Pandemic, Labour Law Changes and Implications for Indian Working Class

Lecture by: Paaritosh Nath (Post Doctoral Fellow, Azim Premji University)

This lecture was held on June 3, 2020 at Indian Researcher, New Delhi. The following document is compiled by Soham Bhattacharya (Research scholar, ISI Bangalore).

This note is a brief summary of a lecture^[i] followed by the discussion on the recent labour law changes in three states in India, namely Uttar Pradesh, Madhya Pradesh and Gujarat (for detailed analysis, Sood and Nath, 2020). The objective of the note is to understand the broader political ideology involved in changing the labour laws in place at the time of lockdown and pandemic followed by the Covid-19 crisis. 

The first two sections of this note deal with debunking the so-called logic behind the dilution of labour laws along the implications of such changes. In the concluding section of the note we try to look into how these misguided logics labour law suspension works as a political tool of the ruling class in the contemporary Indian scenario. 

Fallacious Claims behind Labour Law Suspension in India

The first set of reasons provided to support the dilution of the labour laws is to incentivise the employers of the country. These are the labour laws which aims to reach basic minimum wages and regular payment of wages to workers. These are laws involved to provide occupational safety of workers, laws involving industrial disputes, hiring of contract labour, and most importantly to ensure decent working conditions of migrant workers. The argument put forth to dismantle the existing laws are that the cost of hiring labourers under the existing laws is way high. This apparently causes the employer to not hire workers and also not provide decent working conditions in the workplace. Therefore to incentivise the employer and to improve the poor working conditions, and to decrease informality the supporters behind this changes have resorted to dilute all existing rights of the labourers in the three states.  

These fallacious claims are often debunked if one looks into the scope and reach of existing laws. First, majority of Indian workforce does not come under the ambit of any of these protection, at this outset claiming that dilution of the law will push industrialists to hire and provide formal employment remains as a questionable hypothesis.  Second, the cost of labour being the reason of disincentive is a myth formulated by the ruling class. In the organised manufacturing sector, where some amount of legislations were in place, the share of wages in gross value added has been declining for the last three decades. The Annual survey of Industries data suggest the share was 21.4 per cent in 1990–91, 15.5 in 2000–01, 10.3 in 2010–11 and a mere 12.3 per cent in 2015–16. Therefore a declining wage share in the formal manufacturing sector have not already incentivised the industrialists, whereas one expects that same to be incentive if only the labour protections are taken away. 

Another fallacious claim behind the suspension of labour rights is broadly termed as a compliance costs. A very broad understanding of compliance costs is the cost created by the corruption that employers face from law regulators, or in other words “inspector raj”. It is alleged that the corruption in the labour department dis-incentivises investment of the industrialists. Therefore the solution to that disincentive is to suspend the existing laws. It is an example of how the failure to check corruption in government departments are dubbed as a burden to the labour rights. A parallel to this logic then translates as: to reduce traffic accidents one might suspend the traffic laws. An example from Bihar in 2013 suggests that there was one officer in charge for more than 1,060 factories (Nath et al 2019). A similar situation exists in many other states. The solution to this overall rent-seeking problem lies in checking corruption in government departments and increasing the inspectorate staff rather than doing away with inspections altogether. The inherent nature of shifting the responsibility towards the poorer sections is a known trait of the government, and this claim is just another prime example of such a trait. 

Changes in Labour Laws and Implications for Indian Working Class

The immediate impact of labour laws in these three states is extending the working day in the factory floor. The sudden goodwill to fight the recessionary effects of the pandemic the factories are sought to start production while increasing the length of the working day.  The current Factories act ensure two things regarding the working hour. First, 9-hour time period is currently stated as the factory hours; second, anything beyond those hours are termed as over-time work of the worker. The recent deregulations are trying to bypass the overtime recognition by directly increasing the number of daily working hours to 12 and the weekly hours to 72. 

Using the Periodic Labour Force Survey (PLFS) 2017–18 data in their article, Sood and Nath (2020) have correctly pointed out that:

“…wage workers inside the factory floor work for an average of 60 hours in a week with only 7% working for 55 hours or less. These extra hours are legally considered as overtime work and their rate of payment by the hour varies from 1.5 to 2 times that of the regular hourly pay.”

Therefore when the share of wages are already 12 per cent of the total produce, if the working day is extended without a revision in the wages, these new regulation robs the worker their earnings while taking away the existing rights to claim for the extra wages. ILO and other labour standard organisations have identified a decent working place where the employer provides restrooms, washrooms, drinking water facilities, etc, for its workforce. In the case of India, these provisions are denied most of the time and now with the ease of hire and fire by suspending laws are going to exacerbate the already existing hardships for workers. The ideologue that restricts unionised attempts to save the minimum benchmark of workers are essentially anti-worker at the least.

To summarise the situation of workers, one can see the declining share of wages for the last two decades; there is an increasing incidence of contractualisation of work force; and poor working conditions within the organised manufacturing sector. At this outset the final rhetoric of the labour laws suspension comes into the scenario. A legally protected workforce is marked as “labour aristocracy” and are cited as the reason behind ‘non-protection’ of the vast majority. These allegations are not merely a reflection of economic facts stated regarding the workforce in India, rather it is a political ethos of the ruling class in the country.  The suspension of laws and thereby taking away the rights of the workers are done in one hand, while pitting one set of workers against the other in the other has a greater implication for the working class politics in India. To displace the burden of dismal working condition and of precariousness of one set of workers to another set of workers often satisfy the interests of elite industrial classes. 

Concluding Remarks

The current government have started a vicious political scheme of ‘victimisation of the perpetrator’ using different means from their ruling arsenal. The government denies responsibility of the victims while the victims are portrayed as being self-responsible for their suffering. Be it activists from Bhima Koregaon battle in 2018, be it university students of JNU or AMU, be it arrested protesters of NRC-CAA.   The protesting activists are targeted and termed as the responsible ones to bring the suffering to the community. The same tactic is now applied to the working class in this country. A huge population who are already suffering from hunger, starvation, a historic unemployment, and above all are robbed out of their dignity in the society are now being held accountable for their plight. The heinous logics put forward to them are that any or every attempt by the state to provide a minuscule protection has made the conditions dismal. 

This attacks on working class are coming at a time when there are two crises faced by the workers, one of lives and the other of livelihoods. A survey conducted by the Centre for Sustainable Employment (2020), Azim Premji University shows that more than 60 per cent of their survey respondents reported a loss in livelihood during the lockdown. A severe demand shortage followed by these loss of jobs in an already unstable economy requires the government to provide extensive support to the working class. On the contrary we observe that the government is busy taking away whatever miniscule protection was provided to the workers. Any liability that the owners had are now dismantled so that essentially means the workers need to finance every component of their living, including their healthcare.  The attempts to delegitimise the worker’s movement in India using the pandemic as an opportunity shows the nature of anti-people stance this government has been taking. The preoccupation with changing labour laws at the time when the country is literally witnessing the plight of working class migrants should be resisted. The importance of organised working class politics should be reiterated in order to resist any attempts to violate the long fought rights of workers in the country.

^[i] Endnote: The link to the original discussion can be found here. https://www.youtube.com/watch?v=j5oGfiS_ngw&feature=youtu.be

References

Centre for Sustainable Employment (2020): “COVID-19: Analysis of Impact and Relief Measures,” Azim Premji University, https://cse.azimpremjiuniversity.edu.in/covid19-analysis-of-impact-and-relief-measures/.

Nath, P, U Siddiqi and A Sood (2019): “Thinking Growth or Thinking Employment,” India Exclusion Report 2018-19 (5th ed), New Delhi: Yoda Press.

Sood, A, and Nath P (2020): “Labour Law Changes Innocuous Mistakes or Sleight of Hand?”, Economic and Political Weekly (Vol. 55, Issue 2).