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Mainstream, VOL LVIII No 24, New Delhi, May 30, 2020

Diluting Labour Laws: Expansion of Neo-liberal Governance Regime

Saturday 30 May 2020


by Nayakara Veeresha


Keywords: Alienation, Governance, Labour, Rights and Law

The novel corona virus (Covid-19) has affected the economy severely apart from the health crisis resulting in growth slowdown of major sectors. The agriculture, automobile, hotel, travel and tourism, manufacturing and services sectors are at the receiving end where in the production process has stagnated and curtailed the delivery of essential and non-essential goods. The national lockdown in India has costed the economy of $235 billion as per the estimation of Barclays company. Similarly, according to the Chicago Booth’s Rustandy Center for Social Sector Innovation which analysed the data from the Center for Monitoring Indian Economy (CMIE) has observed that more than 84 percentage of households in India has lost income during the lockdown period.

In this backdrop of suspension of economic activities, some of the state governments have passed ordinances and regulations regarding the labour laws operation and its application. The states of Assam, Goa, Gujarat, Haryana, Himachal Pradesh, Madhya Pradesh, Rajasthan, Uttarakhand and Uttar Pradesh have made changes in the existing labour laws. The purpose and motivation of these steps are broadly is (i) to provide the employment for the workers who returned to their homes due to the Covid-19 pandemic (ii) to create the conducive environment in the state to revive the economic activities and (iii) to regain the industrial investments.

Soon after promulgation of these ordinances and state regulations in labour laws, trade unions across the country, progressive industrial statesmen like Mr. Azim Premji has condemned these suppressive steps which are contrary to the standards of International Labour Organisation (ILO) and the Fundamental Rights and Directive Principles of State Policy (DPSP) enshrined in Articles of 16, 19, 23, 24, 39, 41, 42, 43, 43A & 54 of the Indian Constitution. Many Public Interest Litigation (PILs) were filed in the respective state high courts and the Supreme Court. The Allahabad High Court has sent notices to the Uttar Pradesh government following which the state has withdrawn the provision of extension of working hours (i.e., from 9 to 12hours).

Article 23(1) of the Indian Constitution explicitly prohibits any form of forced labour including the bonded labour. Labour reforms are the one of the agendas of the National Democratic Alliance (NDA) regime. Some of the efforts were made to simply the labour laws in the form of Indian Labour Code (ILC). Labour is a subject in the Concurrent List and hence both union and state governments are competent to enact legislations pertaining to the labour welfare. The entry 24 of the Concurrent List specifically mentions provisions for the “welfare of labour including conditions of work, provident funds, employers’ liability, workmen’s compensation, invalidity and old age pensions and maternity benefits” of Seventh Schedule of Article 246 of the Constitution.

Theoretical underpinnings

The neoliberal state operates the process of accumulation of land and labour from the rights perspective. This gives much needed social legitimacy to the state to enforce its laws through its governing institutions. The capturing of rights by enforcing an exploitative working regime is the main stay of the principles of capitalism in neoliberal governance paradigm. It comes with a labeling of rights recognition yet it excludes the very rights that have given a normative and legal framework to operate its ideological progress in the contemporary times. The exclusion of rights in the name of inclusive principle is the central guiding force of the capitalism through the institutions of governance.

In the neo-liberal governance regime the state’s role has changed from regulator to facilitator of capitalistic development process. The commodification and objectification of labour especially in the countries of third world is evident from the unregulated exploitation of the surplus labour. The political project of neoliberalism promotes the transformation of social contract between the citizen and state. In this, the citizen with full fledged rights will be reduced to consumer without any hold or say in claiming the entitled rights. Precisely, the social component of the contract becomes a business entity in the market place.

Set in this theoretical backdrop, it is necessary to understand the dialectics and subtleties between the law and labour governing through the force of capital. The following analytical framework helps in dissecting the inherent dynamics and patterns of complex relationship between the state, capital and appropriation of labour rights. The appropriation of worker’s rights and dignity augments to the alienation of rights. In this process, the state operates as a facilitator in capturing the benefits of labour including the social security provisions through the means of legislative apparatus. Once the laws and institutions were in place then it becomes easy for the private companies to enter into the state regulated restricted zones of labour laws.

Analytical Framework 

Source: Author’s construction

The graph 1 indicates the inherent pattern and dynamics that operates within the capitalistic mode of development process. One of the important aspects is the state’s withdrawal from the welfare agenda through the institutional arrangements, enactment of legislations and rule of law. The moral decline of the state through the market forces in the pursuit of capitalistic accumulation of labour rights and its denial is the central issue in the neoliberal governance regime. By using the legislative routes such as law making and ordinances the states are trying to legitimise their actions so as to avoid the judicial interventions and other complications. The less bargaining power of the trade unions owing to the lack of resources in terms of social and financial capital creates difficulties in fulfilling the demands of welfare of workers.

The states hegemony is strong such that when a class starts exercising the intellectual and moral leadership it becomes dominant i.e. ruling class and assumes the hegemonic shape to the extent that it expands its corporate interests in order to succeed in articulating the interests of other classes and different social relations, forces. The end product of this growth is that it becomes representative of the important social forces which holds the nation-state and eventually becomes

hegemonic class. The relationship between the ruling class and working class is a complex one like that of capital and labour involving a variety of social forces. Chaulieu (1949:34) notes that

the producers (working class of people) do not have means of production at their disposal, either individually or collectively, and that living labour, instead of dominating dead labour, is dominated by it through the intermediary of the individuals who personify it [Linden, 2007:117]”.

The state in itself is acting as intermediary to promote the interests of the private agencies rather than pushing the labour welfare reforms. The dilution of labour laws by the state governments needs to be understood from the perspective of neoliberal governance regime and capitalist development. To what extent the spelt out labour reforms promote welfare of the workers especially the unorganised sector is the real question. The Bharatiya Mazdoor Sangh (BMS) national general secretary Virjesh Upadhyay has highlights that the dilution of labour laws by the state governments is augmenting to the “crushing of worker’s rights” including the right to appeal against exploitation in the labour courts. The Bharatiya Janata Party (BJPs) election manifesto of 2014 indicates that “we will ensure that the interests of labour in the unorganized sector are protected”. Earlier in December 2019, the Labour Minister Santosh Kumar Gangwar has expressed hope that the year 2020 would be a year of labor reforms as the codes on wages, industrial relations, social security and occupational safety, health and working conditions become reality.

Situation analysis

The states weakening of labour related laws have severely constrained the welfare agenda and justice embedded in the Constitution. Some of the important aspects that are to be understood and analysed from the worker’s rights point of view are as follows,

1. Increase in working hours: The shift in working hours from eight to twelve hours is the most serious one. The Gujarat and Uttar Pradesh states have mentioned that there won’t be any additional payment for the additional work of four hours. Both states have indicated that the additional payment is “not required”. The state of Madhya Pradesh has “not specified” clearly about this aspect. However, it must be understood that this kind of ambiguity gives more room for the state governments to behave and conduct according to the interests of the capital and market forces. This violates the standards of the ILO with regard to optimum working hours as labour right.

2. Deplorable working conditions: With the increase of working hours, the industries and factories have to enhance to the quality of working conditions such as drinking water facility, health and hygiene at the work places. It is also necessary to make arrangements for the timely medical intervention to prevent the worker’s from the occupational hazards. As the states are looking forward to enhance the working hours the existing working conditions are going to become worse than the present.

3. Cutting down of social security benefits: The suspension of labour laws in the pretext of Covid-19 health crisis, the worker’s right to health, social security benefits such as employment provident fund (EPF), pensions, insurance coverage, tenure of work, and other safety valves hit hard as these provisions do not apply anymore for the mentioned time period.

4. Irregularity of wage payments: The Covid-19 has impacted heavily the income of the migrant workers, daily wage earners in the factories due to the national lockdown. The financial stimulus packages such as Pradhan Mantri Garib Kalyan Yojana (PMGKY) do not really come to the rescue of the workers whose life in entirely dependent upon the daily earnings. The relaxed labour laws increase the likelihood of discontinuity and irregularity of the wages thereby deepening of workers marginalisation.

The use of laws to appropriate the rights of working class people is the agenda of neoliberal governance regime. The Gramscian concept of ‘hegemony’ and the Marx’s theory of alienation are at its best in the proposed labour codification process. According to Marx, there are four major ways of alienation in the capitalist production process. They are, (i) alienation from the product (ii) alienation from the process of production (iii) alienation from “species being” and (iv) alienation from “other human beings”. The dialectical interface between the law and labour has an inherent capital accumulation by further deepening the alienation of workers from the production process.

In the era of contractualisation of labour, the real workers’ rights are severely compromised as the governing power has shifted from state to private agencies. The withdrawal of state from welfare to capital is underway as evident from the privatisation of social security benefits. These measures have taken away the dignity of labour and its associated rights. An Analytical Study (2017: 69) titled “Amendments in Labour Laws and Other Labour Reform Initiatives Undertaken by State Governments of Rajasthan, Andhra Pradesh, Haryana and U.P.” conducted by the V.V.Giri National Labour Institute substantiates this point in a persuasive manner. It finds that “these amendments in labour laws have neither succeeded in attracting big investments boost to industrialization or to job creation nor have these amendments singularly resulted in enhancing exploitation of labour and deterioration of service and working conditions of the working population”.

The real problem lies not with the laws but with the nature of the state. The functional experience of ‘modern nation-state’ in India shows that the Indian State is weak when it comes to the question of resolving its own structural constraints and institutional deficits to restore the labour and worker’s dignity. An inward looking by the state may provide the appropriate kind of labour oriented policies to catalyse the welfare agenda of the Constitution. By recognizing the labour and worker’s rights, the Indian state does enhance its social legitimacy and public trust. Let us hope that this structural transformation and the measures to such progressive change take place during this reform period.


Chaulieu, Pierre [Cornelius Castoriadis] 1949, ‘Les rapports de production en Russie’,Socialisme au Barbarie, 2 (May—June): 1—66 [‘The Relations of Production in Russia’,in Castoriadis 1988] in Marcel van del Linden (2007). Western Marxism and the Soviet Union: A Survey of Critical Theories and Debates Since 1917. Leiden & Boston: Brill

Upadhyaya. S. and Kumar. P. (2017). Amendments in Labour Laws and Other Labour Reform Initiatives Undertaken by State Governments of Rajasthan, Andhra Pradesh, Haryana and U.P.: An Analytical Impact Assessment. NLI Research Studies Series No. 122/2017, Noida: V.V.Giri National Labour Institute

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