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Laws and the Reality

Laws and regulations like the minimum wage, say Rs 15,000 per month, touch only the organized sector of the economy which in India covers only 16 per cent of the worker population. The remaining 84 per cent are in the unorganized sector and do not get the benefit of government stipulations. On this basis alone, there is a strong case for lifting all wage stipulations.

Prafull Goradia |

My right to work is fundamental although the Constitution does not say so. But then should governments whether at the Centre or in the State put obstacles in the path of whatever employment I can get?

A recent stipulation is that my potential employer must pay me a minimum of Rs 15,000 per month. Unfortunately, I lost my father early and did not get an opportunity to study beyond class V. My mother asked me to do some work and bring home at least Rs. 50 every evening. I did succeed for a few days, until the police threatened the employer with punishment for employing child labour.

I was therefore out and back home to the distress of my mother. Today I am an adult; I am eligible for a regular job but no one I approached was prepared to pay me more than Rs 8000 with the promise that I take a cheque for Rs 15,000 and return to the company Rs 7000 in cash. The question is: Do I stoop to this corrupt practice or sit at home?

Come election time, and young people are promised jobs. When I was getting a job, I could not accept it, legally speaking. Why are our political rulers so unaware of the gulf between laws ~ made by themselves ~ and the economic realities prevailing in the territories they rule? My boss, for whom I am working, as a domestic help in exchange of food, clothes and an allowance, has tried to explain to me.

According to him, this contradiction, from which I am suffering and many others, is a Russian baggage brought to India by Jawaharlal Nehru. Communist Russia, then known as the Soviet Union, guaranteed employment to everyone. This was a wonderful measure, very humane; unfortunately, it was one of the causes that led to the Soviet Union’s bankruptcy.

Nehru was a socialist, but did not go the whole hog in Communism. His constitution does not guarantee any employment to anyone. On the other hand, nor did his government try to understand capitalism or how social democracy functioned in Europe. More unfortunately, Nehru’s successors, no matter which party they belonged to, did not bother either, to understand the syndrome and young people like me are the casualties of our leaders’ negligence. Capitalist USA continually carries a percentage of unemployment, as do the social democracies of Europe. These countries have a variety of unemployment doles, whereas America distributes food stamps. On the other hand, India has welfare promises and legislations galore, without any thought being given to their implementation.

Over the last several years, the people have become quite conscious of the need for development. There is also frequent talk of the country becoming a super power. We have abandoned socialism but are yet to think through an alternative. In any case, because of the size of the country, its many people, it is difficult to discover a viable alternative. A bigger complication is the variation in economic development from region to region; there are varying levels of poverty and prosperity.

Why not then, give all the people, full freedom to choose a job, an employer and a level of pay and perks which he can afford and the employee can accept with no controls whatsoever? This absolute freedom would offer a fighting chance that we may before too long, reach full or near total employment. There was a time when an unemployed person could live off his family, which in turn, depended on farming its land.

But now, with increased population and the reduced size of most farms, this alternative for a man without a job or income is no longer there; it would be difficult to survive. Therefore, some income is a must. A low wage is better than no wage. The flip side of this situation should be an encouragement to entrepreneurs. Demand for handmade goods, especially in the affluent world, is believed to be limitless, provided it is not too expensive.

A Morgan Stanley report of three years ago had stated that India’s labour laws force firms either to remain small, employing fewer workers, or to use capital-intensive technology. No wonder the share of India’s manufacturing sector in GDP terms is one of the lowest among emerging markets. The Indian track record in creating productive jobs has been poor. How can there be any productive job growth if the country’s labour market is shackled with regulations made 60 or 70 years ago? Another factor so far overlooked is that work itself is a form of training as well as experience.

Even if a youngster has missed sufficient schooling, his early start in a job can offset the disadvantage to a significant extent. On the other hand, if he/she has to be without work for several years he would lose self-confidence, learn little and lack experience, which is a springboard for building a career, however humble. An idle mind is a devil’s workshop is an old truism. The imposition of a minimum wage ignores this old wisdom. In assuring one person with a comfortable wage, it ruins up to nine potential careers. These nine include those who remain jobless merely because the minimum wage stifles the growth of the economy.

Laws and regulations like the minimum wage, say Rs 15,000 per month, touch only the organized sector of the economy which in India covers only 16 per cent of the worker population. The remaining 84 per cent are in the unorganized sector and do not get the benefit of government stipulations. On this basis alone, there is a strong case for lifting all wage stipulations. They serve only the electoral blandishments of a political party. Few political leaders realize the effects of the minimum wage on the employment prospects of their young constituency.

Labour law is a concurrent subject under the Constitution. Thus both the central and state governments have the right to formulate laws on the subject, which means multiplicity of laws, at times with overlapping jurisdictions. For example, there are 44 central laws and about 160 state laws on the issue of labour (source: ILO, 2013). Most are archaic, dating back to the pre-independence era.

There is urgent need to overhaul these laws to attune them to present realities. There are multiple laws governing a single area. For instance, there are 19 laws governing conditions of work and industrial relations, 14 laws on social security and labour welfare, etc. All in all, the appeal of this submission is to examine Indian conditions with Indian eyes and not through a socialist heart. Most rules for workers have a Marxist flavour if not an origin, including the British practices during the era of Margaret Thatcher. Many of India’s laws are borrowed from British traditions.

The writer is an author, thinker and a former Member of Parliament.