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Mainstream, VOL LIII No 1, December 27, 2014 - Annual Number

Reformation of Labour or Reforming the Labour Laws?

Saturday 27 December 2014

by Nisha Bharti

In India, 93 per cent of the labour force is informal and a massive majority of this force lives in miserable conditions. Even in the urban areas, in manufacturing and services, more than 75 per cent of the labour force is informal. Typically, labour cost amounts to 10 to 25 per cent of the total cost in manufacturing. The labour laws impose certain restrictions as well as obligations on the employer in terms of hire and fire, retrenchment, and closure of an establishment, compensation, work conditions, provident fund, paid leave, overtime, hazardous work, night shift employment of women etc. However, the industry is demanding a completely ‘flexible’ labour market to loosen such restrictions and obligations and further cut down the wage cost. The UPA-2 did set the process of labour reforms rolling but fell short of completing it. The dissatisfied industry pinned its hope on the more aggressively reforms-friendly BJP and its leader, Narendra Modi. First, the State of Rajasthan under BJP rule took the lead and soon the less-than-three-month-old NDA-2 Government at the Centre has followed suit with a range of proposals for reform of the existing labour laws in the country.

Bills have been introduced in the Lok Sabha to bring changes in the Factories Act 1948, the Apprenticeship Act 1948 and the Labour Laws (Exemption from Furnishing Returns and Maintaining Registers by Certain Establishment) Act 1988. If these Bills are passed, the Factories Act will not be applicable on units employing less than 20 workers in case it is run on electricity and less than 40 workers if the factory is not run on electricity, changing the earlier provision of 10 and 20 respectively. The limit of overtime by workers will be increased from 50 hours per quarter to 100 hours per quarter in general and up to 115 hours for the purpose of works in public interest. The earlier provision prohibiting night shift for women workers (from 7 pm to 6 am) is proposed to be relaxed so as to allow night shift for women within certain limits. Under the proposed amendments in the Apprenticeship Act, the Central Government retains the power to prescribe the number of apprentices to be engaged by the employer for designated trade and optional trade. The amendments also allow the employers to employ apprentices from other States. The proposed amendment in the Labour Laws (Exemption from Furnishing Returns and Maintaining Registers by Certain Establishment) Act 1988 would allow small establishments—employing up to 40 workers—to file just one return for compliance to 16 labour laws.

The questions before us are: What kinds of impacts these amendments would generate vis-a-vis the interests of the labour as well as capital? Why has the industry been so brutally vociferous in pursuing these reforms? Why is the labour market flexibility so important for capital? What could be the markers to evaluate the impact of these proposed reforms on the interests of the labour? While trying to analyse the proposed amendments, I would also draw from my experience of field work among garment workers in small units in Mumbai.

The changes in the Factories Act would mean that the small manufacturing units would not have legally binding responsibility for workers’ security. These include, for example, legal protection on hours of work, paid weekly off, basic amenities at work place, security of and site facilities for women, safety of workers and other rights relating to decent working condi-tions. Rather than addressing the issue of poor wages, overtime at the cost of health and rest of the workers is proposed as a solution which actually gives a cheap option to the employers to avoid employing new workers.

The issue of night shift for women is more controversial. On paper the law would treat men and women equally opening up more employment opportunities for women. However, in a patriarchal society it can become a double whammy of two workplaces leaving them without adequate sleep and rest. Given the serious implementation problems, this could mean serious violation of norms of safety by the employer and long hours of duty under forced condition. It is ironical that certain amenities—such as toilet, drinking water, canteen, dining and rest space etc.—have to be proposed in the Act for men and women as a bargain for surrendering their rights.

Given the trend of contractualisation, the provisions of the proposed Apprenticeship Act seriously raise the apprehension that the establishments will engage a large proportion of workers as apprentices as a source of cheap and submissive labour at the cost of employing regular workers. Allowing apprentices from other States though can facilitate easy movement of apprentices and expand their options in the context of uneven regional development; it would also allow the establishments to rely more and more on migrant workers who would have less collective bargaining strength in the host States.

The amendments with regard to filing returns would seriously compromise the adherence to the labour standards. Self-compliance of labour laws by the establishments cannot be expected to work in India when non-compliance is so pervasive despite strict laws otherwise.

My own field work reveals that most of the work processes in garment manufacturing, even by some of the biggest brands, is outsourced to small work units. Strangely, almost all the work units using electricity and with more than 10 workers that I visited in 2013 were registered under the Bombay Shops and Establishments Act 1948 rather than the Factories Act. The former is supposed to cover establishments which carry on any business, trade or profession only and not the establishments where manu-facturing is carried out. Thus, the workers of such manufacturing units are deprived of the benefits that are provided in the Factories Act. Under the Factories Act 1948 the employer is obliged to provide clean environment, proper ventilation, sufficient lighting, clean drinking water and sanitation within the premises. But, most of the employers fail to provide even these very basic facilities causing them severe inconve-nience and posing public health problems too. The Act limits working hours to nine hours a day with a compulsory break after every five hours. However, I found employers often exploiting the homelessness of the migrant workers to encourage them to use their workplace also as accommodation which meant just a place to sleep on the floor at night. This sets hidden terms and conditions on such workers whose working hours are stretched to 10-12 hours a day with serious implications for their health. This is further reinforced by piece rate wages.

The avid reformists argue that units applying greater number of labour are more efficient and productive and workers also stand to gain from the increased productivity. This argument is too flimsy given the fact that such units would not be registered; hence in the absence of a regulatory framework, the fruits of the enhanced efficiency and productivity of the workers would accrue exclusively to the employer. Moreover, with further weakening of the inspection system, even relatively larger units may continue manipulating the registration system. The present amendments can at best legitimise the de facto corrupt practices of the employers, domestic and foreign, carried out in collusion with the Labour Department.

It is also argued that the proposed reforms would equally benefit labour. Business is a dynamic process. Investors want to ensure that a corresponding dynamic labour process exists in the host country. A completely flexible labour market, with minimum liability and free from any fetters created by the state or the labour unions, would make India a preferred destination for investments thereby creating new jobs. Absence of such a business-friendly labour environment also pushes capital to adopt deceitful dealings in order to survive in the cut-throat competitive environment. A buoyant market has an inherent mechanism to take care of the workers’ interests. The problem with such arguments is that these conveniently bypass the question as to what kind of new employments would be generated. Would they adhere to decent work standards or further deteriorate the existing work standards? As the majority of the poor in India is constituted by the informal workers, any reform proposal must be evaluated on the criteria of decent work which requires substantial increase in the earnings and improvements in the work conditions of the informal workforce. Thus, more employment is not at all sufficient for the Indian working class, rather they need better employ-ment.

The labour unions of India have expressed their grave concerns over the proposed labour reforms. A highly objectionable part of the reforms process is the lack of dialogue with those who would be the most affected parties—the workers and their unions. The Cabinet approved these amendments without organising any tripartite consultations involving the unions. The haste with which the government rushed to introduce the Bill in the Lok Sabha shows how much disregard it has for the deliberative processes and the interests of the workers. This also shows the dangers of majoritarianism. The mask of reforms is peeled off. It seems that we are headed for another phase of fierce battle between capital and labour. 

Nisha Bharti is a Researcher, School of Management and Labour Studies, Tata Institute of Social Sciences, Mumbai.