Ever since the formalization of the industrial sector, the working class has been at the receiving end of the ill treatment meted out to them by their employers. Their illiteracy further added to the systematic exploitation and discrimination at the hands of the employers, for whom profits took precedence over everything else, including the health and welfare of a worker. Due to constant influx of migrants from rural to urban areas, availability of cheap labour was never a problem. Easy availability of labour allowed employers to keep wages down and made organized resistance difficult.
The demand for consumer goods rose around the two world wars. Employers felt the need to go in for large-scale production in order to cope with the demand. It was at this time that workers realized that if they were to band together, they would be able to demand more equitable terms and conditions of work. Trade unions and other workers’ movements emerged, and labour legislation gradually began to recognize some of these demands.
The existing set of labour laws can be broadly grouped into five groups of laws pertaining to (i) industrial relations, (ii) wages and other remuneration, (iii) social security, (iv) safety, and (v) welfare and working conditions.
The laws that are currently most contentious are those relating to industrial relations, specifically the conditions of hiring and firing, and to wages. In each of these, once again the conflict between capital and labour becomes visible.
However, the implementation of laws themselves has always been hugely affected by social pressures of various sorts. Throughout history and across countries, the recognition and granting of workers’ rights have not occurred because of the benign intentions of governments, but because workers and other social movements have struggled and fought for such rights. That is also why such laws, while accepted at both national and international levels, can be systematically denied to large numbers of citizens because of the prevailing political and material realities.
The rather chaotic regime of labour laws that currently operates in India reflects these tendencies very clearly. On the one hand, the laws are mostly commendable in their declared intentions and acceptance of fundamental rights of workers. However, they are hardly implemented in any meaningful way for most workers in the country, and are generally honoured only in the breach.
In this context, the Second Labour Commission was set up in 1999 under the chairmanship of the former Labour Minister, Mr. Ravindra Verma, to make recommendations on rationalising labour laws.
The ILO declaration on Fundamental Principles and Rights at Work, adopted by the International Labour Conference in June 1998, says, inter alia, that all member-states, whether they have ratified the relevant conventions or not, have an obligation to respect, to promote and to realise the principles concerning the fundamental rights which are the subject of those conventions, namely: (a) freedom of association and the effective recognition of the right to collective bargaining; (b) the elimination of all forms of forced or compulsory labour; (c) the effective abolition of child labour; and (d) the elimination of discrimination in respect of employment and occupation.
The Government of India ratified Convention 122 on Employment and Social Policy in 1998. Article 1 of the Convention lays down that, with a view to stimulating economic growth and development, raising levels of living, meeting manpower requirements, and overcoming unemployment and underemployment, each Member shall declare and pursue, as a major goal, an active policy designed to promote full, productive and freely chosen employment.
Three types of regulation are seen as especially constraining for employers in the Indian context: first, fairly stringent rules relating to firing workers and also for closing down enterprises, along with requirements of reasonable compensation for retrenchment; second, laws governing the use of temporary or casual labour which enforce permanence of contract after a specified time of employment; third, minimum wage legislation which raises the cost of hiring workers.
The Labour Commission has sought to deal with these issues while suggesting desirable conditions of work and pay for unorganised labour in general. In the process, while its intentions are clearly progressive, it has ended up making recommendations that will hit organised labour even as they are not likely to improve the conditions of the vast majority of other workers in the country.
The Second National Labour Commission has actually declared that the following rights of workers have been recognised as inalienable and must, therefore, accrue to every worker under any system of labour laws and labour policy. These are:
Right to work of one’s choice; right against discrimination; prohibition of child labour; just and humane conditions of work; right to social security; protection of wages, including right to guaranteed wages; right to redress grievances; right to organise and form trade unions; right to collective bargaining; and right to participation in management.
While these add up to a formidable array of rights accepted by the Indian Constitution for workers, the problem is that they are rarely achieved or enforced. One of the most common – and most effective – criticisms of labour legislation in India is that it is applied only very selectively, does not cover most workers, and thereby ends up penalising those employers who employ relatively larger numbers of workers and thereby fall under the legal and administrative net.
It is worth noting that labour reforms in India are discussed mostly in the context of organised labour, and this constitutes merely 8 per cent of the country’s total labour force. Are we concerned about only this sector? How about the majority of India’s workforce, which is in the unorganised sector?
Even the Second National Labour Commission Report appears to be aware of this. The Report makes the point that changes in labour laws are only one of the issues involved, and that these have to be visualised and effected in a broader perspective of infrastructural facilities, social security, and Government policies. We, therefore, suggest that these changes be accompanied by a well defined social security packet that will benefit all workers, be they in the organised or unorganised sector and should also cover those in the administrative, managerial and other categories which have been excluded from the purview of the term worker. In evolving such a social security system, it is necessary to provide for both protective and promotional measures, the latter being particularly relevant for the workers in the unorganised sector.
Two-fold benefits
We must have proper labour reforms in both organised and unorganised sectors. There will be more industries coming up in our country, and it naturally follows that there will be more employment opportunities generated. Many multinational companies view India, sans its archaic and anachronistic labour laws, and to some extent its militant labour force, as an ideal place for economic activity. If prompt and correct measures are taken up with honesty and transparency, then both industry and the labour community will benefit.
Labour reform is not just about facilitating the closure of a sick industrial unit or about laying off employees. The core issues of labour reforms centre on a few major points: wage policy, employment security, labour redundancy, industrial relations, labour market information and human resources development. These issues can be solved by liberalising existing labour legislation, enacting a flexible exit policy, rightsizing, reforming trade unions, by continuously retraining and updating workforce skills, worker participation in management, and by good and clean corporate governance.
One of the major issues of labour reform in India has to do with repealing certain laws. Various countries, including Britain, New Zealand and the United States, have liberalised their labour legislation, but India remains hesitant about amending laws that are detrimental to economic growth. It is unfortunate that while labour laws in India were designed to be employee-friendly, they have ended up becoming anti-employment.
Government, industry, trade unions, industry associations, economists, sociologists, constitutional experts, intellectuals, institutes of management and social sciences, and the media, all of these should be involved in the labour reform process. A holistic and multi-disciplinary approach is required to solve the problems relating to labour reforms.
Unfortunately, the concerned parties in this issue are playing the blame game. Industry feels that the government is not doing enough, and the trade unions argue that the government is dancing to industry’s tune. The government, which is, sadly, a conglomeration of opportunistic political parties, ought to take bold and visionary decisions, but it is more concerned with vote banks and extending its grip on power.
Some suggestions to ease the path to labour reform
• Every employer will have to ensure, before a worker is retrenched or the establishment is closed, irrespective of the employment size of the establishment, that all dues to the workers are first settled as a precondition to retrenchment or closure.
• Contract labour should not be engaged for core production/services activities. However, for sporadic seasonal demand, the employer may engage temporary labour for core production/service activity.
• Minimum wage payable to anyone in employment, in whatever occupation, should be such as would satisfy the needs of the worker and his family.
• Every employer must in addition pay each worker one month’s wage as bonus, before an appropriate festival.
• There should be a national minimum wage that the Central Government may notify. This minimum must be revised from time to time. It should, in addition, have a component of dearness allowance to be declared six monthly linked to the consumer price index and the minimum wage may be revised once in five years.
• Where wages are fixed purely on piece rate basis the employer should pay at least 75 per cent of the notified time rate wages to the piece rated worker if the employer is not able to provide him with work. Fixation of piece rate wages must be so done as to enable a diligent worker to earn after eight hours work what would be the time rated daily rate.
• All this should be applied to all employers, in whatever sector, and all workers, whether rural or urban, in whichever activity they are employed.
Concluding Observation
With all the forebodings of difficult times on the employment front, it should be the responsibility of the nation’s political and labour leadership to ensure that the course corrections that are to be made do not result in a legal structure that substantially dilutes minimal levels of protection for the country’s workforce.
It is also imperative that the Government comes out with a comprehensive and workable social safety net. A thorough reworking of the existing systems of social security – which are more attuned to a setting where the public sector occupies the commanding heights of the economy – should be an ideal starting point for such an exercise.