India requires a labour law structure that is stable and secure rather than one which changes every few years. The Govt must strike a balance and implement investor-friendly reforms
The COVID-19 pandemic has exposed the fault lines, vulnerabilities and infirmities that exist in India’s labour law and policy framework. On the surface, the country’s legal structure boasts of 200 State laws and around 45 Central rules that govern the employer-employee relationship. India is a labour surplus country with 47 million unemployed below the age of 24 years and 12-13 million youths joining the labour market every year. Almost 93 per cent of India’s labour force works in the unorganised sector, the majority of whom are unskilled and poorly educated. Nearly 90 per cent of India’s estimated 47 crore workforce is not benefitting from the existing labour law provisions.
But the irony is that the multitude of laws have neither uplifted the socio-economic conditions of the workers nor have they incentivised economic development. This because they “over regulate” and create legal hurdles at every stage of running an enterprise.
Last year, the Union Government drafted four labour codes as part of a process to streamline these laws. They were the Code on Wages (approved by Parliament), the Industrial Relations Code, Code on Social Security and Welfare and the Code on Occupational Safety, Health and Working Conditions. These codes will subsume within themselves various legislations related to specific areas of labour law. The Government’s move guarantees transparency and accountability. But this is also an opportune time to revisit these laws in the light of the health, safety and livelihood challenges faced by the workers.
Another striking feature of the Indian labour landscape is that the proportion of informal workers in the total participating labour force is a staggering 90 per cent. In other words, 90 per cent of the work force does not have job security or a social safety net.
This became apparent when migrant workers, who form part of the circular economy, were left in the lurch without any social security net to tide over the COVID-19-induced lockdown. Left with no guarantee of shelter, their next meal or any certainty as to when the lockdown would end, the workers started a long and perilous walk back to their home States.
It is paramount to consider the link between the inadequacies in an existing law, its implementation and accountability vis-à-vis the State and the enterprise that has to abide by it. Let us first examine the laws and regulations that are already in place.
For the workers’ benefit, the Government has created certain social security nets like the Employees’ State Insurance Scheme (ESI) and the Provident Fund (PF) for labourers who work in the organised sector. It is the duty of the employers or the contractors to register their employees under these schemes but in practice, they grossly under report the number of such workers to reduce compliance costs. As a result, the JAM trinity-linked direct transfer schemes are difficult to implement because a large number of employees are invisible.
Further, schemes such as the Building and Other Construction Workers (BoCW), a welfare fund set up under the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996, meant for the largest section of the migrant workers and informal labour also rely on registration. The Labour Ministry reported that around Rs 31,000 crore was lying unspent in BoCW funds. Several activists have also highlighted that migrant workers did not receive any benefit and that the BoCW fund has registered many bogus workers.
In this context, the need for an accountability and fair work ombudsman has been very much felt. Such an institution would ensure that worker benefit schemes are better implemented and utilised so that their true beneficiaries receive the required social safety net, especially in times of crisis.
Uncertain times call for drastic changes to the labour laws in order to deliver stakeholder benefits. However, in the past month, several States have taken steps to suspend extant labour laws rather than strengthen them.
The primary logic, rather the zeal, behind this move is to incentivise economic growth on the assumption that deregulation through labour law reforms will enhance economic prospects. The Uttar Pradesh Government has proposed the suspension of all labour laws for the next three years. Only those that are related to payment of timely wages, prohibition of bonded labour and health and safety of workers are excluded.
The Madhya Pradesh Government’s amendments focus on new factories and establishments which would be exempted from the provisions of the Industrial Disputes Act, 1947. These State Governments have also suspended the working of the Act, which hampers the rights of a worker to approach the Industrial Tribunal in case of an industrial dispute or seek compensation in case of layoffs and retrenchments.
However, a conjoint reading of Article 246, 213 and 254 of the Constitution demonstrates that a Governor cannot promulgate any ordinance without the assent of the President in relation to an ordinance which suspends labour laws. As of date, the President has not granted such assent to these changes proposed by various States.
One cannot do away with the labour law regulations just to ease pressure on economic growth. Their removal is antithetical to the idea of a social net that makes the workers feel secure at their workplace. Most importantly, these labour changes will last for only three years. Such a sunset clause is bound to detract rather than attract investments due to the short-lived nature of these incentives. Industry requires a labour law structure that is stable and secure rather than one which changes every few years.
The need of the hour is that Governments, while continuing the process to streamline existing laws, strike a balancing act and implement beneficial and investor-friendly labour reforms, which address the deep-rooted problems for the workers’ welfare.
(Writer: Mekhala Pande; Courtesy: The Pioneer)