Labour reforms by states have limited potential, defeat purpose: Experts

As the Centre nudges States and Union Territories (UTs) to make “necessary” amendments to their existing labour laws in a bid to align them with the “spirit” of the four new labour codes passed by Parliament in the absence of a clear timeline for notifying these codes, experts opine that State reforms have only limited potential in terms of achieving ease of doing business, streamlining regulation, improving working conditions, and supporting industry growth.

 

Besides, labour reforms by States end up creating fragmented jurisdictions, which exacerbate complexity in their implementation, thus making the whole reform exercise undertaken by the Centre redundant.

 

Labour lawyer B C Prabhakar says that a large number of establishments have their operations in multiple States, thus making it cumbersome for them to comply with numerous rules and regulations. Also, establishments working in the central sphere will have to keep following the Centre’s old laws, thus putting them at a disadvantage with regard to other establishments in a State.

 

“The new codes were passed with the objective of creating some sort of uniformity in labour jurisprudence. Now, if States were to go ahead and make changes in their own laws, they won't be uniform and it will end up complicating the whole implementation apparatus, in effect negating the entire reform exercise,” he adds.

 

Echoing similar views, labour economist K R Shyam Sundar says that the government’s labour reform process has been a non-starter from the outset. The new codes are incomplete, complex, and are fraught with inconsistencies.

 

“The strategy to shift the onus on the States to undertake labour reforms is not new. It has been in practice for nearly two decades now, with the Chandrababu Naidu-led government amending the contract labour Act in erstwhile Andhra Pradesh way back in 2003. Hence the government might be thinking that once a few States make these changes, it will serendipitously implement the new laws and then it won't have to face the opposition,” he adds. 

 

As of May 20, at least 20 States and UTs have amended their laws and increased the threshold for retrenchment without government approval from 100 to 300 workers — a longstanding industry demand. Similarly, 19 States and UTs have doubled the threshold under the Factories Act to 20 workers (for units with power) and 40 (for those without). An equal number of jurisdictions have raised the threshold for the applicability of the Contract Labour Act to 50 workers, up from 20 at present.

 

“During the past couple of years, we have deliberated extensively with States and tried to convince them to take the lead in undertaking these reforms. Both the National Democratic Alliance (NDA)- and Opposition-ruled States have made these changes,” official sources had told Business Standard.

 

Harbhajan Sidhu, general secretary, Hind Mazdoor Sabha (HMS), says that the nudge by the Centre to have States amend their existing laws is part of the government’s efforts to divert and divide the opposition that they are facing from trade unions.

 

“Rather than alleging that trade unions have been adamant in their opposition to these laws, the government should openly come out with its intent, strategy and road map to implement these laws, which were passed by Parliament nearly five years ago," he adds.

 

The Joint Platform of Central Trade Unions — comprising 10 central unions, excluding the Rashtriya Swayamsevak Sangh (RSS)-affiliated Bharatiya Mazdoor Sangh (BMS) — has postponed a planned nationwide general strike against the implementation of the new labour codes from May 20 to July 9 after “due consideration of prevailing situation” in the country.

 

However, BMS President Hiranmay Panda says that their opposition to the new codes is not political at all and, in fact, they are in favour of implementing code on wages and social security code at the earliest.

 

“While States are free to undertake reforms, it only serves limited purpose and does not necessarily advance what new codes have sought to achieve,” he adds. 

Steps taken 

By states/Union Territories  

• 31 Allow night shifts for women 
• 25 Allow fixed term employment
• 20 Increase threshold to 300 
• from 100 under the Industrial Disputes Act
• 25 Allow compounding of offences
• 12 Enhance quarterly overtime limit to 125 hours from 75 hours
• 19 Raise the limit for Factories Act from 10 to 20 (with power) and 
• 20 to 40 (without power)