We shouldn’t look at the new Labour Code as a reform in isolation. The process of envisioning new Bharat began in 2014 itself. Many steps were taken to prepare the ground for the Labour Codes. Before the multi-pronged changes took place, nearly 90% of the labour force or the so-called unorganised segment had no cover, nor security.
Making lives easier
Getting a job even in Class 4 of government was an onerous exercise that included taking peons and officers into “confidence”. How many of us remember abolition of interviews for this category by PM Modi? Do we recall drain on our time and resources to get our documents “notarised”? This archaic idea went too. While applying for a job, carrying various certificates and sharing multiple ‘Xerox’ copies used to be a problem. With unique free service of digital locker the government resolved this problem. Unique PF number for an employee is another simplification for people who change jobs. The Modi government has also put focus of providing more hostels for working women to make their lives easier.
Better Social Security
I could count 10 insurance and health policies which were introduced to provide basic social security coverage to the deprived and underprivileged citizens at very nominal costs, with the centre providing MSM or support. There could be more. It began with highly inclusive zero balance Jan Dhan bank accounts that came with built-in life cover of Rs 30,000 and accident cover of Rs 100,000. Atal Pension Yojana offering Rs 1000-3000 per month pension after 60 years for insurers in the age group of 18-40 for premium of only Rs 29-200 per month. PM Suraksha Yojana offered at just Rs 12 p.a. an accident insurance of Rs 200,000. In this 75% cost is being borne by the central government. There is health Insurance of Rs 50,000 for a premium of Rs 700-800 per month. Aam Aadmi Beemit Yojana for 18-59 years offers insurance cover of Rs 30,000 plus accident disability of Rs 75,000 plus scholarship benefit of Rs 100 per child for a floater policy costing Rs 200 per member p.a. No one had ever thought about small traders and self-employed people. This government introduced a National Pension Scheme for them with a monthly premium of only Rs 110-400 per month (depending on age) to receive Rs 3,000 per month after 60 years. Then, ofcourse, the biggest of them all – Ayushman Bharat for BPL families. A new scheme, PM Shramyogi Maandhan Yojana for unorganised labour benefitting about 100 million workers earning less than Rs 15,000 per month with a premium of Rs 55 per month with equal contribution from government, provides Rs 3,000 per month. There is another monthly pension scheme for 90 days once in life-time if a person is unemployed for more than 90 days. All these schemes are beyond MNREGA for the village poor, which has been enhanced now.
A migrant worker can use PDS facilities anywhere. For this one ration card across nation has been introduced. Every enterprise, state government and central government will keep track of migrant labour
Curse of Bonded Labour
Many of us are not aware that cursed bonded labour still exists in India. Reader will be surprised to know that the Law for Rehabilitation of Bonded Labour was laid down in 1978. The sum to be given to the liberated labour was Rs 4,000 which was raised to Rs 6,250, then to Rs 10,000 in 1995; doubled under the Vajpayee government in 1999 to Rs 20,000. This amount was to be shared 50:50 by the state and the central governments. This government, in a single stroke in 2016 raised the compensation amount to Rs 100,000. In addition, there is an amount of up to Rs 3 lakh for rehabilitation. The freed labour is also eligible for another Rs 1.50 lakh loan for building his/her house. And all these expenses will be borne now by the Central government, not shared.
Apprenticeship is the best way to train people for an industry. But, India’s Apprentice Act was so archaic that India had only 0.01% of work force working as apprentice. Compare this to Germany where this number is 2.7%. In India, only about 30,000 enterprises offering apprenticeship, this number in UK is 200,000! The Modi government has modified the apprentice laws to make it easier for industries to have apprentices. This is how India jumped Ease of Doing Business ranks from 143 to 63 now.
The New Labour Codes
The above measures were taken to protect the weakest sections of the society, the people who power our economy but are called unorganised because they are employed by micro and small enterprises. The government expanded this safety net to provide security and dignity to most needy people and labour force before it took care of the organised labour (unionised labour in medium and large industries, financial and government services). These groups of employees had necessary social security and laws protecting them. The laws were so complex that they hindered economic growth. These proposals initiated by Atal Behari government in 2003 just hung fire and moved around in select committees etc. during UPA decade.
Trade union movement has evolved over years from ideologically driven Communist unions that considered the capitalist as an enemy, to professional unions run by professional deal makers that saw the death of textile industry in Mumbai; to unions like Bharatiya Mazdoor Sangh that considered themselves as equal partners in industry
Unless industries expand, how can labour force benefit and employment increase? For example, there were 2300 sections in labour law, which have been reduced to 460 in the new Codes. There were 1000 central sections that are reduced to 250. And, 44 Labour codes have now been reduced to 4. According to Manish Sabharwal, there were 17 definitions of wages, 19 definitions of workers and 21 definitions of enterprises. He says, “Labour laws are not pro-labour, pro-industry; but pro-inspectors. Even after the new codes have been implemented, there are 40 central laws and 200 state laws for setting up a business. It was this socialist legacy that India that is stifling industrial growth. Actually, it was not even a socialist legacy, it was a strange twin headed monster called ‘mixed economy’ that inherited the worse of the both the free market and the socialist controls. These shackles were broken with the new labour codes.
The Wages code that was introduced in 2017 benefits 50 crore workers. It standardises minimum wages for all categories of employees/workers, including those who worked on gigs and platforms. Payment terms for all types of wage payments – daily, weekly, monthly etc have been strictly codified. Bonus limits and ceilings have been more liberally defined. Wages for men, women, LGBT are same for same job now. Overtime norms too have been standardized, thus removing any ambiguity that could be exploited by the employers.
Three other codes viz, Industrial Relations code, Occupational Safety, Health and Working Conditions and Social Security have been simplified. The Industrial relations Code does make strikes a little tougher, but opens the gates for better negotiations, reduces the threshold of trade union membership for negotiations from 75% to 51%, and if there is no union with 51%, an option of negotiation committee with atleast 20% workers’ representation is provided. It makes strikes difficult during arbitration or negotiations to avoid disruptions. Yes, industries have got legal support for retrenchment of labour or closure without government approval, raising the qualification from 100 employees to 300 employees. Even beyond these numbers, if an industry applying for closure of retrenchment does not get response in a fixed time, the permission is deemed to be given, so arm twisting won’t be possible now. This opens up an option for industries who need seasonal increase in work force, like garments and rainwear, to raise work force without worrying about the inspectors or the unions.
Yet another very important feature is that the code includes workers of construction, film industry, gigs, platforms and journalists also part of this act. It has created a provision of 1-2% of turnover of enterprises to be used to create a social security fund for these workers. There is provision for grievance redressal where District Collector is the deciding authority. I do have a problem here with government officers being given this responsibility who are already loaded with too many responsibilities and may not be much interested in new labour relations exercise, nor tuned to it.
The Occupational Safety, Health and Working conditions code gives women equal rights to go for any type of job in a plant, provided the company has followed requisite safety norms. The working hours for women are till 7 pm, but if she wants to work beyond this time, she can, with company carrying the responsibility of her safety. Better raternity benefits already extended by this government are part of this code now. Discrimination against LGBT community has been addressed with special bathrooms and rest rooms etc. Gig, platform, construction workers etc have been included in this code. Effects of better deal for LGBT can be seen with better conditions introduced by enlightened companies like Tata and M&M.
Code of Social Security has made sweeping changes with fixed term employees, contract workers getting same rights of social security as the permanent employees. This will help contract workers better wages as there will be no middle agency that would have its cut for providing manpower to the industry. This is a huge step for security of contract workers.
Migrant worker – the unseen, uncared asset
Another huge step is identifying the Migrant worker as any inter-state worker of self-employed person in any profession who earns less than Rs 15,000 p.m. as migrant worker. A migrant worker can use PDS facilities anywhere. For this one ration card across nation has been introduced. Every enterprise, state government and central government will keep track of migrant labour. The Central government has introduced a Shramik Setu portal, which is not only available on mobile, but also in e-service centres for labour where they will be given requisite support and training to use the portal. The portal will provide information about various schemes and policies for migrant labour. There is also provision for Social Security Code for all the workers.
There is a provision for Central and State Level Advisory bodies that would formulate new standards for wages, better policies for workers and find new avenues for employment, specially for women. There is a proposal to utilize CSR funds for welfare schemes that may be formulated in future. Thousands of crores CSR funds are lying idle. I hope that government realises that inefficient ESI has not benefited the workers though it is fleecing the needs revamp too. It is sitting on more than Rs 91000 crore of reserve funds. How can a social welfare agency with such huge funds run such poor health facilities?
Improving the environment for industrial growth
There are many things that fall outside the scope of Labour Code, but are very important for creating the right environment for expansion of industry and better employment opportunities. Like raising the limit of workers, capital investment and turnover for micro, small and medium size industries. The stress of skill enhancement and retraining of workers on new skills finds resonance in the New Education Policy that has opened new avenues of Skill development and vocational training. Similarly, the new Agriculture Bill has opened up new avenues in food processing and warehousing, which means more employment opportunities in this segment.
Considering all the above, one can safely say that India is getting ready to enter a new stage of industrial expansion with higher employment with a integral approach. Yes, MSME segment needs better deals from the financial institutions. Despite much better track record that corporate segment, they are getting much lesser credit and they have to dip into personal savings, seek private fund or deal with chit fund companies to run their businesses. We must also realise that MSME provides 41% of our national income. We hope to see this lacuna removed soon.
People who are decrying lowering of the importance of trade unions, forget that the unbridled power to strike and control industries saw Kerala and Bengal throttling its industries under Communist governments. The industries like Information Technology where there were no trade unions and better working conditions have thrived and offered better employment. Trade union movement has evolved over years from ideologically driven Communist unions that considered the capitalist as an enemy, to professional unions run by professional deal makers that saw the death of textile industry in Mumbai; to unions like Bharatiya Mazdoor Sangh that considered themselves as equal partners in industry and not antagonists. Trade Unionism cannot live in time warp of cold war era. It needs to reinvent itself to the fast changing world. Or they will become history.
(The Writer is a Mumbai-based author, columnist and TV Panelist)