Assume that you belong to the vast and fragmented working class in New India. What is in store for you in light of the new labour relations regime that has been lately established?

If you have read Adam Smith and Karl Marx in a ‘political economy’ undergrad course, you know that the wealth of society is made in work, by the labouring masses. And so how work, workers and working conditions are dealt with in human history, and especially under capitalism over the last 250 years, is an endlessly debated topic.

As Pratap (Undated) has pointed out, the power elites say that labour reform in India is moving in the right direction, even as the workers perceive it as moving completely in the opposite direction. The Central government says the multiplicity of labour laws is done away with by integrating them into ‘labour codes’. Let us look at the results.

The Government has drafted these ‘reforms’ by picking up the suggestions of the employers, word by word and sentence by sentence. Very cleverly, the focus of the ‘reforms’ is on state-level changes in laws, even as labour laws are clubbed at the central level in such a way as to require only a few ordinances. The employers’ organisations have been vociferously demanding that state governments be given the sole authority to change labour laws. Accordingly, the Central Government has authorised the states to fix and revise wages. All states, as a result, are in a race to downgrade wages and working conditions, in order to compete for investments for their so-called ‘development’.

Now job security and more comprehensive labour laws apply only to industrial enterprises with 300 or more workers. Actually, the vast majority of factories, and nearly half of all factory workers, fall outside these limits. Even industrial units that require 300 or more workers can escape from labour laws easily by engaging less than 300 workers on their payroll and deploying a large workforce by way of apprentices, who are not considered as workers by the law of the land. The majority of industrial units will manage to remain within the limit of small factories (less than 40 workers), to avoid applicability of 14 labour laws, including the Factories Act and the Industrial Disputes Act. If they require more workforce they can easily use innumerable unreported, invisible workers by hire and fire system, without complying to any standing orders. And they are saved from the hassle of taking permission for closure.

Now employers need not even engage contract labour system as such, since in the new system, there is scope for employers to engage less than 100 workers and easily hire and fire large numbers of apprentices.

Employers can project wages to be higher without there being any increase, by simply adding their PF and ESI contributions to wages; the resultant effect could actually reduce the take home wages of workers. Easy hire and fire in industrial units with less than 300 workers will increase the vulnerability of workers drastically, and unionization of workforce will be highly difficult to achieve. Workers are totally disempowered to exercise the rights to association and collective bargaining.

The right to strike is bludgeoned. By requiring 14 days’ prior notice and then instituting conciliation proceedings, practically all industries are deemed to be public utility services. Workers in small factories will have no right to strike. Various states are ruthlessly curtailing the right to strike. For example, the state of Andhra Pradesh, where the South Korean automobile manufacturer Kia has situated itself, has already declared the automobile industry as a public utility service. This will put an end to the wave of strikes that were witnessed since 2005, mainly on the issues of right to association and collective bargaining and of ending the rampant contract labour system in the automobile sector. Moreover, note that the Gujarat Labour Laws (Gujarat Amendment) Bill 2015 prohibits strikes in public utilities for two years, and brings out a new provision to settle various offences out of court. This will be copycatted elsewhere.

Health and safety problems of workers will increase like anything, because the small factories (less than 40 workers) are put out of the Factories Act, excessive overtime is legally justified, and the list of hazardous industries is deleted in the new amendments. Self-certifications are granted to various industries under various labour laws, and labour inspectors are directed to be just facilitators. No wonder the country is becoming a free-for-all dumping ground for hazardous industries.

This, in a nutshell, is the picture of labour relations wherein the employers are practically freed from any constraining labour law worth the name, in conjunction with the dumping of the land reforms agenda and easing of laws for land acquisition from farmers for industrial and infrastructure projects, and for reducing the coverage of population under the food security law.

When I recently shared this picture that has unfolded in India with the great psychologist-cum-economist Barry Schwartz, he was aghast. According to Schwartz (2015), Adam Smith had erroneously sanctified stealing of happiness from workers via the division of labour and specialisation drive in factories. Smith had believed that when it came to work, people were fundamentally lazy. If you want people to work, he argued, you have to make it worth their while by paying them a decent wage. This was, however, his invention of human nature.

Schwartz points to recent findings that prove that Smith ignored the fact that people want a good deal more from work than a simple paycheck (which at any rate is progressively getting compressed). Workplaces need to be places that people want to be, places not only of highly productive but also of satisfied and happy people.

Labour studies theorise a distinction between employers who take the ‘low road’, i.e., extracting profits by grinding workers’ wages and working conditions to the lowest level possible, and those who take the ‘high road’ – paying higher wages and benefits, maintaining respectful relations with workers, and providing them opportunities to advance. According to the theory, the latter attracts and retains more productive workers, and improves productivity and quality of output thereby. However, empirical research reveals that employers in India, even if they are multinational firms, are strict adherents to the ‘low road’: Read my many ‘low road’ stories (Bose, 2022).

The storyline of this note is that the working people in India have now been reduced to completely rightless people. How they can get their rights is the question before them.

References

Barry Schwartz, Why We Work, Simon & Schuster/TED, 2015.

Annavajhula J C Bose Economic Stories for Undergrads: More than an Education, OrangeBooks Publishing, 2022.

Surendra Pratap, “The Political Economy of Labour law Reforms in India- Part III”, Centre for Workers Education, New Delhi (undated).

(The author is Professor, Department of Economics, Shri Ram College of Commerce, Delhi. Courtesy: Research Unit for Political Economy, a Mumbai based trust that analyses economic issues in simple language.)