Labour Reforms Gone Awry

A serious debate on the issue of changes in labour laws by BJP-run states sparked off when some of the proposed changes by the Madhya Pradesh (MP) government were rejected. As many as six of the 35 amendments covering 17 labour laws proposed by MP have been declined by the Union labour ministry.  Other state governments have also lined up labour reform measures that trade unions are threatening to take to the streets.

Some of the amendments proposed by MP included exempting micro industries, those who employed capital of less than Rs 25 lakh, from the application of seven central laws like the Contract Labour Act and Factories Act; and disallowing trade unions and increasing working hours per week to 72 from 60 in micro industries.

Many industry bodies protested the rejection saying it is a compromise of the Centre’s ease-of-doing-business commitment. Some also argued that this amounts to interfering with legislation on state subjects. However, a closer look at the proposed amendments reveals that they choke the rights of citizens. For instance, the right to form unions and associations is guaranteed by Article 19 (1) (freedom of speech and expression) and Article 19 (3) (freedom to form associations). Again seeking suspension of seven central labour laws — aimed against child labour, exploitation of contract labour, etc — by the state of MP appear to violate the right against exploitation. Therefore, the decision of the central labour ministry to reject these changes and call for a review of the MP labour ordinance is praiseworthy.

Rajasthan has also brought changes in its state labour laws, but it took a more cautious route. It first passed amendment bills in the state assembly, and then sent them to President for approval. The President, Pranab Mukherjee, thereafter gave his assent to the amendments in the Factories Act, Industrial Disputes Act and the Contract Labour Act.

Meanwhile, in Seemandhra and Telengana there is growing unrest at the passage of amendments to labour laws which unions say have been passed by the state assemblies without giving any thought to how they will impact workers.

In their enthusiasm to announce labour reforms, both the central and state governments are forgetting that in times of high unemployment and large-scale exploitation of labour, protection of jobs and working conditions have to be part of the government’s agenda. A laissez faire approach of abandoning labour to market conditions could add to the social unrest building in the country and come back to haunt the Modi government.

Besides, the problems faced by the manufacturing sector have more to do with bottlenecks in investment and poor infrastructure. Labour laws and militant workers are hardly the stumbling blocks today.

(This story was published in BW | Businessworld Issue Dated 18-05-2015)