On Tuesday, the Lok Sabha passed new versions of three labour codes, namely, the Industrial Code Bill 2020, the Code on Social Security Bill 2020, and the Occupational Safety, Health and Working Conditions Code Bill 2020. Amending stringent and archaic labour laws has long been on the policy agenda. Yet, there hasn’t been much movement on this issue because of the manner in which the debate has been framed — labour reform is often reduced to giving firms the power to hire and fire workers, without having to seek the government’s permission. While there is indeed a strong argument for more flexible labour markets, at a time when the COVID-19 pandemic has exposed the lack of basic safety nets for large sections of the labour force, and given the widespread distrust due to their unplanned and forced exit from cities, the first steps should be aimed at addressing distress and restoring the trust of the workforce, and creating some sort of social security architecture.
To be fair, firms need to be provided flexibility in order to deal with the vicissitudes of business cycles. However, doing away with standing orders for firms with less than 300 workers, which will essentially cover most firms, is tantamount to watering down the basic rights of workers in most organisations, affecting their bargaining power. The other initiatives in the bills which include widening the ambit of social security by including inter-state migrant workers and gig economy workers are steps in the right direction. As is ensuring direct fixed-term contracts, maintaining a database of migrant workers, and an adequately funded social security fund. However, questions are likely to be raised over the design and coverage of such schemes, and how portability of benefits will be ensured. Further, given the temporary nature of workers in the gig economy, how will this framework work?
There can be no argument against the need to amend the existing labour laws in India. However, considering the extent of economic distress in the country, concerns of labour must be placed at the centre of such policy initiatives. At a time of acute precarity, instead of moving in a direction of a reasonably flexible labour market with a degree of social security, the government should not be seen to be taking steps in the opposite direction.