There is a general belief that labour laws are very complex in India. As of now there are 44 types of labour laws in the country, and it is difficult to reconcile these laws, and therefore they cause hardships to employers, and given an opportunity, they try to avoid employing labour. All these labour laws are related to different subjects. Some labour laws relate to the wage rate, while others relate to social security. Some labour laws are related to industrial safety and labour welfare, and a few other laws are related to industrial relations.
With a view to simplifying these laws, the government thought that a new system should be implemented, subsuming the 44 labour laws into four codes. One code deals with wage rates, another relates to social security, the third relates to industrial security and labour welfare, and the fourth relates to industrial relations. The wage code has been passed in Parliament, but the labour code on social security has been referred to a parliamentary standing committee. While the government is presenting these labour codes as a major reform, opposition parties are opposing the move.
What are the different codes?
After the passage of the wage code Bill, the Central government will have the right to determine a statutory wage rate for the entire country. Significantly, till now the state governments used to announce the wage rate in their respective states. In this way, the minimum wage will be uniformly applied throughout the country, which will bring the minimum wage to all workers irrespective of the sector (organised or unorganised) they are engaged in. It will be possible to ensure a minimum living standard for 50 crore workers. This wage code Bill was introduced in the Lok Sabha in 2017.
It was referred to a standing committee at that time, but after the dissolution of the 16th Lok Sabha, the Bill lapsed automatically. Laws related to social security include the Employees Provident Fund, Employees’ State Insurance Corporation and other Benefit Act, The Building and Other Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996, and Employees Compensation Act.
It has been decided to subsume all these laws under the second code, namely, the labour code on social security. In the third labour code, the Labour Code on Occupational Safety, Health and Working Conditions, the laws related to occupational safety and labour welfare, such as the Factories Act, and the Mines Act, have been included.Several laws related to industrial relations, such as the Industrial Dispute Act (1947), Labour Union Act (1926), and the Industrial Employment Act, 1946, have been combined to create the Industrial Relations Code.
Opposition of labour unions
Of the four labour codes, the only one that has received support from some trade unions, most significantly the largest labour union, Bharatiya Mazdoor Sangh, is the Wage Code. It is believed that through this code it will be possible to ensure payment of the minimum wage to all 50 crore labourers in the country without discrimination in terms of sector.
However, the remaining three codes are being strongly opposed by the trade unions. Their complaint is that in the name of subsuming various labour laws under labour codes, the government is acting to benefit the employers at the cost of labourers. Some labour organisations are opposing even the Wage Code, because the ‘apprentice category’ has been dropped from the definition of workers and the determination of the minimum wage has been left to committees. In the new code, there is a provision for a labour inspector and facilitator in place of the labour inspector. Labour organisations complain that this will end the powers of the labour inspector, and due to this labourers could be exploited.
Although the government says that the purpose of simplification of labour laws is to facilitate compliance with the laws and to improve the ease of doing business, so that employment can be increased, labour organisations think otherwise. The labour code on industrial relations is thought to be anti-labour. Labour organisations believe that through this, workers’ right to strike is being tweaked and the participation of outsiders in labour organisations is being eliminated. Labour organisations argue that there is a large number of people helping labour who are not working in the organisations concerned, and their role in the labour movement is crucial.
There are major changes in the labour code related to social security, which is being vehemently opposed and is seen as anti-labour. Labour organisations say that provisions related to ESI (Employee State Insurance Corporation) and EPF (Employees Provident Fund), which has a membership of nearly 40 million workers, are being tweaked against labourers’ interests.
The accumulated amount of EPF is being handed over to the states. Regardless of the motive of the government, labour organisations feel that the accumulated amount parked with the central government is always safe, but after the transfer of funds to the states, there will be no guarantee of security of the funds.
Significantly, the state governments have been adopting populist policies for political reasons, and thus the amount of the provident fund may be in danger. Not only this, provisions are being made for the Employee Provident Fund to be operated through intermediaries such as private fund managers. Thus EPF, which is an accumulated fund of hard-earned money of employees, may be subject to the vagaries of the financial market.
Similarly, the labour code is being considered insensitive to the safety concerns of workers in the workplace. This labour code is not universal. In many cases, this code will not be applicable in establishments with 10, and in some cases 20, workers. Many hazardous jobs, such as sewage cleaning, are outside the scope of this code. This exhibits the insensitivity of those who drafted this Bill. Similarly, protection of labourers engaged in illegal mining is also not ensured in this code.
Improving labour laws and compliance with them can be a step in the right direction, but tampering with the provident fund of the workers, violation of the fundamental rights of labourers, and making provisions against exploitation toothless under the garb of simplifying labour laws cannot be approved. Therefore, after the wage code, if the government and Parliament show sensitivity towards the concerns of labour, a better outcome can be achieved.