That the archaic labour laws in India need to be amended is beyond debate. They have protected only a tiny section of the labour force, facilitated rent-seeking, and have laid the ground for the casualisation of the labour force, the phenomenon of the missing middle in manufacturing, and the substitution of capital for labour in a capital deficient and labour abundant economy. Rationalising labour laws has been on the policy agenda for decades. Yet, labour reform hasn’t taken off because the debate has been framed in terms of empowering the management while curbing the rights of labour, as is evident from industry’s often-demanded concession of the power to fire workers without seeking government permission. But now, a number of states have embarked on this politically contentious course again. While efforts to reform labour laws should be encouraged, coming at a time of acute economic distress and labour insecurity, in a crisis that has exposed the lack of safety nets and the limited access of workers to healthcare, they must keep the concerns of labour at the centre.
Initiatives taken by states such as Madhya Pradesh — which aim to reduce the frequency of inspections, ease the registration and licensing process, and enhance the thresholds of when the regulatory architecture kicks in — are steps in the right direction. As is the introduction of fixed-term employment to help companies sidestep the contractor system. But, removing firms’ obligation to comply with provisions of the Industrial Disputes Act constitutes blatant disregard for workers’ rights. To be sure, certain parts of the Act which deal with the hiring and firing of workers have rightly been seen as impediments to flexible labour markets. Yet, instead of rationalising or doing away with some chapters, giving firms a free pass over complying with the Act strips workers of any degree of protection or redressal mechanisms. It further reduces the bargaining power of labour, their right to negotiate. While fixed-term employment is a welcome half-step, states should ensure that these contract workers receive social security benefits similar to permanent workers, as is the case under the Centre’s model law. If regulations designed to support labour are suspended, it can effectively remove the distinction between permanent and contractual workers. Such moves could trigger a race to the bottom. They also raise questions over the architecture of the labour market of the future. Will this temporary reprieve to industry translate to long-term benefits? Why not increase the number of shifts as opposed to increasing the hours of work?
Any shortsighted move now will only end up increasing workers’ vulnerabilities at a time of acute distress, when unemployment is likely to be at all-time highs, and when the national consensus is veering towards providing labourers safety nets. Labour reform for long has framed labour as an adversary, now may be the moment to see it through their prism — this is the only way to make enduring progress.