Reforms in Labour Laws

Dr. Ashwani Mahajan
There is a general belief that labour laws are very complex in India. As of now, there are 44 types of labour laws in the country, and it becomes very difficult to reconcile among these laws, and therefore they cause hardships to the employers, and given an opportunity, they try to avoid employing labour. It is seen that all these labour laws are related to different subjects. Some labour laws relate to the wage rate, while others relate to social security. Along with this there are some labour laws which are related to industrial safety and labour welfare and few other laws are related to industrial relations. With a view to simplify these labour laws, it was considered by the Government that a new system be implemented subsuming all these 44 labour laws into four codes. One code deals with wage rates, another relates to social security, the third relates to industrial security and labour welfare and the fourth relates to industrial relations. The Wage Code has already been passed in the Parliament, but the other, ie the ‘Labour Code’ on Social Security has been referred to the Parliamentary Standing Committee. While the Government is presenting these labour codes as a major reform, opposition parties are opposing the move.
What are these different codes?
After the passage of the ‘Wage Code’ Bill, the Central Government will have the right to determine a statutory wage rate for the entire country. Significantly, till now the State Governments used to announce the wage rate in their respective states. In this way, the provisions of minimum wages will be uniformly applied throughout the country, which will bring the provision of minimum wages to all workers, irrespective of the sector (organised or unorganised) they are engaged in. It will be possible to ensure a minimum living standard for 50 crore workers. Earlier this Wage Code Bill was introduced in the Lok Sabha in 2017, which was referred to the Standing Committee at that time. But after the dissolution of the 16th Lok Sabha, the bill lapsed automatically.
Laws related to social security, include ‘Employees Provident Fund’ (EPF), ‘Employees’ State Insurance Corporation and other Benefit Act’, ‘The Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996’ and ‘Employees Compensation Act’. It has been decided to subsume all these laws in the second code, namely, ‘Labour Code on Social Security’ In the third labour code, namely ‘Labour Code on Occupational Safety, Health and Working Conditions’ the laws related to occupational safety and labour welfare have been included, which include the ‘Factories Act’, the ‘Mines Act’ etc..
There are several laws related to industrial relations such as the Industrial Dispute Act, (1947), Labour Union Act (1926) and the Industrial Employment Act, 1946. Combining all these laws, a code has been created, which is called the ‘Industrial Relations Code’.
Opposition of Labour Unions
The only labour code out of the four labour codes is the ‘Wage Code’ which has got the support of some trade unions, most significant of them is the largest labour union Bhartiya Mazdoor Sangh. It is believed that through this Code it will be possible to ensure minimum wages for all the 50 crore labourers in the country without discrimination in terms of sector.
However, the remaining three codes are being strongly opposed by the trade unions. Their complaint is that in the name of subsuming various labour laws into labour codes, the Government is acting to benefit the employers, against the interest of the labourers. Some labour organizations are opposing even the Wage Code, because the ‘apprentice category’ has been taken out of the definition of workers and the determination of minimum wage rate has been left to committees. In the new code, there is provision of labour inspector and facilitator, in place of the labour inspector. Labour organizations complain that this will end the powers of the Labour Inspector and for this reason the labourers can be exploited.
There are big changes in the Social Security related labour code, which is being vehemently opposed and is actually being seen as anti-labour. Labour organizations say that provisions related to ESI (Employee State Insurance Corporation) and EPF (Employees Provident Fund), which has total membership of nearly 40 million workers are being tweaked against labour interests. Accumulated amount of EPF is being handed over to the states. Notwithstanding the motive of the Government, labour organizations feel that the accumulated amount parked with the Central Government is always safe, but after the transfer of funds to the States, there will be no guarantee of security of the funds. Significantly, the State Governments have been adopting populist policies for political gimmicks and thus the amount of the provident fund may be in danger. Not only this, the provisions are being made that Employee Provident Fund would be operated through the intermediaries like private fund managers. Thus EPF, which is an accumulated fund of hard earned money of employees may be subject to whims of the financial market.
Similarly, the labour code is being considered insensitive to the safety concerns of the workers in the workplace. This labour code is not universal. In many cases, this code will not be applicable in establishments with 10 and in some cases 20 workers. Many hazardous jobs like sewage workers are kept outside the scope of this Code. This exhibits extreme insensitivity of those who drafted this bill. Similarly, the protection of labourers in illegal mining is also not ensured in this code.
It can be said that facilitating labour laws and improving its compliance can be a step in the right direction, however, in the name of simplification of labour laws, tampering with the provident fund of the workers and the violation of the fundamental rights of the labourers and making provisions against exploitation teeth-less, cannot be approved. Therefore, after the wage code, if the Government and Parliament shows sensitivity towards welfare of labour, better outcome can be achieved.
The author is Associate Professor, Department of Economics, P.G.D.A.V. College (University of Delhi)