Open Forum

New Delhi, 25 November 2014

Labour Reforms

VITAL TO REVOLUTIONISE

Dr.S.Saraswathi

(Former Director, ICSSR, New Delhi)

The Union Government has unveiled new measures to facilitate quicker business transactions which are necessary for attracting foreign investments and trade relations.  Importantly, labour reforms form part of the Government’s new initiative “Make in India” to ease business. Of which labour is an indispensable part.   

These measures here unveiled by the Labour Ministry at the Deen Dayal Upadhyaya Shramdev Jayate Karyakram inauguration recently. Asserted Prime Minister Modi, “Labour’s problems must be seen from labour’s point of view”, initiating the reforms to ease the business climate.

Notably, foreign investors and local employers find labour market “rigidities” an obstacle in liberalization.  In fact, the call for labour flexibility is a global phenomenon arising from the needs of competitiveness of firms.  In the employers’ eyes, protective labour laws need amendments in order to withstand global competition.

In this context, labour reforms proposed is an economic strategy to link business expansion and labour welfare as two areas that are inter-dependent.  The proposed reforms contain ideas for long-term benefit of labour who have so far been offered short-term benefits, notwithstanding rising demands.

Plainly, Modi is committed to building industry-friendly atmosphere alongside labour-friendly measures.  Under this, management and labour are to be genuine partners in the “Make in India” project and not two opponents fighting for space. 

According to the Prime Minister, the series of programmes aim at emphasizing dignity of labour, especially of blue-collar workers who are now venerated as “shram yogi”.  Whether the sweetened reforms will really enhance the labour class’s standard of living or serve as a bait to prevent it from protesting against the insurmountable dictates of liberalization and globalization only time will tell. Presently, the Government needs to take industry along for reforms and convince labour on the benefits of these measures.

Towards that end, five schemes are being launched as preliminaries:   Unified Labour Portal “Shram Suvidha” to allot Labour Identification Number (UIN) to six lakh firms, transparent and random inspection scheme to provide quick reports, Universal Account Number (UAN) method for provident fund holders, Apprentice Protsahan Yojana to expand apprentice scheme to more industries and revamped Rashtriya Bima Yojana for a systematic social security system.

Of these, the proposed self-certified inspection system is severely criticized by labour unions as a move to end mandatory inspection and encourage employees’ dismissal along-with recruitment of more apprentices in place of regular workers.  They perceive these divisions as harmful for creating a peaceful industrial climate. On the other hand, industries are happy with the changes. 

Indeed, globalization has weakened labour movements which were strong in the 20^th century worldwide. Leftist thinkers apprehend that labour today is subject to dictates of global capital power and is no longer concentrated in formal organized workplace. Alongside, trade unions are not as strong as in the pre-global economic world. 

However, in India globalization is not complete and transition pangs to a liberal economy are in full play.  Labour continues to be a pressure group with economic and political influence and cannot be ignored as retains its bargaining power vis-à-vis the working class against capitalists.  The age of bourgeoisie vs. proletariat, landlord vs. tillers or owners vs. servants    might have vanished.  But, workers remain the pivot of production or manufacture with major parties having their labour wings/unions.

Moreover, globalization has empowered workers in a different way.  Systems of outsourcing and sub-contracting are typical methods of global enterprises with both being elevated. Whereby, capital and workers are partners in the enterprise.

Pertinently, labour is now not just agriculture wage earners or within firms in specific places but spread over the entire gamut of the production economy, organized and unorganized.  Any disruption in relations between labour and capital might spell disaster to global production and trade and thus enhance the labour’s bargaining power on the system.

There are three categories of workers in industries in India: Direct wage staff in capitalist enterprises, labour force in the informal sector engaged in contracts of capitalist enterprises and other labour force outside the capitalist class.  Globalization has been shifting the labour force between these categories which have led to enormous increase in independent self-employed producers and workers in non-farm activities in rural and urban informal sector. 

Some are attached to big enterprises indirectly by contract or as allies and many moves towards self-employment as their main source of livelihood.   The growth of the tertiary sector is also visible whereby casual labour plays catalyst in absorbing some of the unemployed.

Though the organized sector is expanding in terms of its percentage share in Net Domestic Product, it has not effected employment growth. The organized sector’s jobless increase is counter-balanced by growth of the unorganized sector and informal employment.  Therefore, reforms in labour policy have to pay attention to this growing sector so as to reap advantages of global enterprises.

The estimated employment in the informal economy in non-agricultural activities for 2009-10 was 83.6% of total non-agricultural employment. With the informal market growing, self-employment has become a major source of livelihood.   Informal service in the formal sector now exceeds 50%. This growth is accompanied by stagnant or declining number of regular, protected employment in the formal sector.

Clearly, contract labour system has grown under globalization wherein it reduces labour cost and opens avenues of employment for the unemployed.

Interestingly, employers may prefer the system because of labour flexibility. But workers get divided as regular salaried employees and insecure contract staff often develop hostility towards each other.  The distinction between the two must be addressed.

Undeniably, contract employees continuing in jobs without regularization for years is a common phenomenon.  Trade unions demand regularization of these workers who are eligible to benefits under labour legislations on a case by case basis as commitment to social justice stresses a better deal for them. Certainly, labour flexibility cannot be allowed to cut into fairness.

Besides, applicability of the hire and fire policy must be carefully examined in the Indian context which barely guarantees any social security for the aged and unemployed.  There are considerable proportion of people who have served long in public or private sector and retired without even benefit of monthly pension. 

Thus, in the anxiety to get benefits of globalization, the employees’ interests cannot be sacrificed even for a short time as it might ruin many families.

Needless to say, labour reforms should tighten laws and its implementation on eradicating child and bonded labour, along-with regulating migrant labour within the country. These are much awaited reforms with no particular link with globalization. 

Also, security at workplaces against occupational hazards which are taking new forms and sexual harassment which seem common must form part of the labour reforms.

In sum, labour reforms have varied interests and many dimensions. Remember, it is difficult to achieve reforms in one go to the satisfaction of all involved as issues are inter-linked with antagonistic demands. The Government must be a neutral authority committed to promoting industry, trade, and labour alongside consumer and public interests. On hopes reforms usher a democratic revolution through law for a brighter future for all. ----- INFA

(Copyright, India News and Feature Alliance)