CURRENT LABOUR SITUATION IN INDIA
C S Venkata Ratnam1
Abstract: This paper is presented in four sections. The first section seeks to
present a brief overview of the current situation with regard to labour force in
Indian economy. The second section deals with Government of India’s policy on
international labour standards and their linkage with international trade. The third
section presents a critique of the issues involved in the politics of labour law
reforms. The fourth section offers broad conclusions.
I.
CURRENT SITUATION WITH REGARD TO LABOUR FORCE
IN INDIAN ECONOMY
BRIEF HISTORICAL OVERVIEW
A study of the Indian economy and its labour force can be divided into three
phases: (i) the colonial era (till 1947), (ii) the import substitution era – postindependence (1947 to 1991), and (iii) the era of economic liberalization (1991to date).
At the time of independence, India had a significant industrial base, which was
substantially diversified under the government’s heavy industrialization strategy
during the plan era, particularly from the mid-1950s to the end of the 1960s. This
period saw the public sector being accorded the dominant role in the growth of
the economy. During the 1970s and the 1980s, the government followed the
policy of self-reliance and import substitution. In this period several East Asian
(Taiwan and Korea) and Southeast Asian (Singapore, Hong Kong and Malaysia)
countries pursued export-oriented industrialization strategies. Domestic industry
was protected in product markets and labour in labour markets. India, therefore,
did not grow as fast as the rest of Asia and its economic, industrial and political
significance in the region and in the world declined.
Post-1991, the measures of economic liberalization, privatization and
globalization have resulted in a drastic change in the mind set of labour,
management and government. Organised labour became defensive as both state
and central governments became investor friendly. Though labour laws
themselves have not changed, the attitude of the bureaucracy and the judiciary
has changed. Government has resorted to phased withdrawal of subsidy and
selective, but slow privatization through, mostly, disinvestment route. Faced with
global competition, employers have tried to tighten belt and cut costs, including,
1
Director Designate, International Management Institute, B 10 Qutab Institutional Area, New Delhi
(Effective from 5 Jan 2005). Currently the author is Professor, IMT, Ghaziabad and Director, GITAM
Institute of Foreign Trade, Viskahapatnam. He can be reached through: csvratnam@rediffmail.com
particular, labour. Cost plus economy became price minus cost as profit
economy. Table 1 tries to capture some of the paradigm shifts in government’s
policy. The rate of economic growth, particularly in the industrial and service
sectors has picked up though employment in the organized sector has stagnated
in relative terms. With economic liberalization both labour and capital now feel
less protected or unprotected.
The change in government policies is reflected in the difference between the
terms of reference of the First National Commission on labour and the Second
National Commission on Labour appointed in 1966 and 1999 respectively
(Annexure 1). While the former was asked to recommend measures to improve
the conditions of labour, the latter was asked to suggest labour law reforms to
align labour policies with the requirements of product market as also recommend
an umbrella legislation for unorganized labour.
Table 1: Changes in the Scenario, Before and After Economic Liberalization
Before Liberalization
After Liberalization
State-sponsored
and
mediated development
state- Market led and private enterprise
dominated
Protected domestic market
Competitive market
Budgetary
and
directed
institutional resource allocation
Competitive
capital
market-led
resource allocation
Subsidies and administered price
regime
Rational
pricing,
including
user
charges
Welfare state active in labour
market
Labour-neutral and invest-friendly state
policies
Systematic
jobs
de-casualization
of Fast
re-casualization
contractualization of jobs
and
Crisis of sustainability of social security
Largely government-funded social welfare programmes, and pressure for
security and welfare programmes security measures for all
for a few
Crisis of governance and fear of
Stable governing structure and political and economic instability
policy regime
Micro-electronics-led new-generation
Stable, though obsolete, labour- capital and skill-intensive technologies
intensive technologies
Dominant status of manufacturing
Threat of deindustrialization and rapid
growth of the service sector
Source: Adapted from C.P. Thakur (2003).
The Indian economy is still characterized by a sharing rural urban divide in terms
of its structure and composition of both industries and workforce.
LABOUR AND ECONOMIC PLANNING
The objectives of labour policy in economic planning in India in the postindependence period can be classified into two categories: the plan era and the
transition-to-market era.
In the plan era, the first seven Five Year Plans (1951- 91, with some breaks in
between) focused on the following objectives vis-à-vis labour:
- improving the conditions of labour and their welfare
- prevention and settlement of industrial disputes and maintenance of industrial
peace and harmony to avoid disruption of industrial activity which could
adversely affect the realization of plan goals
- controlling industrial growth to prevent concentration of economic power in
the hands of a few income disparities among individuals and regions
- workers’ education
- workers’ participation in management
With the transition to a market economy (1991 to date), the need has arisen for
aligning industrial relations policies with industrialization strategies. This calls for:
- facilitating the growth of enterprise and entrepreneurship and aligning labour
policies with economic policies
- a policy focus 7 per cent organized labour to 93 per cent unorganized labour
(Ninth Five Year Plan, 1997 – 2002, Working Group Report)
- reform of labour laws and labour policies in the wake of globalization (terms of
reference of the Second National Commission on Labour appointed in 1999)
- a shift in emphasis from job security to income security and social safety
measures
- concern for skills development, productivity and competitiveness
- reforming of pension
- a shift in government role from control to facilitation
Unemployment and underemployment have been major concerns, but it is mainly
in the Tenth Plan (2002-07) document that a strong plea has been made for
bringing about a qualitative change in the structure and pattern of employment to
promote growth of good quality work opportunities. The growth process alone will
not be able to provide adequate work opportunities for the emerging workforce,
let alone reduce the backlog of unemployment. Further, the Tenth Plan document
recognizes the need for transforming an agrarian economy into a modern,
multidimensional economic powerhouse and an egalitarian society.
The Tenth Plan specifically has as its targets 8 per cent annual economic growth,
reduction in poverty from 26 per cent in 2002 to 21 per cent by 2007 and a
decrease in population growth from 21.3 per cent in the 1990s to 16.27 per cent
during the decade 2001 - 2011. It also aims to provide gainful, high quality
employment to at least new entrants in the labour force, improve literacy to 75
per cent and reduce unemployment to 5.3 per cent by 2006-07. Further, the
Tenth Plan envisaged to reduce gender gaps in literacy and wages by 50 per
cent.
TERITIARIZATION OF THE ECOONOMY
Economic activities are classified into three sectors: primary, secondary and
tertiary. To begin with most economies are engaged in primary (agricultural)
activities. As industrialization takes place the secondary (manufacturing) sector
comes to account for the bulk of employment and GDP. Post-industrialization,
the tertiary (service) sector becomes the major provider of jobs and the main
source of GDP and its growth. In India, since the mid-1980s, the service sector
has been growing fast.
Tertiary sector currently accounts for the bulk of employment and GDP. Of
India’s one billion population, the workforce is an estimated 400 million. About 58
per cent of the country’s workforce continued to be engaged in agriculture and
contributes a mere quarter of GDP. Nearly 18 per cent is engaged in industry and
contributes 26 per cent of GDP. The remaining 23 per cent of the workforce is in
the tertiary sector – its proportion is steadily growing – and contributes roughly
half of the GDP (Table 2). The tertiarization of the economy requires new skills
and new work values and, in some cases, new forms of employment and work
organization.
Table 2: Sector-wise Share in Employment and GDP, 1983 and 2000
(%)
Sector
Share in
Share in
employment GDP
1983
1983
Primary (Agricultural)
69
Secondary
13.8
(Manufacturing)
Tertiary (Service)
17.2
Total
100
Source: Government of India (2001).
Share in
employment
2000
Share in
GDP
2000
38
26
60.4
16.8
25
26
36
100
22.8
100
49
100
Agriculture, which accounts for nearly three-fifths of employment, is expected to
grow without any significant increase in employment. During the 1990s it had
zero elasticity of employment and over the coming few decades it may have
negative elasticity of employment. Without a major shift in employment from
agriculture to other sectors including rural industries, the majority of India’s
working class will remain poor. However, improvement in productivity can be
expected to increase wage levels in agriculture. If those displaced from
agriculture can have gainful employment in the non-farm sector or rural
industries, there can be a significant reduction in poverty.
Table 3: Employment Elasticities, 2001
Agricultural
Manufacturing
Construction
Wholesale and retail trade
Transport, storage and construction
Finance, real estate, insurance and business services
Source: Government of India (2001).
Estimated
elasticity
0.00
0.26
1.00
0.55
0.69
0.73
Employment of elasticity in manufacturing is higher than in agriculture but lower
than in the service sector (Table 3). Global competition and extensive use of
modern technologies have reduced and continue to reduce employment intensity
in the manufacturing sector.
The stringent provisions in labour law restraining layoff, plant closure and
retrenchment of labour introduced during the emergency in 1976 by way of
amendments to the Industrial Disputes Act, 1947 has resulted in an increase in
capital intensity and decrease in labour intensity. Employment intensity in
manufacturing is also declining and there is a virtual stagnation in employment in
organized industry.
The service sector holds the prospects of a major share in new job creation, but
substantial part of it is expected to remain unorganized in the foreseeable future.
The quality of employment in the unorganized sector is usually poor. Growing
global competition has increased casualization and contractualization of labour.
Poverty ratios are declining but quality of employment and quality of the labour
force remain major areas of concern.
The gradual withdrawal of the welfare state role of the government, policy shifts
from labour to investor concerns and the assertion of consumer rights and the
pressures of cost-cutting competition portend persistent jobless growth and
worsening of labour market conditions. To counter this trend, it is imperative to
invest heavily in basic education and skills training
.
LABOUR FORCE IN INDIA: STRUCTURE AND COMPOSITION
The diversity of the Indian industrial workforce makes it difficult to generalize its
profile. Only 13 per cent of the labour force is in regular wage employment and
barely 7 per cent is in the organized sector and 4 per cent unionized. The
growing tertiarisation of the economy – where the service sector dominates in
terms of share of employment and GDP – is accompanied by casualization.
Forty-two per cent of the population is not literate. As a result a substantial
proportion of the labour force, even in the organized sector, is illiterate.
Ninety-three per cent of India’s labour force is in the unorganized sector; 55 per
cent is self-employed; 13 per cent is in regular wage employment. About a third
of the labour force is in casual employment (Table 4). Casualization of labour is
growing due to economic liberalization, changes in ownership and technology,
cost-cutting competitive strategies of employers and the government’s investorfriendly disposition towards the organized sector.
Over one-fourth of the population of the country is below the poverty line.
Unemployment is growing. In the absence of unemployment insurance, open
unemployment is relatively less in India. The real problem is of underemployment
and disguised unemployment. The really poor cannot remain without jobs.
Therefore while the vast majority accept whatever job comes their way and work
below subsistence level, the few who can afford to, wait for a better job.
Therefore, it is little wonder that the incidence of poverty is higher among the
employed than among the unemployed.
Table 4: Labour Force Profile, 2001
2001
Population
>1 billion
Labour force/workforce
<400 million
Organized sector/Formal sector
7%
Unorganized sector/Informal sector
93%
Self-employed
55%
Regular workforce
13%
Casual workforce
32%
Employment in government and public >18 million
sector
Employment in private sector
>9 million
Unionized workforce/Union density
4%
Workforce covered by collective bargaining
2%
Self-employment and regular salaried employment declined between 1977 and
2000 in rural areas (Table 5). Consequently there was a significant rise in casual
employment in rural areas. In contrast, in urban areas, the situation was relatively
stable though there was a 2 per cent increase in casual employment in urban
areas during the corresponding period. Though employment in the organized
sector grew in absolute numbers between 1977 and 2000, it declined marginally
between 1994 and 2000. Overall, the trend points to a worsening of the quality of
employment during the period 1997 – 2000 (Table 6).
Only 5 per cent of the Indian labour force in the age bracket 20-24 years has
obtained vocational training Low literacy, vocational bias against technical skills,
occupational preference for non-production jobs, mismatch between skills
acquired and skills required, dearth of adequately/appropriately trained technical
personnel, low competitiveness of labour vis-à-vis developed nations and
employability and retraining of labour are among the major weaknesses that
characterize the macro level situation of labour in India There is a need to
forecast marketable skills through labour market intelligence system with focus
on linking job seekers with job providers. Competencies for different jobs should
be assessed systematically both in the organized and the unorganized sectors.
Table 5: Distribution of Workers (Usual Status)
by Category of Employment (1997 – 2000)
(%)
Year
Category of Employment
Self-Employment
Regular salaried
Casual
Rural
1977-78
1983
1987-88
1993-94
1999-2000
62.6
61.0
59.4
58.0
56.0
7.7
7.5
7.7
6.4
6.7
29.7
31.5
32.9
35.6
37.3
41.8
40.0
40.3
39.4
40.1
15.8
18.2
16.9
18.3
17.8
Urban
1977-78
1983
1987-88
1993-94
1999-2000
42.4
41.8
42.8
42.3
42.1
Rural and Urban combined
1977-78
1983
1987-88
1993-94
1999-2000
58.9
57.4
56.0
54.8
52.9
Source: Government of India (2001)
13.9
13.9
14.4
13.2
13.9
27.2
28.7
29.6
32.0
33.2
Table 6: Employment in Organized and Unorganized Sectors, 1973 - 2000
Employment
Organized as
Year
% of total
Organized
Unorganized
Total
(Million)
1973
18.8
217.5
236.3
7.4
1978
21.2
249.5
270.7
7.8
1983
24.0
278.7
302.7
8.0
1988
25.7
296.3
322.0
7.9
1991
26.7
315.2
341.9
7.9
1994
27.4
344.7
372.1
8.0
2000
28.1
365.1
393.2
7.1
Note: The organized sector includes all establishments in the public sector and
non-agricultural establishments employing 10 or more persons in the private
sector.
Source: National Sample Survey Organisation and Directorate General of
Employment and Training, Ministry of Labour, Government of India.
The government should invest in basic education, skills formation and training.
Apart from achieving literacy for all, vocational skills provision should receive
urgent attention. This is best done through private public partnerships with due
emphasis on vocational skills certification and appropriate funding. Vocational
education should be integrated at the school level. Along side, there is need to
institute special programmes for protecting the interests of vulnerable groups and
to enhance income security for those who are adversely affected by
unemployment or job loss.
Box 1: Sectors with comparative advantage
and Employment Potential in India
No country can have competitive advantage in all sectors. There is a need to
identify and develop, with state playing a nourishing and nurturant role with
fairness, firmness and compassion. Several studies suggest the following ten
sectors have the potential to generate jobs.
 Agriculture and food processing and agro-based industries including
organic foods
 Bioengineering and biotechnology
 Marine resources (India has long coastline) and inland transportation
 Pharmaceuticals and chemicals
 Education, health, housing and social services
 Physical and public infrastructure: roads, irrigation, and public
transportation
 Communication, information technology and entertainment
 Banking, insurance and financial services
 Tourism and hospitality industry
 Service sector including IT-enabled services
TRADE UNION SITUATION
Today there are over a dozen ‘national centres’ of trade unions in the country
with five of hem having a membership of over 500,000 in at least four states and
four industries/ sectors. Though the official number of registered unions is around
50,000 the actual number may well exceed 100,000. There is a serious problem
with regard to the data base on trade unions, their membership and finances.
In the non-farm sector trade union density is very high. While only 4 to 6 per cent
of the total labour force in the country may be unionized, in public sector
undertakings it could be well over 80 per cent. Trade unions main problem is
inter union rivalry due to multiplicity. While there is usually broad cooperation on
wider issues concerning wages and working conditions, on specific issues at the
work place level such cooperation is rare.
Collective bargaining takes place at national, sectoral and enterprise level. In
banks, coal, steel and ports and docks there is good coordination among the
unions at the national level and centralized bargaining is the rule. In these
sectors, at least till recently, government has been the sole or the major
employer. In sectors like jute and textiles where private sector is the main
employer region-cum-industry wide collective bargaining is common. In other
industries collective bargaining is usually at the enterprise level. National
legislation in India provides for trade union registration, not recognition. Some
state laws provide for recognition through law (Maharashtra for example) or
through administrative notifications (Orissa and West Bengal). Workers’
participation is provided in Factories Act in the form of mandatory works
committees, joint management councils, etc. Their formation and working varies
across enterprises and the over all situation with regard to representative forms
of participation is not encouraging. In several cases, mostly banks and several
public sector companies there is worker representation even at the board level. A
law on the subject is pending since 1990. Through an amendment to the
constitution of India in 1976, the Government of India has included workers’
participation in management as a directive principle of state policy. The second
national labour commission (2002) recommended statutory provision for the
purpose. Several professionally managed companies, including some of those
which follow Japanese management principles and practices have been resorting
to greater use of direct forms of worker participation and involvement thorugh 5S,
Kaizen, Quality circles, Suggestion schemes, etc.
INCIDENCE OF INDUSTRIAL CONFLICT
As seen from Table 7, the incidence of strikes and lock-outs is generally on the
decline in the post-liberalisation period (1991-to date) as compared to 1980s in
terms of number of disputes, number of workers involved and number of
mandays lost. Significantly, in recent years roughly two-thirds of the mandays
lost is due to lockouts. Some of the lockouts may have taken place in the
aftermath of a strike and the resultant law and order situation which provokes
management to declare lockout in the interest of protecting people, premises and
products from possible acts of vandalism, arson and sabotage. Whatever be the
truth in it, usually that is the reason that several employers give for declaring
lockout. There are several plausible explanations, including the following:
1) Increased used of advanced technologies is making control over work shift
from workers to machines and managers thereby blunting the power of
strike to disrupt work Evidence of this can be seen in printing, banking and
many other industries.
2) Declining membership and union power
3) When most of the allowances, etc., are linked to wages and the courts
ruling ‘no work no wage’ principle, workers are not usually prepared to
lose earnings due to strikes. This particularly so because it is usually
difficult to go on a legal strike due to restrictions on strikes in the form of
notice and prohibition during the pendency of conciliation, adjudication,
etc.
4) Growing fear among workers about the futility of strikes and the possibility
of job loss in view of growing competition, industrial sickness,
government’s reluctance to support strikes any longer because of the
need to woo investors, etc.
5) A vast majority of the stagnant organized/unionized workers moving from
working class to middle class are less prepared to take to streets and
support unions during direct action
State-wise analysis of strikes and lockouts reveal that five states – West Bengal,
Kerala, Andhra Pradesh, Tamil Nadu and Maharashtra – account for over half
the mandays lost in India over the past several years. In most years over 90 per
cent of the mandays were lost every year in the past decade due to lockouts and
less than 10 per cent due to strikes.
It is believed that in India more mandays are lost due to poor work ethic than due
to industrial strife. Workers in the organized sector, work usually 5 hours in a shift
of 8 hours in most establishments. Thus every day the 28 million strong
organized sector workforce account for a loss of one million mandays a day as
against about 20 million mandays lost every year on average due to industrial
strife during the past 14 years or so.
If the indirect loss of mandays due to minor and major industrial accidents is
reckoned, perhaps unsafe workplaces and working habits account for more
mandays loss than the number of mandays lost due to strikes and lockouts.
The above observations should not be construed to undermine the seriousness
of the problem of mandays loss due to industrial strife. In fact, in most developed
countries, mandays loss is on the decline. A perusal of the ILO Statistics on
mandays loss in developed and developing countries seem to point out that
industrial harmony and industrial development go in tandem. The importance of
industrial harmony for planned and uninterrupted industrial development and
economic and social well being cannot be exaggerated. At the same time, it is
not proper to put restrictions on strike or lockout. Absence of conflict could, in
some cases, be a measure of the misery of the workforce concerned.
During the post liberalization period on average over one lakh workers are
affected every year due to closures, lay off and retrenchment. Over 90 per cent
of the workers thus affected were due to lay offs. Unlike closures and
retrenchment, lay off is a permanent removal of worker from work with 50 per
cent pay. Therefore, it can be said that notwithstanding the fears about the
adverse affect of liberalization, privatization and globalization the number of
workers actually affected by job loss due to closure of business and
retrenchment is small. However, this data does not include voluntary retirement
and casualisation of jobs.
Table 7 : Industrial Disputes, Workers Involved and Mandays Lost in India
during 1986-2003
India
Number of Disputes
Workers Involved
Mandays Lost
Strike Lockout Total
Strike Lockout
Total
Strikes
Lockout
1986
1,458
434 1,892 1,444,397 200,485 1,644,882 18,823,648 13,294,580
1991
1,278
532 1,810
872,482 469,540 1,342,022 12,428,333 13,999,759 2
1996
763
403 1,166
608,673 330,631
939,304 7,817,869 12,466,934 2
2001
372
302
674
489
199
688
5,563
18,204
2002
295
284
579
900
804
1,704
9,665
16,921
2003
309
293
602
3,169
804
3,973
3,169
26,526
Notes : * Period (1981-91) ; ** Period (1992-03)
Source
: Compiled and Computed from Government of India, Ministry of
India, Industrial Disputes in India (2002) and earlier issues
CAUSES AND CONSEQUENCES OF INDUSTRIAL CONFLICT IN INDIA. As
seen from Table 14.5, since 1961 to date, three fourths to two third of the work
stoppages in India have been due to four reasons in the following order of
importance:
1) wages and allowance
2) personnel and retrenchment
3) Indiscipline and violence
4) Bonus
5) Leave and hours of work
II. INTERNATIONAL LABOUR STANDARDS
As a founder member and one of the 10 countries of chief industrial importance,
India holds a non-elective seat in the governing body of the ILO. India has ratified
39 of the 182 conventions.
The ILO has influenced India and India has influenced the ILO. A tripartite
committee on ILO conventions oversees the aspects relating to international labour
standards, proposals concerning new conventions/ratification of old conventions,
compliance of the provisions in the ratified conventions, etc.
The Constitution of India and labour legislation uphold all the fundamental
principles envisaged in the eight `core’ international labour standards. India has
also ratified three of the eight core conventions that constitute the fundamental
principles. It also likely to ratify two more of the remaining five core conventions:
Convention No. 105 concerning abolition of forced labour and Convention No. 182
concerning immediate action to end the worst forms of child labour. India’s record in
this regard is better than that of US, which has ratified only one of the seven core
conventions. Among the Western European countries, France and Germany have
ratified all the core conventions. Though some South Asian countries have ratified
more core conventions than India, it can be said with certainty that Indian record is
no less, if not better, than its neighbouring countries.
India is actively considering the ratification of Convention No.105 concerning the
abolition of forced labour. India has not ratified Convention Nos. 87 and 98
concerning freedom of association and right to collective bargaining due to
`technical difficulties’ involving trade union rights for civil servants. This, however,
is not a major hurdle because the government can always exempt certain
services while ratifying the concerned conventions.
India’s record in respecting freedom of association and collective bargaining is
much better than that of many other countries in the region, which have ratified
either one or both conventions. Mere ratification, however, cannot guarantee the
achievement of the underlying objectives. It should be backed by a strong political
will and legislative framework and effective vigilance by the other social partners
such as NGOs, consumer groups.
But these considerations cannot be a
justification for non-ratification. India ratified Convention No.11 concerning Right of
Association (1921) for agricultural workers way back in 1923. The Union Ministry of
Labour in association with the National Labour Institute, set up by it in the 1970s,
has organised several workshops and rural camps to facilitate the organisation of
rural workers. Still, given the huge social inequities both in terms of caste and land
distribution, the density of unionisation among rural workers is negligible.
In contrast, there are some highly organised and unionised sectors where
collectively determined labour standards exceed the national and international
labour standards in some aspects. During the 1920s and 1930s, the private sector
steel giant Tata Iron and Steel Company, introduced a number of voluntary welfare
measures long before such measures were incorporated either in the national
legislation or international labour standards.
In the past, some of the legislative initiatives based on ILO conventions have had
the opposite effect. For instance, measures to safeguard the interests of women
through maternity benefits and restriction of employment of women in night shifts
in factories and in underground mining have resulted in many employers
hesitating to employ women. This should not lead to discontinuance of maternity
benefits. Giving paternity leave would perhaps restore the balance and remove
the incentive for employers to employ only males. The ILO Convention on night
shift work was revised in the 1990s to enable the employment of women in night
shift. The Government of India is pursuing, although rather half-heartedly,
changes to some of the labour legislations. The employing ministries have
apparently been pressing for some of these changes. They Include changes in
the Factories Act to permit employment of women in nightshift, particularly in
electronic units and export zones.
India is actively pursuing 14 projects to eradicate child labour in hazardous
industries by 2002. The All India Organisation of Employers has undertaken a
project in Jalandhar (Punjab) to enter into an agreement similar to the one in
Sialkot, Pakistan, concerning the abolition of child labour in the manufacture of
sports goods.
India has advocated the promotion of labour standards within the framework of
the ILO Constitution. It has consistently opposed the proposals to link labour
standards and trade through ‘social labelling,’ etc. The non-aligned countries
summit organised by the labour minister of India at New Delhi in 1995 adopted a
resolution to this effect. India played an active role in Seattle in 1999 to prevent
linking trade with labour and environmental issues. All three social partners --the government, employers’ organizations and national trade union centres
belonging to different persuasions --- are all united against the linkage of
international standards with trade.
Under Article 246 of the Constitution of India, labour is in the concurrent list. Since
liberalisation there has been a tendency among some state governments to pursue
competitive labour policies with a view to attracting investments and creating jobs.
III. THE POLITICS OF LABOUR REFORMS IN INDIA
The stark reality about India’s labour policy during the past 50 years is that it
covers only a small fraction (less than 8 per cent) of the labour force. It has a
long way to go in protecting the vulnerable, maintaining harmony and ensuring
productivity. Neither labour policy nor labour law has kept pace with the changes
in society and in the economy. For good governance what is required is a
firmness to defend traditional values and promote change with dual focus on both
equity and efficiency.
SIX MYTHS
1. Are labour reforms politically risky? Bhaduri and Nayyar (1998) stressed the
need for sensible politics and feasible economics. Public policy on labour in India
has emphasised, for far too long, feasible politics and unfeasible or expedient
economics. The World Bank (1995) cited the substantial wage rise the coal
miners obtained in 1970s before general elections to ridicule to the link between
politics and pay rise. The V Pay Commission recommended pay rise and job cut.
The government accepted the recommendation on pay rise but dithered on job
cut. The economic burden of that unwise pay rise had a more drastic negative
impact than the cumulative effect of economic and other sanctions imposed by
some industrialised countries. Three times in the past, when comprehensive
labour reforms bill was tabled in Parliament, the latter got dissolved. Labour
reforms constitute a deadly political risk. That risk increases disproportionately
when political instability is high. The problem, however, is politicians are looking
at consequences of changes in labour laws/administration. They are not looking
at the consequences of non-change. If we do not move with times, we miss the
bus as it happened in early 1970s. Till early 1970s India maintained its
leadership in industrial and economic development in Asia Pacific. Later, its
insular policies brought down its position to lower than smaller countries like
Singapore despite the sheer size and resource-rich characteristics of India. The
dawn of the new millennium beckons a second opportunity. Should India miss
that too? Politicians being short term oriented, they are afraid of ‘risks’. We need
statesman to think long term and act boldly. The strength of parliament members
from left parties at over 60 is the largest in India’s history. They are supporting
the government from outside. They influenced the drafting of the common
minimum program (but have not signed) which highlights the need to pursue propoor policies including the introduction of employment guarantee as a statutory
obligation of the state, restrain liberalization of foreign investment and cautions
against privatization and liberalization of labour laws. The economic
consequences of common minimum programme are huge and makes its
implementation difficult. Even the left front government seems to be concerned
about unabated litigation if the employment guarantee is provided as a
fundamental right though an amendment to the Constitution. While trade unions
are pressing for the setting up of six central pay commission for revising the pay
scales and benefits of government employees, several of the political parties,
including some left parties, are wary that their governments in states will find it to
bear the economic fallout of further revision of pay scales of government
employees at state level. They are therefore hesitating to echo or endorse the
demands of the unions affiliated to them.
2. Is there is a political consensus on labour reforms in India? Regardless of the
colour and identity of the party, if it is the ruling party or part of the ruling
coalition, it is in favour of investor friendly labour market reforms. If it is in
opposition, it is more cautious, if not outright opposed to. This polarization is not
necessarily based on either ideology or any other principles. It is usually
opposition for the sake of it and endorsement of a particular line because the
ruling party feels being driven to the wall and is usually clue less about any other
better option. The absence of data and devisive tendencies render effective
consensus elusive and perceived political risks made successive governments at
the center feel hesitant to disturb the status quo. The dilemma of political parties
is illustrated best by Bhattacharjee (2001). The consequent dilemmas between
the political party and the trade union affiliated to it were documented well with
specific reference to Communist Party of India (Marxist) (CPM) and Centre of
Indian Trade Unions (CITU) in West Bengal. The employers and administrative
ministries in the government, both central and state call for flexibility and
increasing the bar, if it is not possible to completely dispense with prior
administrative approvals for layoffs, retrenchment and closures. Unions and
labour ministers prefer status quo, it is not possible to further tighten or expand
the existing protection afford to organized labour. The study group on labour laws
set up by the Second National Commission on Labour virtually endorsed, in
2002, the Draft Labour Bill prepared by National Labour Law Association in 1985
and substantive provisions of the first National Commission on Labour in 1969.
The two employer representatives in the study group opposed and submitted a
dissent note. The final recommendations of Second National Commission on
Labour call for increasing working hours and working days and easing
restrictions on workforce reduction. Significantly, the Commission Member
representing Bharatiya Mazdoor Union which has close links with the BJP, the
leader among the ruling coalition, submitted a dissent note while Indian National
Trade Union Congress (INTUC) which is affiliated to the major opposition at
Centre, Congress Party, did not. Continuation of pre-liberalisation labour policies
is not the solution to the problems of labour as many independent analysts agree
that existing labour laws neither benefit workers nor employers.
3. Is it good for a union to have its own party in power? Quite so, during the
1950s through the 1970s when socialist ideals dominated the newly
democratising colonial countries as well as in Central Asia and East Europe. Not
any longer. That it is ultimately becoming a liability was demonstrated amply in
the case of both Poland and Australia. Labour parties in oppositions were like
insurgents. Today, when they become incumbents, they are finding it hard to
retain the spirit of insurgency (Miliband, 2002). Miliband says, in the UK ‘Labour
was reelected in 2001 because its policies were largely in tune with the dominant
currents in British society. But it has yet to succeed in shifting the political centre
of gravity in its direction and forging a broad coalition for change. It has to
become the party of social mobility and economic efficiency. Success hinges on
policies being driven by convincing ideas.
4. Does the Indian government believe in decision-making, not decision-taking.
Decision-taking is a unilateral exercise which is supposed to be an anathema in a
democratic society. Decision-making is a democratic approach to problem
solving. India Government takes decisions, unilaterally, when it wants to. On
other occasions when it shies away from taking decision, it pretends to be
making a decision and blames it on either or both labour/unions and
management/employers for lack of consensus. During the pre-liberalisation era,
Indian Government, particularly under Mrs. Indira Gandhi, protected labour in
labour market and capital in product market. It appeased and kept both parties
guessing. For instance, during the Emergency (1975-77), discipline was enforced
with an iron hand even as the Industrial Disputes Act was amended by the
Communist in Congress robes, Mr K Raghunadha Reddy, Labour Minister, to
make prior permission mandatory for retrenchment, lay off, and closure.
5. Is there social exclusion in social dialogue and social and labour policies in
India? In the first five decades of independence labour policy in India has
focused rather narrowly on the less than 8 per cent organised sector. There is a
growing realisation and firm indications that in future the attention will shift to
unorganised sector. The first indication came from Union Labour Minister Mr P A
Sangma in late 1990s when he was addressing the conference of the All India
Trade Union Congress in Patna. Then the 9th Plan Working Group Report
prepared under the chairmanship of the then Union Labour Secretary Dr L D
Mishra. Though much of the concern for the unorganised sector has been thus
far limited to mere lip sympathy and a few crocodile tears, the Second National
Commission on Labour was asked to, and indeed it did, recommend a
comprehensive legislation for the unorganised sector.
6. Do labour law reforms really matter? Not necessarily so, if they are merely
aimed at merely tinkering a few clauses here and there in the Trade Union Act
and Industrial Disputes Act. The need is for a drastic overhaul with heavy
emphasis on rationalization and simplification. The need is for changing
mindsets. Customs override laws, particularly when we have too many laws and
too blissfully ignorant about their compliance/enforcement. For instance,
minimum wage laws do not matter for the organized labour because any way
they get much more. In the unorganized labour they usually get much less. Given
the vast and growing unemployment, for every person who will assert his/her
right for at least a minimum wage, there are hundreds who will agree to work for
half that minimum. In a market economy with vast unemployment and
underemployment, there is little that unions can do if the government is neutral
and indifferent. This does not mean that there should not be any minimum wage
legislation. It certainly sets the pace and direction and the moderates among
employers who would like to be constitution bound will like to pay minimum
wages as ordained in the law regardless their individual preferences and cost
calculations. Also, contexts matter, not laws themselves. In Malaysia, Industrial
Relations Act recognizes right to hire, assign work, adjust workforce, reward,
transfer and promote as managerial prerogatives. None of these are employer
prerogatives in India. Still, a study of Mumbai and Kualalumpur reveals that
Mumbai labour market is nearly as flexible as Kualalumpur. Why? Even though
the government gave the employers in Malaysia the freedom to hire and fire they
did not exercise because labour is scarce. If they fire a skilled, experienced
person where will they get another equally skilled and experienced person? In
India because labour is surplus employers, particularly in the private sector, find,
through their ‘somehow management- ingenuous ways of exercising prerogatives
that did not exist under the laws of the land.
KEY CONCERNS
The manifestoes of the major political parties in the 1998 general elections had
consensus in the thrust, though not the tone, of their concerns about labour.
Broadly, these can be listed as under:








Job protection and employment creation
Extending legal protection to the unorganized sector
Some promised improvement in living standards while others talked about
linking wages to productivity
Vocational training and skills development
Trade union recognition through secret ballot
Workers’ participation in management at all levels, while some mentioned
workers’ takeover of sick units through cooperatives and worker ownership
Industrial sickness and attendant problems
Social security benefits, including pension
The agenda of the government should therefore cover, as a basic minimum, the
concerns of the pre-poll ‘political consensus’. It should also include some other
issues, which are not necessarily populist. These are:





Paradigm shift in the labour policy environment
Align labour policy with economic policy
Labour law reform
Competitive labour policies at the state level
Reviewing the link between parliament, the judiciary and the bureaucracy
PARADIGM SHIFT IN POLICY ENVIRONMENT
The processes of liberalization, privatization and globalization mean that the
government’s role in social and labour matters has to change, not diminish.
Paradigm shifts in government’s role and attitude to labour should reflect the
following:
1. The content and the purpose of labour policy and labour law should focus on
facilitation rather than regulation, pro-action, reaction and on the creation of
harmonious relations conducive to social and economic development rather than
dispute resolution. A decline in the role of the state in economic activity need not
necessarily lead to a decline in its regulatory/supervisory role in labour and
industrial relations matters. In fact, when the private sector becomes the engine
of growth, the state may need to play a much stronger role in ensuring a balance
between the rights of both labour and management.
2. Labour policy should focus more broadly on the entire labour force. It should
be developmental, not regulatory. There should be a decisive shift towards
proactive labour market intervention, with the major thrust on development of
skills and attitudes conducive to building a cohesive and productive work culture.
Labour policy must be more closely aligned to changes in industrial and other
policies. It should provide stimulus to rather than shun job creation.
3. Globalization is leading to decentralized industrial relations. There is a need to
create and strengthen institutions/mechanisms for information sharing,
consultation, communication and consensus development at the enterprise/firm
level.
4. The labour market is characterized by dualism: an illiterate, unskilled,
unorganized, unprotected and mute majority of the workforce and a literate,
skilled, organized, protected and vocal minority of the workforce existing side by
side. Political unions acting in unison with the state may force it to pursue labour
market policies based on political considerations rather than considerations of
labour and product market characteristics. The resultant distortions are contrary
to the declared goals of equity and efficiency and may even precipitate state and
market failures. The state should therefore broad base the scope of labour policy
and labour legislation to cover the unorganized sector in a more substantive
manner than is currently being done.
5. The state should give up the negative function and assume positive one of
promotion of sound labour-management relations. Statistics on strikes and
lockouts do not always reflect the actual state of industrial relations either at the
firm, industry, state or national level. Here the state can provide mediation and
arbitration services. It can also acknowledge the semi-public status of the labour
market parties, but in democratic tripartite structures.
6. Hitherto public sector enterprises have stressed the need for them to be model
employers. Now, with growing competition on the context of globalisation, there
is a need for them to be model performers as well.
7. Sustaining growth and fostering competitive labour markets are critical to
ensuring job and income security. The demand for jobs does not depend on the
supply of labour. There is a need for a fundamental change in employment and
income security measures. The concept of bankruptcy is not accepted in India
where jobs are treated as property with attendant hereditary rights in some
employment contexts. Employment flexibility, recruitment, transfer, promotion,
work assignment, workforce adjustment, etc., need to be considered
dispassionately with due regard both to employment and social stability as well
as business imperatives, if any. Job security at any cost, regardless of the
viability of the enterprise, which provides the jobs in the first instance, can lead to
a counterproductive work culture. The state should consider it its obligation to
eradicate poverty and end unemployment through creation of productive jobs,
which do not sacrifice the basics of quality of life. Here labour-intensive
industrialization strategies are appropriate and the options should be different in
existing businesses vis-à-vis new businesses. During the transition period,
foreign investment may lead to jobless growth. Therefore, parallel
domestic/public investments should target areas where job potential is high.
8. The state should therefore ensure wider social dialogue for broad-based social
consensus and social cohesion. Tripartism cannot survive without state
patronage. Despite the long tradition of tripartite consultation, in the past quarter
century it was atrophied due to the weak and unrepresentative character of the
three social partners. Traditionally, tripartism is restricted to consultations among
government and organizations of workers and employers in the organized sector.
There is a need to extend the scope to other sections of society including the
unemployed, unorganized and even consumers. In South Africa, the
establishment of the National Economic Development Labour Advisory Council
merits attention for possible lessons. Academicians should be associated with
tripartite bodies. While the government has already taken initiatives to rationalise
and restructure tripartite committees, there is a further need to reform the way in
which tripartite meetings are conducted. They focus on the draft proposals
concerning the agenda and follow the double-discussion procedure in
considering ILO conventions. Ministries other than the labour ministry also need
to take an active interest in such consultations.
9. There is a growing concern that globalization benefits few and but affects
many in negative ways. Commitment to rural labour, women labour, child labour,
bonded labour, and labour in the unorganized sector so far has been largely
rhetorical.
10. The state also has an obligation to make social justice an integral part of
developmental planning. Exhortations like `sacrifice today for a better tomorrow’
will not hold much water in societies where the rich continue to get richer and the
poor
poorer.
As
Reich
(1995)
cautioned,
`Persistent
unemployment/underemployment, declining wages and living standards
undermine the moral fabric of capital democracy.... In a democracy, people will
vote for economic dynamism only if they have a fair chance of benefiting from it’.
ALIGN LABOUR POLICY WITH INDSUTRIAL POLICY
Fifty years ago, in the newly independent and industrializing India, the state
avowed its commitment to the welfare of workers. The politically controlled
economic system required politically oriented economic action by workers. An
influential section of the union movement tacitly endorsed the state’s preference
for adjudication rather than articulate the need to promote collective bargaining.
In today’s world the policies of protection, self-reliance and import subsistence
are giving way to policies of competition with a view to integrating the national
with the global economy and to boost foreign investment and exports. To catch
up with the other industrialized countries, India needs to attract capital, cut costs
and enhance competitiveness. In the sphere of labour, this means a new
alignment between industrialization policies and industrial relations policies.
Towards this end, labour policy should stress on: (i) the observance of a minimal
number of core/basic labour standards; (ii) free trade unions and collective
bargaining; (iii) workplace institutions capable of internalizing enforcement of
labour standards/government regulations and effecting changes at the micro
level smoothly; (iv) investment in education and training; (v) bringing the entire
labour force under the purview of minimal, but effective --- rational and
rationalized --- regulatory/administrative norms; (vi) proactive labour market
policies that provide building skills/competencies, reduce/eliminate the existing
mismatch between acquired and required skills, facilitate information and
counselling facilities for employment; and, (vii) a culture of non-interference by
one party in the affairs of the other.
Labour market flexibility is a factor, not the factor that influences the flow of
foreign direct investment. The minimum that foreign investors expect is: (a) a
clear enunciation of the rights and responsibilities of employers and
workers/unions; (b) an unambiguous and easily understandable legal and
institutional framework; (c) predictable arrangements concerning union
recognition, collective bargaining, skills development, flexibility and workforce
adjustment; (d) well-defined, clear-cut and time-bound procedures for grievance
redressal; and, (e) an administrative and judicial system that can be trusted for its
transparency, integrity, expediency, efficiency and accountability.
COMPETITIVE LABOUR POLICIES AT THE STATE LEVEL
Labour is in the concurrent list under Article 246 of the Constitution of India.
Given the trend towards accentuation of regional disparities, state governments
may consider the pros and cons of competitive labour policies with a view to
inducing investment and encouraging job creation. Presently, states can and do
make a difference in areas like trade union registration, recognition, minimum
wage laws, defining or redefining limits or granting exemptions concerning the
applicability of certain legislations, etc. The labour bureaucracy also can make a
difference in matters ranging from inspections and penalties to adjudication and
even the use of force (deployment of police, for instance).
Since 1991 to date, several state governments have made far-reaching changes
in their policies. For instance, Uttar Pradesh, requires the labour inspector to
obtain prior permission of the labour commissioner or labour minister; and
Rajasthan granted exemption to several firms and both Rajasthan and Andhra
Pradesh simplified several forms with regard to labour inspection. Orissa and
West Bengal introduced secret ballot. While Maharashtra proposed a new
legislation, in the mid-1990s, the Maharashtra Industrial Relations Act to replace
the existing Bombay Industrial Relations Act and Prevention of Unfair Labour
Practices Act; and Kerala announced radical moves in labour policies as part of
its 1994 industrial policy.
The desirability, possibility and feasibility of competitive labour policies merits
serious consideration. The industrial relations implications of centre-state
relations, particularly on public sector undertakings, also needs careful review.
LABOUR LAW REFORM
In a global economy labour law as an autonomous subject stands at a
crossroads. Some judges feel compelled to interpret law not on the basis of the
text of the clauses, but in the light of the preamble to that particular piece of
legislation and more importantly the Indian Constitution itself. Therefore, they
might sometimes question the ‘new economic policies’ as inconsistent with the
Indian Constitution. Elsewhere in the world, there is another view gaining ground:
The social vision of labour law, which went with the old-established institutions
and practices has come under challenge to change or risk irrelevance. The
current scenario requires striking a balance between these two extreme
viewpoints.
There is a perception that the existing laws give virtual veto power to unions in
the organized sector to block changes like improvement in plant and machinery,
rationalization of manpower, and growth of productivity. Further, there is a
perception that labour legislation has paved the way for multiplicity of unions,
growth of intra- and inter-union rivalry, exacerbation of industrial strife and
excessive intervention by the state in industrial relations.
There are as many as 165 legislations --- both central and state --- that address
aspects relating to labour. But more laws mean less when implementation is
thinly spread out. Even minimum wage laws have meant little when the wages
fixed are too low and implementation too lax. Study groups of the National
Commission on Labour and the National Labour Law Association (NLLA)
prepared draft labour codes in 1969 and 1994 respectively. The Commission on
Labour Standards appointed by the Government of India, in its report submitted
in 1995, almost entirely endorsed the NLLA’s Draft Labour Code. It suggested a
few changes: initiate a national debate or wider consultation on the Draft Labour
Code through Project LARGE and simplify the law without further delay.
Labour law reform is not easy. The Korean experience confirms this. When the
economy was doing well organized labour organized bitter struggles against the
new Korean law which was enacted to make, among other things, workforce
adjustment easy. In the wake of the Korean economic crisis, however, a tripartite
agreement provided for the very changes that were opposed just a year before.
Several economies in transition (notably China and Vietnam) and those
undertaking structural adjustment (many in Africa and Latin America) have been
able to rewrite labour law without much friction.
The Government of India has appointed the Second National Commission on
Labour (1999) to address the issue of aligning labour policy and labour laws with
the contemporary concerns of product markets. The contrast between the terms
of reference of the first and the second national commissions on labour
(Annexure 1) points to the stark shift in emphasis from labour market (First
National Commission on Labour) to product market (Second National
Commission on Labour) and a palpable concern for a separate simplified
approach (one umbrella legislation) for the unorganized sector.
The major thrust of changes in labour laws should be along the following lines:






Have fewer laws but ensure better enforcement. It would be still more
expedient and equitable to have one labour code instead of numerous
legislations, as China and Vietnam did in the mid-1990s. The nature and
extent of protection for labour has little to do with the number of laws.
Multiple definitions should be eliminated across different legislations. Wages,
for instance, are defined in a dozen ways in as many legislations, or the legal
distinction between worker, workman and other worker is exclusionary.
Unless otherwise defined perpetrates and perpetuates discriminatory
practices and confusion dictionary meanings should be considered adequate.
The Labour Code can cover all working people rather than have variations in
limitation of numbers employed, amount of wages/salaries drawn, etc.
There should be have one national minimum wage act for all occupations
rather than separate ones for select notified industries/occupations. It should
be made easy to understand, be simple to administer and effective in
enforcement.
Several amendments to the Trade Union Act suggested earlier bipartite
committees and subsequently incorporated in the bill prepared by the Ministry
of Labour do not serve any useful purpose; they do, however, perpetrate
distrust among unions and create strife. Japan and Denmark do not have
trade union acts. In Japan, the union movement is consolidated and
multiplicity reduced without legal intervention. Denmark is one of the countries
with the highest rate of unionization.
Almost all political parties and many unions favour secret ballot. But it would
be prudent to review the experiences of Andhra Pradesh, Orissa and West
Bengal before taking any action, since the experience so far suggests that the
present conditions are not conducive to secret ballot. They have led to antiestablishment vote and destabilising recognised unions, causing strife in
industrial relations and resultant litigation.
The provisions of the Industrial Disputes Act should be reviewed while
preparing the Labour Code. Legislations in some Southeast Asian countries



as well as China and Vietnam offer valuable insights. In the wake of
structural changes and liberalization, more than 100 developing countries and
transitional economies have reformed their labour law. The three most
important changes in legislation which are necessary in the Indian context
also well are as follows: (a) Employment can be secure only so long as the
enterprise where they are employed is secure and viable. According to ILO
Convention No.168, termination of employment at the initiative of employer
can be valid if structural, technical, economic and other changes so require.
Workforce adjustment as per business needs is imperative. Notice,
consultation, and compensation provisions can be and should be tightened.
The requirement of prior permission of the government should be dispensed
with in matters concerning lay-off, retrenchment and closure; (b) Section 9-A,
concerning notice of change, should be amended. Notice is required,
consultation is to be encouraged, but the employer should have the
responsibility, if not the right, to make changes necessary to maintain and
improve competitiveness; (c) As in Malaysian legislation, which forbids
bargaining in respect of recruitment, transfer, promotion, work assignment
and workforce adjustment, in India also collective bargaining should be
encouraged on aspects other than the above.
Industrial relations machinery should be made independent as recommended
by the National Commission on Labour.
Some studies point out that job protection laws impede job creation. Increase
in the price of labour and its relative inflexibility have also been found
responsible for the stagnation of job opportunities. These studies have also
found that job loss was less with adjustment than without it. It is necessary to
investigate the technological determinedness of employment decisions,
employment effects of adjustment vis-a-vis non-adjustment and
consequences of job creation on further job creation and the claims of the
unemployed and fresh entrants to the job market. The cost of job protection
and its effects on job creation require careful analysis. The ILO-South Asian
Multidisciplinary Team’s study drew attention to the need to shift the focus
from job protection to income protection.
Set up a skills development fund and a tripartite national wages council.
LINK BETWEEN PARLIAMENT, JUDICIARY AND THE EXECUTIVE
The process of integration of the Indian economy with the global economy
started seven years ago. Some say it started much before that. Political
manifestoes, however, do not realise the need for a linkage between
industrialization strategy and industrial relations strategy. The apparent
contradiction with the preamble to the Indian Constitution --- which still retains the
magic phrase, ‘socialist democracy’ --- leaves the field wide open for a variety of
interpretations by the judiciary. There is a need to reassess the roles of
parliament, the judiciary and the bureaucracy.
Since Justice Krishna Iyer gave his interpretation of the definition of industry in
the Bangalore Sewerage Company case, there have been couple of other
landmark judgments on the subject which have reversed and re-reversed the
Bengal Sewerage judgment. When the Supreme Court declared P&T as not an
industry, but a sovereign activity under the state, P&T officials refused to appear
before the conciliation machinery of the central government with regard to the
disposal of certain grievances of P&T employees.
Some judgments of the Supreme Court have the effect of prescribing legislation.
For instance, in the case of the Food Corporation of India concerning
representative union, the Supreme Court ordered that the matter be settled
through secret ballot and even prescribed the procedure for conducting it.
Similarly, in many cases relating to child labour, environment and sexual
harassment the judgments prescribed dos and don’ts.
There have been judgments in recent years that have upset organized labour
while those concerning unorganized labour including contract labour have
generally gladdened the hearts of the workers.
Our labour bureaucracy is caught between these two extremes. `Labour policy in
future would be market friendly’, a high-ranking official of the labour ministry
assured the audience at a conference on globalisation. The labour leader present
on the podium demurred, `If labour policy is not labour friendly what kind of a
labour policy is it’.
`I am the labour commissioner, not the management commissioner’, was the
stern reply of a labour commissioner to an industrialist who was pleading his
case about the rigidities in the labour market of the country.
The labour bureaucracy has, however, enormous powers. It can stall the will of
Parliament through delays or notification in the gazette. For instance, the
amendment to Section 9c of the Industrial Disputes Act in 1982 has not been
notified to date. In another case, though electronics is not notified for the
purposes of the Minimum Wages Act in one state, a labour inspector who found
a lathe machine in a unit chose to classify the unit as an engineering industry and
applied Minimum Wages Act to it also.
It is important that all these three wings --- Parliament, the judiciary and the
bureaucracy --- should function in harmony and unison without compromising on
the rationale of their respective roles.
IV. CONCLUSION
In India about seven per cent of the labour force is in the organized sector and
the rest in the unorganized sector. Union density is low if agricultural labour is
included and high in the organized sector. Globalization and technology have
reduced labour intensity. To promote employment, it should stress on improving
thee quality and expanding the base for basic education and skills training. Agro
industrialization, service sector and self employment will be the main providers of
employment. India should focus on few sectors where there is competitive
advantage.
India has ratified four of the eight core labour standards and 39 out of 184
international labour standards. Though convention No.s 87 and 98 were not
ratified, freedom of association is guaranteed under Consitution and India’s
record of freedom of association and right to collective bargaining has been far
better than that in countries which ratified these convention. There is a series
effort to bring unified legislation defining and banning child labour. Labour being
being in the concurrent list of Constituioin of India the government needs to
consult with and make the state governments to work in tandem. All the three
major partners – government, employers and workers organizations are
generally one in their opposition to linking international labour standards with
international trade.
Unlike in the past, the current thinking of Government of India is that labour
policy should concern itself with the entire labour force. Till not too long ago the
labour policy in India has addressed itself mostly to the eight per cent labour
force in the organized sector. Even salaried workers constitute only a fraction
(about 15 per cent) of the total labour force in the country. It is time it paid greater
attention to the issues confronting the workforce in the unorganized sector. A
credible mechanism for providing literacy and vocational skills training to all
aspirants in the labour market together with a support mechanism for basic
health and social security are imperative. Further, workplace industrial relations
systems should be put in place that facilitate change, promote flexibility and
prepare the workforce to be able, adaptive and atuned to respond to the
challenges of the changes.
REFERENCES
Bhaduri, A and D. Nayyar (1998). ‘An Intelligent Person’s Guide to Liberalization’,
New Delhi: Penguin.
Bhattacharjee, D. (2001). ‘The New Left’, Globalisation and trade Unions in West
bEngal: What is to be Done? Indian Journal of Labour Ecoomics, 44(3) JulySeptember. 447-474.
Debroy, B (1997). `Labour Market Reform’. Policy Paper No. 22 prepared for
Project LARGE (Legal Adjustments and Reforms for Globalising the Economy).
New Delhi: Allied Publishers.
Kuruvilla, S. and C.S. Venkata Ratnam (1996). Economic Development and
Industrial Relations: The case of South Asia and Southeast Asia. Industrial
Relations Journal 27 (1), pp. 9-23.
ILO-SAAT (1996). India: Economic Reforms and Labour Policies. New Delhi:
ILO-SAAT and UNDP.
Japan Institute of Labour (1996). `Industrial Relations and Labour Law in
Changing Asian Economies’. Proceedings of the 1996 Asian Regional
Conference on Industrial Relations. Tokyo: Japan.
Miliband (2002). ‘New Labour: A View from Inside’, International Politics and
Society, IPG 3/2002, pp.15-25.
Reich, R. (1995). Address to the delegates of the 10th World Congress of
International Industrial Relations Association. Washington, D.C. IRRA. May 31June 4.
Venkata Ratnam, C.S. (1997). `Competitive Labour Policies in Indian States’.
Working Paper prepared for Project LARGE. New Delhi: Allied Publishers.
Venkata Ratnam, C.S. (1997). `The Role of the State in Industrial Relations in
the Era of Globalisation’. Paper presented at the subregional tripartite meeting on
Globalisation and Transformation of Industrial Relations in South Asia at New
Delhi during 15-17, 1997. New Delhi: ILO-South Asia Multidisciplinary Advisory
Team (Mimeo).
Table 1: Terms of Reference of the First and the Second NCL
Terms of Reference of the First
Terms of Reference of the Second
National Commission on Labour
National Commission on
(1966)
Labour1(1999)
1. To review the changes in conditions (a) To suggest rationalisation of
of labour since Independence and
existing laws relating to labour in
to report on existing conditions of
the organised sector.
labour.
2. To review the existing legislative (b) To suggest an `umbrella’ legislation
and other provisions intended to
for ensuring a minimum level of
protect the interests of labour, to
protection to the workers in the unassess their working and to advise
organised sector.
how far these provisions serve to
implement the Directive Principles While drafting the framework for the
of State Policy in the Constitution above, the Commission may take into
on Labour matters and the national account the following:
objective of establishing a socialist
society and achieving planned (i) Follow up implications of the
economic development.
recommendations made by the
3. To study and report in particular on:
Commission set up in May, 1998 for
(i) The levels of workers’ earnings,
review of various administrative
the provisions relating to wages,
laws governing the industry.
the need for fixation of minimum
wages including a national (ii) The
emerging
economic
minimum wage, the means of
environment
involving
rapid
increasing productivity, including
technological changes, requiring
the provision of incentives to
response in terms of change in
workers.
methods, timings and conditions of
(ii) The standard of living and the
work in industry, trade and services,
health,
efficiency,
safety,
globalisation
of
economy,
welfare, housing, training and
liberalisation of trade and industry
education of workers and the
and emphasis on international
existing
arrangements
for
competitiveness and the need for
administration of labour welfare,
bringing the existing laws in tune
both at the Centre and in the
with the future labour market needs
States.
and demands.
(iii) The existing arrangements for
social security.
(iii) The minimum level of labour
(iv) The state of relations between
protection and welfare measures
employers and workers and the
and
the
basic
institutional
role of trade unions and
framework for ensuring the same, in
employers’ organisations in
the manner which is conducive to a
promoting healthy industrial
flexible
labour
market
and
relations and the interest of the
adjustments
necessary
for
nation.
furthering technological change and
(v) The labour laws and voluntary
economic growth.
arrangements like the Code of
Discipline, joint management (iv) Improving the effectiveness of
Councils, voluntary arbitration
measures relating to social security,
and Wage Boards and the
occupational health and safety,
machinery at the centre and in
minimum wages and linkages of
the states for their enforcement.
wages with productivity and in
(vi) Measures
for
improving
particular the safeguards and
conditions of rural labour and
facilities required for women and
other categories of unorganised
handicapped
persons
in
labour.
employment.
(vii) Existing
arrangements
for
labour intelligence and research;
and to make recommendations
on the above matters.