Friday, Dec 02, 2022

There is much in the labour codes that needs to be discussed and debated

Government’s response to migrants’ plight, economic crisis, has been to unilaterally bring changes in labour laws. But industrial prosperity cannot be built on a race to the bottom for workers.

The crisis of precarity, manifested in the plight of the circular migrants, was not created in a day. It grew over a period of time as scarce jobs in industry and services increasingly became jobs which did not offer any employment security. (Express Illustration: C R Sasikumar)

Only weeks ago, India, and the entire world, witnessed the spectacle of the country’s employment precarity pour out on its roads and highways — men, women and children, in distress of having lost jobs, income and shelter, with no recourse to social security to protect them in those hard days.

The crisis of precarity, manifested in the plight of the circular migrants, was not created in a day. It grew over a period of time as scarce jobs in industry and services increasingly became jobs which did not offer any employment security. Between 2004-05 and 2017-18, the share of salaried workers outside agriculture without any written contract increased from 60 per cent to 71 per cent. Even in private and public limited companies, this share increased from 59 per cent to 71 per cent. The government and the public sector do not offer a different picture with the share of such workers increasing from 27 per cent to 45 per cent over the period. We have estimated that the share of the circular migrants in all the precarious jobs outside of agriculture increased over this period from 47 per cent to 57 per cent. Many of the wage jobs in the organised sector came through contractors. In organised manufacturing, the reported share of contract labour increased from 13 per cent in 1995-06 to 36 per cent in 2017-18.

A policy balm to the exposed blisters of precarity was much needed. The response came in the form the three revised labour Code Bills — on Industrial Relations, Occupational Safety, Health and Working Conditions, and Social Security — which were introduced in Parliament in the Monsoon Session, and approved without any discussion or debate on September 23.

These three labour codes, along with the Code on Wages approved earlier, touch the lives of every Indian worker, except a tiny stratum of the public sector and managerial employees. In the name of codification, the Codes have implemented radical changes in the nearly century-old edifice of labour laws in this country. Yet, unlike the farm bills, they have not attracted much attention of the stakeholders. If anything, this may be a telling commentary of the fragmented and insecure landscape of industrial relations in the country.

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There is much in these Codes that needs to be discussed and debated. But the central touchstone is how, coming after the migrant crisis, and perhaps the greatest recession ever, they have treated the question of precarity.

Explained: In the three new labour codes, what changes for workers & hirers?

We might recall that in 2018, the government amended the Standing Orders on Employment Act and introduced the category of “fixed term” worker. That category, which creates a permanent cadre of temporary workers, with no prospects of career growth and job security, will, after codification, be the cornerstone of the emerging employment structure.


The “fixed term” worker at least figured in earlier drafts of the Codes, although consistently opposed by the workers’ organisations. But more glaring are the changes between the two Bills — one introduced in Parliament in the 2019 version, and the other introduced and approved by Parliament in 2020. I refer to changes that were neither recommended by the Parliamentary Standing Committee nor discussed in tri-partite forums with workers and employers. I mention a few important changes between the 2019 and the 2020 bills.

First, various government spokespersons had rationalised fixed-term employment by arguing that industries had resorted to the third-party engagement of contract labour to get around the rigidities in firing workers. But that has not stopped the Codes from further liberalising the provisions relating to employment of contract labour and making their regulation applicable only in establishments employing 50 or more workers, instead of 20 or more, as was the case earlier.

Second, although nominal provisions, with no teeth, have been mentioned for migrant workers, the key provisions which regulate the employment of inter-state migrant workers have been further diluted and made applicable only to establishments employing 10 or more such workers, compared to five earlier.


Third, along with the provisions of retrenchment, the applicability of the Standing Orders, which regulate the categorisation as well as the terms of employment of workers in establishments, has also been raised from 100 to 300 workers.

Fourth, the threshold for factories has now been doubled — from 10 to 20 workers with power — thereby eliminating a large number of important regulatory provisions for the smaller factories.

Fifth, relevant governments have been given much more leeway in exempting establishments from the applicability of a whole range of provisions in the Code.

Sixth, inspection provisions have been diluted in all the Codes and will no longer even be complaints based.

Opinion | Labour, farm Bills signal the end of inspector raj, freedom for farmers


Clearly, the government’s response to the migrants’ plight, the current economic crisis, and the opportunity presented by the multiple restrictions imposed by the pandemic has been to unilaterally bring about significant changes, all pointing in one direction — that of creating more, not less, precarity in the workplace. The changes have also made legal industrial action a virtual impossibility, and the presence of unions — less than one in five employees are currently represented by unions even in formal sector establishments — less possible. One may add that the Code on Social Security delivers the final blow in the emerging architecture — with no commitments given to the informal workforce.

These changes may appeal to myopic interests which believe that industrial prosperity can be built on a race to the bottom for workers. But as the National Commission for Enterprises in the Unorganised Sector (NCEUS) has cogently argued, and the current crisis shows, informality contributes to inequality and to conditions which make sustainable growth impossible, and economic recovery more difficult. It also creates conditions in which employers under-invest in workers’ capacities and workers are not invested in a company’s future — leading to low productivity and lack of competitiveness. The NCEUS, therefore, made a strong case for changes which balanced employers’ interests with workers’ security and rights. It is this thinking that has led somewhat more enlightened governments, and industrialists, in India and the world over, to investing in the long-term future of workers and reversing the tide of precarity.


This article first appeared in the print edition on October 3, 2020 under the title ‘Towards greater precarity’. The writer is former member of the National Commission for Enterprises in the Unorganised Sector.

First published on: 03-10-2020 at 02:20:33 am
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