Labour Reforms
Dr D Mukhopadhyay
Modern economic activities concentrate around production and distribution of want removing goods and services for society . Land, labour, capital and management are the most important factors whose combined effort makes production and distribution activities possible. The classical economists have given the second place to ‘Labour’ in the hierarchy of importance of factors of production. Capital is indeed an indispensible factor of production in absence of which the existence of business is impossible but judicious utilization of capital is possible with the help of labour only. Labour is an essential means for defining the growth and development of any society. It plays a vital role in the economic activities of an economy. Indian labour market is by and large non-competitive by nature. In other words, labour has hardly any bargaining power in the market since supply of labour is abundant in the third world countries and it is in the receiving end. But, it deserves a dignified treatment in terms of welfare and social security which is a stiff challenge before the policy makers and policy formulators. When the labour market is not competitive, the economic firms try to pay as low wages as possible. On the other hand when the market is competitive, the wage rate is supposed to be determined by the demand for and supply of labour.
The demand for labour is practically a derived demand which depends on its usefulness in production. In the language of of economists, less labour is demanded at higher wages. But Indian labour market is non competitive by nature and employers exploit workers by paying them as less as possible. Moreover, about ninety percent of Indian labour serve unorganized sectors and about ten percent of labour work in the organized sectors. The small portion of labour serving organized sectors are more or less able to secure their justified wages with the help of existing labour laws of the land. The major portion consists of unorganized labour with almost no job and no social security. India is supposed to have the largest workforce in the world in the forth-coming 2025 and under the circumstances, , the policy makers are to give due attention and importance to the cause of labour welfare, social protection and social security and it is now high time to ponder over the issues incidental to dignified treatment of labour . It is an imperative to understand the terms and working conditions of Indian labour and currently they are by and large detrimental to the interest of the labour. The organizational goals needs to be convergent with the offering of social security to labour along with a pledge of providing decent work environment. The economically advanced countries have attained the economic supremacy by dint of providing decent treatment to labour. For instance, United States of America provides for decent social security to the workforce of the country and labour is the most delicate factor of production and it needs special treatment at least different form machines. The illiterate and unqualified labour cannot install the process of technical up-gradation., innovation and creativity.
It is the responsibility of the employer to make them literate and skilled so that best use of labour is possible in order to minimize cost of production. Sustainable development of the national economy shall perhaps remain a dream unless industries change their attitude towards the workforce and provide for basic training for enhancing efficiency and proper use of modern technology. In this context perhaps, it may not be out of place to mention that the implication of social justice is guaranteed by the Preamble of the Constitution of India. The Directive Principles of State Policy provides that the State has to promote welfare of the people by securing and protecting social order wherein social, economic and political justice shall be available to all kinds of social organs. Social security in the form of benefits to overcome the problems of poverty, unemployment, sickness, disability, old age and health protection is urgently called for . The Government of India is seen to have started work in this direction but more rigorous effort is necessary in order to take India to the league of economic super power in the forth-coming days. India aspires to be in the bracket of high income group by 2047 when she shall be celebrating the Centenary of her Independence. But lot of preparation is necessary to reach and attain her goal. Perhaps, labour is one of the most important areas that needs considered treatment with heart but not hands. The Government of India, for instance, has started to offer social insurance to the economically under privileged . Moreover, India is an agro based economy and major chunk of the unorganized labour is employed in agriculture sector . Thus, it is essential to bring about considered development of the agriculture sector so that the interests of the agriculture labour can be secured. It is important to mention that social protection is the unwritten law of human rights and dignity of labour is to be ensured in order to secure sustainable socio-economic development of the country.
It needs hardly any mention that the social security legislations are having their genesis in the Directive Principles of the State Policy as contained in the Constitution of India. The cost of social security is one of the important constituents of the employment cost. The mentionable social security laws for the organized labour force in India includes the Employees Provident Funds and Miscellaneous Provisions Act, 1952, the Employees State Insurance Act, 1948, the Workmen Compensation Act, 1923, the Maternity Benefits Act, 1961, the Payment of Gratuity Act, 1972 etc. Again Article 21A of the Constitution provides right to education to children. The State shall provide free and compulsory education to all the children belonging to the age group of six to fourteen years. Article 24 provides for Prohibition of employment of children in factories accordingly, no child below the age of fourteen years shall be employed in hazardous employment including in any factory and or mines. Again, in order to provide social security benefits to the workforce employed in the unorganized sectors of the economy, the government of India enacted the Unorganized Workers’ Social Security Act, 2008 which is an welcome measure. In a nutshell, there are more than forty labour related legislations in India . It is being observed that India is lagging far behind in the implementation process of the enacted laws and as such the benefits of such laws remain beyond the reach of the targeted people. It is worth mentioning that labour reforms are seen to be a formal approach that remain in black and white but the administrative machinery of the Government hardly bother about compliance with the norms as are set forth in the respective labour laws. It is now high time to have a robust mechanism to oversee as to how and whether the business and commercial organizations and establishments are abiding by the laws of the land while employing and paying the justified benefits as prescribed by the laws enacted by the Parliament of the country. India is cautioned to be careful to handle and treat labour judiciously and bring about labour reforms instantly without much delay anymore. In order to make the mission ” Make in India” successful, the Government of India is recommended to bring about a suitable legislation for effecting and ensuring the compliance requirement of the labour laws and the same needs to be examined by an independent professional. The competent professionals for examining the non-compliance of labor legislations norms and requirements and submitting a periodic report may be Chartered Accountants(CAs), Cost & Management Accountants(CMAs) and Company Secretaries (CS) having the requisite license from the Institute of Chartered Accountants of India, the Institute of Cost Accountants of India and the Institute of Company Secretaries of India respectively.
The labour laws compliance audit or labour audit should cover labour legislations which are applicable to commercial organizations including factories and industries of different kinds dealing with labour . The Ministry of Labour, Government of India, needs to ponder over the issues in order to make India as the congenial destination for the promising and prospective investors. It may be stated that the Chinese labour market is becoming cost prone day by day and the wage rate is increasing by leaps and bounds in China and it is attributed with ever rising trends. Under such circumstances , India should accrue the advantage of such unfavorable labour market for the investors in China to motivate them to divert their route to India from by creating and providing favourable labour market. Indian labour is much cheaper than that of China. Labour reforms is a must in India in order to derive the advantage of cheap labour.
(The author is the Professor of Management, School of Business and Dean -Faculty of Management, Shri Mata Vaishno Devi University, Katra, Jammu & Kashmir)
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