The Coronavirus Lockdown Has Been a War on India's Informal Labour

The government's priority remains to weaken the already feeble labour rights regime further in the name of attracting capital investment to revive the economy.

The harshest lockdown in the world with one of the smallest relief packages has left in its trail catastrophic suffering imposed by the state on informal labour. The debilitating impact of this, many fear, will last for at least a generation, with many more children being pulled out of school into labour and trafficking; even greater levels of endemic hunger and malnourishment; millions slipping into poverty; and this poverty being more intense and much harder to escape. Economist and professor of development studies Barbara Harris-White regards the lockdown a ‘declaration of war’ on informal labour through ‘policy inaction’ towards their survival

In two newspaper articles written with economists Prabhat Patnaik and Jayati Ghosh on measures we believed that governments must take to mitigate the suffering created by the decision to snap the lifeline of all livelihoods of workers, we advocated cash transfers of Rs 7,000 a month to every household for at least three months, and universal access to the public distribution system. But while trying to spell out the details of how this could be actually operationalised, we encountered formidable problems for urban informal workers.

Rural workers presented less of an operational challenge, thanks to the Mahatma Gandhi National Rural Employment Guarantee Programme, which ensures that all workers seeking wage employment are registered with job cards and have bank accounts into which their wages are paid. But for urban informal workers, we realised that there is absolutely no reliable or even part-complete listing of these workers in any official records. This revealed starkly that the state has no system to ensure even the registration of migrant workers, meaning that they are invisible to the state. This is not a chance failure: it signifies that the state is doing nothing at all to secure the protection of their rights as workers or their social security, nor does it intend to do this.

The only practical way we could find to emerge from this conundrum was to suggest – as imagined by Patnaik – that any adult who presents herself or himself in designated offices in the city should be given the cash, and a mark made with indelible ink (of the kind used during elections) on fingers assigned for each tranche of transfer. This crude and desperate stratagem underlined for us the enormity of the state’s wilful abdication of its fundamental constitutional responsibilities to protect the rights of its vulnerable citizens.

The laws we aren’t using

It is not as though laws don’t exist mandating the state to register migrant workers. The stated objective of the Interstate Migrant Workmen Act, 1979 is to regulate and lay down the conditions of service of circular migrant workers. It mandates registration of contractors who employ migrant workers and also requires all employers to maintain a record of their workers. However, by design itself, this excludes a vast majority of self-employed wage labourers and intra-state agrarian and other migrants in the informal economy.

In addition, there is very little appetite and motivation in labour departments to implement any pro-labour legislation. It is not surprising then that an official report admitted in 2011-12 that in 11 states, not a single employer or contractor was registered under this Act. The state with the highest registration was Bihar, but even here, the numbers were as ridiculously low as 20 and 56 over two years. (This is not a typo! And please remember, this was the state with the highest number of contractors registered.)

Another law which could have provided security to millions of workers during the calamity of the lockdown was the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996, or BOCW. Registered construction workers are entitled under this Act to a range of social protection and housing services, to be provided by employers. Any person who worked for at least 90 days in the past year is eligible to be registered as a construction worker. But the registration of workers hinges on the employer or a trade union to certify her or him to be a construction worker. The employer has the perverse incentive not to register workers, and the workers typically never work long enough in one location to be unionised.

A worker wearing a protective face mask cleans a machine inside an undergarment factory in Kolkata, April 20, 2020. Photo: Reuters/Rupak De Chowdhuri

It is no surprise that a CAG audit report showed that out of Rs 4,246.61 crore funds available in UP’s BOCW board, only Rs 282.57 crore was spent. The situation is hardly different in other states. Soon after the lockdown, Jan Sahas interviewed 3,196 workers on the telephone, and found that more than 94% of them construction workers they interviewed did not have BOCW cards, and were therefore outside the ambit of the Act.

Aaditeshwar Seth, co-founder of Gram Vaani, a Delhi-based social enterprise, explained to India Spend, “Although the enforcement of labour laws even for documented workers has been weak, a significant reason why worker rights are often violated is a heavily undocumented workforce.” He said that on the one hand, complex self-registration processes deter workers from registering. These include elaborate documentation, filling of detailed forms, proof of employment and registration with the state worker welfare boards, all of which powerless, impoverished and often poorly lettered workers find very difficult.

He also explained why employers are motivated to under-report the number of workers they employ – it allows them to save on mandatory costs for social-security payments per employee and costs for employee benefits (such as transportation and living expenses). At the same time, it helps them to avail of benefits for units with less workers than the thresholds set under various laws pertaining to factories, industry, unionisation and so on. “This means that they [workers] are invisible – the government does not know who they are and they are unable to claim any insurance benefits, maternity benefits, housing, and other provisions allowed under such schemes.”

Rajiv Khandelwal, executive director of Aajeevika Bureau, an agency working for communities dependent on migration and labour, added, “The result of this invisibility is not restricted to just cash transfers. It also makes it easier for employers to forego their obligations.”

The only chance for the Act to have any chance of reaching its protections to a majority of workers is if it allows for simple self-attestation and self-registration by workers, without complex procedures and documentation. But most of all they would derive power only from collectivisation and unionisation. These remain a challenge given the dispersed and unregulated character of their work, and the indifference of the labour department to their rights and conditions of life and work. As Harris-White observes, “Most of the informal economy…remains beyond the regulative reach of the state as the backbone of India’s economy and the mainstay of its livelihoods. It is a cruel paradox that the state’s actions have had a destructive effect on it through reforms and policies which steer clear of mentioning it.”

Weakening feeble protections

The even more cruel paradox is that instead of being shamed by their unconscionable neglect of labour rights of informal workers, many state governments tried to use the pandemic to further weaken the feeble protections which the law currently provides, including an (ultimately unsuccessful) bid by some governments to extend the work-day to 12 hours, and also to suspend the protections of various labour laws for three years, and to regulate the movement of workers across state borders.

The governments of Gujarat, Madhya Pradesh and Himachal Pradesh cited the public emergency (of the pandemic) to extend maximum hours of work to 12 hours a day and 72 hours a week, followed by governments of Odisha, Maharashtra and Goa. Uttar Pradesh went further, proposing an ordinance to suspend almost all labour laws for factories and manufacturing establishments in the state for three years. Gujarat signalled its resolve to follow the example of Uttar Pradesh. Madhya Pradesh diluted provisions of the Factories Act, which enjoins employers to ensure health, safety, fair remuneration and welfare of the workers, and Karnataka freed many establishments from the application of various labour laws.

Also read: What Job Losses in the Formal Sector Tell Us About the Lockdown’s Impact on Economy

The new exemptions from legal protections of The Factories Act announced by the MP government free the employers from the responsibility of undertaking extensive measures for health and welfare of the employees. The MP government also gave a go ahead to changes in the Contract Labour (Regulation and Abolition) Act 1970 and the Industrial Disputes Act, 1947, which actually were long in the pipeline. For instance, the move to  allow government approved third-party inspectors, as opposed to government inspectors, to provide certification to non-hazardous units employing upto 50 persons, was part of the Business Reform Action Plan 2016 charted out by the Ministry of Commerce and Industries, Government of India. So were the changes in the Contract Labour (Regulation and Abolition) Act.

The more significant changes introduced by the MP government pertain to relations between labour and management and dispute resolution. In one stroke the mechanisms which sought to protect labour from exploitative employers have been all but dismantled. The comprehensive infrastructure provided by the Industrial Disputes Act 1947, with labour courts, tribunals to sort out disputes pertaining to retrenchment, strikes, unfair labour practices has been made ineffective as all industries to be set up in 1,000 days after the notification are exempted from adhering to this law.

Similarly, the decision of the MP government to exempt key labour intensive industries from the purview of the Madhya Pradesh Industrial Relations Act 1960 (MPIRA) undermines the mechanisms of ensuring accountability of the employers. The MPIRA provides a framework and mechanism of conciliation, arbitration and redressal of disputes. More significantly it recognises the right of labourers to represent themselves through unions. The suspension of this Act with regards to industries like textiles, iron and steel, sugar, cement, electrical goods, transport etc, will have drastic implications for trade unions and labour rights.

While the government of Madhya Pradesh sought to protect some minimum safeguards for the workers as regards their safety, retrenchment, and payment for overtime, the government of Uttar Pradesh did not bother itself with even cosmetic concerns. In its “Uttar Pradesh Temporary Exemption from Certain Labour Laws Ordinance, 2020” it did away with almost all labour laws in their entirety. The stated reason for this sweeping move was that industry needed a push and investment had to be brought to the state to revive the economic health of the state and to generate employment after the near total shut-down during the lockdown. The only exceptions to the almost total suspension to the labour laws in the state were the Building and Other Construction Workers Act, 1996, Workmen Compensation Act, 1923, the Bonded Labour Act, 1976, and portions of the Payment of Wages Act, 1936.

In addition, the UP government capped the working hours at 12 hour per day or 72 hours per week. Although, the payment for overtime remained at the same rate as the usual working hours, in contrast to the double rate prescribed by the Factories Act 1948. In one sweep the labouring population in UP stands bereft of all provisions which ensured their safety, job security, health, welfare benefits like resting places and washrooms, and their right to unionise.

In the same vein, the government of Gujarat announced “exemption for new industrial projects from Labour Laws except provisions for minimum wages, safety and compensation in case of accidents”. In April itself, the Gujarat government had announced that working hours could be extended to 12 hour per day without the payment of overtime double rate of wages for the next three months.

Watch: Why Did Six Lakh ASHA Workers Hold Strikes Across the Country?

The withdrawal of labour law protection is not limited to BJP-ruled states. Congress-ruled states like Rajasthan increased the number of working hours to 12 hours. Punjab too, in an order dated April 20, increased the working hours to 12, albeit with double the rate of usual wages for overtime. There are reports at the time of writing of Punjab mulling a loosening of its labour regime on the lines of UP, Gujarat and MP.

Some of these changes, particularly the extension of the workday to 12 hours, have been blocked by legal challenges.

Who will pay?

Soon after the lockdown, the Ministry of Home Affairs in its order of March 29 made it mandatory for employers to pay full wages to workers during the period of lockdown. This in effect shifted the responsibility from the state to capital to pay wages to workers for a lockdown imposed by the state.

There were two problems with this order. The first was the majority of employers of informal workers were MSME entrepreneurs who would not have the capacity to make these payments, even if they chose to, and if they had indeed made these payments even more of them would have been permanently annihilated. The second was that the government clearly was not serious about this measure, because it created no mechanism for its enforcement or penalties for its violation. It was manifestly just disingenuous window-dressing to show that it was acting to protect wage workers during the lockdown, whereas it was, in Harris-White’s words destroying them through deliberate “policy inaction”.  But even this token measure was struck down in mid-May by the Supreme Court, in another betrayal of workers’ rights by the judiciary.

A factory worker making vermicelli during the lockdown in Allahabad. Photo: PTI

If job security was ensured there may not have been a demand contraction to the extent we see today.

The government seems to believe that providing supply side incentives, by diluting labour laws, or pumping in credit, would somehow address the economic and employment slump. It ignores the reality that the lockdown has resulted in severe demand contraction which has fuelled the economic slump. It had a massive chilling-effect on spending by even those who managed to retain their jobs, owing to looming insecurity about the future.

Also read: State Lockdowns and a Flattening of the Economic Well-Being Curve

The economic slump could have been allayed significantly if the government had protected all informal workers with cash transfers equivalent to the statutory minimum wage, which economists Patnaik and Ghosh calculate would have cost an affordable 2-3% of GDP. Even today, when the economy is set to plunge into perhaps its worst performance in half a century or longer, and dark clouds of an intense humanitarian crisis are looming over the country, the worst of the calamitous suffering of the poor and the recession in the economy can be averted if the state still chooses to make significant universal cash transfers to every household (along with universalising and expanding the PDS, vastly expanding the MGNREGA, and on the lines of the New Deal in the United States in the 1930s, introduce a massive urban public works programme as well in the form of an urban job guarantee).

But far from atoning for the distress of unprotected workers by increasing and strengthening their protections in these ways, the states’ priority remains to weaken the already feeble labour rights regime further in the name of attracting capital investment to revive the economy. Rather than resorting to discredited policies of trying to revive the broken economy by further excluding desperate, vulnerable workers from the few feeble labour rights protections they still enjoy, this will only enhance what Alpa Shah and Jens Lerche describe as their “super-exploitation”.

Harriss-White is right. The state has indeed declared war on its informal workers.

Harsh Mander is a social worker and writer. Amitanshu Verma works at Karwan-e-Mohabbat. His interests lie at the intersection of political economy, Indian politics and equity.