People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)

Vol. XXX

No. 35

August 27, 2006



TUs Flay UPA Govt’s Labour Policies


W R Varada Rajan


POSSIBLY sensing a sort of unease prevalent among the working classes of the country, the prime minister Dr Manmohan Singh took the initiative of inviting the central trade union leaders for an interaction meeting on August 19, 2006. Welcoming this move, the central trade unions jointly wrote to the labour ministry that they would like the following issues to be taken up for discussion at the meeting. (The INTUC, however, sent a separate communication listing a few other issues as well.) 


At the interaction meeting with the prime minister, the CITU was represented by M K Pandhe, president and W R Varada Rajan, secretary. 




The prime minister at the outset spoke of his government’s commitment to the welfare of the working class, describing it as the ‘the backbone of our industrial sector’. He asserted that trade unions constitute an integral component of our functioning social democracy. He further said: “We are also working hard to see how we can provide some degree of social security to workers in the unorganised sector”. He claimed, “as far as public enterprises are concerned, our government has reversed the previous trend of speedy closure and disinvestment of all PSUs”. He also mentioned that that out of 32 PSUs in respect of which revival proposals were received, 20 have been approved; revival packages were valued at over Rs 5600 crores; Rs. 1800 crores of wages and other dues to employees of loss making PSUs were released.


The prime minister in his inaugural remarks laid emphasis on two aspects. One, 2/3rd of our population still derives its income from agriculture, which contributes just about 1/5th of the national income now. Two we need to create jobs elsewhere, particularly in manufacturing.




Placing the viewpoints of the CITU, M K Pandhe pointed out that the UPA government was not fulfilling its commitments in the CMP towards labour and in fact several steps are being taken in violation of the CMP itself.
While the CMP categorically commits that the Industrial Disputes (ID) Act provisions would not be part of any amendments to be considered in consultation with the trade unions, the labour ministry itself was unilaterally initiating proposals to incorporate pro-employer amendments in the ID Act. 


The government is yet to take any credible step to enact the promised legislations for the benefit of agricultural labour and unorganised sector workers. The assurance that profit-making PSUs would not be privatised has been breached several times. Ministers in the UPA government were openly advocating policies of ‘hire and fire’.


Despite the prime minister’s assertions that trade unions constitute an integral component of our functioning social democracy, the trade unions are not consulted even on matters where labour interests are involved. The Commission to consider social security for unorganised sector workers has no representative of workers. The Planning Commission set up a committee to consider labour issues in the context of the eleventh five year plan, in which only one trade union representative has been included among its 40 plus members.


W R Varada Rajan pointed out that every argument, economic reason or rationale that was advanced for reducing the rate of interest on EPF, small savings etc – which was not valid even at that time – has now vanished with the interest rates in the economy surging upwards. Hence it is unreasonable for the government to keep the rate of interest pegged down at an abysmal level. He also urged the government to consider permitting further investments in the Special Deposit Scheme, on which an inflation-indexed real rate of return should be ensured. Besides the other issues, he also urged concrete steps on the CMP commitment to introduce reservations in private sector, without allowing it to depend on the vague affirmative action by the corporates.


Other leaders representing the AITUC, BMS, HMS, INTUC, UTUC-LS, UTUC and NFITU placed elaborate arguments substantiating the issues and demands raised by the trade unions. 




There have been several violations of labour laws throughout the country. The minimum wages, wherever notified, are not being implemented. There are instances galore even within the National Capital Territory of Delhi.


Contract Labour (Regulation & Abolition) Act and the rules framed there under have been flagrantly violated. Employment of contract labour on all permanent and perennial nature of jobs has become the order of the day in all industries, including in public sector, central and state governments.


Non-payment of terminal benefits to the workers who left the jobs, are mounting so much so that the deductions on EPF do not reach the workers and their families even after retirement/exit as these are not deposited by the concerned managements. 


In the EPZs, SEZs and MIRs no laws are actually enforced, the officials meant to inspect the implementation of labour laws including social welfare legislations, do not have a free entry into these zones, as was time and again reported in the sessions of Indian Labour Conference. Any attempts for unionisation is met with several unfair labour practices on the part of the employers as well as victimisation of those who come forward to organise a trade union. Even the recorded conclusion of the Indian Labour Conference that trade union representatives should be permitted to visit the EPZs, along with the labour department authorities, has not been implemented. The ILO advisory that the Development Commissioners of the EPZs should not intervene in industrial disputes has not been implemented.


Occupational Safety & Health requirements are not at all maintained in many small and medium industrial industries in different states, resulting in serious accidents, which have been reported widely in the media. The working conditions in these factories/units resemble 19th century sweatshops. Despite several claims, child labour is on the increase mostly in the informal sector.


‘Labour inspection’ in misconstrued to be a crime or unwelcome threat by the employers. Many ‘responsible’ personalities in the government as well as in the employers’ fora periodically ridicule ‘inspection’ and consider it a curb or obstacle on ‘productivity’ and ‘competition’. The talk of dispensing with the ‘inspector raj’ and put in place ‘self certification’ by the employers has been in the air, leading to a total collapse of the enforcement machinery under various labour laws. Unless this basic approach is rectified, and the enforcing machinery is set right to do their duty without fear, favour or bias, the rampant violations of labour laws will thrive unchecked. The pathetic situation prevalent in several states is that the machinery is inadequate or incompetent or altogether corrupt. A serious and sincere approach on these basic and primary issues is required to emanate from the top level and percolate down to all levels.


India being the founder member of the ILO and having voted in the International Labour Conference in favour of the conventions and recommendations, there is no justification in not ratifying the core conventions of ILO and incorporate these provisions in our existing laws or enact laws wherever necessary. In the absence of the adoption of “Freedom of Association” and “Right to Collective Bargaining”, trade unions are not recognised by the employers in many enterprises, big and small, unless industrial relations problems emerge.




In the recent years there have been several judicial verdicts of the apex court as well as some high courts not only affecting the interests of the toiling people, but also taking away their hard-won rights over the years. ‘Collective bargaining’, the universally accepted principle under bipartisanship comprises two stages –– first discussions, and failing which struggles including strike. The Supreme Court’s observation on ‘Right to Strike’ in the case of Tamilnadu teachers and government employees in the year 2004 is a direct attack on the right to collective bargaining, which includes collective protest, when faced with the injustice. Despite repeated pleas of the trade unions to step in and legislate to remove the pernicious impact of the anti-workers judgements, nothing positive has happened.




The government’s policy spelt out in the NCMP was categorical “that the UPA administration will ensure fullest implementation of minimum wage laws for farm labour. A comprehensive protective legislation will be enacted for agricultural workers”. The NCMP further states, “social security, health insurance and other schemes for such workers like weavers, handloom workers, fishermen and fisherwomen, toddy tappers, leather workers, plantation labour, beedi workers etc. will be expanded.”


The recommendation of the National Commission on Rural Workers for enacting a comprehensive legislation has been kept lingering for over 15 years. As late as on November 10, 2004, all central trade unions have again spelt out the approach on the Review of the Unorganised Sector Workers Bill and on the unorganised workers social security and specifically stated the following:


Several discussions in the tripartite fora as well as between the labour ministry and the national TU centres had taken place, but the desired directives have not been given on these two important legislations, which are long overdue.




This is yet another important demand of the workers pending over the last several years, as the existing provisions of the Payment of Bonus Act, particularly with reference to the coverage of employees and rate of bonus have become outdated and obsolete. At the time of enactment of the Act, bonus was available to almost all employees in most factories, including the deputy general managers. However, now bonus is not even payable to semi-skilled workers in most enterprises. “Bonus for all workers” is the legitimate demand of the working class, as bonus was considered the ‘deferred wage’.


In the light of the above situation, circumventing the provisions of the Act, local scheme for payment of bonus are brought in other names and forms. The ceilings on coverage under the Act, rate of bonus as well as the maximum amount payable –– all will have to undergo changes, taking into consideration the many changes that had taken place since over 40 years after the enactment of the Bonus Act.




All the measures curtailing the social security schemes such as reduction of interest rate on EPF/GPF/PPF/CMPF/small savings; move to reduce the benefit package under the employee’s pension scheme; privatisation of social security; withdrawal of tax emption on terminal benefits etc. undoubtedly go against the interest of the wage earners, who pay tax regularly as that is deducted at the source.


The move for privatisation of social security, initially advised by the World Bank, has seen its adverse aftermath in several countries, resulting in losses to the depositors. There is no need to have yet another experience in our country on this. The united demand of the trade unions for withdrawing the PFRDA bill is not heeded to. 

The move for withdrawal of tax exemptions on terminal benefits (as also on savings schemes) is retrograde as it adversely affects the workers, retirees and the senior citizens, who have no other sources other than their own savings under the statutory terminal benefits, to rely upon. 




The government went about compiling a new series of Consumer Price Index for Industrial Workers with 2001 as the base year, without any prior consultation with the trade unions. Despite our written and oral objections at all levels – during the “Index users’ meeting” held by Labour Bureau, Shimla, consultations held by the Ministry of Labour and also in the Technical Advisory Committee – the new series of CPI 2001 has arbitrarily been released. 


The workers all over the country have experienced that the Consumer Price Index number remained static while the prices of all commodities particularly food items, are sky rocketing. In some centres, compilation of both 1982 as well as 2001 series, for the same period has revealed that the 2001 series in defective and injustice is done to workers who are therefore deprived of crores of rupees of Dearness Allowance (DA) they are legitimately entitled to.


In the past also faced with similar experiences, when a Review Committee examined, ‘Index fraud’ was revealed. The trade unions are of the considered view that there is a necessity to set up an Index Review Committee for rectifying the defective and erroneous index being compiled. In the meanwhile the publication of 2001 series of index be stopped forthwith and the earlier series (1982) continued.




The prime minister gave a patient hearing to the views of the trade union leaders. In his closing remarks, the PM made a few announcements as well, which included the following:


‘The labour laws are as much as the law of the land as any and they must be implemented’ the prime minister said and promised to write to all the chief ministers for effective implementation of labour laws and also raise it in the next meeting of the National Development Council.


On the problem of backlog of wages for PSU workers, the government would release before Puja pending wages amounting to Rs 300 crores. Agreeing that the current ceilings in the Bonus Act were set more than a decade ago, the prime minister assured, ‘we will soon consider this in the cabinet’. 


On the question of whether any distortions have crept into our price indices, the prime minister said: “I will have an Index Review Committee constituted.”


Regarding the welfare of agricultural workers and unorganised sector workers, the prime minister stated, “the fact that we have draft proposals from many sources is a demonstration of the interest we are taking in the matter’ and promised to examine ‘the details of each of the components of a social security scheme’.


Referring to the need to generate more jobs, more incomes, better working conditions for labour, better social security system and better labour law implementation, the PM promised to “consider setting up of a Working Group consisting of all stake holders to suggest concrete ways of moving forward on all these issues”.


These may at best serve as a declaration of intents. The prime minister, however, did not spell out any measures for a time-bound resolution of many a vital issue raised during the meeting. 


The CITU has urged the prime minister to take expeditious actions on the issues represented during the meeting. The CITU also called upon all trade unions to unitedly move to mount appropriate pressure on the UPA government to change its flawed policies towards labour.