Article (September-2020)


Are covid-19 woes slowing down labour reforms?

P. Soma Raju

Designation : -   Specialist HR, IR and Labour Laws

Organization : -  Management Consultant, Hyderabad


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Now a days a question is raised quite often online in almost all professional HR Forums is whether labour reforms have been stunted to cross roads after the Covid-19 outbreak? The answer may be emphatic yes and feeble no if the pace and process in this regard is any indication. The NDA government attempted to bring labour reforms on a comprehensive basis to erase the stigma of India being country with rigid and non investor friendly labour laws. The attempts to merge 44 labour laws into four codes i.e. Code on Wages, Code on Industrial relations, Code on Social security, and Code of Occupational health and safety were fruitful to the extent of drafting them and introducing them in the parliament. One should appreciate the Government for this bold initiative to push the labour reforms as a measure of reinforcing in the minds of business community that the government is serious and they really mean what they say on labour reforms. The NDA-II in their exuberance to stick on to their commitment to bring labour reforms with projection of investor friendly policy initiative introduced the Codes in the parliament for approval. The NDA-II government with their predicament of not having majority in the Raja Sabah failed to push through and succeed in their attempts to achieve their objective. The Code on Wages, with great difficulty was passed after overcoming many hurdles. The other Codes have been languishing at various stages in the process of their introduction and approval.

Background in brief: A peep into the history of labour reforms clearly indicate that any government taken up labour reforms in a comprehensive way in the past, failed in their attempts due to stiff resistance from the trade unions and working class. It is not only the trade unions affiliated to opposition parties but also trade unions of ruling party join hands in opposing labour reforms. Employers assert that the industry should respond to the changing competitive market requirements. Indian industry will be left out if it does not respond to the changes in technology, reduced product life cycle and customers high expectations of value for their money. The employers demand for the changes in the existing labour laws allowing them with flexibility to adjust their manpower requirements in line with the market needs and demands. Working class in India with stiff resistance contend that the employers demand for flexibility is nothing but demand for hire and fire. Trade unions vehemently opposing labour reforms argue that any such move of the government to bring about changes in labour laws without providing for adequate social security back up for the working class is disastrous. Balancing the interests of employers and working class is a big challenge. Besides being investor friendly, the labour reforms should take care of employment oriented growth and social security to the working class to have smooth sailing for the government to push their labour reforms agenda successfully.

Labour reforms particularly with reference to changes in the Contract labour Act and the changes in Chapter VB of the Industrial Disputes Act need serious and sincere discussion with the involvement of stake holders before going ahead with them since they have serious larger implications on the forms of employment and interests of the working class, consensus is advised to take forward the labour reforms and implement them successfully by the government as part of its growth trajectory. Consensus in labour reforms is a surreal issue. Attempts made earlier to bring the parties i.e. employers and workers organizations to consensus had miserably failed. Reforms promoting the interests of one party at the cost of other will be opposed tooth and nail. The government as neutral objective stakeholder shall balance the interests of employers and workers. The present set of labour reforms in the name of labour codes have been stuck in the same wheel that was responsible for the failure of earlier attempts by the previous governments. No doubt total consensus is a delusion in the Indian context but a guided consensus can be achieved by convincing the parties in the larger interests of the country's job oriented economic growth and betterment of future generations. Everything depends on the genuine role to be played by the government and their ability to convince the working class with adequate social security safeguards provided in the labour reforms.

Fragile social safety nets

Covid-19 exposed the hollowness and fragile social safety net availability to millions of Migrant contract workers to take care of contingency like sudden outbreak of the Covid-19 pandemic. Hungry workers in millions came to the streets with begging bowls for food to survive. Life and lively hoods of these migrant workers are at stake. The protests and demonstrations of the migrant workers for food to survive signal danger bells to the peace and order. The Government's inability to handle the mammoth unrest from migrant workers is quite obvious. Lessons should be learnt by the policy makers from this experience and draw up a robust labour policy reforms by relooking at the proposed social security code. No government can afford to ignore this reality. A serious thought should be given by the policy makers while formulating labour policy and reforms to this genuine problem of migrant workers. There are many such vulnerable groups like unorganized workers constituting about 90% of the workforce substantially contributing to the GDP that needs special attention and their interests need to be included in the labour policy and reforms. Any attempts by the government to push the labour reforms hastily without taking care of the interests of vulnerable groups in the workforce become futile and unsustainable. Investments induced labour reforms that do not contribute to employment growth and without adequate social safety net to downtrodden groups in the work force will certainly fail.

Wages, a pittance to unorganized workers: Wage laws in our country could not provide any succour to the migrant, contract and unorganized workers. Employers flout them with impunity. The insufficient and inefficient enforcement machinery fails to ensure payment of even the minimum wages. The minimum wages prescribed by the central Government and state Governments in their respective jurisdiction hardly takes care of the basic subsistence requirements. A wide variation in the rates of minimum wages across the country is a clear proof of inconsistency and lack of standardization of criteria in fixing and revising the minimum wages.

In most of the States, the minimum wage recommending authority, the minimum wages advisory Board is bereft of expertise and competence. Members of the Board are appointed by the government. Members appointment is at the whims and fancy of the political party in power that failed to meet the requirements. The Boards largely filled with the cronies of the party. Sans knowledge on wages and labour economics. Therefore, the quality of recommendations always reflects with unprofessional and unscientific proposals. It is quite disheartening to note that minimum wages are not being revised at regular intervals, once in five years, in most of the states. Astonishingly, there is no revision of minimum wages for the last ten years in states like Telangana and Andhra Pradesh. It is unfortunate that they are ranked top on the list of states with ease of doing business. Mere issuance of Government orders without ensuring their implementation is in vain. Majority of unorganized workers, migrant labour cannot even dream of social safety benefits like ESI and Provident fund in spite of their eligibility under the law. These serious lapses have come to the focus during COVID-19 lockdown. Labour law reforms should provide for rectification of this grave lacunae.

Concurrent jurisdiction

Government at the Centre on its failure to bring about consensus among the stake holders on labour reforms hinted the state government to go ahead with the amendments to labour laws at state level. COVID-19 has impacted the economy adversely and GDP stumbled down to below 4%, as such India is no longer an attractive destination to investments. The Government at centre and the state governments are worried over measures to boost the economy and attract the investments for continuing the growth trajectory. The State Governments in their efforts to achieve better ranking in ease of doing business have been tinkering with labour laws by introducing State amendments. The Governments of BJP ruled states and others like Rajasthan and Andhra Pradesh have succeeded to some extent and brought out amendments in the Factories Act, The Contract Labour Act, by increasing the number of workers for coverage and their applicability and also increasing the number of workmen from 100 to 300 for coverage under chapter VB of the Industrial Disputes Act. Small changes like this are in no way comparable to the charges contemplated in the labour codes. The State Governments of Uttar Pradesh, Gujarat , Madhya Pradesh etc have initiated steps to suspend the labour laws and also introduced 12 hour shift working during COVID-19 lockdown period. These changes led to raising alarm bells and hue and cry of trade union for blatant violation of core labour standards, constitutional rights and human rights of the workmen. Indiscriminate changes by way of amendments to labour laws without reference to constitutional rights of the workers and ILO Conventions backfires and will certainly stuck up in the litigation at various High Courts and Supreme Court. The trade unions have petitioned the ILO and brought these unlawful changes proposed by the state governments to their notice. ILO as international body sought the explanation from India with advice to stop such changes forthwith that are in violation of conventions passed. The efforts of State Governments to change or suspend labour laws at their level by taking advantage of COVID-19 and in the name of boosting the economy with labour law reforms boomeranged and came back to square one.

In nut shell COVID-19 could not help the governments to change the existing labour laws; rather it stunted labour reforms agenda to a corner. It is true that adage "history repeats" even in case of labour reforms proved correct. The message is loud and clear that any comprehensive labour reforms needs the consensus and concurrence of the stake holders to sustain and succeed. In fact COVID-19 pandemic is a right opportunity and experience to learn the lessons and discuss, deliberate with stake holders and come to consensus .The role of department of labour and employment both at centre and State level is crucial. The success to bring about labour reforms depends on their neutral, objective and genuine efforts.

Covid-19 has brought a paradigm shift in the priorities of the government and changed the direction towards survival strategies. The onslaught of Covid-19 has thrown the issues of survival of people and economy in danger. Priority sector considered to be pillars of economy have been struggling and looking for oxygen from the government in the form of incentives, exemptions and concessions. Strengthening and expanding the public health care systems, building robust social safety net for workers and reviving the industry, business and economy have become focal points and primary responsibility of the government. In this backdrop, labour reforms have taken a back seat from immediate agenda of the government and hence they are likely to be slowed down for the present.

P. Soma Raju, Specialist HR- IR Labour Laws