By Mukesh Gaur
The Challenges
Multiplicity of laws leading to much confusion which is aggravated by ambiguous and equivocal acts and poorly framed laws.
India being a democratic developing country has still remained incomplete towards the growth of the employment. The history of Indian Labour Laws is naturally concerned with the history of the British Colonialism. Therefore, the industrial or Labour legislations enacted by the British were framed in the light of the Industrial Development in the United Kingdom, which mainly concerned with the protection of the interest of the British employers and Industrialist.
Such laws made in pursuance of the welfare of the British Political Economy. Even after the demise of the British Colonialism, there was a huge demand of the clear and unambiguous partnership of the Labour and Capital since the day of Independence, which was agreed on a tripartite agreement in December, 1947 in furtherance of the fair wages and fair working conditions to the Labour, which may help to the capital to maximize the profits.
Even the globalization and liberalization process which was begun in India in year 1991 had impacted in Labour market only in a limited manner. Indian Government has tried to bring a significant and sporadic change in Labour laws, from last twenty-four years.
Therefore, Indian Labour market is spoiled because of having strictness in the archaic Labour laws. Hence, the Labour market liberalization is urgent need of the day with having flexibility in the Indian Labour laws.
In India, there are number of laws in respect of the Labour not only under the purview of the Central government but also in the purview of the State Governments, which mainly concerned with the Labour issues. In present, there are 44 labour laws under the purview of the Central Government and more than 160 labour laws in the various State Governments to deal with the issues related with the labour.
The Solution
Specific reforms in existing yet obsolete laws which are relevant to and are needed in the present era of liberalization and globalisation.
But, unfortunately, these laws protect only 7-8 percent of the organized sector workers employed at the cost of 93 percent unorganized sector workers. These laws are concerning with such laws as Laws governing Terms and Conditions of Employment, Industrial Relations, Industrial Safety & Health, Social Security, Labour Welfare, Employment & Training, Wages, and such other laws etc.
Even after the Independence number of fundamental labour rights enshrined in the Indian Constitution for the enforcement of the labour laws under different Articles which provides rights or protections to the labour such as: Articles 14-16, Article 19(1)(c), Article 23 (Forbids forced labour), Article 24 (Forbids child labour), Articles 38-39, Article 41 (Right to work), Articles 42-43A require the State to legislate to secure just and human conditions for work and maternity relief and secure the participation of workers in the management of undertakings.
Apart from this labour is the subject of the Concurrent List of the Constitution where the Central and State Governments are empowered to enact legislation.
Challenges in Existing Labour Laws
Though, there are number of laws or policies for the labour welfare and their protection, what are the challenges?
- Multiplicity of laws: It is to be mentioned that the Labour laws are the part of the concurrent list of the Indian Constitution which empowered both the Central Government as well as State Governments to enact the laws in respect of labour welfare. It is so because, such powers of the Governments has resulted in an overlapping jurisdiction. Number of laws is archaic which are dated to pre-independence.
- Multiple Confusion: There are some multiple laws which are concerning upon a same matter such as; there are 19 laws which are governing conditions of work and industrial relations, 14 laws on social security and labour welfare. The bulk of labour force is employed in the unorganized sectors.
- Industrial Disputes Act: This law requires that companies employing more than 100 workers should get government permission to fire a worker or close down a plant. Each worker or trade unions can intervene in the decision of the companies and the things could get into litigations for years. This rigidity is a primary reason why manufacturing fails to take off in India.
- The Contract Labour Act: This act named as The Contract Labour (Regulation and Abolition) Act 1970, prohibits use of contract labour for core functions in the company. The main purpose of this Act was to ensure the interest of the permanent employees. But instead of following the provisions of this Act the companies have continuously employed contract labour which provides flexibilities in the companies, and also because the contract workers are paid less than the permanent employees.
- Trade Union Act: This Act mainly gives legal rights to registered trade unions with immunity from the civil suits and the criminal prosecution. The law requires minimum 7 workers to form a trade union and also permitted outsider to be appointed as office-bearers, which hurts the investor faith and restricts economic growth.
Need for Reforms in Labour Laws
It is one of the biggest threats to the Government of India as well as State Governments to resolve the defects which are continuously challenged by the society of the workers.
The circumstances arose for the reforms because such the existing laws are continuously violated by the companies or the Employers while they mainly preferred the contract basis labour in less amount compared to the permanent workers.
Though laws are existed but as per the change of the scenario of the society or in the era of globalization there shall be some reform in the archaic laws which are existed before the independence of our country.
There shall be reforms in respect of the child labour and the women labour because in our country even the child labour below the age of 14 years is violation of the fundamental rights of the children under Article 24 of the Constitution.
Raghuram Rajan, Chief Economic Advisor in Finance Ministry said that, labour reforms have been pending in India for a long period and number of Amendments to the various labour laws have been awaiting to come on the desk in the Parliament or for the Parliamentary approval. He further said that, there should be careful implementation of the Government’s welfare programmes and targets the Government’s subsidies carefully.
There is a need of reforms in the labour markets which can be possible in by the way to make the labour markets flexible. In respect of the needs of reforms in the labour markets Eyck states three theories to convince the need for flexibility in labour markets.
- First, theory focuses on the need for labour force to change according to the market fluctuations which resulted because of increase in specialized products.
- Second, theory emphasizes upon the labour costs and increasing productivity because of rising competitiveness.
- Third, theory lay down on the political economy perspective which advocates free markets where there would be no intervention of the Government and trade unionism.
Therefore, the above mentioned theories basically emphasizes of these kind of employment relations and occupations have the potential to evolve more employment and also make an available ranges of the opportunities to the both workers and the Employers.
In other words we can say that the purposes of these theories can be possible if the various States will be introduced this kind of flexibility through the legislative reforms. The reform in way of flexibility in the labour markets would be attracting more investment as well as jobs. And there should be flexibility in the free entry and exit.
Under Article 246 of the Indian Constitution, issues related to labour and labour welfare come under List-II that is the Concurrent List. Various items of legislation have been enumerated under three lists: the Union List, the State List and the Concurrent List. These lists are enumerated in the Seventh Schedule in the Constitution of India.
Exceptional matters related to labour and safety in mines and oilfields and industrial disputes concerning union employees come under Central List.
In all there are 47 central labour laws and 200 state labour laws. The three main acts that are the cause of contention are the Industrial Disputes Act (1947), the Contract Labour (Regulation and Abolition) Act (1970) and the Trade Union Act (1926).
Specific Reforms Needed
- There should be some restriction imposed on the contract labour.
- There should be collective bargaining by the trade unions.
- There should be uniform definitions and consolidation of the laws.
- There should be an effective enforcement of the existing Labour Laws.
- There should be a payment through Cheques or Bank Accounts.
- There should be changes in the Contract Labour Act.
- There should be proper indexing of the benefits and penalties by the Government.
- There should be reformation of the unorganized sectors into the organized sectors which would increase the GDP of our Country.
- There should be mandatory registration and necessary tracking of the labour force.
- There should be an All India Service for the labour administration to provide professional experts in the field of the labour administration.
- There should be grievance redressal process more effective and simultaneously.
The urgency for the need to reform labour law was brought into front after the two recent spat in Gurgaon (Honda Motorcycle and Scooter India Case). The differences between the management and the labour started in December 2004 and escalated in April 2005. It had turned severe in the next two months that led to a riot in Gurgaon where the workers and the protestors were mercilessly lathi-charged by the police.
The workers had demanded in that situation to take back suspended and dismissed workers. It was settled two months later in July when four of the employees who were suspended were taken back but the production loss to the company was amounted to Rs. 120 cr.
Major issue put forward by many economists and policy makers is the multiplicity of labour laws. Unification and harmonization of the labour laws has been highly recommended by Debroy (2001, 2005). He says that apart from the Seventh Schedule there are separate statutes for cine workers, dock workers, motor transport workers, sales promotion employees, plantation labour, working journalists and workers in mines.
There are varied definitions on child, contract labour, wages, employee, workman, factory, industry, etc. In other words we can say that there is an urgency of the reforms in the labour laws in India with enforceable power in the field of labour markets.
Therefore, there is a need of such above mentioned reforms but in case of failure of reforms of the labour laws our country would lead to great economic and social loss. It is upon the Governments both the central as well as the States for the reform of the labour laws because even after 67 years of the independence the laws which are related from the period of pre-independence should be reformed as per the requirements of the changing society.