Scrapping of the Labour Laws: The Thin Line Between Majdoori and Majboori

Though it may be late to write an article about the ordinances passed by several states earlier this month, I think it is only fair that being a Human Resource student with an interest in Labour Laws and Industrial Regulations, I pen down my views on the Scrapping of the Labour Laws. I tried to write a neutral piece but my sympathies lie with the workers and thus some may find this article biased towards them.

What Happened?

Around the initial weeks of May 2020, states like Uttar Pradesh and Madhya Pradesh passed an ordinance to scrap the labour laws for the next 3 years. The suit was followed by other states like Gujarat, Maharashtra, Rajasthan, Goa etc. with varying degrees of severity. Here in this article, I shall discuss the case of Uttar Pradesh in particular for I found its measures to be more drastic compared to the other states.

The UP Government scrapped all major laws barring 4 of them: The Bonded Labour System (Abolition) Act, 1976, Building and Other Construction Workers Act 1996, Section 5 of the Payment of Wages Act, 1936 and Workmen Compensation Act 1923, along with some provisions related to women and children.

The Good:

We have always been taught to see the positive side of things and to view life through rose tinted glasses (Well, I have always preferred pragmatism to optimism), let us see how this move by the state governments can be beneficial:

• It can attract new industrial investments (or so they argue).

• It can put the existing industries back on their feet and running as they do not have to follow age old laws, they can easily get cheap labour.

• It can help bring back the economy on track.

• Puts an end to the years of Inspector Raj (Acts like the Factories Act 1948, mandated for the factories and industrial establishments to be supervised by an Inspector. This was meant to see if Factories adhere to all safety standards and other compulsory provisions. But the Inspector ended up taking huge bribes from the Factories in order to give them a clean chit, not benefiting either the factories or the workers in it).

• Workers will not have to migrate in search of jobs as the new and easy going regulation shall bring jobs to their hometowns (Again, I personally do not believe this is going to happen).

• Everyone has been hard hit during the pandemic; this move can be a breather for the small scale industries and can also help workers earn some extra wages as it shifts the ceiling of overtime to 72 hours in a week or 12 hours in a day from the earlier 54 hours a week or 10 hours a day.

The Bad:

• Labour Laws not only protected the workers/workmen/employees but gave certain rights to the employers as well. Workers were supposed to give notice periods before strikes, failing which employers could take action. With the scrapping of the Industrial Disputes Act, 1947, all provisions related to strikes have been done away with. It is not clear what course of action can the employers take if employees decide to go for illegal forms of strike like Go-slow or Pen-Down.

• As opposed to its intention, the move may not be successful in attracting more industries because there are various other major hindrances that the firms face.

The Ugly:

• The ones worst affected during any calamity or pandemic are always the poor. During this pandemic also we see that migrant workers were badly affected and had to walk kilometres (The Govt. did start special trains but I think it should have been done sooner as many migrants already lost hope and started walking). The scrapping of labour laws shall lead to the exploitation of the already distressed workers.

• Minimum Wages Act, 1948 sets minimum standards of wages for workers. By scrapping this Act, workers will be forced to work at extra low wages.

• Factories Act, 1948 mainly focuses on the health and safety conditions of workers like clean drinking water, sanitation facilities, proper ventilation etc. Do we expect workers to work in dingy conditions like the sweatshops we have in countries like Bangladesh.( Major companies have their warehouses in third world countries like Bangladesh where the condition of labour is nothing short of pathetic).

• Now people who are arguing that Vietnam did good by bringing about bold labour reforms fail to understand that reform means a positive change and eliminating the labour laws completely cannot be called a reform.

• The Factories Act, 1948 also lays down working hours and overtime pay of employees. Even with this Act in use, employers hardly paid workers for overtime, now employers got a legal way of not paying overtime and making workers work for long hours.

• Scrapping of the Industrial Disputes Act, 1947 does away with the terms and conditions related to lockouts, layoffs and retrenchment. Now employers will be able to easily fire the workers without giving adequate compensation or notice periods.

• The Contract Labour (Regulation and Abolition) Act, 1970: The worst hit will be the contract workers. With the abolition of the Contract Labour Act, it remains unclear that who shall be responsible for the payment of wages, working hours, regulating working conditions or payment of compensation in case of injuries to the contract workers? The Principal Employer or the Contractor?

• Scrapping of the Industrial Disputes Act, 1947 and Trade Unions Act, 1926 poses questions about how industrial disputes shall be solved and whether the existence of Trade Union, a body which gave a platform for collective bargaining is in jeopardy.

• With the scrapping of the Shops and Establishment Act, there isn’t going to be any regulation on the opening and closing time and conditions of workers working in shops and other similar establishment like restaurants, salons, theaters etc.

What should the State Governments do instead?

• Come up with other suitable provisions that favor Industries and new Investments. Eg: The Karnataka Govt. brought major changes to the Land Reforms Act, 1961; allowing investors to buy land directly from the farmers/owners, thus eliminating the middlemen who charged very high commissions.

• Firms have to go through a lot of red tape bureaucracy, labour are least of their problems. Eliminating unnecessary paperwork can help a lot of industries to establish themselves.

• To give credit where it is due – The Govt. should give enough tax credit to support the struggling small scale and local industries

• ·If the Govt. needs to bring changes in the Labour Laws, it can do away with unnecessary provisions/laws that are obsolete or it can put certain laws like The Payment of Bonus Act, 1965 on hold for some time rather than totally doing away with Acts like the Minimum Wages Act and Factories Act.

It is high time the Centre and the State Governments realized that the development of the economy should not come at the cost of the poor. Let us not force the Majdoors to become Majboors.