Overhaul the labour regime: Unions ill-prepared for tech reshaping work

India needs simpler, more flexible labour Codes and modernised trade unions, not a return to 29 outdated laws that hurt productivity, formalisation and competitiveness

Ten major trade unions in India have formed a consortium and called for a one-day strike. Their threat is simple — repeal the recently notified four labour Codes (on wages, industrial relations, safety, and social security) and go back to the system of 29-odd laws, or else things will get worse. Unfortunately, the unions don’t identify specific elements that they don’t approve of. If they had, there would have been space for a conversation and more focused analyses.

 

The Joint Platform of Central Trade Unions has expressed “deep anguish” over government policies on the labour Codes, the Shanti Act associated with nuclear power, the rural employment scheme (GRAMG), foreign direct investment in insurance, the Education Bill, pollution in north India, and the Aravali Hills. The National Coordination Committee of Electricity Employees and Engineers has also joined in, perhaps over the Electricity Amendment Bill. Barring the Bharatiya Janata Party associated Bharatiya Mazdoor Sangh, all major unions have signed in, including the Indian National Trade Union Congress, the All India Central Council of Trade Unions, and all sectoral federations/associations.  Strangely, the Samyukt Kisan Morcha also has joined in.  Luckily for the farmers, these labour laws mostly don’t apply to agriculture. I doubt farmers would want Indian labour laws to operate on them, let alone prefer 29 labour laws over the four labour Codes.

 

Strikes are costly and harmful to everyone concerned, which forces one to ask the question: What might be wrong with the new Codes? Since the unions are not willing to be more explicit in public, we are forced to look at what people have been criticising them for.

 

One criticism is that now any unit having up to 300 workers need not require permission to rationalise workers, up from 100 previously.  I would argue India needs to eliminate this provision altogether, not simply loosen it.  A homemaker needs no permission to change her maid; the people need no one’s permission to change their political representative; the doctor needs no one’s permission to change the compounder; the farmer needs no one’s permission to remove his worker.  These are simply employer-employee relationships, not marriages that need to be governed by permissions from the government. Workers who are less productive disrupt the production chain, and their persistence on the shop floor harms the workspace. Remember, it is the less productive workers whom managers tend to replace. And less productive workers in larger units will cause as much harm as less productive ones in smaller units.  So why limit it to 100 or 300 — why not 3,000 or 30,000, or any number at all? We need to eliminate the need for rationalisation-related permissions altogether, and instead bring in protection of workers through unemployment insurance.

 

Another criticism is that by converting 29 different labour laws into four labour Codes, the government has given more power to itself. The argument is that rules are easier to change than laws, and with the four Codes, the executive may misuse its powers and write rules that go against labour. 

 

This argument is flawed as well, for rules are always framed under the law, and the rules cannot go against it. It is true that, depending upon how they are written, rules can make laws tighter or looser. But the alternative of 29 laws is too cumbersome for any labour law regime and will have to be simplified. In fact, an analysis of the four new Codes will show that they are, even now, too long and complex, and need to be simplified further. Moreover, many elements, including limits on overtime, allocation of work, and the cost of women’s safety, etc, need to be eased. The government should announce an empowered commission on further simplifying the four labour Codes, not repeal them.

 

Yet another criticism is that related to how many unions that the entrepreneur or manager needs to interact with.  Previously, the rules called for multiple unions but the new ones mention that the managers need only engage with the largest one.  When multiple unions are involved, the ability of any one to jab a spanner in the works is greater. Therefore, solutions take longer, are costlier, and introduce many middlemen into the picture. A one-on-one interaction between entrepreneur-managers and a union is so much better by any standards. Why might the unions dislike this provision? Because the new code reduces the unions’ power in units where they have low representation.

 

A search for other criticisms of the Codes — of why the four labour Codes may be inferior to the 29 labour laws — yields other points as well. These include limited say in labour matters at the policy level, non-adherence to International Labour Organization (ILO) conventions, reduced ability of unions to call strikes, difficulties in getting registered, greater say of the government in union matters, etc. But the unions have not asked for eliminating these changes, they simply don’t want the Codes. 

 

The unions may mean well, but they belong to a different era.  They don’t realise that the impending tsunami of technological disruption will require a complete overhaul of workspaces as we know them.  For that we need unions that will push for creating cooperative, flexible and creative work environment. Not ones who will demand a complete repeal without giving any specifics.  We need unions that call for economic reforms to generate greater opportunities for workers, help identify policies to transition workers from the informal to the formal sector, and find better methods of linking worker compensation to competitiveness. Even in the domain of protecting workers and their welfare, we need unions to ask for safer workplaces for women, unemployment insurance for workers, skilling opportunities, etc.

 

But the unions appear to be remnants from a distant past.  A web search shows that unions tend to be run by career unionists, most of whom are past worker retirement age, and have been in leadership positions for long.  In other words, unions themselves are not being run as dynamic democratic entities, but are places where stagnation has taken over and where leaders are more interested in protecting their own turf than workers’ long-term interests.

 

Trade unions need new functions, functionaries and perhaps also funds.  The government must ask a senior well-respected politician to head a committee to look into how to get our unions working well, with the objective of ensuring India’s global competitiveness, improving productivity, and enabling the informal sector to formalise.  We must, therefore, work at aligning the unions’ objectives and functions with what modern workplaces require; also look at getting union functionaries to be more representative of workers by getting internal democratic processes right; institute limits on tenure and retirement age, etc; and ensure that unions are well funded for the new objectives at hand by analysing their funding and allocating budgetary funds if required.

 

Therefore, the government needs to ensure two things.  First, simplify the labour Codes further, not re­peal them.  And second, overhaul the ecosystem governing union functioning.  The cost of not doing so is a large informal sector, a less productive manufacturing sector, and large subsidies to push Indian manufacturing.

---

The author heads CSEP Research Foundation. 

Views are personal