Friday, Oct 07, 2022

Ordinances by states to change labour laws are a travesty

Indian labour laws had the unique distinction of representing the state’s war on both capital and labour.

Ordinances by states to change labour laws are a travesty Basic necessities like environmental protection, worker safety, hazardous industrial activity, basic rights, require regulation. (Express File Photo by Gajendra Yadav)

Indian labour laws needed serious reform. But the ordinances being promulgated by state governments are, under the pretext of reform, unleashing a whole-scale assault on labour. By increasing working hours, the state wants to literally break their bodies, their freedom and their dignity. By taking away any serious pretence of grievance redressal, the state wants to immobilise all questions of justice. States want to ensure that labour has no bargaining power left.

Indian labour laws had the unique distinction of representing the state’s war on both capital and labour. They were irrelevant to 90 per cent of India’s labour force. At best, and very rarely, they protected a small section of it. They created enough distortions to prevent greater formal protections for the labour force. The work of KR Shyam Sundar showed in great detail that these laws were, in his phrase, “not even a paper tiger.”

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It is a myth that India’s labour laws increased Indian labour’s bargaining power. As brilliant papers by Aditya Bhattacharjea of Delhi School of Economics showed, Indian labour’s wages stagnated, since the 1980s there was a massive decrease in strikes and lockouts, factories with hundred or more workers experienced more variability in employment than smaller firms. So the idea that Indian labour’s bargaining power was an obstacle to India’s industrialisation is errant nonsense.

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Labour law did not protect workers. It was not incompatible with growth. But these propositions are not incompatible with the idea that labour laws can still sometimes unfairly hurt business. These laws were excessively complex. Some laws created rigidities that had nothing to do with labour protection. They disincentivised industry investment in human capital. They created a political economy of rent-seeking. Business has often circumvented these laws. But the very need for circumvention can distort the nature of entrepreneurship and adversely select those who can manage the state, more than genuinely innovative entrepreneurs.

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So the Narendra Modi government was right in thinking that these laws needed to be looked at afresh. The Industrial Relations Code was introduced in the Lok Sabha in November 2019. The Standing Committee has just given its report. This was a sensible way to proceed: It allowed room for serious deliberation on first principles, it allowed parliament to take an all-things-considered view of the matter, and would have, if done right, created a labour code fit for the 21st century.

But, instead, we have a four-pronged assault on labour that threatens to undermine the Modi government’s own legislation. The first is an assault on constitutionalism. Previous governments have abused the ordinance route. But the brazen use of ordinance to suspend such important provisions of the law, when Parliament is already deliberating on the matter, shows contempt for democracy. Allowing the states to override central legislation, without justification, will create future problems for federalism. Repealing many of these provisions will put India in contravention of ILO conventions and its own laws. And there is also a non-application of mind in many of the proposals. Some states will increase work hours without increasing rate of compensation. Let us say we do want more flexibility in working hours that allow occasionally for 12-hour shifts. What is the objective of flexibility? If it is workers’ health and reducing commutes, should such flexibility not still be within a limit of the total number of working hours in the week? Or do we want to barbarically increase the total number of working hours? On constitutionality, democratic propriety, application of mind, the president has a good basis for withholding assent. These ordinances confirm the worst fears that the pandemic emergency will be used to amass arbitrary powers at a time when it is not even possible to protest.


Second, we are seeing a systematic assault on whatever little bargaining power labour has left. We inflict needless duress, indignity and the spectre of poverty on millions of workers by refusing to provide adequate social support. We artificially create a mass army of reserve labour, barely on the brink of subsistence, so they have no option but to work on any terms that are offered. If the government is genuinely worried about what to do with labour who might not want to return to work because both the state and their employers have treated them atrociously, it can easily expand the remit of MGNREGA. But here is the dirty secret for why governments and employers hate the MGNREGA. Its real effect is that it puts a floor under labour, and marginally improves its bargaining position.

The third is an ideological assault on Indian labour. The narrative build-up has been that India’s inability to attract companies leaving China has largely to do with labour. Indian labour’s capacity to supposedly obstruct the onward march of Indian capitalism pales in comparison with the state and Indian capital’s capacity to inflict damage on the Indian economy. The fourth is the cultivation of an authoritarianism: The more we can punish our own people the more salvation there will be for us. The ease with which we applaud 12-hour working days, the machismo with which we applaud the gutting of grievance redressal, suggests a deeper pathology that might have nothing to do with economics.

Basic necessities like environmental protection, worker safety, hazardous industrial activity, basic rights, require regulation. We have to invest in the state capacity to do them right. We need to reclaim the word reform. “Reform” should be used only when a particular measure actually achieves a desired objective. Gutting environmental laws is not “reform.” Designing laws and enforcement that achieve clean air and water is reform. Gutting labour protection is not “reform.” Designing protection that can protect core interests of workers, respect their bargaining power and at the same time rescue distortions in capital allocation, is reform. What our chief ministers are doing is not reform: It is indolence and authoritarianism masquerading as reform.


The Industrial Relations Code was a good beginning by the Modi government. The ordinances are a travesty. No country can develop that does not invest in human capital of its citizens, that does not increase the share of labour in the country’s wealth, and does not get the balance between capital and labour right. The Modi government can decide whether it wants to write a new and fairer social contract. Or will it unleash a new 19th century barbarism?

The writer is contributing editor, The Indian Express

First published on: 12-05-2020 at 12:30:23 am
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