Are the new labour bills in India anti-labour in nature?
Image source: www.businesstoday.in
What are labour laws?
Labour laws fall under the concurrent list of the Indian constitution — implying that both the state and the centre can create laws to regulate labour.
The government uses labour laws to govern and regulate the relationship between the workers and the employers. These laws work as mandates to ensure that the rights of labour unions and independent workers are protected.
They safeguard these rights by defining minimum wage requirements, health and safety benefits and insurance benefits as a part of the contract between the employer and the worker.
The Indian Context
On September 19, the Modi government received parliamentary approval for three more proposed labour reform bills. This means that the government has now subsumed 44 labour laws into 4 broad codes* to ensure better implementation and easy interpretation:
- The code on occupational, Safety, Health and Working Condition (OSH & WC code)
- The Industrial Relations Code
- The Social Security Code
The government plans to implement all of these codes in one go by December 2020. But are these fair and in favour of the Indian workers? Let’s discuss!
*The wage code was already passed by the parliament in 2019.
OSH and WC code
- This code is relevant for contract workers. It entails that for a firm that has branches across different states, a single license for hiring employees will make the cut. Today, the firms need permissions from individual state governments for the same.
- The code makes it mandatory for staffing firms to provide mandatory employment letters for all employees while hiring.
- Under this code, the government will also provide staffing firms with relevant data on migrant workers to improve their employability.
The Industrial Relations Code
Today, firms with more than 100 employees need approval from the government for layoffs, closure or retrenchment of employees. This code will increase that cap to 300- giving more power to the firms to hire and fire employees. While the risk of doing this at a time when unemployment is peaking is very high, the government believes that it’ll lure more companies into hiring in bigger numbers.
The Social Security Code
- Under this code, the government aims to introduce a voluntary scheme to provide uniform social security to all workers in the country — including the “unorganised workers, gig workers and platform workers”. (~50 Cr)
- This implies that the workers in the informal economy will have access to medicare, PFs, health and maternity benefits, free annual health check-up etc.
Pros of the bills
- A lot of labour related financial transactions (minimum wage, digital payment) will now get streamlined and be included in the formal economy. This will lead to improvement in IT returns filing and fewer union strikes.
- Since these bills centralise a lot of functions, it’ll improve the ease of doing businesses significantly — a charter where the Modi government has done a very impressive job.
- In a significant first, India stands to have a sophisticated data repository around migrant labourers which will increase the firms’ ease of mapping the worker with the right skill to the right job.
- Today, 39 Cr. workers of the country are outside the social security allowances. These bills will improve that number significantly.
Cons of the bills
- There are provisions where the government can exempt certain firms/industries from following these codes if it is in “public interest”. It allows the state government ro make these exemptions if it can increase economic activity in their state. These are subjective terms and increase scope for corruption.
- In addition to the exemptions, the codes do not apply to certain establishments of smaller size (less than 20 workers) which will lead to a big chunk of workers being left out. While I agree that it’ll be a logistical nightmare to apply all three codes to all firms, it’s important that certain aspects of the codes like mandatory healthcare benefits, provision of social security, etc are covered for all workers irrespective of the firm size.
- The Industrial Relations code bill requires a 14 days strike/lockout notice from the unions. This will reduce the Union’s bargaining power which is essential for the welfare of their workers.
Overall, these codes are forward looking in nature. Although they might dent an already deteriorating employment market in the short run, the new codes will lure a lot of companies to set-up bases in India because of cheap and organised labour. There is a huge skill gap in India because of information asymmetry that the codes have the potential to overcome. There is heavy emphasis on gathering data and making it available for employees. This will increase the country’s credibility while pitching for foreign investment in the country.