A looming threat

Print edition : March 02, 2002

Trade unions react strongly to the move to amend the IDA in order to make layoffs and retrenchment easier than at present.

THE contentious issue of amending sections of the Industrial Disputes Act (IDA), 1947, facilitating lay-offs as part of the ongoing process of labour reforms was cleared by the Union Cabinet on February 22, the day after polling concluded in the Uttar Pradesh Assembly elections. This was no mere coincidence. Immediately after the announcement of the Cabinet decision, all Central trade unions, including the Bharatiya Mazdoor Sangh (BMS), voiced their protest against the move.

Thus, once again, without waiting for the report of the Second National Commission on Labour (NCL), the tripartite body involving trade unions, the government took a decision that would impact on the lives of the working class. The next day, the Prime Minister, addressing a seminar marking the golden jubilee of the Employees State Insurance Scheme, emphasised that "social security cannot, in the post-liberalisation environment, continue to mean exclusively state-funded and state-administered security schemes".

As expected, the Cabinet decision invited strong responses. While Labour Minister Sharad Yadav reportedly opposed the Bill in its amended form, the Shiv Sena, an important constituent of the ruling National Democratic Alliance government, threatened to walk out of the alliance unless the decision was reconsidered. The Shiv Sena supremo Bal Thackeray declared that the party may join hands with the Left parties and call for a nationwide strike. The BMS, at its 13th national conference in Thiruvananthapuram, took a similar position. Its founder Dattopant Thengadi, addressing the conference, said that the Central government had sacrificed the interests of the working class in its pursuit of globalisation. The amendments, he said, would make it easier for company managements to lay off workers and close down industrial units on the pretext that they were economically unviable.

The implications of the amendments are manifold. Chapter V-B of the IDA placed certain procedural restraints on employers in the matter of lay-offs, retrenchment and closure. The abolition of this chapter would ensure that units employing up to 1,000 workers can be shut down without the need to seek clearance from the government. At present, such permission is not required in the case of units employing less than 100 workers. The Cabinet decision only echoes what has been recommended by the Group of Ministers headed by Planning Commission Deputy chairperson K.C. Pant. While the move to effect labour reforms was indicated by Finance Minister Yashwant Sinha in his Budget speech last year, sustained protests by trade unions, including the BMS, had stalled any such move.

Later in the year, the Task Force on Employment Opportunities headed by former Finance Secretary Montek Singh Ahluwalia, came up with the argument that rigid labour laws were hurdles in the way of employment generation.

The Cabinet decision is but a culmination of several interventions over the past one year to introduce changes in labour laws. Amendments to the Contract Labour (Abolition and Regulation) Act, 1970, and the Trade Unions Act, 1926, are also expected to be made. Trade unions argue that the majority of the units in the organised sector would be affected as there were very few companies that had an employee strength of more than 1,000 workers. The Centre of Indian Trade Unions (CITU), the All India Trade Union Congress (AITUC), the Indian National Trade Union Congress (INTUC), the Hind Mazdoor Sabha (HMS), the United Trade Union Congress (UTUC), the UTUC-Lenin Sarini, the All India Central Council Trade Unions (AICCTU) and the Trade Union Coordination Council (TUCC) have decided to observe a national protest day on March 14. On March 4, all trade unions, including the BMS, will meet to chart out a strategy.

D.L. Sachdeva, AITUC secretary, told Frontline that only 5 to 10 per cent of the industries would be left out if the limit to exempt industries from the I.D. Act was raised to 1,000 workers. He criticised the government for not waiting for the NCL's report, which was due on February 28 (it is learnt now that the Commission had sought an extension). "The NCL's work is now infructuous with the government going ahead and announcing these amendments," he said.

Referring to the proposed amendments to the IDA, Tapan Sen and W.R. Varadarajan, national secretaries of the CITU, said that initially employers had wanted the provisions of the Act made applicable to units employing 300 or more workers, as was the position in 1976. The government had gone even beyond that, raising it to 1,000. The Maharashtra government, incidentally, had amended its Industrial Tribunal Act to raise the ceiling from 100 to 300 workers. R.A. Mittal, national secretary of the HMS, said that with the amendment there would be a greater sense of insecurity.

Even the INTUC, whose support to the rest of the trade unions has not always been unconditional, given its flexible views on liberalisation, has now joined issue with the government regarding the amendments. G. Sanjiva Reddy, president of the INTUC, told Frontline that he had met the Prime Minister and suggested that the government wait for the NCL's report. The INTUC had asked for the compensation package for retrenchment to be raised from 45 days' wages for each year of service to 90 days. The INTUC has always seen liberalisation as an inevitable and finds little merit in protesting against it.

The amendments to the Act may well be the tip of the iceberg. Trade unions also want the Group of Ministers' observations on the Contract Labour Act. The notice period for strikes or lockouts in public utility services has been enhanced to 45 days, making flash strikes illegal. Section 22 of the I.D. Act deals with strikes and lockouts and the proposed amendment recommends a mandatory notice for strike in all cases and also the introduction of a system of strike ballot whereby a strike can be called only if it is supported by a qualifying majority of the workers. Tapan Sen said that all these measures were aimed at finishing off the trade union movement.

While trade unions are apprehensive that the Bill will be passed in the Lok Sabha, they are banking on the Congress(I) to defeat it in the Rajya Sabha. Unions feel that even if the Maharashtra pattern is pushed through and the amended Act allows for retrenchment and closure of units employing up to 300 workers instead of 1,000, it will not be acceptable to them. After all, that would mean neutralising the gains of their struggles over the past several decades.

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