New laws for the new economy

Historically, labour laws have favoured organised labour but have neglectedcrores of workers in the unorganised sector. Some of the most prosperousindustries in the State like textiles became chronically sick sick as labourlaws failed to keep pace with the changing times. The result was that theprivate sector simply cut back on hiring, banishing the bulk of the workforce to the unorganized sector and outside the purview of the laws.

It’s a fact that one-sided labour laws that provide benefits to organizedworkers automatically deprive less favoured labourers. The worst statementon India’s labour regime is that of some 360 million workers, over 90 percent are in the unorganized sector. Few workers can move from informalemployment to varieties where they can enjoy full benefits. Economic reformshave so far moved forward in areas where there is minimal politicalresistance. This is why the external sector was the first to see its doorsthrown open. There has been progress in finance and other services.

However, labour has been largely untouched. MNCs and new industries comingup in the state avoid the burden of the labour laws by buying machineryrather than hiring people. It imposes a far greater cost on the Indianworker, since employers are too scared to hire, preferring to invest inlabour saving machines.

Unions are unconcerned. Seventy per cent of the membership of central tradeunions comes from the public sector. Against this backdrop, the Maharashtragovernment says amendments in the labour laws are necessary in view ofongoing liberalisation and introduction of uniform floor rate for sales tax.“Our objective is to attract more investment while protecting the welfareof workers,” say officials.

The plan is to increase the limit of workers to be covered under theFactories Act. At present, the Factories Act is applied to industrial unitshaving less than 10 workers without power supply and about 20 workers withpower supply. The government wants to increase this limit to 25 and 50workers respectively with a view to reducing the “harassment and inspectorraj.”

The government is also looking into the Contract Labour Act with a view tointroducing a “hire and fire” policy especially in underdeveloped areasfor new industries to come in. However, the state Labour Minister HussainDalwai is opposed such a move on the grounds that it may lead to misuse byfactory owners and affect workers’ interests.

The state government, led by its Chief Minister Vilasrao Deshmukh, went onto stress the importance of providing social security and decent minimumwages to labour. “We have to promote industrial safety and preventexploitation of labour,” he added.

Deshmukh says that the labour can not prosper without industrial growth.“Labour laws have to be flexible if industry is to face internationalcompetition”. He has assured the industry and trade that his governmentwill simplify various procedures including registers, returns andrationalise the system of visits by inspectors.

Reacting to the State government’s proposals, the Joint Action Committee ofTrade Unions said they would not give any proposal for change in labour lawsto the State government as “new proposales will only exploit labourfurther.” “If they are really keen on making changes in labour laws forthe cause of labour, that can wait. It cannot be linked to these changes,”said deputy convenor of the Joint Action Committee, A D Golandaz.

“They claim that the attempt is to make Maharashtra progress further inindustries and commerce, to which we have no dispute, but should it be atthe cost of labour?” he asked.

Today, if a company employing 100 workers needs to retrench people, it hasto take government sanction. According to the changes proposed, if a companyemploys a maximum of 300 people it does not need government sanction. “Thenotice of change provision can be waived off if the employer needs to changeon conditions of modernisation, computerisation and rationalisation. How canwe accept that?” says Golandaz.