The only limit to our realization of tomorrow will be our doubts of today.

Franklin D. Roosevelt

Labour Law Annexure

2020 will be earmarked as the year of the ‘pandemic’. True.

Besides bringing into focus the growing number of cases each day, it is deeply impacting and transforming the way the economy operates. Making headlines recently, is the transformation in ‘labour laws’ proposed by few Indian state governments like Gujrat, Uttar Pradesh, Madhya Pradesh, Rajasthan, Himachal Pradesh, Tamil Nadu, Kerala, Maharashtra and Punjab through exempting various parts of labour laws.

Underlying logic for why this is being done are A, giving a ‘green signal’ to global companies that are considering to shift their supply chains away from China and reduce their dependencies on factories there and in turn attracting better global investments for India. B, making it more business friendly by securing smooth flow in terms of more number of hours of work and lesser disruptions.

Well! Every coin has two sides, here’s the first perspective.

The core focus is on increasing the output through increased number of work hours which in turn will lead to investments and help economy stand again post covid-19.

There are number of factors to be considered here before we start exempting labour laws-
A, cost of labour in the total cost of business unit (manufacturing etc) is just 7-9% of total cost. Then why this rucus around reducing the labour rights further more.

B, Nature of markets we are catering to. For a price sensitive markets how and in what conditions the product is being manufactured doesn’t matter because the consumers will buy whatever is cheap like Africa, Vietnam, Korea etc. but for a socially sensitive market the demand of the product can impact highly if the process of production followed is not as per green standards (green standard search review ).
For example India is the major exporter of handmade carpets since decades. The demand of carpets dropped sharply following a study published in 2011 by ICF international that extensive child labour is involved in manufacturing carpets.

Therefore we need to understand that in order to become the preferred destination for production, a country needs to be labour rights compliant. Covenant on Civil and Political Rights, the International Covenant on Economic, Social and Cultural Rights and various Conventions of the ILO as a result of which it is bound to promote decent work in conditions of freedom, equity, security and dignity.

C, the policies need to be lucrative enough to attract the large chunk of the labor that has migrated back to their native places during this pandemic.

The laws stand to benefit the workers and provide a safe, secure work environment. In an ideal scenario, this should foster productivity and stability of work force. However, the industrialists and factory owners have their set of grievances.

What are they?

  1. Many claim the laws and policies to be highly rigid. It has been argued that due to the legal requirements, many firms dither from hiring new workers because firing them requires government approvals. This not just constrains the growth of firms but also provides a raw deal to workers, who may in turn become complacent.
  2. Secondly, there are currently too many laws, often unnecessarily complicated. Many feel that this has mostly fostered corruption and is eating into the system.
  3. Thirdly, since the laws are stringent, a larger chunk of labour population is a part of the informal workforce. As a result, they fail to get better salaries and social securities and hence lack commitment. This factor actually goes out to hampering mutual benefit actually.

Why the discourse, then? Without a doubt, this has come under the scanner of several. Does the dark cloud have a silver lining? Or is it nothing but just a dark cloud? Many have been dandling with the question. Some do have definitive answers though.

Many believe that this would strip workers from their bargaining power. Thereby bringing down wages furthermore and fuelling an environment of exploitation. With practically no social security, the labourers will live in a constant fear of when they may lose their work.

With firms shaving off salaries, and demands falling, which firms would hire more workers now? This is the question many are asking at this point. And does increasing shift timing from 8 hours to 12 hours really help? Won’t a two shift scenario of 8 hours each driven the larger agenda more efficiently? And of course, the fact that increasing the length of the workday may endanger the health and safety of workers seems to have been entirely overlooked.

Will a stringent labour law system help us in the long run? Or does the centre need to take a long look at redefining some of the laws? Especially as the newer geographies line up to acquire bigger share of the manufacturing market.

What does the future hold?

It’s a known fact that the state directed policies cannot sing a different tune that the central laws. Currently centre has declined the proposals from the states to tighten the laws. Reasons in favour are many. Well, so are those against it.

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