When prime minister Narendra Modi unveiled
some steps towards labour reforms, he was responding to long pending demands
from business houses and international institutions such as the World Bank; but
the critical question is if he has found the fine balance between the needs of
the industry and labour.
A highlight of his
announcement was the reform of the “inspection raj” in which labour inspectors
visited industries according to their will. According to the new arrangement,
the process will be automated, which will prevent inspectors from selecting the
units to be inspected locally, while inspection reports have to be
uploaded within 72 hours.
According to Modi, the
old system harassed businesses while the new one will bring in transparency and
ease in dealing with the government.
Another point is the
announcement of an universal account number for labourers which will allow easy
transfer of their Provident Fund accounts. Apparently, about Rs 27, 000 crore
is lying idle because of the earlier immovability. "I need to return this money
to the poor," Modi said, adding that it was a part of his vision. The
reforms will also make paperwork easy - instead of 50 forms, companies will now
need to fill only one form, that too online.
At first sight, Modi
seems have combined the demands of the industry and welfare of the labourers,
but going by the contradictory reactions from both, he certainly has a long way
to go.
While ASSOCHAM
complimented the "government for initiating the labour law reforms as it
will create a conducive environment for growth of Trade and Industry and bring
transparency in social security benefits to help workers,” Tapan Sen, General
Secretary CITU and Rajya Sabha member said: “it’s only cheating of
workers, as while the Government is launching these schemes, simultaneously it
is changing the labour laws to push out the labour from their purview”.
Similarly, both FICCI and
CII welcomed the measures, while Gurudas Gupta, General Secretary, AITUC, said:
“the PM is going in for drastic changes which will ultimately benefit the employees
to carry out a hire-and-fire policy and harm working people.
This is being done
to give a free hand to the Corporates. This will depress wage levels and shall
create a situation for low paid apprentices in place of permanent labour and
even contract workers”.
Whether it’s the Modi
government or the previous UPA government, labour reforms have mostly been seen
as reforms of the labour laws, which the country and states (labour being a
concurrent subject) have in plenty. In fact, the UPA had initiated amending
many of the labour laws, with a view to helping Indian industries to compete in
the global market. In 2005, a tripartite discussion under the then common
minimum programme had agreed that “the management would require operational
flexibility which includes power to right-size the work force”
The myriad labour laws
and the extremely disempowered conditions of labour, a majority of which is in
the unorganised sector, makes labour reforms a very complicated endeavour. For
instance, writing for
the BBC Economist Kaushik
Basu, highlights the case of the Industrial Disputes Act (IDA), 1947,
which he says “is a good example of a well-meaning policy that is founded on
antiquated economics and a handsome misunderstanding of the way markets function.”
“In fact an amendment
made to the IDA in the mid-1980s requires that any firm employing more than 100
workers needs to get permission from the State Government before retrenching
workers (and in practice that permission is seldom given), he adds.
His point is that IDA
makes firing of workers very hard, which limits the flexibility of free
contracting.
From the perspective of
industries, and even from the point of view of the prospects of short term
contracts for manufacture that companies undertake which require short term
workers, it may be true; but from the point of view of labourers, it affects
their welfare and security. There may be certainly some justification on
tweaking laws to make more trained labour easily available to the industries,
without considerable legal hassles, but then the labour also has a right to
feel secure. It may also be true that because of the rigidity of some of our
laws, companies are unable to expand and innovate. Experts such as Basu point
out that labour data from the 1980s show that companies employing more than 100
people have gone down because of the labour laws.
While the labour unions
fear a free hire and fire policy, what reformists want is the ability to write
different types of contracts - some short term, some long term and an easy
regime from the government in terms of controls and supervision.
Will Modi be
able to convince both the businesses and the labour that he stands for growth
as well as welfare?
A planning
commission working group
document that contributed to the 11th Plan
(during the UPA) is worth a revisit in the present context, it said: “The UPA
rejects the idea of automatic hire and fire. It recognizes that some changes in
labour laws may be required but such changes must fully protect the interests
of workers and families and must take place after full consultation with trade
unions. The UPA will pursue a dialogue with industry and Trade Unions on this
issue before coming up with specific proposals. However, labour laws other than
the Industrial Disputes Act that creates an Inspector Raj will be re- examined
and procedures harmonised and streamlined.
The UPA government firmly believes
that labour-management relations in our country must be marked by
consultations, cooperation and consensus, not confrontation.
Tripartite
consultations with Trade Unions and Industry on all proposals concerning them
will be actively pursued. Rights and benefits earned by workers, including the
right to strike according to law, will not be taken away or curtailed.”
This sounds reasonable
and sound in principle. Perhaps, this is the line that the Modi government
should also pursue while pushing for reforms.
//copy// PTI
