In the last two months, India’s labour laws have experienced rapid changes in the blink of an eye. A number of state governments have either amended or are considering amending the Factories Act, 1948 to extend maximum working hours which violates the ILO Convention, Hours of Work (Industry), 001.
Madhya Pradesh and Uttar Pradesh, in particular, have carried out substantial changes in the labour laws, with the latter suspending nearly three dozen labour laws and constricting the scope of Factories Act, 1948. On the other hand, at the central level, the finance minister has announced a bouquet of measures to privatise the coal sector, increase foreign direct investment in the defence sector, and so on.
More worrying than the actual disruptive changes in the laws and the policies is the lack of any dialogue with trade unions, who are legitimate and legal representatives of millions of workers whose welfare is at stake.
India, being a founder-member of the ILO, ratified the Tripartite Consultations (International Labour Standards) Convention, 1976 (C.144) immediately after it came into force and hence is bound to consult stakeholders like trade unions in the law and policymaking process. The ILO has always advocated social dialogue as a democratic forum and more so during the time of COVID-19 to arrive at sustainable laws and policies.
Before the 1990s, ‘tripartism’, a form of social dialogue, majorly contributed to labour laws and policy-making. Its significance reduced in the post-reform period (1991 onwards) and later began to be completely ignored at the national level. The tripartite forum, the State Labour Advisory Board (SLAB), has been either non-existent or least active in most states in India. It is not a coincidence that ‘reform’ has been carried out in spaces where social dialogue is nominal or non-existent.
During the post-reform period, it was evident that the state was using the ILCs to convey its ideas of liberalising labour laws and also often pitted organised sector employees with those in the unorganised sector.
There are two examples of this that are important. The late Prime Minister A.B. Vajpayee talked at length about the need for change and speed in the economy and how these have generated substantial benefits to economies which embraced them and urged the trade unions and workers to be “sensitive to the needs” business units and went on to say: “flexibility in working conditions are crucial for our business units to be competitive in the new environment. Wherever this has happened, it has benefited both businesses and their employees.”
Manmohan Singh, in his address to 40th ILC, observed: “Several expert groups have studied them and come to the conclusion that some of these laws have in fact hurt working class interests by discouraging investment in labour-intensive industries. They have encouraged expensive automation and capital-intensive technologies in a country where our real comparative advantage lies in skilled, yet affordable labour”. He continued: “This tyranny of the Inspector Raj must end and it must end, if Indian manufacturing is to prosper.”
As both ‘state’ and ‘capital’ orchestrated in a sense jointly the neo-liberal labour and economic measures, this, in an ironical sense, united the otherwise fragmented trade union movement. The state did not implement many of the unanimous recommendations of tripartite committees appointed by the ILC. At the same time, as is inevitable in a market-driven economy, the interface between government and business strengthened.
Thus, the ILCs became a forum for reiterating “ideological positions” of the actors rather than being a forum for the exchange of information between and evidence-based positioning by the tripartite actors. Further, these dynamics considerably weakened the compromising orientation on the part of the actors. As a result, the ILCs became what some referred to as “talking shops” or “periodic rituals” or “ideological monologues”. Social dialogue ran the risk of being irrelevant.
So, the rather united trade union movement tried to block what they saw as the state’s neo-liberal agenda. However, labour flexibility assumes urgency in a market economy to facilitate globalisation.
Social dialogue is seen by the neo-liberal state and pro-reform agencies to be painstakingly slow, often hindering ‘much-needed’ reforms. They see trade unions as being obstructive to reforms.
Coalition politics till 2014 did not allow the state to enact labour flexibility – the labour law framework remained virtually the same as in the command economy. But with the assumption of a powerful NDA government since 2014, the reform dynamics changed.
The central government has adopted a twin solution to the reform stalemate. At the regional levels, the trade union movement is fragmented, labour protests are less extensive, and more importantly social dialogue forum is generally non-functional, if not non-existent. So, the central government has shifted the reform mandate to various regions. Labour is on the concurrent list in the constitution which empowers state governments also to make laws within the constitutional framework and this legitimises the reform strategy.
States like Andhra Pradesh, Gujarat, Maharashtra, during the 2000s, Rajasthan, Haryana, Maharashtra, Jharkhand since 2014 and more daringly during COVID-19 times, Madhya Pradesh and Uttar Pradesh have affected reforms ranging from partial but significant to considerable dilution of a couple of labour laws and even suspension of labour laws. It is quite essential to note that the state governments have introduced reforms unilaterally. So, reform spaces have been those where the institutional basis of social dialogue is weak or non-existent.
However, at the national level, the central government has time and again assured the trade unions that it will initiate reforms after due consultation with them. At the 45th ILC, Prime Minister Narendra Modi assured workers that “changes in the labour laws will be made with the concurrence of the unions and the consultation process will continue”.
While the so-called consultation was taking place, reforms will continue to be carried out. In fact, the government held symbolic consultations with trade unions while simultaneously talking to the industry even during the COVID-19 pandemic. It is significant to note the last ILC took place in 2015. The proposed 46th ILC had to be “postponed” owing to the threatened “boycott” of BMS among others.
The trade unions have always complained that the central government has not consulted them in the labour law reforms process. Some trade unions even went to the extent of questioning the claims made by the government that it consulted them before drafting the Industrial Relations Code in 2019 and called it a “sham consultation”. BMS has rebuked the NDA government time and again for not honouring tripartism – “The government has disrespected the tripartite tradition followed in the country before any labour-related decisions are taken.”
The finance minister included economic and labour policies like privatisation of coal sector, corporatisation of ordnance sector, increasing foreign direct investment in defence, etc. in her relief package which the trade unions and BMS protested strongly against. So, unilateralism has dominated even the sole mode of law-making even at the national level.
Not surprisingly, several reforms like fixed-term employment, ordinances by the state governments, etc. are issued through executive orders – recommendations of the relevant Parliamentary Standing Committee are not fully considered in revising the laws.
Even while the national process of “codification of labour laws” is going on and the Parliamentary Standing Committee (PSC) has submitted to the government its reports on two Codes, viz. the Code on Industrial Relations and Code (IRC) on Occupational Safety and Health and Working Conditions (OSHWCC) and currently working on the Code on Social Security (SSC), several state governments have amended the labour laws as noted above and the PSC has not taken this kindly.
The committee has asked for clarifications from the state governments concerned and the BJP-ruled states are reported to have not yet responded to PSC as of mid-June 2020. So, democratic process is being bypassed also as this is complementary to and constitutes a part of unilateralism.
And what of the courts? India’s trade unions, some say, are hesitant to approach the judiciary as they perceive it to be partisan and not as reliable as it once was. The judiciary’s handling of issues concerning labour in general and migrant workers, in particular, has been criticised by many, including one former Supreme Court judge.
As a collective result, mediocrity and incompleteness characterise law-making processes and they lead to sub-optimal outcomes in the IRS. The state listens to one actor in the IRS, i.e. capital and ignores labour. It is in a hurry and committed to reforms and hence does not engage experts for fear of non-endorsement of its reform agenda by independent minds.
A thorough and longer discussion of law-making in the legislative bodies is absent as and when reforms are placed before them. Then it is not surprising that the Codes and the state governments’ ordinances read so poorly and are often incomplete and ill-conceived legal documents. For example, the laws do not formulate the substantive provisions and leave them to the rule-making processes. The constitution of Safety Committees in the Occupational Safety and Health Code is left to rule-making unlike in the existing Factories Act, 1948. The Industrial Relations Code (IRC) leaves the amendment of the threshold for permission for retrenchment/closure to the executive orders. In the IRC “as may be specified…” occurs more than 100 times, which is not a good law-making process.
The UP ordinance promulgating suspension of many labour laws is an example of troubling law-making. A small document to dismiss nearly three dozen labour laws and constrict two vital ones? There is no mention of the list of labour laws that are suspended for information in the Appendix.
In fact, the central government has asked the governments of UP and Gujarat to mention the labour laws that they desire to repeal by their ordinances. It is not only based on misconceptions regarding the role of labour laws but is an incomplete order which is pending approval by the president. It portrays law-making in very poor light. The unilateral mindset that pervades the pursuit of labour law reforms disengages the state from the stakeholders, experts and even the ILO. As a result, it hesitates and even refuses to listen to the views of and possible extension of technical assistance by notable jurists, academics and the ILO.
Neo-unilateralism leads to “voice ignorance’ in the industrial relations system (IRS), which is not in consonance with pluralistic democracy. Voice ignorance leads to protests and the post-reform period has witnessed 18 nationwide protests and agitations and micro level industrial unrest and even bloody violence and it weakens cooperation between the actors in the IRS.
The eventual labour market governance system is one that is non-reflective of empirical realities, unresponsive to the needs, and is ill-suited to promote all-round benevolent outcomes in the IRS. Thus, the laws will not promote a conducive industrial relations environment, intensify informality, produce inordinate delays in resolution of industrial disputes and eventually even will not assist in achieving ease of doing business. Simply put, ignoring social dialogue will lead to poor labour market governance.
We have seen above that the governments in India at all levels have disregarded social dialogue despite ratifying the ILO Convention. However, prime ministers have eulogised the ILC as “Labour Parliament” and always assured that trade unions will be consulted and workers’ interests will be protected.
Social dialogue though apparently frustrating to people looking for quick fixes by involving the stakeholders promotes an inclusive, democratic, sustainable and sound governance of the IRS. India needs to honour the ILO Convention on social dialogue and also continue the glorious tradition of tripartism. In fact, India is under ILO’s scrutiny as ILO’s Director General Guy Ryder has written to the Prime Minister expressing “deep concern” at the recent developments (cited above) and appealed to him to uphold India’s commitments to international treaties and “encourage effective social dialogue”. Now, ILO has sought information from trade unions in India on job and wage losses and details of bipartite and tripartite social dialogue.
Lawmakers need to be as convinced about a consultative process as they are about the need for labour flexibility. There cannot be a better alternative to it in a pluralistic and democratic society. And let’s not forget, India is still one such society – a fact that perhaps needs gentle reminding given the recent parade of events.
K.R. Shyam Sundar is a professor at XLRI, Xavier School of Management, Jamshedpur