BJP thinks un­do­ing labour laws will spur a man­u­fac­tur­ing boom. Even now work­ers en­joy lit­tle pro­tec­tion or so­cial se­cu­rity


BJP di­lutes labour labou laws in the name of growth grow

IN RE­CENT weeks, the pink press has been singing paeans to a new star in the po­lit­i­cal fir­ma­ment, one whom they see as a wor­thy dis­ci­ple of the man who gave us the “Gu­jarat model” of de­vel­op­ment. The me­dia’s new dis­cov­ery is none other than Va­sund­hara Raje, the Ra­jasthan chief min­is­ter, who, if the eu­lo­gists are to be be­lieved, is fash­ion­ing a sim­i­lar Ra­jasthan model. Raje, who has taken back the reins of the state after a lack­lus­tre in­nings from 2003-2008,is win­ning plau­dits for just one decision—amending key labour laws that some econ­o­mists think are ob­sta­cles to the de­vel­op­ment of labour­in­ten­sive in­dus­tries. It is all about flex­i­ble labour laws.

The me­dia’s gush is less em­bar­rass­ing than the ful­some praise that some are heap­ing on Raje for amending the In­dus­trial Dis­putes Act (ida), the Fac­to­ries Act and the Con­tract Labour (Reg­u­la­tion and Abo­li­tion) Act, all of which the Modi gov­ern­ment at the Cen­tre is work­ing on chang­ing, too. The cheer­leader here is Arvind Pana­gariya, pro­fes­sor of eco­nomics at Co Columbia, who prom­ises “dy­namic” Raje that wit with th­ese mea­sures she can “count on harves har­vest­ing a bumper crop by the time the next elec­tion e comes around”. This is, per­haps, not no to be won­dered at since Pana­gariya is vice-chair­per­son vic of the Ra­jasthan chief min­is­ter’s min­iste Eco­nomic Ad­vi­sory Coun­cil and is a vo­cal cham­pion of the flex­i­bil­ity school.

Econ­o­mists of his ilk be­lie be­lieve that the rigidi­ties im­posed by labour laws la stop en­tre

preneurs from ex­pand­ing ex­pandi their oper- ations, forc­ing them to keep their fac­to­ries as small units that em­ploy less than 100 work­ers since laws on re­trench­ment kick in for larger units. In other words, hir­ing and fir­ing work­ers is so oner­ous that in­dus­tri­al­ists pre­fer to re­main small rather ex­pand to meet mar­ket de­mand.

Is this the­sis of neo-lib­eral econ­o­mists borne out by the re­al­ity? Let’s start with the ba­sic fact that the or­gan­ised sec­tor where such laws ap­ply em­ploys no more than 6 per cent of the labour force; the rest are in what is called the un­or­gan­ised sec­tor. Th­ese work­ers have no pro­tec­tion or safety nets what­so­ever and even the In­ter­na­tional Labour Or­gan­i­sa­tion has char­ac­terised them as among the most vul­ner­a­ble work­ers of the world.

But what of those in the “pro­tected” or­gan­ised sec­tor? Has their lot im­proved? Far from it. This sec­tor, where just two mil­lion jobs were added since 200405, has seen in­creas­ing “in­for­mal­ity” with more work­ers be­ing hired as con­tract work­ers than reg­u­lars. This in spite of the fact that labour laws do not al­low the ap­point­ment of con­tract work­ers for per­ma­nent tasks. The cat­e­gory of di­rectly em­ployed work­ers has been de­clin­ing steadily, while the share of con­tract work­ers in to­tal or­gan­ised em­ploy­ment had shot up to 25.6 per cent in 2009-10. In the last three years, their num­ber is sure to have risen fur­ther. This has led to stag­nant wages be­cause work­ers have found it dif­fi­cult to unionise.The ac­tive in­ter­ven­tion of the state in help­ing man­age­ments has been a prime cause for the sharp de­cline in trade unions.The re­sult has been in­creas­ing frus­tra­tion among work­ers and pe­ri­odic bursts of vi­o­lence as seen in the au­to­mo­bile fac­to­ries in Gur­gaon.

The plethora of reg­u­la­tions that ex­ist on pa­per to pro­tect work­ers have not al­ways been im­ple­mented with gov­ern­ments at both the Cen­tre and states turn­ing a blind eye to the vi­o­la­tions. One such ex­am­ple is the Wazir­pur steel rolling mills. Here work­ers in 23 mills have been on strike since June de­mand­ing no more than what is set forth in the law: pay­ment of min­i­mum wages, pay­ment of over­time, iden­tity cards and safety mea­sures at the work­place.

Em­ploy­ers have not been made ac­count­able. In­stead, the new flex­i­bil­ity will give them more im­punity.

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