Easing Labour Laws
By Dhurjati Mukherjee
The recent decision of States such as Uttar Pradesh, Madhya Pradesh, Gujarat, Maharashtra and Odisha to ease labour laws has been the subject of concern and discussion. On the one hand there are employers who are supporting the move and on other trade unions and labour experts vociferously opposing it.
The changes in the labour laws include allowing employers to raise or change working hours, such as by four hours (under the Factories act to increase daily working hours to 12) and up to 72 hours a week in overtime for workers who are willing; allowing third party inspections for new units; more flexibility in hire and fire policy, determining wages, reducing liabilities viz employee benefits. These are being justified to do away with rigidities that have hamstrung the existing concerns and deterred fresh investments.
The UP government on May 6 passed the Uttar Pradesh Temporary Exemption from Certain Labour Laws Ordinance, 2020, that exempts businesses, manufacturing mostly, for three years from a range of labour laws. And other States decided to follow suit.
The reasons given for the proposed changes are obviously meant to attract investment but which clearly lack logic and justification. Over working of labour is not an established norm in any part of the world and these changes cannot be expected to bring foreign investments. Some economists are of the opinion that this may be a ploy to further exploit labour, which is near normal in this country.
Besides, few political parties, mainly from the Left have written to President Ram Nath Kovind registering their protest at the dilution of labour laws. Even the RSS-affiliated Bharatiya Mazdoor Sangh (BMS)), has stoutly opposed the changes. Further, Central trade unions are contemplating to lodge a complaint with the ILO against government’s misadventure of gross violation of labour standards and in the meantime, as many as 10 trade unions have given a nation-wide strike on May 22 to protest the suspension of labour laws by these States.
According to a professor and labour economist at XLRI the changes posed considerable cause for concern as these spell labour market anarchy. This is based on certain presumptions such as labour laws are not needed in society, which means that the state will have no role in monitoring, that workers have to depend on the employer’s goodwill and that the labour rigidities are the principle irritants that halt investment and hence economic growth. But these assumptions are difficult to accept as employees can’t possibly be at the mercy of employers, who have been found to cheat them and that investment does not depend on labour but more on infrastructure and competitiveness of the industry.
Well-known labour economist and chairperson, Centre of Informal Sector & Labour Studies at JNU, Santosh Mehrotra, referred to a survey eight years ago of the World Bank to find out from employers in South Asia what they considered the most important barriers to industrial growth. It was found that electricity, infrastructure and logistics were considered the most critical impediments. Mehrotra added that the findings were particularly true for the Hindi belt States, where agriculture is the main source of employment and that not following labour laws was not welcome. Other economists expressed worry over reduction in labour standards and in labour cost to benefit employers at the cost of poor labourers.
Those who talk of getting rid of archaic laws do not realise that in this country most of these regulations as it is are not adhered to due to lack of monitoring. As such, exploitation of labour is rampant as without these changes, they have to work at least 2 hours more that the stipulated 8 hours without any extra payment. Increasing this to 12 hours a day appears unrealistic as it will be a strain on the human body and not necessarily productive and even a health hazard. Moreover, optimistically speaking, not more than 50 per cent of units would give them overtime.
Another aspect for consideration is whether the changes would actually be for a period of three months only as claimed. If that be so, till labourers join back to work, the proposed changes are welcome but it must be ensured that these cannot continue beyond July 31, at the latest. Also extra work should come for extra payment which should have the approval of the respective labour directorate of the States who need to ensure compliance.
The question on unemployment and underemployment is quite severe in the country and by allowing labour to do extra work would obviously lead to curtailing the workforce. As it is, unemployment has reached around 28 per cent and if this is allowed, one can easily visualise the situation at the end of this fiscal. Besides, under-employment is a fact of life as around 40 per cent of the rural workforce fall in this category.
An additional fact is that if one delves deep into the migration problem, it is very much manifest that lakhs have returned to the eastern States. Thus, the problem of unemployment is grave for the migrants who have entered these States and, as statistics reveal, are backward and face critical problems.
Meanwhile, it is known fact that globalisation and automation are job destroyers as hard figures will demonstrate. There is also a tendency to go for automation and hire less labour. Those who talk about jobs being created, it can very well be said that most of these are in the informal sector with salaries being rather low and job security much less.
The political leadership which speaks of labour reforms should at least try to find out the real conditions of labour and the actual salary they get in their hands before talking of reforms. While big corporates pay adequately, the small and micro sectors are those that fail to give sufficient compensation to their labour.
Observations the CEO of Niti Aayog in a national daily recently are worth noting wherein he stressed that what States must ensure is that terminated employee must get 45 days’ worth of salary. The big question is whether he has tried to find out how many SMEs follow this? Is there any mechanism at the State or Central level to ensure compliance? Or, for that matter, how many of these units pay minimum salary to their employees? Or keep a small percentage of the total workforce as employees, while the rest are treated as temporary workers for years together.
In these unprecedented times, clamouring for labour reforms without even delving deep into the problems that labourers already face needs re-thinking. Issues need to be examined, not by bureaucrats but by labour economists and civil society groups. Genuine attempts need to be made to ensure that, in an emerging economy, the conditions of their livelihood improve for the better and not worse. —INFA