Targeting labour laws: On whose behalf do states operate?

In an attempt to keep corporate profitability afloat during the pandemic, a nightmarish scenario is emerging for the workers with the suspension of labour laws.

With fewer workers allowed in factories due to partial lifting of the lockdown, production can be kept at a profitable level either by extracting more work within the working day or by extending it. The intensification of labour means for the same pay the job descriptions are expanded to include more tasks. The extension of the working day aims at fewer workers producing more by working longer hours. These changes worsen working conditions and prevent new hiring.

The strategic shift to extend the working day was initiated by a Gujarat government notification on April 7 to allow 12 hour shifts, six days a week for three months from April 29. The notification also denied the provisions under the Factories Act of 1948 of paying overtime at double the normal rate for the extra hours. Rajasthan (April 11), Punjab and Himachal followed suit (both on April 20), but retained overtime for extra hours of work.

Labour law experts believe that these states are in violation of the Factories Act which permits the extension of the working week to a maximum of 60 hours. Moreover, the denial of overtime payments by the Gujarat government effectively qualifies the extra hours of work as forced labour and would contravene the International Labour Organisation’s Forced Labour Convention (1930) to which India is a signatory. The convention gives an exemption in the case of “violent epidemic or epizootic diseases”, but only for the “shortest possible time.” The only legal cover the Gujarat government may have for not paying overtime rates would be the removal of Articles 3-24 of the 1930 Convention by the Protocol of 2014. Earlier, Article 13 had mandated that such labour “shall be remunerated at the rates prevailing in the case of overtime for voluntary labour”. That India’s 'model' state has to go for forced labour is shameful.

Meanwhile, Uttar Pradesh apparently to protect existing employment and provide jobs to returning migrants has suspended all but three existing labour laws for the next three years. Only laws relating to bonded labour, construction workers, and for compensation for injuries or death remain. In Madhya Pradesh, all new manufacturing units have been exempted from most provisions of the Factories Act of 1948 for 1,000 days; managements allowed to resolve disputes without adjudication by the Labour Courts and the coverage of the Industrial Disputes Act diluted.

Labour law experts believe that these states are in violation of the Factories Act which permits the extension of the working week to a maximum of 60 hours
This largesse that state governments are giving away to employers is not theirs to distribute. The whole gamut of laws relating to wages and work conditions has evolved out of decades and in some cases, like the eight-hour day, over a century of national and international struggle to make factory work civilised, equitable and safe. However, as “Labour” is a concurrent subject in the Constitution these measures have been brought in through ordinances which need ratification by the Centre. More importantly, is it possible that the UP Chief Minister is unaware of the consequences of making infructuous laws like the Minimum Wages Act, Maternity Benefits Act, Equal Remuneration Act, Industrial Disputes Act, Employees’ Provident Fund Act, Employees’ State Insurance Act and the Trade Unions Act, among a plethora of other progressive labour laws? Or that the MP Chief Minister does not know the consequences of suspending the Factories Act or making Labour Courts redundant? Would they have dared to act so audaciously unless their actions had the blessing of higher powers?

Perhaps the Centre wants to advance changes in the labour law by manipulating the states. Of its four labour code bills on Wages, Industrial Relations, Social Security and Occupational Safety and Health and Working Conditions only two have been passed and two are still in the pipeline. They also dilute existing labour laws and empower the states to change laws relating to working hours, wages, dispute resolution process and organising trade unions.

The removal of legal safety nets will increase low income and exploitative jobs. Already poor quality of jobs and high degree of informality are responsible for the large number of the working poor in India. According to the International Labour Organisation, of the 535 million workforce in India (2019), nearly 398.6 million suffered from poor quality jobs or vulnerable employment. With legal dilution, the number of working poor (those living on incomes of less than Rs.198 per day) will go up further.  

The Indian economy was not creating enough jobs before the pandemic (unemployment rate is estimated at a staggering 27 per cent by Centre for Monitoring Indian Economy), but it was nonetheless adding 12 million people to the labour market annually. Now the lockdown and subsequent suspension of labour laws will lead to further immiserisation of the working poor, lowering their consumption of goods and services. The profitability crisis of the corporates will not be solved unless demand revives and these policy changes do not address that question.

The hope that India could become the next hub in the global supply-chain as capital seeks to relocate from China is unrealistic. Despite claims of moving up the ladder in “Ease of Doing Business”, Vietnam, Thailand and Mexico are emerging as the preferred destinations.

It is difficult to imagine how UP and MP can offer a stable and safe environment for foreign capital and become global manufacturing hubs. They are among India’s most regressive states with high level of social instability. Poor infrastructure and lack of connectivity to deep sea ports already takes away the advantages of cheap and plentiful labour. Low skill levels place them far below states like Tamil Nadu and Karnataka where there is the largest cluster of Japanese investments.

A feverish rush to the bottom by diluting labour laws is unlikely to yield sustainable solutions. These legal protections for workers evolved as social stabilisers in times of crises and helped build public trust in state institutions and government. Suspending them will come with social and political consequences.



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