Reform, don't trample

Workers can't be completely at the mercy of employers

State governments in India seem to have discovered a new way to breathe life into economic activity — radical labour law changes. It began with the Madhya Pradesh government’s announcement earlier this month of a light-touch labour law regime for new units setting up shop in the next 1,000 days. Through an executive order, routine labour inspections have been replaced with third-party certification for industry and processes eased for obtaining a factory licence. Along with these measures, most of the provisions under the Factories Act, 1948, and the Industrial Disputes Act, 1947, will not apply to these firms. This also means workers in factories may be denied basic working facilities such as cleanliness, proper ventilation, drinking water, canteens, and rest rooms. It would also become easier to lay off workers. Significantly, raising a dispute will become an arduous task because unions will no longer be recognised to negotiate with employers. It will also create a differentiated regulatory regime between the new and existing firms.

A day later, the Uttar Pradesh government didn’t even care to go into these nuances and decided to do away with all but four labour laws. All of these moves have been justified to attract companies moving out of China. Taking the Ordinance route, the Uttar Pradesh government has proposed to exempt all existing and new manufacturing units and establishments involved in manufacturing processes from most of the 38 labour laws in the state for three years, save some provisions related to the safety of workers, women welfare, and wages. Leaving aside how the Ordinance is drafted, without following the due processes of consultation, it’s too early for businesses to rejoice. The biggest jolt is the industrial dispute mechanism, which will be dismantled.

Work conditions would change dramatically in the medium term as Covid-19 is unlikely to go away soon. Companies will have to follow a new set of rules, which might be dynamic, depending on the spread of the virus, and both employers and employees would need to adapt. Many states have already increased the maximum working hours from eight to 12 a day to compensate for the loss of production — making it officially the most burdened work set-up for workers anywhere in the world. With such a shock, workers are bound to have their own concerns while companies will be expecting them to put their best foot forward to cover the losses.

With no industrial dispute mechanism in place, the balance of power will be tilted in favour of companies and may potentially lead to a situation of distress and, in some cases, unrest. Already, workers are protesting in industrial hubs such as Surat for not being allowed to go back home. In the present scenario, the proposed changes may not prove to be the real cure. India needs changes in labour laws, but no one wants a lawless state where employers can do anything and everything. The point of reform is not to put workers completely at the mercy of employers. This is no way to reform or attract investment, or to restart industry. It is important to strike a balance and protect the interests of all stakeholders involved.