Labour pains

As in land Bill, labour changes could unite Opposition

Given the need to impress upon industry that the government is committed to reforms vital to Make-in-India, it plans to push through a slew of labour-related Bills aimed at making life easier for industry while, at the same time, also giving some more rights to workers. The most important of all the Bills, in terms of what they will do for business sentiment, is the Industrial Relations one that allows firms to shut down without applying for government permission if they employ under 300 people—this provision was first thought of by the BJP when it was in power in the 2000s but nothing ever came of it due to pressure from the unions. Indeed, when the unions vociferously protested against raising the limit from the current 100 when the BJP revived the move last year, the government formed a 5-member committee, including the finance minister, to examine the issue—the fact that the government is going ahead signals its resolve.

There are several other progressive features in the various Bills planned. Given the difference between peak and trough production—1.4 times in the case of Maruti, for instance—companies need a way to reduce employment during certain months. Since this is difficult with fulltime employees, companies go in for contractors and that leads to other problems since contractors often pay workers less than what the company is giving them. What is proposed is fixed-term employment, but with the same terms given to permanent employees, which means both workers and employers benefit—the changes in the Apprentices Act also gives managements more flexibility in hiring while training workers on the job. Also proposed is automatic conciliation once a strike notice is given and classifying gheraos and go-slows as coercive action—since a conciliation process will be deemed to have begun once a strike notice is given, and no strike can take place during a conciliation, this means no flash strikes are possible. Office bearers of unions will have to be either employed in that unit or in the industry—in several high-profile strikes in the past, it was found outsiders were egging on the workers in a big way.

Though smooth worker-employer relations lead to more employment in the long run, there are several immediate sops for workers as well. Apart from fixed-term workers having to be paid as much as permanent employees, retrenchment compensation has been trebled and a workerreskilling fund for retrenched workers is to be set up, funded by employers. An industrial relations board is to be set up to help address workers’ grievances if the conciliation process fails and managements will have to negotiate with the largest union in the factory in case there are multiple unions. There is, of course, merit in the view that, like the land Act where the government was only trying to undo the damage done by the UPA’s Act, the proposed changes in the labour Bills will also unite the Opposition against the government. In which case, a better solution would be to let the laws be and encourage state governments to come out with their own labour laws and approve them under Article 254(2)—Rajasthan’s labour law, for instance, doesn’t allow unions to be formed unless 30% of the workers are members as compared to 10% earlier. But with the government needing to buttress its reforms credentials, perhaps it needs to get the labour Bills through and then let the states better them.