Mass scale job losses, pay reduction and uncertainty about work have taken the sheen away from Surat’s famed diamond industry, which employs around seven lakh workers in thousands of factories in cutting and polishing rough diamonds and exporting them in multiple countries.
Geopolitical factors and slacking global demand for diamonds have led to a severe recession in Surat, the largest hub for cutting and polishing rough diamonds.
Recently, one of the largest diamond firms in Surat declared a 10-day ‘vacation’ for its 50,000 employees from August 17 to 27 citing diminished demand for polished diamonds in international markets due to economic recession in developed countries.
“We have announced a 10-day vacation for our 50,000 employees. Though we will deduct some amount, all employees will be paid a salary for this period. We are forced to announce this vacation because of the recession. I am tired of this recession now,” Kiran Gems owner Vallabhbhai Lakhani told media persons in Surat.
According to him, the short supply of rough diamonds and the lack of sufficient demand for polished diamonds exported from Surat are the twin factors that have upended Surat’s factories, which are essentially doing job works.
Since 95% of polished diamonds are exported, global factors always affect the sale of the precious stones, said experts from Surat, blaming the Russia-Ukraine and Israel-Palestine conflicts as some of the factors responsible for causing this situation.
According to Surat Diamond Association’s president Jagdish Khunt; the Russia-Ukraine war and Israel’s action in Gaza are some of the factors which have affected the demand for diamonds and overall jewellery sector globally.
“In 2022, our diamond industry’s turnover was nearly ₹2,25,000 core, which has come down to nearly ₹1,50,000 crore today. So, we have been negative for the last two years,” he added.
Another factor is sanctions imposed by the U.S. and the ban by G7 countries on Russian diamonds. The industry in Surat has been left with large inventories because Russia is one of the largest suppliers of rough stones.
Global diamond mining firm De Beers announced a 15% cut in rough diamond production in the second quarter ending June, as compared to the first quarter, citing “higher than normal” inventories as one of the reasons.
While big firms like Kiran Gems have given extended vacation to their employees, smaller firms employing 100-500 artisans have found it difficult to sustain their operations and have simply fired their workers.
“Yes; there are job losses because small firms are not able to sustain themselves. The problem is not in their control,” a representative from Surat’s Diamond Association said.
Last month, Surat Diamond Workers’ Union, launched a suicide helpline number for those affected by job losses or any financial problems.
Within weeks of the launch; the helpline has received 1,600 distress calls from those who either lost their jobs or were struggling with reduced wages that crippled their household finances.
Citing media reports, the union’s Surat president Bhavesh Tank claimed that as many as 65 workers have committed suicides in Surat in last 15 months.
“There is massive distress among workers and those engaged in the diamond sector in Surat. The situation is worse than what it was during the 2008 global financial crisis,” he said, adding the union has demanded financial support for the workers and their families from the state government.
“We launched a suicide helpline number on July 15. So far, we have received more than 1600 calls with many of them saying they are on the brink of ending their lives due to financial stress. Most of those who call have been rendered jobless in the last few months. They also call in distress looking for employment,” he said.
He added that many workers have suffered salary cuts by 20 to 40% and now they have been calling in the helpline seeking financial assistance in paying their children’s school fees, house rent, home and vehicle loan EMIs etc.
“Due to the Ukraine-Russia and Israel-Gaza conflicts as well as weak demand for polished diamonds in key market China, there is oversupply, which has resulted in 50,000 workers losing their jobs this year,” Mr. Tank explained the factors behind the crisis in Surat.
“The closure of small diamond units has led to some jewellers losing their jobs and they are unable to run the household and even pay their children’s school and college fees,” a leading firm Dharmanandan Diamonds said in a statement after its owner announced financial support to some needy families.
“After surveying the financial status of the families seeking financial assistance, they were given cheques for school fees. A cheque distribution programme was organised on Sunday, in which 40 students studying in schools and colleges were given cheques of ₹15,000 each for school fees,” it said.
The industry representatives have asked the diamond factory owners to extend support to the workers and their families to tide over the crisis.
Disclaimer: The copyright of this article belongs to the original author. Reposting this article is solely for the purpose of information dissemination and does not constitute any investment advice. If there is any infringement, please contact us immediately. We will make corrections or deletions as necessary. Thank you.
