What labour law reforms imply

Stress needed on skill development, employment generation and social security

rehman

MM Rehman | May 29, 2015


#International Labour Day   #labour day mm rehman   #narendra modi   #karl marx   #May day   #maruti trade union case   #cpm   #sitaram yechury  

Since the opening up of the Indian economy in 1991 an issue has been prominently raised by the government that huge investment is needed to boost economic growth. It is assumed that once economic growth takes place, employment and income of workers in the country will correspondingly increase, thereby reducing present unemployment.

However, there is a great impediment to investment to take place. Investors from home and abroad are waiting in the wings to invest their money for setting up industries. But they are afraid and uncertain, the government and others argue. The reason is the country’s plethora of labour laws which the government and the neoliberals view as the hindrance. They argue that the labour laws are to be amended, the investors/employers be given freedom to treat labour as ‘commodity’, then employment and investment will eventually increase leading to windfall economic growth. They argue that a liberal dose of labour law reform will act as a magic wand for investment in the country. First, the UPA government began to bring about reforms in labour laws, now the NDA government is bent upon amending labour laws further.

Before going into the implications of labour law reforms on workers, let’s take a look at the existing conditions of workers, which will help us understand the further slide in their condition after the reforms agenda rolls on.

According to the 68th round (2011–12) of National Sample Survey (NSS), the total number of labour force in the country is 483.75 million. One-sixth of the world’s labour force is in India. The labour force is growing 10 million a year, adding 20-22% to the world’s labour force. But of this total, 472.91 million are employed, leaving 10.34 million or 2.2% of the total workforce unemployed. Almost half of the workforce is in agriculture, forestry and fishing (48.9%) while the rest is in industry (23.3%) and service (26.2%). Also, more than 92% are informal or unorganised workers. They are informal because they are unprotected by labour laws. Their working conditions are unregulated. The provision of labour laws for basic amenities, like paid holiday, medical benefits, accident compensation, safety, security, etc., are conspicuous by their absence in workplaces of unorganised workers and for contractual labourers even in the organised sector. And India is yet to ratify the social security convention (No. 102), which the International Labour Organisation (ILO) adopted in 1952.

More than half of the workers are self-employed while more than 30% are casual/wage employed. Around 15% are into regular employment. Over the years the proportion of self-employment is continuously declining while casual employment is correspondingly increasing but the regular employment situation remains stagnant. Every worker is supposed to be paid minimum wage. But on the contrary, 52% workers in rural areas and 30% in urban areas are still not paid minimum wages. These are the results of the increasing informality of employment. So far, there is no policy and programmes in place to stop this sliding situation in the labour market.

In the recent past, the influence of workers’ organisation has gradually declined, leading to erosion of workers’ rights. Trade unions are not consulted on any labour-related issues by the government and labour organisations are not in the best of their health.

If one examines the skill levels of workers, the situation appears to be bleak. Only 10% of the labour force in the age group of 15-49 is vocationally trained. Of this 10%, 33% are in the service sector, 31% in the manufacturing sector, 27% in the non-manufacturing sector and the rest 9% are in allied activities. Apart from this, one-third of India’s labour force is still illiterate and poor.

The national commission on labour and the national commission on enterprises in the unorganised sector have been highlighting the issue of vulnerability of labour force and suggesting remedial measures.

Against this backdrop, the government has amended several laws and weakened the inspection system of the labour department, hoping that so-called self-regulation will make employers comply with the legislative provisions for safety, amenities, etc., which are workers’ rights. There are more than six lakh large, medium and small manufacturing units in the country. Time will tell to what extent they will comply with the laws. The ‘Shram Suvidha’ portal has been introduced to regulate inspection of factories. Its efficacy and impact is yet to be assessed.

Prime minister Narendra Modi has initiated the ‘Make in India’ campaign for job creation and economic development. The major intention is to increase the share of manufacturing in GDP from present 15% to 25%, and the government hopes to create decent jobs for the employment seeking population of the country. This could be achieved if three things are put in place. They are: (i) education and skill development, (ii) employment generation, not only in manufacturing but also in other sectors and (iii) provision of social security to the vulnerable workforce of the country.

1. Education and skill development

Earlier, the national commission on labour 2002 observed that only 5% of the Indian labour in the 20-24 years age category, has obtained vocational training. The corresponding figure in other industrialised nations is much higher, ranging between 60% and 80%, except for Italy, with 44%. The corresponding percentage for Korea is very high at 96%. Even among developing nations, Mexico is far ahead at 28%, Botswana is at 22% and Peru at 17%. The only saving grace is the quality of the skilled labour being ranked best amongst the 10 newly industrialised countries.

India cannot sit quietly, as  globalisation leads to dramatic changes in work processes and organisation and infusion of new technology demands skilled labour force.

2. Employment generation

The most crucial aspect of security is employment security, which lies in the availability of jobs in different sectors. Along with manufacturing, agriculture, agro-processing sectors, burgeoning construction industry, travel and tourism sector, education and information technology sectors, community services, etc., will have to be given due importance. Planned interventions in these sectors will create huge  employment opportunities.

3. Social security

As we have noted, vulnerability of an overwhelming number of people in the country is a disturbing fact. Job security, employment, healthcare, education, accident benefit, pension, proper social security during any contingency, have to be provided to workers. This will help increase production and productivity of workers. At present, a little over 1% of GDP has been allocated to social security. This has to be substantially enhanced.

Today, the government can play a catalytic role in creating a win-win situation between the employers-employees and the government.
I reiterate here the Philadelphia Declaration, 1944:

  • Labour is not a commodity;
  • Freedom of expression and of association are essential to sustain progress;
  • Poverty anywhere constitutes a danger to prosperity everywhere.


(The column appears in the May 1-15, 2015 issue)

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