Events & Issues

New Delhi, 31 July 2019

Labour Reforms

POSITIVE, GAPS REMAIN

By Dhurjati Mukherjee

Employment generation has been a big problem as also the inflexible labour markets. In fact, the economy has been slow to create well-paid jobs for the masses. Both in the realm of skilled and unskilled labour, those working in the organised sector are paid well but those engaged in the informal sector get poor remuneration. It is agreed by economists that the protection extended to organised labour and their families, which constitutes around 7-8 per cent of the population, may not fully reach their counterparts in the informal sector and at least 70 per cent should be extended to them.

It is in this connection that labour reforms are needed as also a minimum wage in all parts of the country. The recent decision of the Cabinet to approve four Labour codes by merging 13 Central labour laws which will apply to all establishments employing 10 or more workers is a step in the right direction. This consolidation can potentially benefit large sections of the 40-crore workforce. The Code on ‘Occupational Safety, Health and Working Conditions, 2019’, drafted in consultation with 13 workers’ organisations, is expected to enhance coverage of workers manifold. The rules state that workers will have to be given an employment letter besides an annual medical check-up, the labour minister, Santosh Gangwar stated in the Lok Sabha while introducing it last week. The code will be applicable to all business entities dealing in the port and mining sectors, even if they have only one employee.

Another important action the government taken is to introduce The Codes on Wages, 2019, prescribing a nation-wide daily minimum wage of around Rs 178-180, rejecting the Anoop Satpathy panel recommendation for at least Rs 375 a day. Though independent analysts and trade union leaders described the move as ‘anti-labour’, in reality, 90 per cent of labourers do not get this amount today. As is well known, there is variance in daily wage amongst the States and a uniform rate would probably be better. There are some who feel that minimum wage should be fixed depending on the cost of living in different geographies. But the point to mention here is that State governments are free to give more than the official minimum wage.

However, as per the bill, the minimum wage will regularly be adjusted against rising prices with the appropriate government (Central or State) consulting experts, employers and employees. A very pertinent point is made by well-known social activist, Nikhil Dey, who criticised the decision to leave the Mahatma Gandhi National Employment Guarantee Act, which provides up to 100 days’ unskilled work for every rural household a year, out of the bill’s purview.   

If the Code on Wages Bill fixes Rs 178 as the minimum wage, it would become binding across the country. One may mention here that in 2017 it was notified that floor-level minimum wage would be Rs 176. However, the rate would be too little and fixing the rate at around Rs 200-220 would have been more realistic, keeping in view the inflationary conditions and the rising cost of living. The code has clearly stated higher wages for higher levels of skills. There is also a need to review the minimum wage after a year to ensure that it is in tune with inflationary conditions in the economy. 

The decision to replace the existing labour laws by four codes on wages, social security, industrial relations and workers safety is clearly indicative of the fact that the government, after a long time, is focussing its attention on labour reforms. But even after fixing the minimum wage and giving more benefits to labour, the problems still remain. 

Some analysts are quite confused about the minimum wage which, in certain parts, looks less while in others may be quite adequate. There is hardly any mechanism in the hands of the panchayats or the sub-divisional offices to ensure that minimum wages are being received by the labourer. Even in small enterprises, the minimum wage is not given to unskilled workers while their skilled counterparts may just get around Rs 20-25 more. What is the role of trade unionists in ensuring that justice is meted to workers at the grass-root levels?

The economic condition prevailing in backward districts of the country is such that a labour would accept whatever he is paid which may be 25 per cent less than the prescribed minimum wage. In fact, most of them do not know the minimum wage amount and thus have no alternative but to accept whatever is given to him. Political leaders at the grass-root level are usually found to back the businessmen and would mediate for the labour. An important question that arises here is how many labourers can read, write and sign?

The next question is the hours of work, which is normally found to be not less than 8-9 hours. Again there is no monitoring and businessmen are allowed to exploit their workers, both in big and small establishments. In this connection, one may refer to the Factory Act 1948, which mandated overtime pay for any factory worker beyond 9 hours a day or 48 hours a week, at twice his ordinary wage rate. But the code is silent on overtime pay, leaving it to the ‘appropriate government’. What to speak of such workers in the unorganised sector; even in organised counterparts, one has to work, say from 10 a. m. to 7/8 p.m. every day and sometime even more. If the government is serious towards the whole question of labour reforms, the true picture needs to be revealed and transparency brought about regarding conditions of work.

Economists agree that the long working hours in most private sector units – even in big ones – have resulted in curtailment of employment. Added to this, people above 62-65 years of age are retained to work in a Consultant’s capacity with reduced pay, thereby blocking the employment opportunities of a fresher.

There are virtually no health facilities in most establishments but this is an important aspect that needs to be seriously considered. The proposal of setting up a National Occupational Safety and Health Advisory Board with representation of employers, employees and the government is, no doubt, a step in the right direction, if it acts judiciously on matters of health, safety and working conditions.  

Thus, it can be concluded that the two bills have positive points though in certain matters decision have not been taken and left to the ‘appropriate authority’. Moreover, it would have been suitable if MGNREA too would have been brought within the purview of applicability of national minimum wage. As the bills are introduced in the Lok Sabha, it needs to be seen how the Opposition views these and whether the government will relent to their demand that these be sent to Parliamentary Standing committee.---INFA

(Copyright, India News &  Feature Alliance)