The coronavirus induced lockdown across the world has had deep implications upon the socio-economic fabric of the global fraternity as we know it, with fraying threads, communities are battling with not only the deadly virus but also its underlying repercussions. Even before the lockdown began, working conditions were not exactly ideal for workers in India, especially those employed in the informal sector - from the Delhi Anaj Mandi factory fire, to the various concerns raised by Trade Unions in the capital, India’s labour regulations have, for long, had an addressal due.
In India, approximately 130 million people have been rendered jobless due to lockdown, most of them are migrants returning to their home states from their places of work. In the initial weeks of May, many ‘migrant out’ states of the nation have released ordinances to relax or roll back partially the labour laws of their states. According to the National Sample Survey Office (NSSO) data, 92 per cent of India’s labour force belongs to the informal sector. Further, 49.6 per cent of workers do not have any social security benefit, 71.1 per cent have no concrete written job contract and 54.2 per cent are not eligible for paid leaves.
On the face of it, these measures are aimed at a two-pronged approach towards dealing with the economic repercussions of the lockdown - absorbing the unemployed into the manufacturing or production sectors by facilitating a nudge towards somewhat easy access to the labour factor of production, and to attract larger foreign direct investments in the country.
“This is needed as multinational companies looking at relocating from China to India would prefer flexible central laws over state laws for uniformity of operations across different locations,” policymakers at the Centre have also been considering fast-tracking changes towards ‘uniform, flexible labour laws’ to supersede these ordinances that the state governments of Uttar Pradesh, Madhya Pradesh and Gujarat (for now) have brought about. Several other states - Rajasthan and Punjab, as well as Odisha, too made some changes, albeit smaller in scope. Most notably, the Uttar Pradesh Government has legislated the Uttar Pradesh Temporary Exemption from Certain Labour Laws Ordinance, 2020 which was passed a few days ago, exempting businesses from all labour laws except three i.e. the Bonded Labour Act, 1976, Employee Compensation Act, 1923, and Building and Other Construction Workers’ Act, 1996 for the next three years.
If we are to consider the legalities of the matter, labour law regulations fall under Entry 55 of the Concurrent List under Schedule VII of the Constitution of India and as of recent, India has around 44 Central Laws and approximately 200 State laws that have been enacted to safeguard the rights and interests of its workers. The purview of the labour restrictions, and the fact that they fall under the ambit of both the Centre and states, adds another layer of complexity to the issue. Many states have argued that a uniform structure might fall short of addressing the specific concerns for their respective labour markets.
For decades now, a debate has ensued amongst policymakers, lawmakers and economists in India regarding the flexibility (or lack thereof) in labour laws - be it the argument that flexible labour regulations call for greater autonomy to firms albeit, at the cost of workers’ social security, or the contrary, that stringent laws account for stricter control of the workforce while setting greater restrictions over firms to scale. It has also been pointed out that there are too many laws in place, most of which are neither effectively planned nor efficiently implemented, further leading rise to dire working conditions for workers and corruption within the system. Presently, the question is whether these ordinances and reforms being envisioned by the government, the long-awaited ones being deliberated by the economists or as some say, is the suspension of labour laws an ‘ill-timed and retrograde step’?
Ideally, simpler labour laws allow firms easy expansion and contraction based on market conditions and hence give rise to the much-needed formalisation that would help workers get formal and defined work, better salaries, paid leaves and other social security or employment benefits. However, the measures being currently taken are not reformative in nature, instead, they strip down almost all of the existing laws. According to Dr Radhicka Kapoor of ICRIER in conversation with the Indian Express, the removal of these laws would drive out the basic human rights of workers and also bring down wages - we could see a firm firing all existing employees and hiring them again at lower wages.
The Economic Survey of 2019 stated that deregulating labour law restrictions can create significantly more jobs. However, keeping in mind the already sinking economy, the existing abundance of labour in the market, lay-offs, salary cuts and low demand - these measures to spike employment might be ill-timed, aside from more evidently being negligent of the human rights of the majority of the workers.
The ILO has estimated that close to 400 million people in India will lose their employment or have cuts in income and sink into poverty on account of the economic impact of the pandemic. The ILO responded through a letter to the various complaints made by trade unions across the nation and expressed concern over the proposed reforms in India, that might come as a setback to the 47 conventions that India has signed as a member of the ILO to uphold the basic and labour rights of its workers.
In other countries, governments have been partnering with the private sector to set aside 3 to 5 per cent of GDP towards giving wages - Canada, Vietnam, the UK and Bangladesh have promised aid to employers towards paying severance packages to their employees and even social security allowances for up to three months. It may be a possibility that structural reform in India, at the moment, would not be the right approach towards creating stimulus to encourage employment. Most experts agree that a balanced solution would be to consolidate and simplify the labour laws, instead of their outright removal, to serve the purpose of making upholding them easier for firms and businesses. Lastly, it cannot be denied that the state cannot shrug off its responsibility towards workers that are granted as part of Article 43 of the Constitution of India where the state affirms to protect their rights and liberties.
Views expressed are solely those of the author.
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About the Author
Bhavya Pandey is a student of Economics at Daulat Ram College, University of Delhi. A voracious reader and declamatory writer, she has grown up exploring and opining on a plethora of subjects ranging from environment to economics. She is a trained Indian classical dancer in Kuchipudi, under the tutelage of Padmabhushan Gurus Raja Radha Reddy and has been performing for more than a decade. Bhavya enjoys penning down poetry besides affixing a monocle and combing library bookshelves in search of classics in her free time. She is also currently serving as the Joint Secretary for the Women’s Development Centre of Daulat Ram College and editing for three collegiate level magazines. Bhavya can have endless conversations about the internet and food.