People's Democracy

W R Varada Rajan

WITH the onset of the ‘economic reforms’ in 1991, there was an orchestrated demand for introduction of the ‘exit policy’ measures. As the ‘reforms’ agenda met with serious opposition from the workers and trade unions, the chorus for ‘exit policy’ was consigned backstage. But now, as the government of India has embarked on the ‘second generation reforms,’ the demand for an ‘exit policy’ has surfaced again; the only change is in its nomenclature into ‘labour law reforms.’

There is no denying the fact that this drive towards deregulation of the labour market is an offshoot of the ‘reforms’ process.

As a consequence of the ‘reforms’ implemented in the last decade, there have been massive job losses, resulting from ever increasing lay-offs, retrenchments and closure of industries. Employment in the central public sector undertakings alone reduced by two lakhs: from 21.79 lakhs in 1991 to 19.78 lakhs in 1996. This was further reduced to 18.54 lakhs in 1999-2000.

The present thrust for ‘labour law reforms’ is only to facilitate the adoption of new strategies such as: re-engineering (measures aimed at cost cutting through labour shedding); downsizing workforce; early retirement; substitution of skilled, often hi-tech, workforce, replacing unskilled workers; and search for flexible labour utilisation arrangements through casualisation, etc. This is, however, presented, attached with some sort of social and economic ‘justification.’

The justificatory arguments run like this:

"The labour laws are rigid and therefore, they impede growth."

"Flexibility in labour laws will lead to generation of more employment."

"This is needed for attracting more Foreign Direct Investments."

"The labour laws are too harassing and cumbersome for the employers." And so on.

Trade unions in the country can by no means afford to buy such specious arguments that flexible labour laws will lead to generation of more employment. If these arguments are to be believed, will legalisation of forced or bonded labour usher in full employment?

What is the situation on the ground?

One need not dwell at length over the ever-growing magnitude of the menacing problem of unemployment in this country. The data provided by the National Sample Survey Organisation’s 55th round (1999-2000) testify to the fact that unemployment rate has scaled scary heights. The recent report of the Task Force, appointed by the Planning Commission of India, headed by Montek Singh Ahluwalia, is a revealing document, confirming that the decade of ‘reforms’ had only aggravated this problem, with no sign of mitigation anywhere in sight.

The total number of job seekers on the live registers of employment exchanges in the country has steadily gone up. The government statistics reveal that their number had gone up from 3.46 crore in 1990 to 4.02 crore in 1999 (Source: Ministry of Labour, Annual Report 2000-2001). As on April 30 this year, the number was 4.12 crore (reply to a question in Rajya Sabha on July 26).

The annual employment growth rates decelerated from an overall average of 2.04 per cent before ‘reforms’ (1983-94) to a mere 0.98 per cent in 1994-2000. The Economic Survey 2000-2001 explained this away as: "Higher economic growth in the recent past, if it has been more capital-intensive, may have resulted in lower employment intensity." The report of the Task Force said: "The low employment elasticity in the 1990s reflects the fact that employment growth decelerated in this period while GDP growth accelerated."

When it is certain that economic growth may per se not bring about employment growth, how can one accept the logic that ‘labour law reforms’ will result in growth leading to generation of employment? One should not forget that the ‘reforms’ agenda itself aims at only jobless growth.

The Task Force report as well as the Approach Paper to the Tenth Five Year Plan of the Planning Commission clearly point out that any further growth in employment might at best be in the informal and service sector only.

The data released by the NSSO (55^th round) reveal that employment in the organised sector is only 8 per cent. Given the fact that all this 8 per cent is not unionised and casualisation of jobs had taken place in a big way in the organised sector, there is much cause for concern about the quality of employment in the organised sector itself.

In this context, the question arises: Whether ‘labour law reforms’ will result in quality employment or only in non-standard employment and non-standard work practices?

At the International Labour Conference held in Geneva in June this year, the focus was on bringing down the ‘decent work deficit.’ Juan Somavia, director general of the ILO, in his report noted the shortcomings in this regard as 1) Employment Gap, 2) Rights Gap, 3) Social Protection Gap and 4) Social Dialogue Gap. The proposed ‘labour law reforms’ will only lead to widening these gaps and not reduce them.

The government had appointed the Second National Commission on Labour. But, the finance minister has, in his last budget, announced far reaching amendments to the labour laws, reducing the Second National Commission on Labour to a mockery. The Task Force of the Planning Commission on Employment made such recommendations, touted as ‘remedies’ for the grim employment scenario in the country, as no civil society can accept.

The amendments to the Trade Unions Act are already past the Rajya Sabha. It is claimed that these amendments will reduce the fragmentation of trade unions. In reality they will only make the formation and registration of trade unions difficult, if not almost impossible. This exercise is attempted without any safeguards like: (1) ratification of the ILO convention on ‘right to association,’ (2) legal obligation on employers to grant recognition to the representative union, (3) collective bargaining right, (4) making ‘union busting’ activities by employers a punishable offence, and (5) grant of ‘protected workmen" status to the worker-applicants for registration of a union.

The Industrial Disputes Act does not give any legal protection to workers against lay-off, retrenchment or closure. It only prescribes a procedure for securing the permission of the appropriate government. The employers have been demanding that these provisions, which are applicable to establishments with 100 or more workers now, be made applicable to those with 300 or more workers, as was the position in 1976, when these provisions were inserted in the Act. The finance minister announced to raise this number to 1000 workers, freeing almost 98 per cent of the establishments to which these provisions apply, from undergoing the prescribed procedure. The Task Force goes a step further and recommends complete repeal of Chapter V-B itself! Moreover, the finance minister announced to enhance the compensation for the workers from 15 days wages per year of service to 45 days wages per year of service. The Task Force ‘generously’ reduces this to 30 days wages per year of service. What a competitive race for appeasement of the employers’ lobby!

Another area of ‘labour law reforms’ relates to the legislation on contract labour. The employers have been demanding a core and periphery arrangement by which the permanent employment may be limited to core jobs and outsourcing be freely permitted in peripheral jobs. The finance minister announced that contacting would be permitted in both the core and peripheral jobs.

The finance minister announced, in his budget speech this year, repeal of Sick Industrial Companies (Special Provisions) Act and winding up of the BIFR and the AAIFR. The central cabinet has given its nod to the proposal to replace the Board for Industrial and Financial Reconstruction (BIFR) with a National Companies Law Tribunal (NCLT), accompanied by a revolving insolvency fund to be serviced for sending the workers home. It may be recalled that during the meeting of the tripartite Indian Labour Conference held in 2000, no one, including the employers’ side, demanded abolition of the BIFR. Without any concern for the productive capacities in the sick industries being ruined, the government moves for a fast track liquidation of these units.

‘Labour’ is a subject in the concurrent list of the constitution of India. However, the state governments are not involved in the decision making process in respect of introducing the ‘labour law reforms.’

‘Social security’ and ‘social safety net’ are often talked about in the context of ‘labour law reforms.’ But the government of India has no concern for this.

A question was raised in Lok Sabha on whether the government of India proposed to take any effective measures to provide unemployment allowance to those unemployed young men/women whose names have been registered in various employment exchanges of the country for more than three years. The minister of state for labour and employment, Muni Lall, had no qualms of conscience in answering it in the negative. He emphatically added that "the central government is not in favour of making payment of unemployment allowance to any category of the unemployed youth." A cruel response, to say the least!

The Working Group on Labour Policy for the Ninth Five Year Plan (1997-2002) had recommended that the ILO Convention No. 102 concerning Social Security (Minimum) Standards, 1952 should be examined and efforts be made to ratify the same during the Ninth Five Year Plan period. But, in reply to a question in Rajya Sabha (unstarred question No. 1308), the government of India stated:

If the government expresses its inability to raise the resources for providing social security to the working poor and the unemployed "at this stage of development," why then it is in a mad hurry to ‘reform’ the labour laws right away now? It is precisely because of the pressure mounted by the employers’ lobby and the multinationals.

Another argument is that with the existing "rigid" labour laws, the Indian industry will not be able to meet the competition in today’s globalised market economy. But, will those advancing this argument answer whether the economies with which the Indian industry will have to compete have, in comparison to ours, (1) More of organised sector employment or less? (2) Less proliferation of informal sector or more? (3) More of worker unionisation rate or less? (4) Work force with a much higher real income or lower? (5) A superior quality of work or inferior? (6) Better social security measures or worse?

If none of the above questions can be answered in negative, why then should we go in for measures that will only lead to further deterioration of the conditions of the workers of our country?

It is not the case of the trade unions in the country that our labour laws have no fault lines. Most of them are obsolete and have a negative orientation towards workers’ welfare. None of them has any teeth. The implementation machinery is in a shambles. It is at best an irritant for the employees and a source of gratification for the corrupt bureaucracy. Employers have been violating them with impunity. Why then do the trade unions raise a hue and cry over these laws being amended? It is only because the practices of the employers, which are unfair and illegal now, at least for the record, will be given legitimacy by the proposed ‘labour law reforms’ and the trade unions striving to secure justice for the workers will be damned as indulging in unlawful activities.

Trade unions will rather be guided by the following advice given by Justice V R Krishna Iyer: "Industrial law is rapidly (though wrongly) under mutation. The sound system we have will soon be surrendered when foreign corporations fall foul on them. MNCs are allergic to industrial justice.…… Therefore, it is the task of Indian labour to begin the struggle against operation industrial injustice."