- Prelims: Current events of national importance(Different social service Schemes, Labour laws etc)
- Mains GS Paper II & III: Social empowerment, schemes for vulnerable sections, development and management of social sectors/services.
ARTICLE HIGHLIGHTS
- India’s gravest socio-economic problem is the difficulty a vast majority of citizens have in earning good livelihoods.
- Investors say the laws protect labour too much.
- Reforms were begun by the United Progressive Alliance government.
- Their principal thrust was to improve administration by simplifying procedures and digitisation.
- Those improvements were appreciated by employers as well as workers
INSIGHTS ON THE ISSUE
Context
About the labour codes:
- The new set of regulations consolidates 44 labour laws under 4 categories of Codes namely:
- Wage Code
- Social Security Code
- Occupational Safety, Health & Working Conditions Code
- Industrial Relations Code.
The Code on Wages, 2019:
- It applies to all the employees in the organized as well as unorganized sector
- It aims to regulate wage and bonus payments in all employments and aims at providing equal remuneration to employees performing work of a similar nature in every industry, trade, business, or manufacture.
The Code on Occupational Safety, Health and Working Conditions, 2020:
- It seeks to regulate the health and safety conditions of workers in establishments with 10 or more workers, and in all mines and docks.
The Code on Social Security, 2020:
- It consolidates nine laws related to social security and maternity benefits.
The Code on Industrial Relations, 2020:
It seeks to consolidate three labour laws namely:
- The Industrial Disputes Act, 1947
- The Trade Unions Act, 1926
- The Industrial Employment (Standing Orders) Act, 1946.
- The Code aims to improve the business environment in the country largely by reducing the labour compliance burden of industries.
Benefits of Labour Codes:
- Reduce litigation: They expected to reduce litigation as it streamlines the definition of wages.
- It will substantially reduce the number of minimum wages in the country from the existing more than 2000 rates of minimum wages.
- Minimum wage: They ensure that every worker gets a minimum wage which will also be accompanied by an increase in the purchasing power of the worker thereby giving a fillip to growth in the economy.
- Consolidation and simplification of the Complex laws: The three Codes (IR , SS & OSHW) simplify labour laws by subsuming 25 central labour laws that have been on the table for at least 17 years.
- It will provide a big boost to industry & employment and will reduce multiplicity of definition and multiplicity of authority for businesses.
- Single licensing method: It will give fillip to industries by ushering in substantive reform in the licensing mechanism.
- Earlier, industries had to apply for their license under different laws.
- Ease of Doing Business: According to the industry and some economists, such reform shall boost investment and improve ease of doing business.
- Gender parity: The maternity leave is increased from 12 weeks to 26 weeks.
- Women were allowed to work in mines under Pradhan Mantri Rojgar Protsahan Yojana (PMRPY).
Issues with these codes:
- Do not provide flexibility: The work hours provisions for regular workers do not provide flexibility to fix work hours beyond eight hours a day.
- Part-time employment: The codes have also missed laying down uniform provisions for part-time employees.
- Employee wages: There are also provisions that impact employee wages.
- Fines on businesses: The labour codes also chalk out fines on businesses for non-compliance of provisions, second offenses and officer-in-default.
- Impact of pandemic: After the current pandemic situation, a majority of small businesses are in no position to adopt and implement the labour code changes.
Impact of reforms:(V. V. Giri National Labour Institute’s interim report)
- Impact Assessment Study of the Labour Reforms: Undertaken by the States”, it provides insights into the impacts of the reforms so far.
- The report has focused on the reform of the Industrial Disputes Act, which is to raise the limits of applicability of laws relating to terms of service and modes of dispute resolution (roles of unions) to 300 people.
- The report spans the period 2004-05 to 2018-19.
- It focuses on six States which have implemented reforms: Rajasthan, Maharashtra, Andhra Pradesh, Tamil Nadu, Jharkhand, and Uttar Pradesh.
- The report reminds readers that labour laws are only one factor affecting business investment decisions.
- Investors do not go out to hire people just because it has become easy to fire them.
- Little effect on increasing employment in large enterprises: Reforms of labour laws have had little effect on increasing employment in large enterprises.
- The report says that the effects of labour reforms cannot be revealed immediately:
- Rajasthan, the first State to implement the reforms, seems to have benefited the least from them.
- Overall employment is affected by many factors: The share of employment in plants employing more than 300 people increased from 51.1% to 55.3% between 2010-11 to 2014-15 (the period when the emphasis was on administrative reforms), and then increased less, from 55.3% to 56.3%, in 2017-18, when some States made the bolder reforms favourable for employers.
- Though overall employment is affected by many factors, the bolder reforms post 2014 were designed to promote larger factories.
- Promotion of larger factories: This hardly happened because labour reforms that increase the threshold of application of the Industrial Disputes Act are conceptually flawed.
- They cannot induce creation of large enterprises to whom the laws will continue to apply.
- Employment in formal enterprises is becoming more informal: In fact, the report says, employment in formal enterprises is becoming more informal.
- Large investors can afford to use more capital and are also employing increasing numbers of people on short-term contracts, while perversely demanding more flexibility in laws.
- Formal employment: The report defines “formal” employment as the grant of paid leave, a written contract, and some “social security”.
- An enterprise should not have to employ more than 300 people before it provides these benefits.
Way Forward
- Fundamental reforms are required in the theory of economic growth: More GDP does not automatically produce more incomes at the bottom.
- The paradigm driving employment and labour policies must also change to enable the generation of better-quality livelihoods for Indian citizens, now and in the future.
- To achieve this, fundamental reform is required in the ways policies are made.
- Better livelihoods for all: If the benefit of reforms is supposed to be the improvement of ease of earning, better livelihoods for all citizens and with more dignity, whether they are farmers, factory workers, or service employees, should they not be listened to most of all, within their enterprises, and in the process of shaping policies
- Minimal essentials: Along with the right to be heard and dignity at work, these are the minimal “essentials” all employers must provide to all those who work for them, whether in small enterprises or domestic help.
- Increasing the threshold of the laws dilutes the rights of association and representation of workers in small enterprises.
- Skilling Under CSR Expenditure: The large corporate houses should also take the responsibility of skilling people in the unorganized sectors under CSR expenditure.
- Recognizing Invisible Labour: A national policy for domestic workers needs to be brought in at the earliest to recognize their rights and promote better working conditions.
QUESTION FOR PRACTICE
- Account for the failure of the manufacturing sector in achieving the goal of labour-intensive exports. Suggest measures for more labour-intensive rather than capital-intensive exports.(UPSC 2017)
(200 WORDS, 10 MARKS)
- The paradigm driving employment and labour policies needs to change for better-quality livelihoods. Discuss.
(200 WORDS, 10 MARKS)
