Commission of contradictions

Published : Sep 12, 2003 00:00 IST

The Report of the Second National Commission on Labour takes note of the pernicious effects of the globalisation and liberalisation processes on the working class, but its recommendations might do little to mitigate the workers' misery.

One has to accept the fact that we have travelled quite some distance along the road to full-scale globalisation. It is technology that has made globalisation possible. It has generated new hopes and given rise to new dangers and temptations. Its impact can already be seen in many fields of human activity. Old mind-sets may prove a handicap in responding to the new situations and factors that have emerged.

A large number of workers have lost their jobs due to VRS, retrenchment and closures both in the organised and the unorganised sector. The exact number is not available. According to our information, no data on this subject has been compiled by any State government.

- From the Report of the National Commission on Labour, 2002.

IT is ironical that while the first excerpt refers to the inevitability of globalisation, the next one exposes one of the many aspects of its impacts. Unfortunately, the report of the second National Commission on Labour (NCL) has little to do with the interests of the industrial working class. The terms of reference of the second NCL are heavily loaded in favour of employers. According to the Government of India resolution that set up the Commission, the NCL had to suggest means for the rationalisation of existing laws relating to labour in the organised sector and umbrella legislation to ensure a minimum level of protection to workers in the unorganised sector. The majority of central trade unions have opposed its recommendations. That is one of the reasons why the recommendations pertaining to labour reforms have not been implemented, though it is more than a year since the report has been submitted to the government.

In fact, a trade union representative who was a member of the Commission submitted a note of dissent to the report. C.K. Saji Narayanan, representative of the Bharatiya Mazdoor Sangh, stated in his note of dissent: "The economic reforms and the consequential labour reforms for the last decade had been in a totally wrong direction. Capitalist ideology has swallowed the thought process at the helm of affairs. It discusses how much rights of workers are to be curtailed and why not employers be given unfettered rights against workers... Globalisation is an excuse to hurt the workers. Globalisation has caused damages to the workers in many ways." The Indian National Trade Union Congress (INTUC) representative seemed to have given his unqualified assent to the report. The other trade unions - the Centre of Indian Trade Unions (CITU), the All India Trade Union Congress (AITUC), the Hind Mazdoor Sangh (HMS) and so on - boycotted the Commission as they had not been consulted in the framing of the terms of reference. In fact, in the last Indian Labour Conference held in September 2002, the government wanted a consensus on the NCL's recommendations. The trade unions opposed it and demanded a thorough discussion on the recommendations, which is yet to take place.

One of the crucial recommendations of the NCL pertains to amendments to the Industrial Disputes Act. The existing provisions of the IDA on layoff and retrenchment apply to an industrial establishment in which not more than 100 workers are employed. There are sections that protect the worker from arbitrary layoffs. The Commission recommends: "Prior permission is not necessary in respect of layoff and retrenchment in an establishment of any employment size. Workers will, however, be entitled to two months' notice or pay in lieu of notice, in case of retrenchment." With respect to closures, the NCL has freed employers from the obligation of obtaining prior permission from the government for closing down establishments employing up to 300 workers. In fact, there was a proposal from the Finance Minister in his 2001 Budget speech to increase the limit to 1,000 workers. The trade unions protested, for it was clear that almost every unit would come under this limit, giving employers unrestrained right to close down their units. As a critique of the NCL put forward by the CITU points out, it seemed initially that the Commission had disagreed with the Finance Minister's suggestion.

However, this was not the case. The NCL report recommends that employers of units with more than 300 workers could make an application for permission for closure 90 days before the intended date of closure and "if permission is not granted by the appropriate government within 60 days of the receipt of the application, the permission will be deemed to have been granted". Such a recommendation is clearly intended to facilitate closures. At the same time the Commission notes that in the post-reform period, a total of 129 million man-days were lost in lockouts, and 80.2 million were lost owing to strikes between 1991 and 2000. "Conditions of employment have been uncertain, and many workers do not seem to be willing to go on strike or resort to action that may put their jobs in jeopardy. But employers seem to have acquired more confidence and are resorting to lockouts more often. The agreements that are arrived at too are more in favour of the managements. This reflects a changed situation."

According to Sukomal Sen, general secretary of the All India State Government Employees' Federation, World Bank reports too mention that living conditions and poverty have increased in India but it did not mean that the Bank was against globalisation. The NCL's homilies seem to be on similar lines. The recommendations of the NCL are all anti-labour, the veteran trade unionist said, and added that the tragedy was that a large number of people were unaware of the pernicious effects of liberalisation.

The Commission's recommendations for establishments employing less than 20 workers, if implemented, can affect workers' interests. It has suggested the exemption of all such units from the purviews of general labour laws. A draft law titled "The Small Enterprises (Employment Relations) Act, 2002" confers the right on employers of such units to lay off and retrench workers by paying a compensation equal to 20 days' wages per year of service. As for wages, it has been left to the State governments to fix the minimum wages for enterprises under this Act. The CITU has pointed out that several firms in the Information Technology sector operate with less than 20 workers and yet have an investment and turnover of several crores of rupees. It has argued that these firms definitely do not deserve the special treatment that the Commission has designed for them.

Even as such moves are certain to add to the numbers of unemployed, it is pertinent to see what the NCL's report states on contract labour. It ordains that organisations must have the flexibility to adjust the number of their workers based on economic efficiency. While recommending that constract labour should not be engaged for core production or service activities, it also says that engagement of contract labour in such activities can be done for sporadic seasonal demand. The unions have argued that the concept of perennial work as envisaged in the existing Contract Labour (Regulation & Abolition) Act has been given short shrift by the Commission.

On the aspect of social security, the Commission's study group had pointed out that while developed countries were spending 40 per cent of their gross domestic product (GDP) on safety nets, the public expenditure on social security in India was a mere 1.8 per cent (while in Sri Lanka it was 4.7 per cent). Hence it was naturally expected that the Commission would have taken cognisance of the observations of its own study group and recommended greater public expenditure on social security. Instead, what were proposed were self-contributory social insurance schemes.

While employers have been given the unfettered right to close units or retrench workers, the workload of employees and workers is sought to be increased. The Commission recommends three gazetted holidays, with two more days to be added by States according to their specific traditions, and 10 restricted holidays in a year for each employee, and Saturday as a working day if there is a holiday in a five-day week. More significant is the suggestion that the approach to working hours should not be rigid. The Commission recommends that while the total number of working hours a day should not exceed nine hours, it should not exceed 48 in a week. No corresponding increase in wages has been suggested.

The report has also recommended that each establishment should have a Grievance Redressal Committee consisting of equal numbers of representatives of workers and employers. It is clear that the basic approach of the report is to wean trade unions from adopting confrontationist tactics. It mentions negotiating agents and has recommended that provisions be made in the law for determining such agents, particularly on behalf of workers. The negotiating agents will adjudicate disputes and may take the shape of labour courts and labour relations commissions to be set up at the State and Central levels. A trade union too can be the negotiating agent, but only if 66 per cent of the workforce endorses its authority. It also suggests that where bilateral agreements are not possible, a third party other than the government be brought into the adjudication process.

There is little doubt that the drafters of the NCL report were not unaware of the ground realities. It is their own observation that employment opportunities are not increasing and that globalisation-inspired growth cannot be described as job-led growth; that there is a general slowdown in industrial activities; that small scale industries have been worst affected; that since 1992, many companies have resorted to downsizing by using VRS; and that except the Information Technology, telecommunications and entertainment industry, all other traditional industries in India are facing problems. There is no demand for their products and they have had to face tough competition from imported products or products manufactured by multinationals in India. Most important, the NCL report notes: "The burden of structural adjustment has fallen mostly on the poor. Whenever either Central or State governments balance their budgets, social expenditures are the first victims." The hiatus between the observations of the Commission and its recommendations favouring the employer class is indeed striking. However, it will be difficult for the government to implement at least the terms of reference relating to labour laws, as that is where much resistance will be expected. And this time, all unions seem to have made up their minds to oppose it.

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