The Covid-19 crisis has brought one of the major extraordinary changes in the labour regime that India has ever witnessed. This has not only brought massive migration of labourers but also India has recorded high levels of unemployment due to the closing down of markets.
The migrant labourers are forced to leave for their hometown, walking sometimes barefoot for thousands of kilometres. Amidst all this, incidents like the Aurangabad train disaster have uncovered the vulnerability and helplessness of migrant labourers.
It does not only raise questions on India’s economic model but also on the human rights issue. In such a situation, 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.
Almost similar announcements for 1,000 days are also being made by the Government of Madhya Pradesh.
These new developments in Labour Law have come about in a very bizarre way; thus on the one hand we are witnessing inhuman labour plight and on the other we are trying to liberalise the laws so as to protect industries which will promote the hire and fire policy in the guise of creation of more jobs.
India has one of the largest labour forces.
According to an analysis by the National Sample Survey Office (NSSO) 92 per cent of India’s labour force belongs to the informal sector.
The report further shows that 49.6 per cent still do not have any social security benefit, 71.1 per cent had no written job contract and 54.2 per cent were not eligible for paid leave.
Most urban employees in India according to the NSSO work on an average for more than 60 hours a week which is higher than the International Labour Organisation (ILO)’s prescribed time-limit and one of the highest in the world.
This is the present scenario of a nation which strives in its Preamble for creating a socialist pattern of society of which labour welfare is one of the important pillars.
India proudly claims to have enacted many legislations for the benefit of the working class. Labour regulations are a part of Entry 55 of the Concurrent List under Schedule VII of the Constitution of India.
As of today we have around 44 Central Laws and approximately 200 State laws and all have been enacted to safeguard the interest of workers. Liberal economists have time and again argued that labour laws we have in India are archaic and if they are removed or weakened it would result in many benefits.
It is said that these laws emphasize more on the protection of jobs and less on labourers and employers. The latter have very less flexibility in situations of lay-offs, retrenchment and so on.
In a way labour laws have looked better in the statutes than in the real industrial scenario. So, they believe that one of the major benefits such new labour reforms can bring is that industries will be able to work in an independent manner.
There will be a positive impact on economic activities like setting up of more industries, attracting new investors, which in turn will bring a change in the income of the labour and this will in turn be beneficial for both the employers and the workers.
The Economic Survey 2019 stated that deregulating labour law restrictions can create significantly more jobs. A comparison between indicators for labour, capital and productivity of manufacturing firms reveals that flexibility in labour laws creates a more conducive environment for growth of industry and employment generation. What is happening in today’s scenario is that, despite having so many laws as mentioned earlier employers evade these in some way or the other.
In an industry, under Section 26(5) of The Minimum Wages (Central) Rules, 1950, a muster-roll shall be maintained by every employer and this is directly related to the social security schemes. But to comply with such provisions was difficult for industries.
Again, under Section 25F of the Industrial Disputes Act, 1947 in case of a factory employing more than 100 workers, prior permission of the appropriate Government must be obtained for retrenchment although few states have now allowed factories with 300 workers to retrench staff without official sanction.
So, what happens eventually is that the industries do not try to expand as taking approvals at multiple levels involves a real cumbersome process which employers try to avoid. Now this becomes the sole reason why many industries refrain from hiring permanent employees; rather they find contract workers to be more profitable.
The Contract Labour Act, 1970 under Section 1(4) applies to every establishment or contractor wherein/with whom 20 or more workmen are employed and this is deviated easily more now by the contractors by appointing specialised contract workers who are less than 20 at a given point of time to work for industries.
This means that the labour law is so stringent without any freedom for employers.
This makes it difficult for employers to abide by laws and thus workers end up becoming a part of the informal sector doubling the issues for the economy.
Undoubtedly the present labour law regime must be reformed to ensure industrial growth but at the same time we cannot abandon labourers on the altar of the free market. Certainly, our labour laws are archaic and much behind the needs of the society and the economy.
There is no doubt that liberal economists have rightly pinpointed the issue but doing away with labour laws would be like throwing the baby out with the bathwater.
The Covid crisis has bust the ‘market myth’ and re-emphasised the need for a strong state which can regulate if not control all its business areas. Moreover it has also made us realise that the business of the government is to remain in business.
It is understandable that the economy at this point of time is facing a huge setback and revival is an urgent need. However, it must be noted that the state cannot shrug off its responsibility towards labourers which are promised as part of Article 43 of the Constitution of India where it affirms to protect their rights and liberty.
Hence a golden mean should be arrived at so that on one hand development of the economy is ensured by giving ample working space to the employers and on the other hand, workers are not just protected but helped at this time of crisis.
The government should strive for re-strengthening and reenergizing the poorly enforced laws such as the Unorganised Workers’ Social Security Act of 2008. Also restructuring and simplifying Indian labour laws based on the recommendations of the Second National Labour Commission and the rules set by almost 47 ILO Conventions to which India is a signatory will help raise labour standards to face any crisis in the future.
At this juncture it is unimaginable to think about a labour regime which will have no welfare facilities, no Trade Unions, little or no scope for collective bargaining and no sanitation facilities.
This list of basic deprivations will be endless with such sweeping exemptions!
The writer is Assistant Professor of Law at the Faculty of Law, University of Delhi.