That the second National Commission on Labour receives grace time to present its report indicates that the Central government is undecided about its labour reform programme.
THE recent reshuffle in the Union Labour Ministry may have been done with a view to lubricating the process of aggressive labour reforms that has been kickstarted by the National Democratic Alliance (NDA) government, but the induction of Sharad Yadav as the new Labour Minister and his posturings only indicate that the transition to flexi-labour may not work out as smoothly as envisaged. Sharad Yadav, none too happy after being ousted from the Civil Aviation Ministry, seems keen to make a point with whatever is left of his socialist credentials.
Soon after taking over as Labour Minister, Sharad Yadav addressed a meeting in his capacity as the Chairman of the Central Board of Trustees (Employees Provident Fund) on September 24, where he referred to some future challenges to the reform process. Among them was the need to provide social security to those who were yet to be covered by any scheme and to ensure the timely collection of contributions from all establishments covered by schemes. He also hinted at a plan to amend the Provident Fund Act so as to widen the coverage of establishments.
None of the Labour Minister's proposals has endeared him to employer organisations, who, it is learnt, suggested the deferment of any such amendment until the report of the second National Commission on Labour (NCL) was released. Ironically, it had been the trade unions that had so far insisted on the government holding back labour law amendments until the NCL's report came out.
That there may be hiccups in finalising the NCL report was evident from the extension of the commission's term by another three-and-a-half months. The NCL, set up on October 15, 1999, through a notification, was asked to submit its report within two years. But now the date for submission has been extended to February 15, 2002. This is the second National Commission on Labour and it came more than 30 years after the First National Commission on Labour was appointed in 1966.
The zeal with which the Bharatiya Janata Party-led government went about setting the terms of reference for the NCL without taking the trade unions into confidence, was criticised by representatives of workers all over the country. The main terms of reference for the commission include the issue of social security; the impact of globalisation; the formulation of umbrella legislation that will cover the unorganised sector, women, child workers; skill development, training and worker's education; and above all a review of labour laws. That labour law reforms take precedence over the issue of globalisation has become increasingly evident. But even as the commission looks into the various aspects of labour reforms, the NDA government has kept voicing the need to amend the rigid labour laws, especially sections of the Industrial Disputes Act, 1947, and the Contract Labour (Regulation and Abolition) Act, 1970.
The need to amend labour laws first found mention in the Budget speech of Finance Minister Yashwant Sinha and took everyone, including the then Labour Minister, Satya Narayan Jatiya, by surprise. Prime Minister Atal Behari Vajpayee expressed similar sentiments in his address to the Economic Advisory Council and the Indian Labour Conference this year. It soon became apparent that the government was not looking for a consensus or for any tripartite discussions involving the Labour Ministry as well as the trade unions. Therefore the extension of the NCL's term came as a surprise to the trade unions, which expected the report to be submitted this October-November. The delay, if anything, gives the unions more time while they await some amendments to be moved in the forthcoming winter session of Parliament. But their consistent stand has been that no amendments be passed prior to the release of the NCL report; the unions are also united in seeking to oppose recommendations if they are detrimental to labour interests.
Despite the opposition of unions, including the Bharatiya Mazdoor Sangh (BMS), amendments to the Trade Union Act, 1926, were passed in the monsoon session of Parliament. The amendments made registration of unions difficult and participation of "outsiders" in union activity impossible. However, it may not be all that smooth in the case of the Industrial Disputes Act and the Contract Labour Act, the proposed amendments of which will have far-reaching implications for the working class. On the other hand, they stand to benefit employers greatly as "hire and fire" and retrenchment will become easier even in the organised sector.
The new Labour Minister had asserted during the Group of Ministers (GoM) meeting on October 11 that the amendments to the Industrial Disputes Act and the Contract Labour Act be given shape and finalised. The meeting chaired by K.C. Pant, Deputy Chairperson of the Planning Commission, made no headway, with Yadav insisting that the GoM wait for the commission's report. As a result, a group of Secretaries was constituted to look into the issue though no-time frame has been suggested. Sharad Yadav apparently expressed his apprehensions about the amendments getting passed in the Rajya Sabha and impressed upon the GoM the need for a consensus.
Apart from the other central trade unions, the BMS too has opposed the GoM's stand. Laxma Reddy, national secretary of the BMS, questioned the competence of the GoM to deliberate on the subject of labour reforms. The BMS, which also rejected the report of the Task Force on Employment Opportunities headed by Montek Singh Ahluwalia, suggested that a tripartite committee be set up to discuss the issue of labour law reforms. "Without labour representatives, what is the meaning of the GoM and a discussion on labour laws," he asked. He stated that the BMS' clearly wanted the replacement of the GoM with a tripartite forum. The unions, he told Frontline, had come together to counter the government's aggressive pursuit of the reform programme.
ON October 17 at a national trade union convention, several unions including the Centre for Indian Trade Unions (CITU), All India Trade Union Congress (AITUC) and the Hind Mazdoor Sabha (HMS) criticised the reports of three committees - the Geethakrishnan Committee or the Expenditure Reforms Commission, the Rakesh Mohan Committee (pertaining to the Railways) and the Montek Singh Ahluwalia Committee - for their recommendations to make downsizing, retrenchment and drastic pruning of the workforce much easier.
The recommendations of the Ahluwalia Committee were criticised severely. In the section on reform of labour laws, it is stated that in a globalised world, persisting with labour laws that are much more rigid than those prevailing in other countries only makes us uncompetitive not only in export markets but also in domestic markets. Some changes, the Task Force rationalises, are therefore necessary if we want rapid growth. It further states that the most important change needed is to abolish the requirement of prior permission of the government for retrenchment, lay-offs or closure by deleting Chapter VB from the Industrial Disputes Act. As a sop or as what the Task Force calls a "balancing measure", it has recommended a raise in the retrenchment compensation from half a month's pay per year of service to one month's pay per year of service. It has recommended the deletion of Section 11A of the Industrial Disputes Act, which allows labour courts, industrial tribunals and national tribunals to give appropriate relief in case of discharge or dismissal of workmen.
Ironically, while the Task Force's apparent mandate is to deal with employment opportunities it recommends something quite to the contrary. It suggests a system of short-term employment contracts under which workers hired on contract basis can be terminated at the end of the contract period without scope for dispute. To avoid any legal challenges on the grounds that such labour be treated on a par with permanent labour, the Task Force suggests that a premium be given over the normal wage for such labour. As for the Contract Labour Act, the Task Force recommends amendments that would help to outsource free peripheral activities, the rationale being that "an important aspect of cost-effectiveness is that the service can be discontinued or contracted on a reduced scale in difficult times."
Difficult times are ahead indeed, not for employers but for workers. With the report of the second NCL being delayed citing logistical problems, the government's intentions do not seem to be transparent. Also, it is learnt that the work of the six study groups constituted by the NCL to make recommendations to the NCL, is yet to be completed, with only two groups having submitted their opinions. The fact that more time has been given to the remaining groups to give in their recommendations indicates that the government may not be prepared to take unpopular and politically sensitive measures as of now. In all probability, the two Bills, amending the Industrial Disputes Act and the Contract Labour Act, may be placed in the winter session of Parliament in spite of the trade unions' plea to hold back amendments until the release of the NCL report.
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