It has long been argued that India’s labour laws hold back business, particularly the manufacturing sector, from roaring into action and joining the India growth story. Now, India’s 29 central labour laws have been consolidated into four labour codes, notified on November 21 in what the government has called a “landmark move” that “heralds transformational change” and “lays the foundations of a future-ready workforce”. The operationalisation has been welcomed by many observers as one of the biggest steps in India’s journey of reforms. There is little doubt that labour laws, and indeed several other laws, practices, and traditions, in this country are outdated, many flowing from the British Raj, and deserve to be revisited.
So, in general, a review of what is being presented, and even denigrated as the long litany of 29 laws, should be a welcome step, but only if such a giant change is crafted with at least some consensus so that it can carry everyone along, particularly the trade unions.
This is the first hurdle before the labour codes as they are put into effect, given that trade unions are precisely the stakeholders who have not felt included in what will impact them the most. This puts the much-acclaimed reforms in the league of the infamous farm laws that were similarly pushed through, only to be met with widespread unrest, and were subsequently withdrawn.
There is some commonality between the farm laws and the labour codes: Both were passed by Parliament in September 2020, both were passed in the teeth of vehement opposition, and both were passed without much debate, given the significance of the change that was being brought.
Those days, the government still believed that it would ride roughshod, but was subsequently surprised at the vehemence of protest from the farmers, so that the farm laws went, but the labour codes got moved effectively to cold storage — only to be revived now. Labour unions are weaker at this stage; so while on road agitations may not take off that easily, there is little doubt that the new effort opens on a negative note.
None of this is to argue that the labour laws do not deserve to see important changes, just as the argument was in the case of the farm laws. The problem in the Indian context is not about the legal codes, but about the on-ground working conditions that remain markedly at odds with what is professed from the corridors of power and from the boardrooms of owners and directors. When this market reality meets a government that has not built capital with the workers and is further seen as working in favour of business lobbies, then, in effect, trust disappears, and the government has hurt itself and the ‘reforms’ by pushing through measures that will trigger fierce resistance.
While the direction of the labour laws is toward formalisation of the workforce, many deficiencies lie even in the formal sector, with the gap between what is claimed and what is practiced remaining high. Matters are, of course, dismal in many areas. To offer a recent example, the report Crushed 2025, the seventh on worker safety in the Indian automotive manufacturing sector by ‘Safe in India’, an independent non-profit, noted this year that thousands of workers continue to lose their fingers (crush injuries) in the automotive sector supply chain, and 76% workers reported working more than 60 hours a week. This is like the Foxconn problem of Apple — can large brands and claimed leaders in safety and sustainability practices, as many car manufacturer leaders are, turn a blind eye when their suppliers violate laws?
There are enough laws on the statute to check this, but why have they not worked? If they did not, how and why will the new laws work, particularly when the direction is toward making the laws more industry-friendly, and making room for fines and decriminalising offences?
Note that the very day three of the four labour codes were passed by the Lok Sabha on September 22, 2020, was also the day the government reported that more than 1.06 crore migrant workers, including those who travelled on foot during the lockdown, returned to their home-state when the lockdown hit hard. This added formal numbers to the shameful accounts of workers walking back miles to the safety of their villages, penniless, hungry, after they were abandoned by the contractors and establishments that had employed them.
As the lockdown was lifted, in what should stand as the second most shameful act, industry associations met the labour minister to ask for protections of the labour laws to be lifted so that business could restart! All of this is recent recorded history, around the time the labour codes were born by working in association with businesses. If actions speak, then we can see that at the root of the problem is a certain disregard for the labour force, which is anyway prone to exploitative practices given that Indian workers are less educated, less aware, less skilled, less supported, and so less productive, and are often desperate for a job, any job, to make ends meet.
Productivity in India is low not merely because Indian workers are less productive, but because the investments required to make them more productive are often weak or non-existent. Further, the business chain operates with an approach that sees labour as expendable, unable to stand up in a lax regulatory system where labour law violations are easy to get away with.
Indian business sectors will move to the next orbit when they begin to see and treat labour as an asset, invest in their growth and well-being, and violators of labour laws are made to pay dearly for crossing red lines. The new labour codes may not take us there.
(The writer is a journalist and faculty member at SPJIMR. Syndicate: The Billion Press)
Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH.