Given its political constraints, this is evidence of courage. If the UPA government does amend the Contract Labour Act, as this newspaper reports it is planning to, it could be the second big reformist moment after airport modernisation. Plans to be brave have combined with efforts to be smart: the amendment will apply to textiles, where India’s performance has surprised both itself and outsiders. In the post-multi fibre agreement regime, textile exports to the US has increased by 22 per cent in 2005. This is lower than the spectacular Chinese performance: 44 per cent. But not even India’s textile ministry had expected to be half as good as China.It could have been better had textile manufacturers been able to employ workers during boom times, and lay them off — with severance payments, of course — during the slack season. That is what the amendment aims to do. It will also boost employment in textiles, a naturally labour intensive industry. All data shows there has been no significant rise in organised sector employment in textiles, despite the export boom. Domestic and foreign capital is wary of having to pay workers when orders books are empty.If this change goes through, some other sectors need the same help. Automobiles, for one. The labour trouble at Honda’s Gurgaon factory and Toyota’s Bangalore unit are evidence of the tension between economic conditions that offer big investment and employment opportunities and economic laws that restrict factor of production mobility. If the UPA, understandably, chooses the incremental way to labour reform, hopefully the big issue will be back on the agenda some day: the Industrial Disputes Act. At one time, factories with over a 1,000 workers used to require government permission for lay-offs. The size threshold was amended in 1976 to 300. In 1982, when Indira Gandhi was back in power, this was further reduced to 100. There it stands, and kills India’s manufacturing and mass employment potential. The act requires the government becoming a third party to the dispute, even if many employees are satisfied with the severance package. Any disagreement between an employer and an individual workman becomes an industrial dispute regardless of the fact that no other employee or trade union is a party to the dispute. Fair dues can be worked out without making every negotiation a grist for the labour ministry’s mill. That’s not oppression. That’s common sense.
