Concerns with the existing Labour Laws in India
- The Labour law in India is rigid, and restricts mobility.
- The list of laws that govern India’s workforce is itself formidably large—at least 40 central laws and more than a 100 state-level acts and regulations.
- The Industrial Employment (Standing Orders) Act, 1946 goes to the extent of making employers seek permission to even reassign an employee’s tasks.
- There are also arguments that the Existing laws protect only a small proportion of the Indian workforce.
- A majority of the workforce is employed in the informal and unorganized sector. So, less than 11 million people out of 450 million workers are given the service of protection today.
Defining Labour Law Reforms
- Uttar Pradesh unveiled an interesting definition of reform by eliminating nearly all worker protection laws, include basic guidelines on occupational safety and minimum standards for working conditions, for a period of three years.
- Madhya Pradesh government announced some startling labour law exemptions to new investors for the next 1,000 days. Labour inspectors—the bane of industry managers—were to now be replaced with a third-party certification. For new units, firing workers would become much simpler and trade unions would not be allowed to raise issues and bargain with the management. Except for the Building and Other Construction Workers Act, Bonded Labour System (Abolition) Act, and Section 5 of the Payment of Wages Act (which gives workers the right to receive timely wages), all other laws were deleted for the next three years for all firms.
- Gujarat granted labour law exemptions for 1,200 days.
- Assam government has also announced a provision for fixed-term employment of workers, and it has also been proposed that factories will now be allowed to increase working hours from the existing eight hours to a new 12-hour shift.
Judging these moves by various state governments
- The broad justification given for such reforms is that – economic activity has been hampered by the pandemic and governments across the country need to give greater flexibility to businesses and industries to provide employment to returning migrants, among others.
- However, if that was indeed the purpose, the 12-hour shift decision is clearly contrary to the objective.
- If jobs have to be added, the push should have been for shorter work hours and an increase in shifts, which would then distribute employment.
Is such elimination of Laws entirely right during these times?
- But minimum workplace standards may actually be more important in the post-COVID world, not less.
- There will have to be serious supervision with regard to safe distancing, facilities for washing hands, and even adequate sanitization.
- By diluting aspects of the law which already mandate many of these basic minimums, India will only hurtle towards more COVID-19 cases.
The Beginning of Reform
- India’s first labour law was the Apprentices Act passed in 1850.
- It was the government in Rajasthan in 2014, that started the labour law reform process – when it relaxed the prevailing norms for retrenchment and hiring of contract workers and also made the process of registering a new trade union more stringent.
- This reform lead to – Rajasthan’s wage growth dipping considerably, unemployment rates going up, and the state’s gross domestic product growth fell as the effect of demonetization kicked in and economic activity went downhill.
Is China’s downfall a silver lining?
- The silver-lining, according to some, is that China has become unpopular and is now on its way down. Trade with China will no longer be encouraged by various nations and supply chains will attempt to move elsewhere.
- However, this optimism seems misplaced. Industries that did move away from China in the recent past have mainly shifted to Bangladesh and Vietnam, and have stayed away from India, despite the country’s large domestic market.
- The reason for this cannot be stringent labour laws alone.
Weakness in Indian Industries
- India’s ease-of-doing-business is still struggling with other issues: poor contract enforcement, shortage of skilled labour, and an unstable tax structure.
- Even if industrial revival and the need to make India globally competitive is the only pressing concern in policy circles at the moment, the case for rigid labour laws being the main villain preventing an Indian manufacturing renaissance is very weak.
- In the 21st century, Indian industry has been repeatedly slow and ineffective in reacting to global economic shocks—for instance, the textile sector losing its sheen after the Multi-Fibre Arrangement expired in 2005.
- Labour is a concurrent subject and the significant laws are central laws. They cannot be done away with through state ordinances.
- The Economic Survey of 2018-19 had stressed that a high minimum wage is critical for workers and does not impact employment generation.
- At a time when there are calls for universal basic income, at least a higher minimum wage is essential.
- When law ceases to exist, the jungle raj takes over.
- This move of allowing state governments to use a weak moment in national history to push through hurried and sweeping measures will only undermine worker safety and distort our labour institutions further.