Hard truths about India’s labour reforms

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Hard truths about India’s labour reforms

  • India’s “tryst with destiny” was to provide “ poorna swaraj” (i.e., full freedom) to all its citizens: political freedom, social freedom, and economic freedom.
  • After 75 years of independence, we still examine socio-economic freedom we thought to provide to one of the most deprived classes of our population: labourers.

The country’s faultlines - After 75 Years

  • Political liberties and freedoms of speech are being curbed in India.
  • Social equality amongst castes has not been achieved.
  • Lower caste citizens continue to live in great indignity.
  • Lower caste poor women live in abject poverty in India’s villages.
  • India’s gravest socio-economic problem is the difficulty a vast majority of citizens have in earning good livelihoods.
  • Problem is not just employment but the poor quality of employment:
  • insufficient and uncertain incomes, and poor working conditions.

State of Working India 2021

  • Azim Premji University’s Centre for Sustainable Employment reported that 100 million jobs were lost during the April-May 2020 lockdown.
  • Though most of these workers had found employment by mid-2020, 15 million remained out of work.
  • Between 1980 and 1990, every 1% of GDP growth generated roughly two lakh new jobs;
  • between 1990 to 2000, it decreased to one lakh jobs per percent growth; from 2000 to 2010, it fell to half a lakh only.

Labour reforms

  • labour is a subject in the Concurrent List, so both the Parliament and the state legislatures can enact laws on it. Before the new labour codes were passed, there were more than 40 central laws and more than 100 state laws on labour and related matters.
  • The Second National Commission on Labour (2002) recommended that the central labour laws should be integrated into groups like: Industrial relations, Wages, Social security, Safety, Welfare and working conditions.
  • This was recommended by the Commission because the existing labour laws were archaic, complex and had inconsistent definitions.
  • The Commission suggested simplification of the labour codes for the sake of transparency and uniformity.

The new labour codes

  • Over 2019-20, the Parliament enacted 4 labour codes to consolidate these multiple laws
  • Code on Wages, 2019
  • Industrial Relations Code, 2020
  • Social Security Code, 2020
  • Occupational Safety, Health and Working Conditions Code, 2020

Labour rights are in free fall

  • The report defines “formal” employment as the grant of paid leave, a written contract, and some “social security”.
  • An enterprise should not have to employ more than 300 people before it provides these benefits. Along with the right to be heard and dignity at work
  • These are the minimal “essentials” all employers must provide to all those who work for them, whether in small enterprises or domestic help.
  • Increasing the threshold of the laws dilutes the rights of association and representation of workers in small enterprises.
  • The question is whether the reforms have benefited workers.
  • After all, the primary purpose of labour laws is to protect the rights of workers, not promote the interests of investors.

Way forward: closing the gap

  • The gap between where our economy is and where it needs to be, is increasing.
  • Fundamental reforms are required in the theory of economic growth more GDP does not automatically produce more incomes at the bottom.
  • To achieve this, fundamental reform is required in the ways policies are made. If the benefit of reforms is supposed to be the improvement of ease of earning, better livelihoods for all citizens and with more dignity.