Severe gaps in new labour reforms

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The proposed labour codes of the Government have come in for sharp criticism from a wider trade union fraternity, as it allegedly seeks to rob millions of workers of decent work and wages, an equal work place and avenues for access to justice.  Chandan Kumar says that the legislation is all set to alter the labour protection landscape in India beyond repair and reclaim.

On July 4, the Economic Survey argued that a higher national minimum wage is central to addressing inequality and widespread poverty in the country. A couple of weeks later, the Government of India (GOI) trashed its own analysis by proposing a “starvation wage” of Rs. 178 a day. The central government hit the nadir with a minimum wage hike of Rs. 2! Experts allege that it is a precursor of what is in store for millions of workers as the cabinet passed two of the four proposed labour codes – Code on Wages as well as the Code on Occupational Safety, Health and Working Conditions.

The two codes were tabled for discussion recently by Santosh Gangwar, Minister of Labour and Employment. With this the Parliament has struck the proverbial hammer on the fate of millions of workers, robbing them of the possibility of decent work and wages, an equal workplace and avenues for access to justice. Primarily driven by the interests of the industry, this predatory piece of legislation is all set to alter the labour protection landscape in India beyond repair and reclaim.

A precursor to the darker days ahead

The new minimum wage of Rs. 178 per day translates to Rs. 4628 per month. It goes against the Labour Ministry’s own expert committee recommendation of Rs. 375-447 per day, let alone the 15th Indian Labour Conference’s suggestion of Rs. 692 a day, Rs. 18000 a month. The new national minimum wage, half of what was recommended, truly portends a death knell on India’s labour protection framework.

The rhetoric on labour codes passionately pitches a National Minimum Wage. However, a closer look at the provisions of the wage code busts this myth. First and foremost, it violates the Supreme Court and Indian Labour Conference guidelines for a “need-based” criteria (covering nutrition, healthcare, education and provisions for old age) to fix the minimum wage – something that was adopted for central government employees, but ignored for the larger mass of unorganised sector workers.

Wages are also proposed to be determined by state level advisory boards, something that Indian industry has long wanted. Experts argue that such an arrangement would lead to a race to the bottom as different states would compete to attract investments by lowering wages – an observation that is borne out by facts on the ground. India’s Labour Law Changes from 2015 points out that in the period between 2010- 2015, several industrialists relocated from Okhla Industrial Area in Delhi to Uttar Pradesh and Haryana as the latter offered 25-35% lower minimum wages than Delhi. Flight of capital would become extremely convenient in such a regime, pushing state governments to compromise on worker’s wages and welfare.

One may well question the intention of GOI in even announcing such a national minimum wage. In our judgment it is primarily a signal to the industry that the jungle has been let loose, only wilder this time and wages can be pushed down to the lowest levels possible to suit capital interests.

The chowkidar is not even a worker as per law

Despite its claims, both the codes exclude millions of unorganized workers. The OSHW Code (Code on Occupational Safety, Health and Working Conditions) does not cover workers employed in small enterprises deploying 10 or less workers, or those in the informal sector. As per an estimate, this is over 85% of India’s labour market, especially including those in medium and small enterprises, which often tend to be more risky and vulnerable to occupational hazards and safety violations. The wage code also does not cover the large mass of informal workers because its definition of “employer” is ambiguous and narrow. Most workers would struggle to establish their employment relations to benefit from the Code provisions.

The wage code is disturbingly silent on providing equal opportunities to women, and penalising discrimination on the grounds of gender. In India, where female labour force participation has hit an abysmal 23%, this deletion is highly damaging. Most disturbingly, the code does not have any provisions to prohibit discrimination against workers from Adivasi and Dalit communities. There is pervasive evidence on the exclusion faced by such workers in the form of low earnings, wage thefts, abuse, harassment, low opportunities and minimal upward mobility. The new law is blind to all this!

What if you are duped of your wages?

What happens if a worker does not receive due wages or receive them in time? As per the new code, in case of a dispute, a worker can now approach only a quasi-judicial, appellate authority, not within the jurisdiction of courts – a violation of the Civil Procedure Code section 9 that requires mandatory judicial review of decisions. What is worse is that a claim can only be filed by an appropriate authority, employee or trade union. This leaves out all workers in casual, informal, undocumented work, denying them any formal avenue to seek justice.

India’s informal economy is structured through long serpentine chain of contractors. Migrant workers often do not know who their employer is. The new wage code weakens the principal employer liability to pay wages to contract labour, if the contractor has failed to do so. This has grave and far reaching consequences on the access to justice for informal workers, especially in a scenario where the volume of wage thefts from such workers is unacceptably high. Notably, the Occupational Safety and Health (OSH) Code does talk about Principal Employer liability but it also stealthily passes the buck to the manager or the supervisor.

Coercive work assuming new forms

Labour bondage and other forms of coercive work have existed in India for centuries. Coercive work is also assuming new forms in the contemporary labour market. Vulnerability to coercive labour is rooted in longstanding patterns of inequality, social exclusion, discrimination and inadequate labour market governance. In the contemporary economy, distressed migrants employed in the informal sector who are willing to accept advances are particularly vulnerable to coercive labour relationships.

By permitting recoverable advances, Code on Wages, 2019 leaves marginalised workers vulnerable to coercive labour. Recognising the stubborn persistence of coercive labour in India, the Supreme Court has explicitly linked advances to coercive labour, and has even declared a legal presumption that advances suggest the presence of bonded labour. Despite this presumptive link between advances and coercive labour relationships highlighted by the Supreme Court, the Code on Wages, 2019 retains provisions permitting employers to recover advances. Using provisions such as “deductions for recovery of advances of whatever nature”, will lead us to dark days and encourages slavery like practices across informal economy. We should not be using archaic provisions of statute that existed before independence, especially when India claims to abolish forced labour and slavery.

The entire tenor of both the codes reeks of eagerness to appease industry and create the much hyped labour market flexibility and ease of doing business. This is exemplified by the flexible provisions for overtime, a move that can potentially legitimise 14- hour workdays as the norm.

Furthermore, the vocabulary replaces inspectors by introducing facilitators who merely have an advisory function, as opposed to their previous regulatory role. There is no mention of the labour department and its functionaries across both the codes – an omission that is more than deliberate.

‘Craftily’ written piece of legislation

Finally, it is most ironical that the Parliament is about to debate on what could be the most poorly (read shoddily) written piece of legislation in Indian history. Both the codes have no understanding of informal labour and its requirements from the law. There is a lot of ambiguity in the way provisions are phrased. At times the codes get too specific and at times too vague, reflecting either poor ground work done or a deliberate ambiguity to allow for excessive discretion of the appropriate government.

The OSHW Code most notably subsumes the Building and Other Construction Workers’ Act, 1996 leaving out millions of construction workers in the lurch who were enrolled with the Welfare Board created under the Act. It makes vague mention of provisions for construction workers, too visible to miss.

While many of us have been fighting for a change in labour laws ourselves and demanding a protective framework for informal workers in India, the proposed changes are far from what we have strived for. Our collective analysis shows that the new codes are crafty – in the garb of promoting worker welfare and enabling formalisation, it is seeking to repudiate basic human and labour rights to workers.

Working people are a national asset – undermining their wellbeing is the biggest anti-national act. Need based MW (minimum wages) should be guided by Supreme Court, based on principles and test laid down by judiciary, and if any committee, any advisory board decided below this, has to give reason and recommendation.


Chandan Kumar

Chandan Kumar, works with Rashtriya Hamal Panchayat, a national trade union, organsing workers in the informal economy. He is one of the coordinators of Working Peoples’ Charter Secretariat (WPC), an alliance of over 100
informal worker organisations, comprising trade unions, civil society, academia, etc. He was part of Delhi Minimum Wages Advisory Committee, which implemented the landmark Supreme Court judgement on living wage. He is also member of National Minimum Wage Advisory Board, a statutory committee responsible for wage revision. (The article has inputs from Working People`s Charter.)

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