A nnouncing the first phase of the national lockdown on March 24, Prime Minister Narendra Modi appealed to employers to be compassionate towards their employees. On April 14 when the first phase of the lockdown came to an end, he once again appealed to employers not to dismiss their employees. By then there were reports of employers laying off their workers and of jobless migrant workers being anxious to return home. Perhaps anticipating that employers would resort to such tactics, the Labour Ministry sent a letter to employers on March 20, pointing to the catastrophic situation caused by the COVID-19 pandemic, which could lead to services of workers being dispensed with or workers being forced to go on leave without wages and salaries. Stating that coordinated efforts of all sections of society were needed to meet the public health challenge, it advised employers to extend their cooperation by not terminating their employees, especially casual contract workers, or reducing their wages. Strangely, the advisory also said that if the place of employment became non-operational due to COVID-19, the employees would be deemed to be on duty. It stated that reduction of wages or termination of employees would not only weaken their financial condition but lower their morale to fight the epidemic. Neither the Prime Minister nor the Ministry spoke about “labour reforms”. That the appeals proved ineffective became evident when thousands of migrant workers deprived of their jobs decided to return to their home States, many of them traversing hundreds of kilometres on foot or by cycle.
Taking advantage of the lockdown and the inability of workers to organise protests, some State governments, mainly those headed by the Bharatiya Janata Party (BJP) and the Congress, announced sweeping changes in labour laws making it easy for employers to hire and fire workers and extend the working hours to 12 from the mandatory eight hours with a view to reviving industrial production. When the Centre announced easing of lockdwon restrictions outside containment zones from April 20, the BJP government in Madhya Pradesh interpreted it as relaxation in labour laws. On April 22, the Shivraj Singh Chouhan government invoking Section 5 of the Factories Act, 1948, issued a gazette notification that exempted all factories coming under the ambit of the Act from its provisions relating to weekly and daily working hours and interval for rest for adult workers for a period of three months. The relaxations were evidently not in labour’s favour. As per the notification, workers could now be made to work for not more than 12 hours a day as compared to eight hours before and not more than 72 hours a week; they would not be allowed to work for more than six hours without taking 30 minutes of rest; there would be no factory inspections for three months; third party inspection was allowed; and there would be no inspection for firms employing less than 50 workers. Factory licences would be renewed once in 10 years and new licences and registrations (of factories) issued in a day.
Section 5 of the Factories Act, allows a State government to issue a gazette notification exempting any factory or factories from all or some provisions of the Act (except Section 67) for a maximum period of three months under a situation of “public emergency”. Section 5 describes a “public emergency” as one where the security of India or any part of its territory is threatened by war, external aggression or internal disturbances. As the Centre had not declared the COVID outbreak a national or public emergency, the dilution of labour laws in the present circumstances was inexplicable.
On May 6, the Yogi Adityanath government in Uttar Pradesh issued an ordinance to revive industrial activity and investment for which, it argued, a reprieve from labour laws was necessary. The Uttar Pradesh (Temporary Exemption from Certain Labour laws) Ordinance, 2020, in one stroke has exempted all industries and manufacturing units from observing factory laws for a period of three years. The ordinance did not resort to Section 5 of the Factories Act.
The exemptions do not include application of the Building and Other Construction Workers Act, 1996; Bonded Labour (Prohibition) Act, 1976; Section 5 of Payment of Wages Act (the right to receive timely wages) and Workmen Compensation Act, 1923; and laws pertaining to the employment of women and children. Apart from encouraging investment, these laws were meant to encourage setting up of new industrial and manufacturing units and continued operation of the existing ones. As per the Factories Act, no adult, 18 years of age and above, could be made to work for more than nine hours a day and 48 hours a week.
The moves of the Madhya Pradesh and Uttar Pradesh governments had a domino effect. In the second week of May, the Gujarat government issued an ordinance providing for 12 hours of work a day and a maximum of 72 hours a week. The ordinance exempted new establishments from labour laws except the Minimum Wages Act, the Industrial Safety Rules and the Employees Compensation Act. Another BJP-ruled State, Himachal Pradesh, increased the working hours from eight to 12 hours by amending the Factories Act.
It was apparent that these governments were able to roll out such changes as they did not anticipate any protest as much of the industrial workers had left the places in which they worked and lived, and lockdown restrictions prevented trade unions from mobilising workers for a campaign. The workers who had returned to the cities were fewer in number and were expected to have less bargaining power.
In some places, the authorities were not making it easy for those who wanted to return to work. On May 20, clashes were reported in the Dungahera industrial area of Gurugram, Haryana, when migrant workers, who were living in and around the National Capital Region, returned to rejoin work. They were stopped from entering the industrial areas and were lathicharged by the police. “First, they don’t let the workers leave, and when they want to work, they are not allowed to,” said Satbir Singh, an office bearer of the Centre of Indian Trade Unions (CITU). There was unrest at the Maharaja Shree Ummaid Mills in Pali, Rajasthan, when workers demanded payment for work done during the lockdown period. The police resorted to lathi charge, and several workers, including their 68-year-old leader Ramnath Singh, were taken into custody. Ramnath Singh later died in a hospital. Union leaders alleged that it was a custodial death.
Trade unions resent reforms
Trade union representatives believe that the changes in labour laws and the hostility of employers will lead to labour unrest in the near future. Ten central trade unions—the Bharatiya Mazdoor Sangh (the trade union wing of the Rashtriya Swayamsewak Sangh), the CITU, the All India Trade Union Congress, the Indian National Trade Union Congress, the Hind Mazdoor Sabha, the All India United Trade Union Congress, the Self Employed Women’s Association, the Labour Progressive Federation, the All India Co-ordination Committee of Trade Unions and the United Trade Union Congress— have criticised the amendments to the labour laws. These unions have written to the International Labour Organisation about the dilution of the Factories Act and other laws without holding tripartite consultations. Drawing its attention to the enforced reverse migration of migrant workers due to the inability of the government to provide relief to them during the lockdown period, they said that the Inter State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979, which enjoined several responsibilities on State governments, including features such as registration of workers, establishments and contractors and principal employer’s obligation to pay wages, was done away with by subsuming it under the provisions of the Occupation, Safety, Health and Working Conditions Code, 2019.
The Congress government in Rajasthan raised the working hours from eight to 12 and amended the Industrial Disputes Act to increase the threshold for laying off and retrenching workers, from 100 to 300. (The previous BJP government in the State had made far-reaching changes in labour laws causing a lot of resentment. Frontline , October 13, 2017) In Punjab, another Congress-ruled State, the working hours were increased by amending the Factories Act. Maharashtra, Goa and Odisha have also tweaked their labour laws to suit industrial needs.
Callous Centre
Interestingly, Union Finance Minister Nirmala Sitharaman while presenting the government’s relief package for the revival of the economy in mid-May did not mention labour. She made a passing reference to the four labour codes that had subsumed 44 labour laws and were pending in Parliament. Not once during the unveiling of the five series tranche did the Minister talk about giving unemployment allowance to those who lost their jobs or livelihood. While the package had several provisions relating to ease of doing business, the Minister did not reveal how many workers had been laid off during the lockdown.
On the one hand, the government let a huge number of factory workers leave their places of work and stay by not helping them financially, and on the other, it watched sweeping changes being made to labour laws through executive orders. The government has been pushing the idea that the post-COVID employment situation will be different, with “working from home” becoming an acceptable norm, but it gave production floor workers no options. While white-collar workers have been laid off and asked to accept wage cuts in view of the economic crisis sparked by the pandemic, blue-collar workers have been losing jobs ever since the economic slowdown began in the last quarter of 2018 and spilled over to 2019.
Industry associations that participated in a webinar organised by Union Labour Minister Santosh Gangwar on May 8 suggested increasing the duration of working hours to 12 and suspension of labour laws, barring those relating to minimum wages, statutory dues and bonus, “for the next two-three years” to “help industry come out of the present crisis”. They suggested that the lockdown period should be considered as layoff period and sought reduction in social security costs on employees and employers. The Centre’s decision to reduce Employees’ Provident Fund contributions from 12 to 10 per cent clearly indicates that the Labour Ministry paid more attention to meet the needs of industry than to protects the interests of workers.
Azim Premji’s warning
While NITI Aayog experts and much of industry gushed over the amendments to labour laws, calling them “brave reforms” and the “boldest and bravest initiatives”, two industrialists, known for their outspokenness, warned that the such changes would have far-reaching consequences. Azim Premji, founder of Wipro Limited, in an article published in a leading financial daily, wrote: “It was shocking to hear that various State governments encouraged by businesses are considering suspending or have already suspended many of the labour laws that protect workers.” This would exacerbate the conditions of low wage workers and “the way we do business and industry”, he said.
Figures provided by the Centre for Monitoring Indian Economy (CMIE) for the week ending May 3 showed that the unemployment rate at 27.1 per cent was the highest so far. This was accompanied by a surge in labour participation, that is, a surge of people seeking work. Small traders and wage labourers were the worst hit by the lockdown. Between March and April, 91 million people had lost their livelihoods. Large entrepreneurs, those with fixed assets, according to the CMIE, had reported job losses. This, the CMIE noted, was unusual as a businessperson normally would not declare job losses unless the trend was irreversible. Some 27 million people in the 20-30 age group and 14 million people in the 25-29 age group had lost their jobs. The loss of jobs, the CMIE observed, would have a bearing on savings, which in turn would have long-term implications.
While governments the world over are giving generous unemployment doles and even discussing the importance of public spending, the crisis created by the pandemic has presented the Indian government with an opportunity to push through policies it could not have thought of implementing in pre-COVID times.
