Labour Law Reforms: Why Informal Women Workers Might Feel Shortchanged

Reduced representation of women in advisory committees and ambiguity over funding of social security schemes are some of the major issues raised by informal workers.

The current political regime is trying to reform its labour laws so that India can improve its ranking in the ‘Ease of Doing Business’ index. The wide belief is that to increase foreign direct investment inflows, there needs to be less labour compliance.

Since it came to power in 2014, the Narendra Modi government has set about the mammoth task of amalgamating the existing Central labour laws into four labour codes on wages, industry, social security and welfare, and occupational safety and health. The codes are at different stages of drafting and consultation, and so far only the Code on Wages has been tabled in the Lok Sabha and is awaiting the standing committee’s report.

What the codes are set to do

The wage code is aimed at ensuring a minimum wage and the timely payment of wages.

The industrial code brings together regulation on trade union registration, strikes, layoffs, closures and the setting of rules and model standing orders by the Central government.

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The social security code provides for the ‘progressive universalisation’ of social security benefits for all workers, organised and unorganised, based on a rights-based approach.

The fourth code, on occupational safety, health and working conditions, only recently introduced in preliminary draft form, will regulate safety and health standards, working conditions and employee welfare.

What are the issues related to informal workers?

After careful scrutiny by trade unions and labour rights groups, the draft codes have been critiqued on various grounds, but broadly for prioritising the ‘ease of doing business’ over the rights of workers.

The extension of the definition of gender-based discrimination to cover transgender employees has been removed from the draft wages code, and even from the subsequent parliament Bill. Other contentious clauses include reducing the representation of women on advisory committees from 50% to 33%, doing away with the appointment of labour officers to hear discrimination cases and scrapping a Central government authority to ‘police’ gender discrimination in employment.

The entire statute relating to women is contained in one section that refers to the ‘Prohibition of discrimination on the grounds of gender’.

Women are already constrained from entering the labour market as wage earners because of the unfair and unrecognised divisions of domestic chores. Even when they do enter the market, their work is undervalued in the paid economy, which relegates them to precarious employment, low wages, long working hours, hazardous working conditions and very little job security. Thus, any steps that promote their employment and provide mechanisms for adjudicating discrimination cases are critical to improving their opportunities and outcomes.

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Similarly, while the draft Code on Social Security promises various types of benefits (pension, sickness, maternity and so on), it does not mention a national package or social protection floor, guaranteed under the state subsidy. The extent of exclusion, however, becomes clear when we look at the eligibility criteria for availing these benefits: a worker must have an Aadhaar-based Vikas account, with income and employment details presented in a predetermined challan format, and must deposit a stipulated portion of their income to the account. The worker will temporarily or permanently stop receiving benefits if any of these conditions is not met.

Further, a vital link is missing – it is not clear who will dispense the benefits, how and when. The draft code recognises only two types of contributions to the social security fund: from workers or employers. Private entities can donate to social security funds, but there is no clarity on whether the government will contribute on behalf of workers below the minimum wage. It appears that the entire financial burden of social security under the proposed draft code will be borne by workers and employers.

The informal sector is at the core of our economy, engaging 93% of the total working population, and contributing more than 60% to our GDP. Still, several of the definitions in the Code on Occupational Health, Safety and Working Conditions relate to factories or establishments, and don’t take into consideration the informal economy. For example, it mandates a crèche facility in premises employing more than 50 workers, which clearly excludes informal sector women workers from availing of crèche facilities.

The informal sector is dominated by women, who have little contact with mechanisms that protect workers’ rights. Their employment is not regulated, they are not paid regularly and most of their work does not follow the statutory minimum wage framework.

Thus, while the government claims to be providing social security for all, it ignores the precarious conditions in which most workers function. The issues and concerns of informal workers, specifically women workers, should be viewed in the context of the nature of their work, and should be addressed separately from the problems of those in the formal sector.

Chandan Kumar works with the Working Peoples’ Charter, a collective that works with informal labour across India.