Breaking the wall, finally

The NDA government is attempting to match workers' protection with ease of doing business.

Breaking the wall, finally

The last few weeks have been enormously significant for both workers and employers as the Union government began to carry forward its agenda of “Make in India”.

First of all, the major psychological breakthrough that strikes one was brought about by Prime Minister Narendra Modi who has said that labour issues should be understood through the perspective of the workers. This statement, along with the underlying sentiment that protecting the interests of workers is not incompatible with improving the ease of doing business, breaks down the artificial boundary between workers and businesses. 

It's not as if attempts to provide some relaxations were not made earlier. A notification to provide for flexibility to hire additional workers who could be discharged after the end of the peak period had to be rescinded. Amendments to the Labour Laws (Exemption from Furnishing Returns and Maintaining Registers by Certain Establishments) Act 1988, were withdrawn hours before the bill was to be introduced. Amendments to this law have now been taken up by the government along with a slew of other measures, each of which is a stupendous step forward. 

With the PM’s statement regarding Shram Yogi becoming Rashtra Yogi and Rashtra Nirmata coupled with the recent initiatives under the Pandit Deen Dayal Upadhayay Shrameva Jayate Karyakram, the ice has finally been broken. These measures demonstrate that the interest of workers and employers can be nurtured simultaneously, a fact that hardliners among the stakeholders will have to accept.

The impact of these will be far reaching. Self certification of documents and the new scheme for labour inspection will address the long-pending demand for ease of compliance and simplification of paperwork. The transparent labour inspection scheme for random selection of units for inspection will minimise the negativity associated with labour inspections. The introduction of Universal Account Number and the appointment of national brand ambassadors of vocational training are significant steps with huge psychological as well as tangible outcomes. 

Similarly, the Apprentice Protsahan Yojana takes note of the fact that the potential for apprenticeship is massively under-utilised. Changes proposed in the Rashtriya Swasthya Bhima Yojana are timely and needed. This scheme was soft launched in 2007, after a few months of intensive effort. A few years down the line, the lessons learned need to be incorporated. All these measures provide a positive environment for major legal changes, which have already been taken up.

Bills taken up now are those that will amend major laws such as the Factories Act, 1948, The Apprentices Act, 1961 and the Labour Laws Act, 1988. The Factories Act amendment proposals strike a balance between the needs of employers and workers. Proposals, conducive for labour welfare, relate to lowering the threshold for paid leave eligibility, provision of canteen, rest room and lunchroom facilities, employment of women at night subject to ensuring their security and improvement in occupational safety of workers. Pro-employer measures include provision of paid overtime from 50 hours to 100 hours a quarter, from 75 hours to 125 hours in work related to public interest. According to industry majors, these changes should have come about many years ago.

Amendments proposed to the apprenticeship law create a win-win situation for the industry and the apprentices. It would enable a fuller utilisation of industry resources for relevant and effective training. It also proposes to include as apprentices individuals with non-technical, non-engineering background. Once these amendments go through, this all-important but "used less" law (to borrow a quaint phrase from OLX) will define the scale and standards of skill training. It will have the capacity to take the number of apprentices to about 2.3 million. At present, the available slots for apprentices number only less than half a million. Of these, less than 50 per cent are utilised. Bold measures have been suggested regarding the stipends to be paid to apprentices.

Modest exemptions

The exemptions and relaxations proposed in the  Labour Laws (Exemption from Furnishing Returns and Maintaining Registers by Certain Establishments) Law, 1988 are modest, the same as were proposed when  UPA was in power. The ministry had proposed extending these liberal provisions to units employing up to 500 people. The bill was returned for further consultations and finally it appeared that a beginning could be made with an employee ceiling of 40 persons. Even this did not go through, though the proposals could not be called anti-labour. Hopefully, this law will see an expansion in its applicability in the coming years.

The government still has major challenges ahead. Amendments to all these bills have to go through and amendments to the Industrial Disputes Act have to be taken up if we are not to face another decade of jobless growth. The distortions and unrest brought about by widespread misuse of the Contract Labour Act have to be tackled head on. 

A bilateral arrangement on social security with the US is required so that social security deductions in the US of IT professionals are not forfeited when they return to India. The Employees Provident Fund Act needs to be amended to bring the applicability threshold down, to units employing 10 or more workers (currently social protection law exists for unorganised workers in units employing less than 10 workers and for organised workers in units employing 20 or more workers). 

Many underlying problems have to be dealt with, for example, the downward pressure on wages to remain competitive (we need to look at other problems that push up cost of production), school education has to have a serious component of vocational education so as to keep children from poor families in school and worker families have to earn enough so that the earnings of young children are not needed for survival.

The PM’s inter-ministerial approach promises all this and more. Along with this, we should remember that the draft National Employment Policy is in the cold storage for the last five years. The government should have a look at it and use it for a clear articulation of its approach.

(The writer was secretary, Union ministry of labour and employment between 2007 and 2009)

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