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Sunday, May 09, 2021

Why abrogation of labour laws is problematic

It could reduce participation of women in workforce, create incentives for exploitative practices.

Written by Ashish Bharadwaj |
June 17, 2020 8:44:52 pm
coronavirus migrant labourers, india lockdown migrant workers, migrant workers go home india lockdown, Migrants reach Lucknow’s Charbagh railway station to board a Shramik Special train homeward bound.

Written by Ashish Bharadwaj and Shohini Sengupta

In terms of the number of people infected by COVID-19, India is amongst the worst-hit by the disease. The impact of the pandemic has been particularly tragic for the socio-economically depressed categories of people, including informal economy workers, migrant labourers, pensioners, women and children — people who lie at the intersection of abject poverty, caste and other systemic forms of oppression. The nation-wide lockdown aggravated their problems leading to the mass exodus of migrant labourers who have little or no social security. The institutional response to this humanitarian crisis was grossly inadequate.

Last month, labour laws in 11 states were changed in an attempt to promote business operations and maintain industrial output, particularly in the manufacturing sector. The major changes proposed include increasing working hours from 8 to 12 hours — Uttar Pradesh, however, took back the ordinance on this issue — no inspection of SMEs and firms employing less than 50 workers, easing the process of securing a business license, amending the Industrial Disputes Act to increase the threshold for lay-offs and limiting the submission of annual returns to once a year as opposed to multiple returns under various labour laws.

There has been a growing need to rationalise labour laws in India, with several scholars and economists pointing out the perils of having a vast multitude of labour laws operating at the Centre and state level. This has resulted in both overregulation of the formal economy, driving labour costs in the regulated market, and expanding the number of people outside this formal economy (roughly 90 per cent according to some estimates). The move to assimilate various labour laws into a draft code on social security last year was a necessary first step in this direction. However, removing the scant social welfare protections to correct existing regulatory arbitrariness creates incentives for employers to continue with exploitative labour practices, and even terminate businesses without compensation and other terminal dues.

Women and children have been excluded from the changes in the labour laws. On the face of it, this may appear a good step. But this could create a new incentive for not hiring women, since it is now cheaper to hire men. In addition, a sizeable portion of the relaxations involve doing away with inspections by labour commissioners, resulting in the creation of a regulatory black hole where employers might get away by hiring low-cost child labour. Whilst the Child Labour Prohibition and Regulation Act (1986) remains in effect, there are fears that several employers will pay no heed to the legislation.

Relaxation of labour laws can also have other far-reaching, adverse implications on the rights and well-being of women, young workers and children. According to the World Bank, the female labour force participation rate in India was a meagre 17.5 per cent in 2017-18. Extended working hours and other labour law relaxations are likely to further decrease the participation rates of women in the labour market and increase the already widening wage gap. It will also have a detrimental impact on childcare and could force elder siblings (particularly girls) to shoulder the responsibility of providing care to younger children. Adverse working conditions could have an undesirable impact on the mental health of parents and lead to children adopting adverse coping mechanisms, including violence and self-harm.

The absence of inspections and monitoring and a reduced focus on safety measures at workplaces will increase health hazards and may translate into an increase in health expenditure. This could divert limited resources away from childcare. Informal economy protection measures adopted by countries across the world include unemployment insurance, facilitating direct cash or in-kind transfers, public work programmes and support to struggling small businesses. The right to satisfactory working conditions has to be a necessity both during a crisis, and otherwise. Efficient monitoring mechanisms are the only way to reduce if not prevent exploitation and abuse.

Complete de-regulation of an already oppressive labour market, in the middle of a humanitarian crisis, represents a failure of the state to cater to the needs of the most vulnerable people.

(Bharadwaj is Professor & Dean and Sengupta is Assistant Professor of Research, Jindal School of Banking & Finance, O P Jindal Global University, Sonipat. Views are personal)

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