Indian Labour Conference 2010: Contract Labour need a better deal

The 43rd session of the Indian Labour Conference, which concluded in New Delhi recently deliberated on issues like global financial downturn and its impact on employment and measures to protect the labour force. It had also focussed on the problems of contract labour, social security, employment generation and skill development. The thrust of the conference was "a united step in true spirit of tripartitism towards better industrial relations and welfare of labour force."

The history of Indian Labour Conference dates back to 23, Nov 1944, a forum set up by the Ministry of Labour &n Employment for tripartite consultation amongst social partners--workers, employers and government at various levels, on issues relating to labour. It is also referred to as "Labour Parliament of India." The latest session was held under the chairmanship of Shri.Mallikarjun Kharg, Union Minister of Labour and Employment.

The conference was inaugurated by Prime Minister Dr.Manmohan Singh. Senior level representatives of the stake-holders participated in the deliberations of the two day conference. A press-release issued by the Press Information Bureau(http://pib.nic.in/release/release.asp?relid=67422) quoted Mr.Mallikarjun Kharge, Union Minister of Labour & Employment as having emphasised that we have to make our millions productive and ensure some form of social security net to them. It further added that deliberations by the Conference provided new ideas in the areas related to economic slowdown, contract labour and skills to help the government's efforts in working towards improving the conditions of workers in all sectors.

The Conference Committee on 'Problems of Contract Labour, Social Security, Wages and Amendments in the Contract Labour Legislation recognised the pressing need to protect the interests of the contract workers. A Tripartite Group was constituted by the 42nd Conference to suggest amendments to the Act. The report submitted by the Group was deliberated upon.

The Committee after a detailed discussion, passed the following resolutions, unanimously:(1)All efforts should be made to ensure that the existing provisions of the Contract Labour(Regulation and Abolition)Act, 1970 and Rules made there under are implemented in letter and spirit;(2)The labour enforcement machinery in the Centre and States should be strengthened by providing requisite manpower and other logistic facilities so as to ensure effective implementation of labour related legislation.(3) State are mandated to constitute Tripartite State Advisory Boards under the Act. However, it was pointed out that a number of States do not have such Boards constituted. It was unanimously resolved that such States should be asked to constitute such Boards under the Act at the earliest;(4)Payments should be made to the contract workers through banks. Necessary amendments should be made in the Act/Rules.

The following proposals were also considered by the Group:(1) In case where the contract labour perform the same or similar kind of work as the workmen, directly appointed by the Princial Employer, the wage rates, holidays, hours of work, social security and other conditions of service of contract labour shall be the same as are available to the workmen on the rolls of the Principal Employer. This provision exists substantially under the existing Rules. This needs to be incorporated in the principal Act;(2) The threshold limit of 20 workers for applicability of the Act should be dispensed with.

The proposals were supported by the workers' representatives as well as those from the State Governments. However, the representatives of the Employers did not agree with regard to both the proposals on the basis of the documents submitted by them. A suggestion was also given by the Workers' Group that in the even of abolition of contract labour under section 10(2) of the Act, the workers should be absorbed/regularised. This was agreed to by the State Governments but disagreed by the Employers' Group.

The Conference Committee on Global Financial Downturn--its impact - Job losses - Comprehensive Package for Protection of Labour Force etc was of the unanimous view that the recommendations made in the 42nd ILC session including short-term and long-term strategies should be followed more vigorously particularly in areas of:(1) strict implementation of labour laws on lay-offs, retrenchment, job losses, closure etc;(2) broad-based social security including unemployment insurance should be devised; (3) the availability of credit at concessional rate of interest to micro, small and medium enterprises besides traditional and export oriented industries by banks/financial institutions; (4) consideration of Urban Employment Guarantee Scheme; (5) statutory fixation of National Floor level minimum wage to cover all employments; (6) extending employment guarantee from 100 days to 200 days.

The Conference Committee on Employment Generation and Skill Development recommended that "for employment generation, agriculture sector should be given more importance. Agriculture based industries and cold storage should be set up at village levels. More industries and skill training centres should be set up in rural areas so that people don't migrate to cities."

India is a country of more than a billion people (1027 million as in 2001). A major part of this population is mainly dependent on agriculture, while the total labour force is estimated to be around 340 million (as per 2001 census). Further, out of the total labour force, only 29 million or 8.5 per cent are employed in the organised sector, rural areas account for about 270 million (79 per cent), whereas almost 93 million (27 per cent) are engaged in industries as contract workers. About 92 per cent of the workforce is employed in the unorganised sector that contributes 65 per cent value to the country's economy.

"There is gross violation of existing labour laws and contract workers are not even being paid minimum wages," said Dipankar Mukherjee, secretary, Centre of Indian Trade Unions (CITU), in a recent press statement.

Employers, on the other hand, maintain that giving privileges to contract labour could act as a disincentive to the industry to employ. "We do not want a situation where the industry is forced to go in for increased mechanisation," an industry representative said on conditions on anonymity as he is part of the discussion process initiated by the government on changing the law.

Shri Harish Rawat, Union Minister of State for Labour and Employment recently stressed the need to arrive at a consensus between the workers’ organizations and the employers’ associations with regard to use of contract labour so that Government can focus on regulation of contract labour which is a part of India’s massive unorganized labour who are more vulnerable to exploitation.

Third Party Administrator's Role in Health Insurance

Ernakulam Insurance Institute recently(11.12.2010) organized a national seminar on 'Evaluation of TPAs in Health Insurance'. The seminar invited lots of attention in the context of public sector general insurance companies removing leading hospitals in metros from Preferred Provider Network(PPN) list, for fraudulent practices like inflating hospital bills.

Mr.P.J.Joseph, General Manager, United India Insurance Co. Chennai, who was the key speaker, observed that a comparison of prices charged by metro hospitals with Central Government Health Scheme(CGHS) governed major hospitals showed huge variations. For example CGHS charges just Rs.15,000 for a caesarean delivery compared with Rs.1,35,000 charged by leading hospitals. He said, the data collated by the insurance companies revealed that a majority of the tertiary-plus-care hospitals in the country have formed a cartel and are stoking medical inflation.

While health-care costs have been rising, health insurance premium rates haven't risen at the same pace. This situation leads to a bleeding health insurance portfolio of the insurance companies. General insurance companies have a claim ratio of around 140 per cent on health business, which means that for every Rs.100 earned, insurance companies spend Rs.140 to service service the claims, Mr.Joseph said. General insurance companies garnered more than Rs.8,000 crores during the financial year 2010 as health insurance premium.

The Third Party Administrators-Heal Services(TPAs) was introduced in health insurance as part of the reforms in insurance sector by special notification of the IRDA, in 2001. TPAs are mandated to perform functions like arranging cashless claim service, speedy and effective claim processing, controlling claims cost, reducing incurred claims ratio etc by use of special expertise.

Dr.George E Thomas, Secretary(General Insurance), Insurance Institute of India, Mumbai, in his presentation explained that a Committee under Regulation 23 of the IRDA(TPA) Regulations, 2001, was constituted with the terms of reference such as:1)To examine the role of TPAs in the current health insurance market scenario and to make suitable recommendations clarifying their utility to the furture growth of the health insurance industry, 2) To evaluate the performance of the TPA system till date, with particular reference to the objectives behind the introduction of the TPA system and specially with regard to the provision of Cashless facilities, data management, timely settlement of claims and reducing claims ratios, 3) To suggest standards of best practices for TPAs, 4) To devise customer service bench marks for TPAs including TAT for ID cards, settlement of claims etc. with optimum and maximum time lines for different process.

Quoting the report Dr.Thomas said the Committee recognized the lack of standards for grievance redressal in the health insurance delivery system and sought to address the same. The core of this task was to keep the process simple for the consumer and also guide him to the right level for the most efficient redressal of his/her grievance. Standardization of discharge protocol is also suggested by the Committee, after consultation with hospitals and TPAs, he said.

Quoting the CAG report No.10 of 2010-11(http://www.cag.gov.in/html/reports/commercial/2010-11_10PA/chap5.pdf), Dr.Thomas pointed out that the cashless settlement has been achieved to the extent of 55 per cent only and cases of delay in issue of ID cards, and claim settlement beyond working days were noticed in respect of 72 per cent of the cases.

CAG report has further recommended:1)To review and introduce a system of payment of service fee with suitable incentive/disincentive differentiating between group and individual policies; 2) To develop a mechanism to evaluate the performance of TPAs on issue of identity cards, settlement of claims on cashless treatment/reimbursement; 3) To strive to achieve standardization of the hospital charges and clinical procedures through negotiation with the service provides to contain cost.

CAG Report has concluded that "the main objective of introduction of TPAs for providing cashless services to the policy holders, remained largely unfulfilled."

In their research paper titled “Third Party Administrators and Health Insurance in India: Perception of Providers and Policyholders” Ramesh Bhat, Sunil Maheshwari and Somen Saha(http://www.iimahd.ernet.in/publications/data/2005-01-02.pdf) of Indian Institute of Management, Ahamedabad, observed that, “General awareness about TPAs existence and services they provide is low. Policyholders relay more on their insurance agents than on the insurance companies or Third Party Administrators.”

Mrs.Ajitha Menon, Senior Manager, TTK Healthcare TPA Pvt. Ltd. highlighted services rendered by TPAs and argued that they performed value-added services in the health insurance industry. Best way to control the cost of hospital treatment is for the insurance companies to set limits for specific treatment, Mrs.Menon said. The New India Assurance Co. recently, set the limit for cataract surgery and is accepted by most hospitals. Mr.Sharad Shrivastava Secretary General, Insurance Institute of India, Mumbai, highlighted the efforts of the Institute in promoting research and education activities, by assisting the regional centers. The Institute has initiated a thorough restructuring of the academic programmes, he said.

Reform Lessons for Indian Labour

Continuing job-loss of workers, violation of labor related laws and disinvestment of shares of public sector units are some of the issues that agitated trade unions around the country for some-time now . These issues have aggravated with liberalization policies pursued by the central and state governments, for the last two decades.

Economic Survey 2008-09 and Union Budget 2009-10, demonstrate how the burning issue of job losses--involving retrenchment, layoffs, redundancy--in the time of the global financial crisis and economic slow-down, is perhaps the least understood of the economic, social and political concerns.

“The Global Economic Crisis: Assessing Vulnerability with a Poverty Lens,” counts India among countries that have a “high exposure” to increased risk of poverty due to the global economic downturn.

One of the most significant attack of industry has been on employment tenure. With the decline in tenured employment, came a decline in trade union strength. A major casualty of this resulted in an attack on the right to collective bargaining. Instances of refusal by employers to negotiate with unions, or even recognize unions, chosen by workers, are extensive and range from large Indian corporates to MNCs.

International Labour Organisation’s(ILO) World of Work Report records that from 1990 onwards, wage inequality has risen across the globe including in India. It was also a period when contract employment became the norm. Legislation for abolishment of contract employment stands diluted. Projections by the ILO point to a worsening global unemployment in coming years.

How neo-liberal policies have affected the industrial relations(IR) climate in the country can be had from the gruesome killing of of Lalit Choudhary Cheif Executive Officer and Managing Director of Graziano Transmission India Pvt.Ltd. in September 2008, allegedly by dismissed employees and the more recent murder of the VP--HR of Pricol, Joy George, under similar circumstances in September 2009, and a spate of other IR incidents in many of the manufacturing belts across the country.

The International Trade Union Confederation(ITUC) in its annual survey on violations of trade union rights in India observed that "Barriers to organize trade unions continued in law and practice, and the government maintained strong restrictions on the right to strike. Workers at two garment factories faced a systematic anti-union campaign, while Unilever closed down a factory to remove the union. The government remains committed to a policy of creating greater flexibility in labor law which would be detrimental to workers and their unions."

Under the 2001 Trade Unions Act, a union has to represent a minimum of 100 workers--which is excessive by international standards--or ten per cent of the workforce, whichever is less. The act also sets limits on the number of "outsiders" (those not employed at the enterprise) allowed to sit on a union executive and requires unions to submit their accounts for auditing.

Under the 1947 Industrial Disputes Act(IDA), industry workers in public utilities have to announce a strike at least 14 days in advance. Workers in the banking industry have to give five six months' notice before going on strike. The industry has been declared a public utility under the IDA. The Essential Services Maintenance Act(ESMA) enables the government to ban strikes and demand conciliation or arbitration in certain "essential" industries. The Central Civil Services(Conduct)Rule, 1964, stipulates that no government servant shall resort to, or in any way abet, any form of strike.

The ITUC survey has pointed out that the government has aimed for a number of years to create a more flexible labor market in which employers could hire and fire employees at will and easily hire workers on contracts. The Ministry of Labor drafted amendments to the labor laws in 2003, and in 2005, developed a policy proposal entitled "Making Labor Markets Flexible " to explain its initiative. The Ministry also recommended that export oriented activities, including those in special economic zones, and support services for those zones, should be on the list, which would make contract labour available for these sectors. The proposal to raise the threshold(from 100 workers to 300 workers) of the size of enterprises that do not need government permission to lay off workers, also invited strident opposition of India's trade unions.

Investigations by labor rights organizations based in Bangalore, discovered a pattern of systematic and grave abuses of workers' rights at two ready-made garments exports units. Workers were not allowed to form unions, and were intimated to prevent them from engaging in any collective activity to stand up for their rights. In clear contravention of the labor laws, workers were employed without written contracts. In response to these abuses, international campaigners led by Clean Clothes Campaign and its Netherlands national affiliate, raised concerns with European and North American brands. The factories set up a management-run grievance committee but refused to recognize the workers rights to freely associate with unions or other groups to seek assistance.

New employment sectors such as call centers, the visual media and telecommunications are not covered by any explicit employment regulations and employers obstruct the formation of unions. High level of casual employment were built into the structure of the call centre/business process outsourcing(BPO) industry, affecting many of the approximately 400000 of these workers in India, and making it difficult for them to organize.

Even governments are resorting to use of contract labor. In 2004, the government of Tamil Nadu ordered its health department to recruit personnel, other than doctors, on a contract basis through private agencies. The government also refused to recognize or negotiate with unions of government employees and teachers.

Globalization and economic liberalization have created a climate in which there is further pressure to dilute labor standards, in particular labor inspection and the enforcement of labor legislation. For example, the Haryana State government created a "State Labor Policy 2006" to reform the way that the State Government enforces labor laws. The State now forbids more than one labor inspection per factory per year.

In May 2006, the government of Maharashtra State introduced a new policy applicable to EPZs in the state that allows industries and/or export oriented units to employ certain categories of services on a perpetual contract basis. The regulation supplants the law that currently prohibits industries from retaining employees under 'temporary' category beyond 240 days(after which such employees can claim the rights of permanent employees) in the EPZs.

By forming the Indian Labor Conference, the State Labor Ministers Conference and the Standing Labor Committee, the country recognized that the workers in the organized and unorganized sectors can only achieve the right to work and the rights at work, along with the right to organize and agitate, if positive conditions are created together by the State and the employers. The Union Minister of Labor and Employment Mallikarjun Kharge, and the Minister of State Harish Rawat, both had to mention the inevitability of contract labor in their speeches, at a forum(February 2010 New Delhi meet) which is primarily meant for the defense and expansion of labor rights is unfortunate.

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Poverty of Policy Aid Food Insecurity

A Press Trust of India(PTI) report from Mumbai, carried by Business Line(09.05.10) said that lack of adequate or proper storage facilities is resulting in rotting of food grains. Quoting the Union Agriculture and Food Minister Mrs.Sharad Pawar, the report observed: “The condition of the go-downs in the country is not good and that is resulting in the rotting of good grains. The report further added that the country wastes Rs.58,000 crores worth of food items every year due to lack of or poor storage facilities.”

There is no other country that presents a more shameful paradox of plenty—grains rotting in the open while millions live in hunger. “India is home to the world’s largest food insecure population, with more than 200 million people who are hungry,” says the India State Hunger Index(ISHI) 2009, prepared by the International Food Policy Research Institute.

The ISHI measures hunger on three leading indicators and combines them into one index. The three indicators are: prevalence of child malnutrition, rates of child mortality and the proportion of people who are calorie deficient. The ISHI found that 12 States fell in the ‘alarming’ category and one State—Madhya Pradesh—fell in the ‘extremely alarming’ category. Four States—Punjab, Kerala, Hariyana and Assam—are in the serious category.

The report identifies that strong economic growth does not necessarily translate into lower hunger levels. Even States with high rates of economic growth in recent years, such as Gujarat, Chattisgarh and Maharashtra have high levels of hunger, while States with relatively slower economic growth, such as Punjab, achieved a lower hunger level.

“Hunger and malnutrition are often rooted in poverty. Part of the solution rests with increasing investments in agriculture and poverty reduction programmes,” says Mr.G.K.Nair, a former Union Agriculture and Food Ministry official, who had served in central government projects in Orissa, Mekhalaya and Andamans.

Several experts have pointed out that the underlying problem of Indian agriculture that threatens food insecurity is extremely low productivity. A study by the M.S.Swaminathan Reseach Foundation(MSSRF) revealed that in the case of rice, it is only a sixth of what has been achieved elsewhere. The situation is no different in the case of other crops. The system of monitoring soil fertility and maintaining it is flawed and needs urgent attention.

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Food Policy analyst Mr.Devinder Sharma in his Decan Herald(21.04.10) article writes: ”There is no reason why in the 6,00,000 villages of the country, which produce food for the country, people should be living in hunger. These villages have to be made hunger-free by adopting a community-based localized food-grain bank scheme. Such traditional system exist in several parts of the country and there is an immediate need for its revival.”

Experts and activists argue that the persistence of widespread poverty and hunger is the cumulative out-come of the public policies that produce and reproduce improvishment; of failures to invest in agriculture, especially in poorer regions of India and for rain-fed and small farmers.

Allegations of starvation deaths are typically met with official denials and the blaming of the victims. Public servants believe mistakenly that death from consuming no food whatsoever is the only “proof” of starvation. But starvation is a condition of not just the dead but the living, and people who have lived with prolonged food denials mostly succumb not directly to starvation, but to health condition which they would have easily survived had they been adequately nourished.

For large number of poor people who live routinely and precariously at the edge of survival, each day comes afresh with the danger of one push that will send them hurtling over the precipice. This may come from an external emergency, like a natural disaster, epidemic or riot, but even from local crises; a sickness in the family, a sudden untimely death of a bread winner or a brush with the law.

Independent studies and assessments have highlighted that government programmes are woefully inadequate to address wide-spread poverty and destitution. Presenting incontrovertible evidence, The Hindu’s Rural Affairs Editor, Mr.P.Sainath, in a series of brilliant articles captured the plight of the people and that it is the result of a profound collapse of governance.

Inagurating the 92^nd Conference of the Indian Economic Association(IEA) at Bubaneswar, last year, Prime Minister Dr.Manmohan Singh observed: “To achieve our objective of inclusive growth, we need to pay much greater attention to the education, health care, and rural development, focusing on the needs of the poor—the scheduled castes, scheduled tribes and other minorities.” Dr.Singh conceded that poverty was not declining fast enough. He urged IEA to respond to these challenges.

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Report on the State of Food Insecurity in Rural India, published by the M.S.Swaminathan Research Foundation said in India, given the regionally adverse concentration of food grain production, the food security could be ensured only through improved universal PDS with adequate accessibility to the poor. Tracing the origins of the PDS to the years of scarcity in the 1950s and the 60s as a part of rationing, the report finds that there was a healthy spread of universal PDS in the 80s. But in the 90s there was a set back. The Targeted PDS was introduced osten- sibyl to reduce the cost of food subsidy, to check leakages and to prevent the diversion of grain. None of these objectives achieved effectively. Worse, it resulted in high cost due to the holding of more stocks and the exclusion of many poor house-holds.

Media reports suggest that in spite of having the world’s largest population of hungry, the good subsidy bill is proposed to be pruned, from Rs.56,000 crores for 2010-11 to Rs.28,000 crore under the proposed National Food Security Bill.

System of identifying India’s poor are seriously flowed and many studies show that they leave out many of our most improvised people. The Suresh Tendulkar Committee has demarcated 37 per cent of the population to be living in poverty. Earlier Arjun Sengupta Committee had concluded that 77 per cent of the population is able to spend not more than rs.20 a day. Justice D.P.Wadhva Committee has recommended that any one earning less than Rs.100 a day should be considered as living below poverty line.

In the rural centres and the food deficit areas, instead of reducing the number of beneficiaries, a universal public distribution system is required experts feel. The existing PDS system has to be overhauled and this requires a strong political will. Also, there is a dire need to involve social and non-governmenal organizations in food distraction. At the same time, nothing can succeed if we do not ensure safe drinking water and sanitation to the part of the hunger and poverty mitigation programmes.

It is often argued that the government cannot foot the bill for feeding each and every Indian. This is not true. In the budget 2010, Finance Minister Mr.Prpanab Mukherjee has announced a ‘revenue foregone’ of Rs.5 lakh crore, which means the sales, excise and other tax concessions plus income tax exemption for the industry and business. The annual budget excise is for roughly Rs.11 lakh crores. This means, the government is doling out massive subsidies to the industry.

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The thrust of the Swaminathan Research Foundation Report on the State of Food Insecurity is that over the years, especially since the advent of the economic reforms, issues related to food and nutritional insecurity have been getting less and less priority at the policy level. The euphoria over food grain self-sufficiency, combined with policy shift towards structural adjustments, resulted in decrease in public investment in areas such as agricultural infrastructure, agricultural research and development of right technology. This in turn affected growth of productivity especially on small farms, with a far-reaching impact on food-grain availability in the future. In the name of fiscal constraint, food procurement, storage and distribution needs are sought to be assessed in terms of costs, leaving more room for market players in the food regime, which is having its own toll in the form high food prices.

The National Family Health Survey(2006) showed that the child under-nutrition rate in India is 46 per cent. This figure is almost double that of Sub-Saharan Africa, which is economically poorer than India. In the latest Global Hunger Index, India ranks 66^th among the 88 countries surveyed by the International Food Policy Research Institute. It comes below Sudan, Nigeria and Cameron and slightly above Bangladesh. There has been virtually no change in India’s ranking in the U.N. Human Development Report between 2000 and 2007-08, indicating that there has been no marked gain in terms of the quality of life for the average citizen.

For the Central government’s inclusive growth agenda to make a difference to the urban poor, interventions that insulate the rural poor from the multiple vulnerabilities of rural living are critical. In the rural areas, the incidence of poverty is higher among workers in the informal sector. While the government’s proposal to extend the National Rural Employment Guarantee Scheme to more areas, with modifications, is welcome to the extent that it will provide job opportunities and incomes to the poor, measures that prevent a relapse into poverty are also required. More important is to put in place policies than ensure access to affordable healthcare, expenses on which are a major cause for impoverishment of the vulnerable sections. A social security system for all unorganized workers, therefore, is a priority. The larger aim of poverty reduction programmes should be to ensure that the vulnerable are not impoverished because of the pressures of rural living.

Mari-time Piracy An Emerging Threat

Piracy continues to be a serious risk for shipping companies, sailors, cargo owners, and insurers. According to the weekly report of the International Maritime Bureau(IMB) in London, pirate attacks occur on the world's oceans almost daily.

Modern day pirates are armed with state-of the -art weapons and have been given good training. Experts suspect that they are also supported and trained by terrorist organisations. They comb coastal waters in high-speed boats. Surprise is the most important element in their raids.

They operate both in ports and on the open sea. In many cases, they come abroad disguised as coastguards or harbour police. The dividing line between piracy and terrorism is becoming blurred and the danger of terror at sea is growing too.

There has been a dramatic increase in the number of cases in which a ship is hijacked and ransom demanded for the vessel and/or the crew. The Somali coast is considered a particularly dangerous area in this respect. Pirates also attack private yachts off the usual commercial shipping routes.

The recent downturn in the global economy and the increase of Third World poverty have contributed to the rise in piracy, according to John Burnett, author of the recently published “Dangerous Waters: Modern Piracy and Terror on the High Seas.”

Political terror also plays a role in hot spots like Somalia and Sri Lanka. What ever the motivation, pirates prowl waters all around the world.

“Ships are sitting ducks at sea. It’s very difficult to stop pirates these days. Ships and their crews are not equipped to defend themselves,” says an Indian Navy pilot who participated in action, in that area.

The International Maritime Bureau runs the piracy Reporting Center, worldwide monitoring agency in Kula Lampur, Malaysia, and issues an annual report “Piracy and Armed Robber Against Ships.” Its web site tracks piracy week by week throughout the year at weekly Piracy Report.

Munich Re the international re-insurer has been observing the development of this risk on the world's oceans for a long time and has now published a report on the subject(www.munich-re.com). This report analyses the dangers emanating from piracy and marine terrorism and explains the legal position at national and international levels. It highlights underwriting aspect and describes ways of minimising the risk.

The hijacking of the supertanker Sirius Star off the coast of Somalia had triggered a veritable media frenzy. The frequency and the scale of recent acts if piracy are a real cause of concern says Dieter Berg, head of Munich Re's Marine Division.

Munich Re views current events with growing concern. Even if piracy only accounts for a very small portion of marine insurance business, the potential perils are enormous. When a ship is attacked, the hijackers frequently just lock the crew in the hold and leave them to their fate. If the "rudderless" ship then collids with a tanker, losses could be of enormous proportions.

The safe transportation of goods across water is a vital economic factor in these days of increasing globalisation , with 90% of all goods worldwide transported by ship.

Piracy usually occurs in areas without effective government control or where corruption is rife. There are estimated to be over a thousand pirates operating off the Somali coast.

While private yachts and boats can travel in convoys to avoid notorious pirate areas, commercial shipping has no simple safeguards against pirates. Tight time schedules, unchanging shipping routes and the scale of some vessels—like tge skyscraper-long oil tankers that are hard to guard against intruders—make it tough to maintain security on the high seas.

About 48,000 vessels pass through these waters each year. The terrorists who lie in wait, picking off yachts, freighters and fully laden tankers, are very different from the old pirate image. Armed with missiles and rockets, they have established a heaven in northern Somalia, and send out speedboats to seize ships and crews for ransom. The attacks are often coordinated from a captured vessel disguised to look harmless.

Keeping statistical records of piracy is very difficult. Shipping companies report only a fraction of the actual cases for fear of their ships being impounded for a long periods or because they simply do not want to pay the resultant higher insurance premium. Reliable figures on the economic losses involved are therefore very hard to come by. The IBM, puts losses from piracy in 2008 alone at some 13 bn Euro.

Piracy off the cost of Somalia has led to a “shocking” hike in shipping insurance premium of at least 30 per cent.

Preventive measures and effective pursuit of the pirates by governments and authorities will only be possible once a clear legal basis is in place. There is clearly an urgent need for action in this respect. The success in combating piracy in the Malacca Straits is testimony to the effectiveness of close cooperation between the coastal states, their police forces and the armed services.

Merchant ships plying the waters off Somalia should increase their vigilance in the light of an increase in pirate attacks according to West Asia based media reports quoting US Navy officials.

As Somalia, a country without a functioning government for the past 17 years, sinks ever deeper into poverty, violence and lawlessness, the attacks have grown in number and daring, becoming a main source of income for the gangs terrorizing the country.

The UN Security Council has authorized warships to enter Somali water to combat piracy, and recently, European Ministers, in response to calls by France and Spain, agreed to set up a unit to coordinate the fight against this terrorism at sea.

IMB reported an “unprecedented rise” in maritime hijacking in 2009, when figures surpassed all previous records. The IMB Piracy Reporting Centre started tracking piracy data in 1992.

So far, 294 attacks, including close to 34 successful hijackings of vessels, were reported in 2009 according to web site information of Piracy Reporting Center. The total number of incidents reported so far has surpassed the total number reported in 2008. A total of 559 hostages have been taken in these hijackings. The lion’s share of hijackings have taken place off the coast of Somalia, either in the Gulf of Aden or off the country’s east coast in the Indian Ocean.

IMB Director Potengal Mukundan is quoted as saying: ”The fact that last year’s figures have been surpassed three quarters of the way through 2009 shows that pirates, particularly off Somalia, still pose a significant threat to shipping.”

London news paper, Independent, recently, reported that Gulf banks are being used by organized pirate syndicates to launder millions of dollars taken as ransom from vessels hijacked off in the Gulf of Aden. Investigators hired by the shipping industry told the newspaper, around $ 80 million was paid out by shippers in 2008, much of which find its way to piracy ‘godfathers’ based in the Gulf and African countries such as Kenya.

Impact of Natural Disasters

A wave of natural disasters has struck a tragic chord globally. From the devastating floods in Philippines to the tsunami-hit South Pacific Islands, the disasters are a potent reminder of man's helplessness against nature.

The "strange" changes in typhoon patterns observed over recent years in Philippines confirm fears of the devastating impact of global warming, climate scientists warned. They point out that serious attention should be given to the factors responsible for a worsening climate situation. A strong global strategy to fight climate change, getting worse by the day because of merciless abuse of the environment is the need of the hour.

Floods, storms, droughts and other climate-related natural disasters drove 20 million people from their homes last year, nearly four times as many as were displaced by conflicts, a new U.N. report said recently. The study tried to quantify for the first time the number of people forced to flee their homes because of climate change. Global warming is increasing the frequency and intensity of storms and otherwise altering weather patterns, so disasters are now "an extremely significant driver of forced displacement globally", it said.

The study said a total of 36 million people were driven from their homes by rapid onset of natural disasters in 2008. The report was compiled jointly by the U.N. office for the Coordination of Humanitarian Affairs and the Internal Displacement Monitoring Centre(IDMC), a body which normally tracks displacement caused by conflicts. In the Philippines, nearly two million people were forced from their homes by severe storms, China and Myanmar also saw large-scale displacements due to storms.

Last year, more than five million people were displaced by flooding in India, attributed in part to changes in the country's monsoon cycle. Asia accounted for over 90 per cent of disaster-related displacements last year, which the report said "may simply because Asia is the most disaster-prone region."

A World Bank study titled "Climate Volatility Deepens Poverty Vulnerability in Developing Countries" noted: "Extreme climate events influence poverty by affecting agricultural productivity and raising prices of staple foods that are important to poor households in developing countries. With the frequency and intensity of extreme climate events predicted to change in the future, informed policy design and analysis requires an understanding of which countries and groups are going to be most vulnerable to increasing poverty."

Writing in The Economic and Political Weekly(Aug.2009) E.Somanathan and Rohini Somanathan on "Climate Change :Challenges facing India's Poor" pointed out that "Rising temperature, changes in rainfall patterns, and an increased frequency of floods and droughts are likely to have serious effects on rural populations in the absence of policies that actively help these households adjust to their changing geography." Based on the survey data from villages affected by the Kosi flood of 2008, they revealed how households and governments are likely to respond to unexpected weather events. "The flood in Bihar rendered much of the land in the area uncultivable and resulted in large-scale unemployment. The state, while effective in providing immediate relief to flood victims, has done little to help the rural population adapt to their changed geography", they concluded.

Extreme climatic events carries a sinister message for policy-makers from around the world who are busy drafting the climate-change agreements for the UN Climate Summit in Copenhagen. The message is :Act now or face the fatal consequences. The series of natural disasters are part of a string of Nature's out-poring of wrath that are growing more frequent and severe due to the rapid raise in global temperature and the world's unwillingness to shift to sustainable development, the use of green technologies and an earnest commitment to curb runaway consumerism.

Nature's dire warnings should make the climate-change negotiators from rich and poor countries alike realize that they can no longer allow themselves to be trapped in the blame game. Time is running out. It is suicidal to keep shifting responsibilities or arguing about the wording. While constantly looking over one's shoulder for fear of losing an inch to their economic rivals. The latest string of natural disasters in this part of the world should also drive home another important message :while policy makers are at loggerheads, it is the ordinary people who lose lives and livelihood, paying the price for their leaders short-sightedness.

World Disasters Report 2009 observed :"The rising dangers of climate change require a response from governments equivalent to the one made to address the global financial crisis."