“REVIVAL” OF ECONOMY THROUGH “NULLIFICATION” OF LABOUR LAWS: THE ILO PERSPECTIVE

Introduction

In light of the Covid-19 pandemic, the governments of various states have been taking measures to nullify the labour laws in an attempt to boost investment by the business houses in an already battered economy. Particularly, the Uttar Pradesh Government gave effect to the “Uttar Pradesh Temporary Exemption from Certain Labour Laws Ordinance, 2020” to exempt all factories and businesses from the purview of the labour laws. Other states like Rajasthan, Himachal Pradesh, Assam, Bihar, Madhya Pradesh and Gujarat have also issued a similar notification in this regard. In effect, such a step allows for the exploitation of the workers as per the convenience of the employers.

Suspension of the labour laws

It is nonetheless important to state that while laborers and migrant workers have already been hit by the Covid-19 crisis due to unemployment, lay-off and sudden halt in the wage earning, a further long term dilution of the labour law protection acts as a catalyst to their already worsened conditions.The subject matter of labour falls in the concurrent list under the Constitution of India and thus, states are free to enact laws on it but would require the approval of the Central Government (“Government”). Some of the changes which will be brought about through these ordinances are as follows:

1. In Uttar Pradesh, there will be a suspension of all labour laws except the Bonded Labour System (Abolition) Act 1976, Workmen’s Compensation Act 1923, Building and Other Construction Workers Act 1996, Maternity Benefit Act, 1971 and Section 5 of the Payment of Wages Act, 1936.

2. Increase in the working hours from 8 to 12 hours a day in Odisha, Assam, Punjab, Rajasthan, Haryana.

3. Suspension of important provisions from the Factories Act, 1948 in Uttarakhand.

4. Cease in the application of the Trade Union Act 1926, Industrial Disputes Act 1947 in the states of Madhya Pradesh, Uttar Pradesh and Gujarat.

International Perspective

The International Labour Organization (“ILO”)has maintained minimum standards which function asa decent compass for the issues relating to the working conditions, minimum wages and occupational concerns of the workers while aiming to achieve dignity, freedom and security for the laborers. Pursuant to this, it also released a policy framework for the economic and social impact of the Covid-19 crisis in May 2020. The ILO expressed a deep concern over the suspension of the operation of the labour laws in India which had ratified the treaty almost a hundred years back.

A response to the economic downfall does not allow a compromise on the human rights and the fundamental principles underlying the right to work.What remains essential to do is that, India as a signatory to the ILO convention must aim towards the adoption of a strategic multi-phased approach wherein stability of the livelihood as well as income is thoroughly maintained. It is of utmost alarm that the state governments took the decision of suspending the operation of labour laws without conducting an employment impact assessment. There was an apparent absence of ‘tripartite’ consultation and social dialogues which should have taken place between the Government, the trade unions and the employers for the purpose of collective bargaining between the two bodies. Such a responsibility emanates from the Tripartite Consultation International Labour Standards Convention, 1976 to which India is a party.

Freedom of opinion and expression are essential constituents of the rights of a trade union. The Government should be motivated only to take selective measures wherein the rights of the laborers are not repealed in its entirety. Restriction on the right to strike is a clear limitation on the right to form associations and unions under Article 19(1)(c) of the Constitution of India. The increase in the hours of work to 12 hours a day is a blatant violation of the Hours of Work (Industry) Convention, 1919. India has ratified the Labour Inspection Convention, 1947 as well, thus, a suspension by the Madhya Pradesh Government of routine inspections in the factory stands contrary to this convention. While we have adopted the Employment Policy Convention, 1964, we still do not have a comprehensive uniform employment policy in place.

India’s response towards the plight of the workers does not fall within the four pillars as put forth by the ILO. In fact, even in 2014-15 when several states in India had taken employer friendly measures to incentivize investments, a study revealed that such measures had no apparent effect other than further crumpling the rights of the workers and the trade unions. In the case of PUDR v. Union of India, it was held that the suspension of  the labour laws like the Minimum Wages Act, Payment of Wages Act etc. raise concerns with respect to the violation of the very fundamental rights enshrined under the Constitution of India.

The European countries have focussed more on giving wage subsidies which seems like a logical conclusion in these times as it gives incentives to the employers to refrain from laying-off their employees while upholding their morale. On the other hand, India has taken a radical view by completely suspending the operation of the labour laws. While flexibility in hiring and firing of employees is seen as a sign of development, such a policy must be strictly combined with state unemployment compensation measures, a system which prevails in the USA. The relaxation of labour laws further acts as a deterrent for the creation of jobs. The step taken by the state governments is immensely short-sighted and a “draconian measure”which will in turn undermine the historic struggles of the workers of our country. Talking on facts, it is estimated that labour costs constitute merely 10-15 percent of the total turnover in a business. In fact, as per the ILO research, there is not enough evidential support to say that suspension of labour laws or the flexible hours of work can invite more capital and investment in the economy. We are in a strong need for improvement in the wage code to extend its benefits to migrant workers as well for a better response in times of crisis wherein they are forced to leave their work-states due to shortage of money.

Investment in the public employment programmes may serve as an effective response not just to tackle the pandemic crisis but also in the long run to ensure sufficient involvement in economic activities by the workers. The Government should focus more on implementing measures which will allow the business houses to cover their fixed costs like payment of wages, payment of monthly bills etc. Such possible measures include credit availability, waiver of the due payments and  reconversion of enterprises to produce goods for which we are heavily dependent on other countries. Social security contribution schemes and work sharing arrangements are further steps to ensure maximum retention of the workers. The workers can also be provided with new training courses to allow them for an easy and efficient transition in case of shortage of workers in particular sectors which requires the learning of certain skills.

While the ILO has also acknowledged that the developing countries may face difficulties in implementing such employee friendly and retention measures, it nonetheless has stressed upon the need to refrain from taking drastic measures such as repealing the already applicable labour laws. Instead of giving “incentives” to the business enterprises by relaxing the labour laws compliances, the Government can follow a reverse approach wherein wage subsidies, tax reduction and grants are offered to enterprises for giving effect to the employment retention measures. Parallel to this, it is pertinent that the Government puts in place proper guidelines for permitting termination of employment considering that many employers may find ways to lay-off the workers while dealing with a fund-pressing situation. While the Government has relaxed the insolvency procedure timelines under the Insolvency and Bankruptcy Code 2016, the Protection of Wages Convention 1949 puts forth further suggestions for treating workers as creditors in cases of unpaid wages during the pandemic. This could in fact be contemplated by the Government as part of the social welfare measures for the labourers in India.

Conclusion

Upon analysis of the current situation, it may be concluded that the state governments are required to “revisit” the labour laws suspension decision, to incorporate more long term beneficial and balanced measures thereby upholding the edifice of all the workers’ rights in India. We should take a step towards an approach of recovery and support while strengthening the collective bargaining powers of the trade unions to give them a podium for voicing their suffering in this pandemic situation. India has always been a strong advocate of the rights of the workers and is committed to fostering their dignity and participation for the creation of an inclusive economy. It altogether becomes essential to see how far the stated policy vision achieves the objectives of more investment and creation of jobs.

ABOUT THE AUTHOR

Pallavi Mishra is a final year student at Hidayatullah National Law University, Raipur. She has keen interests in policy matters and likes to analyse the laws from international perspective. Her interests also revolve around the corporate, commercial laws and other socio-legal issues. 

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