A raw deal

In the neoliberal environment, outsourcing and informalisation of employment is accompanied by the government’s abdication of its responsibility to implement labour laws to protect workers’ interests.

Published : Jul 20, 2016 16:00 IST

Government employees staging a protest in support of their demands at the Mini Secretariat in Gurgaon, in July.

Government employees staging a protest in support of their demands at the Mini Secretariat in Gurgaon, in July.

IN July, Guy Ryder, Director General of the International Labour Organisation (ILO), visited India and also met Prime Minister Narendra Modi. India is a founding member of the ILO, though it has not ratified all the conventions. In 2015, the International Labour Conference adopted a recommendation with an overwhelming majority that governments should facilitate the transition of workers from the informal sector to the formal sector. Undoubtedly, informalisation of employment and outsourcing of jobs has been one of the biggest outcomes of neoliberal policies in India and the world over. The structural reforms initiated in the 1990s included making labour flexible; today, it is called ease of doing business. There is an explicit recognition in the government that industry has to be helped even if it is at the cost of labour.

Amendments to the Factories Act, the Industrial Disputes Act and the Trade Union Act by various State governments, labour being a concurrent subject, have harmed the interests of workers badly. The Central government introduced amendments to the Factories Act, 1948, Apprentices Act, 1961, and the Labour Laws (Exemption for Furnishing Returns and Maintaining Registers by certain Establishments) Act, 1988. The Factories Amendment Bill, passed by the Lok Sabha without any consultation with trade unions, allows State governments to raise the threshold of coverage from 10 workers to 20 workers in the case of factories operating with power and from 20 workers to 40 workers in those not using power. This, unions said, would exempt the bulk of units from the Factories Act, which is meant to regulate working conditions. In several States, including Uttar Pradesh, Haryana, Rajasthan and Andhra Pradesh, labour inspections cannot be carried out without a certification by the Labour Commissioner. The codification of 44 labour laws, an idea that is supported by the World Bank, has been opposed by trade unions. The chief economist for the South Asian region of the Bank suggested in a self-authored article that appeared in a leading economic daily in 2014 that all new formal sector hires, regardless of size, should be exempted from Chapter V (which deals with lay-offs, retrenchments and closure of establishments employing more than 100 workers) of the Industrial Disputes Act (IDA).

Unions resist dilution Unions on their part have resisted the dilution of labour laws for almost two decades even in the face of judicial pronouncements that went against them. In a recent judgment of the Supreme Court, it was held that government employees did not have the moral right to strike work. The post-1996 period was marked by coalition governments at the Centre. This might have made it difficult for the governments and the political parties that were in power at that time to tamper with labour laws.

The situation now is that a political party that opposed foreign direct investment (FDI) in crucial sectors such as defence while in the opposition is in power and has changed tack to allow the same on the grounds of creating employment. Trade unions point out that what Congress governments could not complete all these years despite being the architects of reforms, the present government with a majority in the Lok Sabha is going full steam ahead to complete. “It is much more aggressive,” said D.L. Sachdeva of the All India Trade Union Congress (AITUC). To incentivise small-scale industry, a draft proposal of the government exempts units employing up to 40 workers from 14 basic laws that include the Factories Act, the IDA, the Employees State Insurance (ESI) Act and the Maternity Benefits Act.

Outsourcing and informalisation of employment was accompanied by the withdrawal of the government from its mandated responsibility of implementing labour laws. Therefore, as new industrial zones, including export-oriented zones, opened, employers were not obliged to comply with labour laws. Even so, in export promotion zones, labour was almost in a captive state. Entry and exit in these zones were monitored strictly, and independent studies and reports exposed the inhuman conditions of work inside these complexes. Unions could not be formed easily, and even if one was formed, it found little support from the government. Collective bargaining weakened as a result, and most tripartite agreements on wage settlement issues remained only on paper. Employment grew in the unorganised sector, while it stagnated in the organised sector, and in several areas it was pruned so drastically that it had an impact on the quality of public utility services. The shrinking of jobs in sectors such as transport, electricity, water, and the public works department had a negative impact on the delivery of services. “The talk of good governance is meaningless. There is nobody to govern,” said Sachdeva.

Conflicts grew as a result and some of them were televised—the police action on Honda workers (2005) and the agitation by workers of Maruti Suzuki India Limited (MSIL), in which 150 workers were jailed for more than two years following the death of a manager. In almost all worker protests, the immediate reason would be a skirmish, but what lay behind it was a history of unfulfilled wage agreements and a reluctance to let workers form unions. In February 2016, workers of Honda Motorcycle and Scooters India Limited (HMSIL) at Tapukara village in the Bhiwadi industrial area struck work following police action on them for demanding the registration of their union. The demand had been pending for more than a year.

The practice of treating permanent and contract workers differently for the same kind of work has also been among the dominant reasons for clashes on the shop floor. The trigger is often a skirmish with the immediate supervisor, as was seen in both MSIL in 2011 and HMSIL early this year. But what emerged during these protests was that workers unanimously stated their desire to work in peace and with respect. They also felt that contractualisation of work and treating workers differently for the same kind of work done were not acceptable to them.

In a paper published in the May 2004 issue of Seminar , the economists T.S. Papola and Alakh N. Sharma wrote that “the weakening of the workers’ bargaining capacity and rise in the militancy of employers is also captured by a significant increase in the incidence of lockouts and a decline in the incidence of strikes. In the pre-liberalisation phase—between 1976 and 1990—the mandays lost due to strike were 54.9 per cent, while mandays lost due to lockouts were 45.1 per cent; the corresponding figures are 39.2 and 60.8 per cent respectively for the post-liberalisation phase, between 1991 and 2000. Further, the average duration of lockouts is also considerably higher, roughly 2.5 times those of strikes.”

According to Labour Bureau statistics on strikes and lockouts, 389 industrial disputes involving 0.72 million workers were reported in 2007, with the maximum being reported from the private sector. There were 210 strikes and 179 lockouts, with the private sector accounting for slightly more than 67 per cent of the strikes. The statistics also point out that the number of disputes (strikes and lockouts), workers involved and mandays lost in the public sector constituted 17.48, 34.79 and 1.22 per cent respectively of the all-India total figure, while the figures for the private sector were 82.52 per cent (disputes), 65.21 per cent (workers involved) and 98.78 per cent (mandays lost).

Liberalisation and planning K.R. Shyam Sundar, Professor, Human Resource Management, at XLRI, the Xavier School of Management, Jamshedpur, explained that for the working class, especially those not belonging to the so-called labour aristocracy, the Liberalisation, Privatisation and Globalisation model, or LPG, was no different from the planning model. He said:

“During the first two or three decades of economic planning, policymakers and leaders exhorted workers to give up their quest for higher wages and better working conditions for the larger quest for capital accumulation so needed to fund industrialisation, and that too heavy goods industrialisation, which ate up capital as elephants did without adding value in the product market. Workers were exhorted to sacrifice for the sake of posterity. Of course, the cream of the working class benefited from the closed economy system by sharing economic rents with employers.

“Post-liberalisation, the situation is no different for workers at the margin. They are often told that liberalisation will cause hardships in the short run. As economic growth takes place, firms’ growth effects will percolate to the lowest strata of society and the growth will produce employment, rise in real wages, and the virtuous cycle will go on. So workers at the margin were again asked to sacrifice and participate in the economic cost-sharing—that is, the costs of the structural adjustments will be borne by the state [via higher indirect taxes] and workers in the form of lower growth of real wages and temporary lay-offs and possible relocation. This is a double whammy for the working class at the margin.”

The biggest and the most significant change due to the LPG model is the change in the nature of industrial and employment relations. Mistrust and insecurity reign supreme. Shop floor skirmishes have gone up, according to him.

labour market ‘rigidity’ In the aftermath of the subprime crisis in 2007, there were huge job losses. Ravi Srivastava, Professor of Economics at Jawaharlal Nehru University, said there were a lot of vertical linkages in manufacturing within the organised sector where the trend was towards outsourcing. Srivastava, who was a member of the National Commission for Enterprises in the Unorganised Sector (NCEUS, which threw light on the working and living conditions of unorganised sector workers and recommended a social security scheme for them), told Frontline that hardly a day passed without policymakers or commentators making a reference to rigidity in the Indian labour markets and to the need for “reforming” these markets. There was an almost exclusive focus on the rigidity of labour laws relating to the organised sector, which in any event employed a very small percentage of the workforce. There was little attention, he said, on the impact of labour market flexibility and inflexibility on working conditions and workers’ rights and income distribution. As late as 2011-12, 81.5 per cent of the workforce in India was self-employed or casual and only 18.5 per cent was “regular”, he said. Therefore, it was clear that only a fraction of workers were under the protection of labour laws.

According to ILO estimates that Srivastava quotes in a paper, “Myth and Reality of Labour Inflexibility in India—what is to do be done”, prepared for a conference of the Indian Society of Labour Economics, India with 83.6 per cent informal employment in the non-agricultural sector had the highest percentage of informally employed persons in a group of 40 countries. The NCEUS report (2007) also revealed the trend of increasing informality in the organised sector. Contract labour had grown significantly in the manufacturing and services sectors, said Srivastava, and wage differentials, too, had gone up even in the organised sector. He also pointed to a survey by the National Sample Survey Office that showed that access to social security benefits was clearly associated with the employees’ security of tenure. All this was accompanied by a declining trend of membership with unions. One of the main reasons could be that because of the precariousness of employment, employees were diffident to partake in union activity. But this had not prevented workers from protesting, as was seen in worker unrest in the garments sector and the automobile industry in various parts of the country. Srivastava pointed out that unionisation was more consistent with secure contracts of employment. There was enough empirical data to show that employers discouraged union formation.

The agitation by workers of MSIL in 2011 began with a dispute over suspension of workers, but at the heart of it lay the denied right to form their own union.

A special package for the textile and garment sector approved by the Union Cabinet has angered trade unions as the industry has been described as “seasonal”, which trade unions say is a ruse to introduce fixed-term employment and to facilitate hire and fire. The package is expected to promote employment generation and bring about social transformation among women, who comprise 70 per cent of the workforce of the garment and textile industry.

The proposal also offers to make Provident Fund optional for employees earning less than Rs.15,000 a month, which has been perceived as an attack on the social security scheme.

Clearly, when the economy was opened up, the impact on labour was not a real concern for the ruling party of the day. The irony is that 25 years later, the then ruling dispensation in 1991 and its successor seem unconcerned about the havoc those polices unleashed on the working class. The four core ILO conventions—the Freedom of Association and Protection of the Right to Organise Convention; the Right to Organise and Collective Bargaining Convention; the Minimum Age Convention; and the Worst Forms of Child Labour Convention—have not been ratified by India. Further, the tripartite agreements arrived at in various Indian Labour Conferences and also the recommendations of the Second National Commission on Labour are only indicative of the lack of sincerity of the government as far as the working class is concerned. Issues of a decent, living, minimum wage are not even on the agenda.

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