2023, its three operational underground mines employed more than 3,000, whereas 33 open cast mines were staffed by more than 14,000. CCL shed 886 workers in 2022-23 and more than 400 between April and September 2023.

There is another transition taking place – increasing informality in the workforce. Regular employment has nearly halted and public sector companies are leasing out or sub-contracting the mining work to private operators under the Mine Developer and Operator (MDO) model. They are working mostly with a contractual workforce. 

“The MDO mode is substituting formal sector employees with informal/contractual workers who will have very limited or no rights when these new mines close,” said Bansa Gopal Chowdhury, a West Bengal-based trade union leader of the Communist Party of India, India’s largest leftist party. 

“When the question of transitioning away from coal comes in India after a decade or so, the overwhelming majority of the coal workforce will have little protection,” Chowdhury, a former member of the Indian parliament, told Eco-Business.

A 2021 report by think tank The Energy Research Institute (TERI) on the impacts of mine closure in the Betul district of Madhya Pradesh state in central India also highlighted the trend of increasing informality in the coal sector.  

“It implies that more workers are entering into vulnerable jobs, with limited or almost no upward mobility in skills and limited access to legal remedy,” said the report.

A complementary picture emerges from an April 2022 report by iFOREST, Just Transition And Informal Workers In Coal Regions In India. It pointed to a growing interest among union representatives, particularly in Jharkhand, to start unionising informal workers.

Lack of data: A major impediment 

The growing share of informal workers is not a good sign for India’s coal sector. 

2021 report by the Just Transition Research Centre (JTRC) at the Indian Institute of Technology (IIT) found that the closure of mines in the Margherita area in the northeast Indian state of Assam left the contractual workers the worst off.

“The plight of contractual labourers went unrecognised by the management, making them suffer the most at the time of closure. Their condition worsened to the point that they starved for nights, pushing their female family members into prostitution,” said the JTRC report. 

2022 report by the Indian Institute of Management, Kolkata, found similar concerns. It said that contractual workers, whose rights and entitlements are significantly limited, account for nearly 75 per cent of the workers employed in the thermal power generation sector. 

The government’s lack of preparedness is exemplified by the lack of official data on the number of informal workers or transition plans for out of work miners. Most of the information on the sector has been published by non-profits or academic institutes. 

The NFI’s 2021 report pointed out that without data, there can be no proper planning or fund allocation to address the impacts of the transition. 

report published in October 2023 by Partnership for Action on Green Economy (PAGE), an initiative of the International Labour Organisation (ILO), found that a clear definition of the just transition did not exist in India’s policy documents and data on informal and contractual labour and the socio-economic profiles of the workforce was unavailable or inadequate. 

Among transition measures that need to be taken, the PAGE report proposed compensation packages for coal workers who are upskilling or reskilling into greener jobs.

The government’s efforts to provide a safety net for coal sector workers have been inadequate to date. The Central Pollution Control Board issued guidelines for decommissioning coal-based plants and the coal ministry has set up a Just Transition Division.

Last year, the coal ministry said it plans to repurpose old mine assets to create solar parks, eco-parks, fish farms, warehouses, resorts, museums, picnic spots and golf courses. It said that a “key thrust area” was the development of eco-tourism sites to promote mine tourism on reclaimed land.

However, an August 2023 publication by the coal ministry listing the achievements of the past nine years mentioned a just transition only in passing. The only achievement in this regard was creating 25 eco-park sites on 230 hectares of reclaimed land and linking some of them with local tourism. 

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