People's Democracy

PRIME minister Vajpayee presented ‘Shram Awards’ to 28 workers
on February 4, 2002. Speaking on the occasion, he sought the support of all sections on labour reforms and said that changes in the "archaic labour laws" would be made only after consultations with all the stakeholders. He swore that his government would also consider the recommendations of the Second National Labour Commission, before deciding on these changes and abide by its responsibilities to protect the interest of workers.

The very next day Vajpayee presided over a meeting of his cabinet which, inter- alia, pronounced a capital punishment to 11 lakh central government employees, in a bid to carry out the downsizing prescriptions of the Geethakrishnan Commission. This was presented as an ‘attractive’ VRS package, which will be imposed on them at the end of one year period. The prime minister conveniently overlooked the consultative machinery, in place for the central government employees, and allowed his cabinet to decide arbitrarily.

The move was aimed at ‘expenditure reforms’. Is there a case for pruning the expenditure on staff? Has it become an unbearable burden on the ‘slender’ resources of the government?

The Rakesh Mohan Committee on Indian Railways, in this context, noted: "The Fifth Pay Commission is currently regarded as the villain of the piece in causing the current fiscal problems. Analysis of the data suggests that this is not the case at the central government level. The total cost of government salaries, excluding defence and police, when expressed as a proposition of GDP, can be seen to be much lower now than it was right throughout the 1980s".

It is clear that, justified or not, this NDA government is determined to pursue its anti-worker `reforms’. It must be noted here that this is not merely a question concerning eleven lakh jobs in the government. Downsizing the government is only a precursor to heavily slashing down the central government expenditure on social sector, which has already come down during the liberalisation years. It is ultimately the people at large who will face further deprivation.

The day after the polling in the four states were over, the Vajpayee cabinet met again - this time to approve the amendment to Industrial Disputes Act, vesting the employers with the right to hire and fire workers. Dissent, even inside the cabinet, was disregarded. The finance minister, Yashwant Sinha, in his 2001-02 Budget, promised 'labour market reforms'. The cabinet decision is his compliance report to the employers’ lobby, on the eve of his next budget!

Rightly, the employer class has jubilantly described the decision as a ‘shot in the arm’ (Sanjiv Goenka, President, CII.) The columnists in the print media have also welcomed the move with unconcealed glee. To cite one such piece: "At long last, the government has decided to take the labour bull by its horns: It has decided to amend the Industrial Disputes Act, passed 55 years ago, and bring it in tune with present circumstances and requirements. Companies employing 1,000 or less will now be free, in their best judgment, to resort to retrenchment or lockout to maintain their viability. The decision will come as a boon to 92 per cent of the units in the organised sector employing a workforce of 35 million." (Business Line, Feb. 27)

Now again, the prime minister had no qualms of conscience to have infringed on his own commitment for consultations with all the stakeholders. Rather, the Vajpayee government has brazenly succumbed to the pressures mounted by the big business lobby.

A Task Force on trade and industry, constituted by the prime minister himself, comprising representatives of all the major private industrial houses viz. K M Birla, Nusli Wadia, P K Mittal and Ratan Tata, had made the following observation in their report:

The NDA govt. has faithfully fulfilled the task mandated to it by the big business. The only change in the script is the prescription of the compensation package of 45 days per year of completed service, as against leaving this open to mutual agreement.

It must be remembered that apart from this recommendation for changes in Industrial Disputes Act, 1947, the report had outlined other "reforms" as well. They include: withdrawal of all restrictions and regulatory provisions relating to working hours and compulsory rest period etc. in Shops & Commercial Establishment Act and introduction of the concept of Flexi-time in regulating working hours. Payment of double wage for overtime work and those pertaining to sick leave, earned leave etc. are unreasonable and disadvantageous in a competitive market. Drastic changes are called for in the Payment of Wages Act, ESI Act, and EPF Act. Labour inspectorate system must be abolished. So on and so forth. That is why the employers, while welcoming this move to amend the Industrial Disputes Act, have termed it as ‘not adequate’, in the hope that further measures to fulfill their further aspirations will also follow.

The ‘Economic Survey’ presented to the Parliament on the eve of the budget presentation is a rank admission that the exuberance associated with the economic reforms process, initiated in 1991 and more zealously pursued by the BJP led government, has evaporated and a sense of gloom has set in. Despite all the concessions and incentives heaped on the corporate households they have performed the least. The private sector investment had registered a fall. The growth rates of real gross domestic capital formation in both public and private sectors have shown only deceleration. There was a distinct deceleration in growth of manufactured exports and slowdown in growth rates of core and infrastructure industries. Industrial slowdown has been observed across all major sectors. On the employment front, the Survey noted: "Overall employment is estimated to have grown by about 1 per cent during the period 1993-94 to 1999-2000, compared with the growth of 2.43 per cent during the period 1987-88 to 1993-94. Organised sector (both public and private) employment grew by 0.53 per cent during the period 1993-94 to 1999-2000". Worse still, "an absolute shortfall in agricultural employment has occurred for the first time". All the regeneration of economic activity predicted is a mere pipe dream as is signified by the negative growth of 4.8 per cent recorded during April-Dec. 2001 in the capital goods sector. There had been no considerable import of capital goods either. Thus, the Vajpayee government, in the name of ensuring employment generation through flexible labour laws, is only determined to reduce the quality of employment to sub-standard levels through fracturing of the labour laws.

The proponents of the ‘labour market reforms’ have been trying to fork out certain social and economic objectives or justifications. They argue that flexible labour laws will accelerate economic growth, attract more foreign direct investment and promote employment generation. Worldwide, there is no positive evidence to support these arguments. Rather the evidence in India itself testifies to the opposite.

The Institute for Human Development had conducted a study recently based on 1300 firms belonging to nine industries in 10 states and eight size groups of employment. It is interesting to note some of the findings of that study.

"Our study showed that employers brought about an increase in total employment by increasing the share of non-permanent employees and increase in manual employment by increasing the share of women workers". "It is generally believed that in the formal sector the earnings of a worker consist of a basic wage, DA and a bonus. But our sample showed that more than four of every five firms paid a consolidated wage"." Payment of separate DA was reported by only 12 per cent of the firms whereas consolidated wage was reported by 75 per cent".

Coming to the specific issue of the Industrial Disputes Act provision placing ‘restrictions on exit’ the survey showed that "the share of employers covered by the exit ban reporting a decrease in employment is not only higher than that of the employers not restrained by the 1984 Amendment but it increases with the size of the firm. In other words, proportionately more of the bigger firms than smaller ones have been able to reduce employment".

The study concludes on this note: " We found that employers who increased employment resorted to employing flexible categories of workers such as temporary, casual, contract and women. Even if the exit clause were rolled back, employment of non-regular categories is likely to increase thereby increasing the dualism in the labour market" (emphasis added).

Incidentally , this study has been reported by L K Deshpande, in an article in the Indian Journal of Labour Economics (July-September 2001), who is supportive of – and not opposed to - labour flexibility.

This is proof positive of the fact that not only the justifications adduced for flexibility of labour laws are untenable but also that the main motive is to usher in perpetual contractorisation and casualisation of labour.

The advocates of ‘labour market reforms’, at least for the record, assert that the labour law changes must be accompanied by some arrangements for providing the displaced workers with the social safety net. Even the Ahluwalia Report, which doled out a much tougher dose of amendments to labour laws, as for instance ‘a more radical step of deleting Chapter V B from the I.D.Act’ as against raising the numerical strength for coverage from 100 to 1000 opted for by Yashwanth Sinha, noted in their report:

" Another issue that has to be addressed in parallel with efforts at labour market reforms is the need for a social safety net in the form of unemployment compensation or insurance in the event of retrenchment. Industrialised countries, and even some developing countries , are able to provide employers with greater flexibility to hire and fire labour policy because labour retrenched in the process of restructuring has the benefit of unemployment insurance". Of course, the former finance secretary was careful enough to suggest that such unemployment insurance scheme "should strictly be self financing, base on compulsory deductions of contributions from wages with a corresponding contribution from the employer and involving no liability on the part of the government"(emphasis added). But, the Vajpayee government appears to have totally discarded the social safety net concept itself.

Trade Unions in the country, with not a single exception, have naturally raised the banner of resistance to the move initiated by the NDA government. It is heartening to find that some of the constituent parties in the NDA alliance have also come out with overt or covert disapproval. But, the working class and the trade union movement must bear in mind that countrywide united movement of the working class is the only option to meet the challenge effectively.

The BJP-led government at the centre has thrown a serious challenge before the working people of the country. It is an attack on the basic trade union right. It is an evil design to free the employers from all their statutory obligations and to strip the working class of all legal protections. It is a design to enslave the working class, which is also the integral part of the conspiracy of enslaving the country through the suicidal policies of liberalisation and globalisation. The working class has an uphill task to fight back the conspiracy. We are confident that the united movement of the working class shall be able to force the government to give up the anti-labour sinister move. Trade union unity should firmly assert and proclaim to the employer class and the government that "workers are not ‘use and throw’ products; workers are not disposable commodities; workers are not those mineral water bottles to be crushed after being emptied".