AN ANALYSIS OF LABOUR LAW REFORMS DURING COVID-19 PANDEMIC
By Mohammad Mishal
[Mohammad Mishal is a second year student of B.A. LL.B (Hons.) at Rajiv Gandhi National University of Law.]
The nature of wealth creation in our economy is such that it is primarily dependent on the efforts put in by the workers. The weight of historical change in India has traditionally been borne by the working class – which also happens to be the class with the least agency. While we revere the great architects of modern India with awe, the massive swathes of workers who built that country should not slip out of our minds. The status quo is by no means favourable for the working class in India. India’s performance in labour rights has been abysmal. The International Trade Union Confederation’s Global Rights Index (which ranks ‘the world’s worst countries for workers’) from 2016-19 gave India the lowest score on their scale signifying ‘no guarantee of rights.’ [i] India has still not ratified International Labour Organisation (“ILO”) conventions on freedom of association, collective bargaining, and other conventions relating to safety at work. [ii] A huge portion of labour in our country is employed in the informal sector which hardly comes under the purview of any statutory provision. The steady increase in the use of contract labour has been weakening the bargaining power of unions for decades. The traditionally antagonistic approach of employers towards trade unions (often in less than delicate ways) has steadily chipped away at their membership and political backing. Export Processing Zones (EPZ) and Special Economic Zones (SEZ) all over India serve as exclusion zones for labour rights. [iii] The institution of bonded labour – expressly outlawed in Article 23 of the Indian Constitution [iv] – still thrives in parts of the country. [v]
In this background, it is extremely concerning to see state governments ‘temporarily’ suspend the operation of multiple labour laws and trigger an already devastating race to the bottom.
Changes in Labour Laws Post COVID19 Pandemic:
The most drastic changes have taken place in the state of Uttar Pradesh (“UP”) in May 2020. The state administration announced the Uttar Pradesh Temporary Exemption from Certain Labour Laws Ordinance, 2020 which would suspend the operation of all labour laws (save the provisions relating to women and children) in the state for three years. The only exceptions are the Bonded Labour System (Abolition) Act, 1976; Employee’s Compensation Act, 1923, the Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996. [vi] The rationale given for this is to kick-start the economy and offset the negative impact caused by the novel coronavirus pandemic. Laws relating to job safety, industrial disputes, health hazards & working conditions, trade unions, contract labour, and migrant labourers will all be virtually non-existent for this period. This will give employers a free hand in the treatment of workers, as options of collective bargaining have actually been eliminated. This move will increase the potential for exploitation as it has come at a time when a huge number of labourers have been left unemployed and penniless by the global pandemic. Moreover, one cannot overlook the timing of the states in bringing about these changes which would otherwise have been met with stiff resistance from trade and labour unions. The global pandemic has understandably caused an environment not conducive to large scale protests by a class of people who are well-aware that their state is ill-equipped to protect them against the infection.
India has long been guilty of participating in the ‘race to the bottom’ of labour rights, ostensibly under the guise of attracting investment. [vii] However, even by India’s underwhelming standards for labour rights, the present move is unprecedented in the vacuum it creates for the exploitation of labour. The right to life and liberty, [viii] and the right against forced labour, [ix] enshrined in Part III of the Constitution of India, are liable to abuse under a regime operating with these changes. In theory, fundamental rights have supremacy over any constraints that come against it except through a procedure established by law. However, as the Supreme Court noted in People’s Union for Democratic Rights v. Union of India, ‘the compulsion of economic circumstance which leaves no choice of alternatives to a person in want and compels him to provide labour or service’ can itself be construed as a violation of Article 21 and Article 23. [x] It is not an unreasonable stretch to imagine many workers may be forced to provide labour in this manner as a result of these changes.
There are also compelling reasons to question the narrative that an easing of labour laws will boost the economy, which is not to suggest that easing labour laws would be a cost worth bearing for economic growth. [xi] Research has consistently shown that relaxing labour laws does not attract investment as is normatively asserted. [xii] There is also evidence to suggest that capital does not have a singular focus on lower labour standards while analysing potential avenues for investment. [xiii] Raising the standard of living of the local population, which in turn attracts more investment, can be done by increasing securities for the general workforce.
It is also imperative to have a look at some of the legislations which have now been made defunct and analyse the uncertainty the changes can potentially bring into the lives of workers:
The Factories Act, 1948, has been amended by Gujarat, Punjab, Odisha, and Himachal Pradesh to increase the maximum working hours from nine to twelve per day and maximum number of hours per week from forty-eight to seventy-two. [xiv] The ILO, of which India is a founding member, stresses on the principle of a 48-hour workweek in multiple conventions. The immediate aftermath of enabling 12-hour workdays will be employers causing labourers to spend more than half their day (including transit) away from home. This will disproportionately affect the women in the workforce while being equally unwelcome for men. There is a chilling defiance in this complete disregard shown towards ILO’s calls for decent working time to ensure health and safety, work-life balance, gender equality, enhanced productivity, to facilitate worker’s choice and influence over working hours. [xv]
The present changes promise to polarize an already uneven playing field for individuals belonging to oppressed castes and marginalized identities. The Equal Remuneration Act 1976 provides equal pay for equal work and is among the statutes that have been suspended. The occupational divide still exists largely along caste lines in India, which means that Scheduled Castes will be amongst the hardest hit by these changes. Exploitation through caste-based labour has been one of the historical ways to maintain the caste system, and the current vacuum of legal recourses will certainly hurt the most exploited the hardest. [xvi]
The changes made by Madhya Pradesh government puts the entitlements and recognitions of labour unions in a precarious position. [xvii] The Trade Unions Act, 1926, covering the statutory provisions regarding trade unions in India, and The Industrial Disputes Act, 1947, regarding the same for settlement of disputes between trade unions and employers, are among those that have been made defunct for new establishments ‘for a period of 1000 days’ by the Madhya Pradesh government. [xviii] This eliminates, at least in the short term, the possibility of forming new trade unions in such establishments while also leaving the existing ones in uncertainty. [xix] There is a very real possibility that these changes will ‘informalize’ the formal sector, and labourers will be treated as nothing more than another variable cost of production. With the elimination of job security, employers will face no hurdle in treating labour as disposable. As wages slink down to the absolute minimum, there will also be an obvious reduction in spending from this working class, which can be harmful for the economy. In the last six months alone, two major industrial accidents have occurred in Vishakhapatnam and Delhi, which have provoked questions about safety standards at the workplace. [xx] Relaxing laws in this respect is likely to have an adverse effect.
The ‘UP model’, criticized by the trade unions and workers, is being greeted with calls by employers to be nationalized. It has already received the validation of NITI Aayog whose CEO went so far as to brand it the ‘boldest and bravest initiative since 1991’. [xxi] The immediate and potent threat of COVID-19 may be enough to temporarily stop a coordinated response from trade unions and labourers. But the full effect of this change will only be felt once the immense depression of wages and working conditions in an already underwhelming environment for labour rights manifests at a large scale. Successive governments in our country have both failed and occasionally fulfilled their commitments to the working class. However, we have never been at a juncture like this one where state administrations seek to undo rights that labourers have fought to win in over a century, in one sweeping motion. Some statutes, like the Trade Union Act 1926, predate independence itself while others like the Industrial Dispute Act, contain provisions from that period. Trade unionism in India has left a lot to be desired, but these changes do a great disservice to all that has been achieved.
On May 22, 2020, ten central trade unions went on a nationwide strike against these proposed changes. [xxii] The petitions made to the Prime Minister contained demands of relief for the scores of migrant workers stranded around the country along with the rolling back of proposed changes. Kerala, Tamil Nadu and other states saw participation in figures counting up to two lakhs. While central and state administrations give us little cause to cheer in the face of this pandemic, one can only look at such shows of resistance in the hope that this wholesale stripping of rights will not be taken sitting down by the population.
There can be no question that the regime of labour laws in India needs to be looked at with the intent to reform. The solution arrived at by the various state administrations; however, does little more than shift the cost of rebuilding the economy on the hapless working class. One cannot overstate the importance of a healthy dynamic between participatory trade unions and employers. Collective bargaining must not be treated as a privilege accorded to the workers but rather a right they reserve. Efforts must be made to institutionalize the informal sector, with legislation to protect labourers from exploitation. The central administration reaffirmed its commitment to sell out more employment to the private sector – which understandably comes under less scrutiny – in the budget session for this financial year. [xxiii] We must resolve not to be mute spectators to the lowest rung of society bearing the brunt of this dynamic.
(The views and opinions expressed in this article are author’s own and do not necessarily reflect the official policy or position of the Legal Aid Society, Campus Law Centre, University of Delhi.)
[i] International Trade Union Confederation, “ITUC Global Rights Index Report” (June, 2019).
[ii] K R Shyam Sundar, “Changes to Labour Laws by State Governments Will Lead to Anarchy in the Labour Market”, Economic and Political Weekly June 06, 2020, available at: https://www.epw.in/engage/article/changes-labour-laws-state-market-anarchy-labour-market (last visited on June 12, 2020).
[iii] World Trade Organization, “Trade Policy Review” (May, 2007).
[iv] The Constitution of India, art 23.
[v] International Labour Organization, “Report of the Committee of Experts on the Application of Conventions and Recommendations” 477(2009).
[vi] Somesh Jha, “Adityanath Govt in UP to Suspend Key Labour Laws, Workers’ Rights for Three Years” The Wire, May 7, 2020, available at:
https://thewire.in/labour/adityanath-govt-in-up-to-suspend-key-labour-laws-workers-rights-for-three-years (last visited on June 12, 2020).
[xi] Simon Deakin and Prabirjit Sarkar, “Indian Labour Law and Its Impact on Unemployment, 1970-2006: A Leximetric Study” Centre for Business Research University of Cambridge (December, 2011), available at: https://www.cbr.cam.ac.uk/fileadmin/user_upload/centre-for-business-research/downloads/working-papers/wp428.pdf (last visited on June 12, 2020).
[xii] K R Shyam Sundar (ed.), Globalization, Labour Market Institutions, Processes and Policies in India (Palgrave Macmillan, Singapore, 2019).
[xiii] David Kucera, “Core labour standards and foreign direct investment” 141 International Labour Review 31–69 (2002).
[xiv] Supra note [ii].
[xv] Sangheon Lee, Deirdre McCann, et.al. (2007) Working Time Around the World 1 (Routledge, New York, 2007).
[xvi] Human Rights Watch, “Caste Discrimination: A Global Concern” (February, 2007), available at: https://www.hrw.org/report/2007/02/12/hidden-apartheid/caste-discrimination-against-indias-untouchables (last visited on June 22, 2020).
[xvii] Supra note [ii].
[xviii] Aanchal Magazine, “Labour Laws: Legal hurdles, trade union opposition force some states to pull back major changes” The Indian Express, May 26, 2020, available at: https://indianexpress.com/article/business/labour-laws-legal-hurdles-trade-union-opposition-force-some-states-to-pull-back-major-changes-6427147/ (last visited on June 22, 2020).
[xix] Supra note [ii].
[xx] “From Anaj Mandi to Vizag Gas, Accidents that Shook India” Firstpost, May 7, 2020, available at: https://www.business-standard.com/article/current-affairs/from-anaj-mandi-to-ntpc-power-plant-industrial-accidents-that-shook-india-120050700663_1.html (last visited on June 13, 2020).
[xxi] Amitabh Kant, “It’s now or never: States are driving bold reforms. We will never get this opportunity again, seize it” Times of India, May 12, 2020, available at: https://timesofindia.indiatimes.com/blogs/toi-edit-page/its-now-or-never-states-are-driving-bold-reforms-we-will-never-get-this-opportunity-again-seize-it/ (last visited on June 12, 2020).
[xxii] Press Trust of India, “Trade unions stage protests against suspension, tweaking of labour laws by some states during lockdown” Firstpost, May 22, 2020, available at: https://www.firstpost.com/business/trade-unions-stage-protests-against-suspension-tweaking-of-labour-laws-by-some-states-during-lockdown-8398231.html (last visited on Jun 13, 2020).
[xxiii] Sudhakar Shanbhag, “Budget 2020: Scale of privatisation will demonstrate govt’s desire to undertake structural change” Firstpost, January 13, 2020 available at: https://www.firstpost.com/business/budget-2020-scale-of-privatisation-will-demonstrate-govts-desire-to-undertake-structural-change7951171-7951171.html (last visited on June 13, 2020).