Laborers on a construction site for a metro rail project in Kolkata. Photo: Reuters / Rupak De Chpowdhuri
Laborers on a construction site for a metro rail project in Kolkata. Photo: Reuters / Rupak De Chpowdhuri

On May Day, a gathering of trade unions in Mumbai, including the labor unit of India’s ruling Bharatiya Janata Party, Bharatiya Mazdoor Sangh, urged workers to defeat the BJP in the 2019 elections. Their call was in response to the slew of amendments to labor laws in recent years that the trade unions say are “anti-labor.”

The purpose of these reforms brought about by the government led by Prime Minister Narendra Modi is believed to be to help India climb the World Bank’s “ease of doing business” index. Thus they please the industrialists. The Rajasthan Chamber of Commerce and Industry, hailing the reforms, said that they “helped in removing the … time-consuming litigation processes.”

However, research published by VV Giri National Labor Institute and released by Labor Minister Bandaru Dattatreya on May Day 2017 noted that the impact of the reforms had only been symbolic in nature.

The study covered labor-law amendments by the states of Rajasthan, Madhya Pradesh, Uttar Pradesh and Andhra Pradesh to the Industrial Disputes Act 1947, Factories Act 1948, Contract Labour Act 1970 and a few other acts, allowing greater flexibility in closures, hiring and firing, inspections, online registrations, union recognition, and wage compensation, among others.

Sanjay Upadhyaya and Pankaj Kumar, who worked on the research, said: “On their own strength, these amendments in labor laws have neither succeeded in attracting big investments, [boosting] industrialization or job creation, nor have these amendments singularly resulted in enhancing exploitation of labor and deterioration of service and working conditions of the working population.”

Dr Jens Lerche, a lecturer in the University of London’s School of Oriental and African Studies who has studied labor reforms in Modi’s India, in 2015 pointed out three reasons these reforms are controversial. He said they “make it easier to lay off workers,” they “deregulate smaller factories,” and “they make it difficult for trade unions to be officially recognized” as representing workers in a factory.

Controversial reforms

One of the most controversial and widely implemented amendments was to the Industrial Disputes Act, which lets owners close factories or retrench workers without government permission. The reform raised the cap for retrenchment of workers from 100 to 300 workers in Rajasthan, Madhya Pradesh, Gujarat and Maharashtra.

Sukumar Damle, Maharashtra state president of the All India Trade Union Congress, said late last year: “The factory owners want to have both benefits – retrenchment without government permission and employment of laborers on a contractual basis to deprive them of their benefits. We’ll strongly oppose it.”

One amendment to the Industrial Disputes Act also made it more difficult to form unions. The minimum number of workers required for a group to be legally recognized as a union has shot up from 15% to 30% of the workforce.

Another amendment made it possible for laborers and employers to reach out-of-court settlements. Trade union activist Ramanand Kumar has said: “This amendment favors employers and alienates workers from their right to approach a court. In an out-of-court settlement it’s usually the employers who are powerful and a fair resolution is difficult.”

Leeway for informal sector

Trying to justify the amendments to the Factories Act, the government reasoned that because of the earlier limit, small units came under the definition of a “factory” requiring several compliance procedures, which hurt their expansion and growth. Lerche said: “Factories with under 10 workers are already in the informal sector in the sense that they are exempt from most labor laws.

“The upper limit for informal factories will now be raised to 20 workers and factories below this threshold will be exempt from 14 labor laws, which worryingly include laws dealing with occupational safety, health and welfare of workers.”

Vishwas Utagi, general secretary of the Bank of Maharashtra Employees Union, who was at the forefront of the May Day protests in Mumbai, has pointed out another reform seen as anti-labor: “The amendment of the Contract Labor (Regulation and Abolition) Act in 2017 [in Maharashtra] happened in an undemocratic manner,” he said at a press conference late last month.

“The law says the contractor can employ 49 contract employees, but will not have the legal obligation to give them Employees State Insurance benefits, uniforms, holidays, incentives, etc.”

Before the reforms, it was mandatory for establishments having 20 workers or more to give these benefits to their laborers. Now the laborers can get these benefits only if an establishment has 50 or more workers. The government argued that because of the threshold limit, employers while hiring personnel or procuring commodities from small entrepreneurs found it difficult to execute contracts, as the small units faced hardship in following formalities under the act.

No benefits or welfare

Tapan Sen, general secretary of the Center of Indian Trade Unions (CITU), has been a vocal critic of the labor reforms brought in by the Modi government. He points out that the amendment to the Apprentice Act increased the number of apprentices a firm can employ from 10% to 25% to its workforce.

“The government will be funding part of the … apprenticeships training but they will be working for a private employer. Further, no time period has been fixed for the apprenticeship,” Sen said. Thus private factories can continue keeping the apprentices for an unlimited period without giving them any further benefits.

He says the Social Security Draft Bill of 2017 will lead to “the dissolution of critical and well-functioning statutory schemes and mechanisms – such as Employees’ State Insurance [and] Employees’ Provident Fund,” and shut various welfare boards and welfare funds for informal workers. Additionally, the proposed Fixed Term Employment amendment permits all firms to hire workers on a short-term contract and fire them without notice.

A report brought out by the International Labor Organization, of which India became a founding permanent member in 1922, says that 77% of Indian workers will be engaged in vulnerable employment by 2019. “Vulnerable employment” is characterized by meager earnings (below minimum wage), difficult and insecure working conditions (such as working long shifts and a lack of job security), unsafe work environments, and complete violation of labor laws.

The Ministry of Labor and Employment did not comment on the issue despite repeated attempts to reach it for a response.

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