Economic Highlights

New Delhi, 20 June 2015

Industry As Employer

LABOUR SHUDDERS ‘REFORM’

By Shivaji Sarkar

Labour in India is akin to its ‘caste’ system. On the one hand are the pampered government or semi-government workers and on the other the exploited non-government ones. Even the so-called organized sector does not match the conditions of the government workers.

In such a scenario of high and low caste workers, the utterance of reform has become a dreaded word. The more reform is the higher is the suffering of the Indian worker. It is not restricted to a sector or two but every sector. That is the reality. So when someone says that an investor in the US, or the West or anywhere else in the developed world wants more labour reforms in India, it rattles the workers.

The million dollar question is: Can India take the giant leap without caring for the working class? Certainly not. But the employers of all hues choose to think otherwise. They want pliable workers, who would subsist on below poverty wages, be prepared to be kicked out at whims and fancies and at the same time contribute to the growth of the economy! Their wishes are encapsulated in a Bengali phrase – “bamuner gai, khaabe kam, doodh debe beshi” – the Brahmin’s cow should have less to eat but must yield more milk. This has not happened to the Brahmin and it is not now happening to new employers.

The Indian economy is sliding because its ‘holy cow’, the workers, is at the receiving end and is being asked to shed more (Do the workers have anything to shed?). So what do those investors want? How would they be contributing to the economy?

All they have are complaints against everything – the tax system, wages, welfare, regulations and simply want a free run to escape all laws. The Union Carbide phenomenon continues. While FDI is good and welcome, should someone bringing some pennies be allowed to romp home with all the profits? Is the country that helps them repatriate enormous profits supposed to remain deprived?

The Indian labour has suffered through the era of supposed protection. Workers were sacked by the industry in droves without even giving them their basic minimum wages and other benefits. The closed or abandoned mills around Kolkata, Mumbai and Kanpur are stark testimonies of the sufferings of the organized labour.

The ushering in of information technology and related activities initially brought glee. Some workers were paid in six figures, while others too were drawing handsome wages by Indian standards. However, the euphoria didn’t last long. The IT industry, despite soaring profits, has now squeezed their high-paid employees forcing most of them out it. The new wage standard varies from Rs 5,000 to 40,000. Those who put in some years and rose to higher scales are often put conditions that they have little option but to quit.

The phenomenon is widely prevalent in the private banking and insurance companies. More employees are outsourced and they are not privy to any benefits proposed by law or company rules. Take the example of the courier industry. It doesn’t have a law or regular employment. Those employed work at the lowest wages of around Rs 5,000 or so with the dagger hanging over their heads. The real estate is no better. Even otherwise its bubble has burst.

Foreign companies such as Nestle or Pepsi hardly have any plant that they call their own. Every activity, from manufacturing to distribution, is outsourced. Indian businesses are given loans to produce their product at prices fixed by the companies. The foreign companies have no liability to the workers. As the recent quality issue hit Nestle’s noodles, many such outlets closed down overnight making the workers helpless and distraught. (One worker in Uttarakhand has committed suicide). The company has little to lose. The losses are to their Indian operators and workers.

It is important to make a note of what the International Labour Organisation (ILO) has stated: that on the policy front though many achievements have been made, bottlenecks have emerged in the implementation of policies and delivery programmes. In certain areas, fragmentation and coordination of initiatives have become a challenge for policy makers.

Its report ‘Decent Country Work Programme 2013-17’ finds that 92 per cent were employed in informal sectors. It’s concerned over the rising contract jobs, euphemistically called “outsourcing”.  Further, it mentions that half of the workers are engaged in agriculture and just 11 per cent in manufacturing. There are not many non-farm jobs in rural areas and also finds that the number of women workers there has declined while there has been a marginal rise in urban women employment.

Additionally, it also notes with concern that 27 million micro, small and medium entrepreneurships (MSME) may have relevance for youth employment but their competitiveness is limited. While it would advocate employ people in large numbers, the red herring is “there is no specific provision for labour laws”. It obliquely even suggests that the laws there are more violated than observed.

This is where foreign companies take fancy in employing MSMEs to bypass laws. The ILO notes that while social protection and minimum wages remain amongst the basic essentials, labour protection is minimal. So is the case it found in the 166 functional SEZs.

In the case of India’s growing education sector, it is found that here too the faculty and other staff are not paid as per provisions of the law. Recently, a faculty member of a well-known private university had to seek none other than Prime Minister Narendra Modi’s intervention to get his gratuity following termination of job. Most of the teachers in universities or secondary and primary schools across the country are “officially” paid a wage through the banks but they have to refund at least half of it to their employers in cash. This happens even in the national capital, Delhi.

Shockingly, prosecution of an employer for violation of law is rare and time consuming. Worse, a mere eight per cent of workers are employed in the so-called organized sectors. The plight is indeed horrendous. The private sector – foreign or indigenous – has paid scant attention to it. Can India grow with such dismal record on labour scenario? What more reforms the industry or the business need?

Apparently, there is almost a consensus that lots needs to be done for labour. In the name of “reform”, the workers are set to be deprived of the least they have. Modi has to look at the workers with a fresh vision. The labour laws do not need reforms. Rather these need a new approach to treat labour with compassion. Plus, the government alone cannot remain a model employer. The industry too has to chip in. Remember, it takes two to tango. ---INFA

(Copyright, India News and Feature Alliance)