There is a lot of talk about labor reforms in India. Many reports have come that it will be unveiled soon. But still it is not clear what will be those reforms. There are conjunctures and predilections. But on one knows exactly what these reforms are. Will the government openly discuss these reforms with the stakeholders and political parties? Today, there is a news in Times of India that the President has approved the amendments to the labor laws passed by the Rajas than Government. The report quoting the government officials, says that the move will open up for deeper changes in the archaic labor laws.
First of all, let us face the fact that labor is a state subject and one state passing it will not lead to its adoption in other states. Every state will have to move a similar legislation and get it approved by the state assembly. Clearly, there is no consensus among the states to move towards such a legislation. Even if they go for it, there will be stiff resistance. And in some states like Kerala, West Bengal, etc it will be near impossible to have such a legislation. Even the BJP affiliated BMS, a trade union outfit has not made its mind clear in this regard nor the all powerful RSS, who have a sizable number of followers among the working class
In Indian situation, there are two types of labor laws operating. One for the IT companies, which almost all states having IT industry, have complied with. There is no restriction on night shifts for ladies, working hours, and almost all of them follow a policy of hire and fire. There is no union and therefore no resistance. In certain companies, there are advance warning systems to the under performers. In certain other companies, lay off and retrenchment of the efficient employees are resorted to as a policy of downsizing the labor force linked to general performance of the company. In some other companies, mostly, the multinational ones there are instances when the companies are closed down. And yet, there are no protests or resistance. It is because the people who are working in these companies are different from the people in factories or work sheds. When a worker in a knowledge company is fired or laid off, he or she gets another placement almost immediately or can hope to get a suitable position sooner or later. That is not the case with the factory workers, whose skill sets are limited and scope for undoing whatever they had learned is very limited. He or she is going to join the backlog of millions of unemployed people in case of unemployment.They will not have any safey net unlike in the developed countries.
I had extensive discussions with many owners of factories regarding the labor reforms. Significantly, most of them are not looking for a hire and fire policy. They want less number of paper works and compliance. Presently, I am told that a company has to maintain close to 25 records about the employees. Some of them are trivial and unproductive exercises but non compliance attracts penal action.They want such silly restrictions and unnecessary paper works to go.
Admittedly, the number of strikes, go slows and things of that ilk have come down substantially. The employers' organizations are not talking about the man days lost on account of the strikes and go slows. They want to have the rights to rationalize the labor as and when they require. It is a fact that the government could get rid of millions of workers who were working with National Textile Corporation without giving them any compensation or minimal packages, despite having the same rigid and archaic laws.
There are many private sector units which had pulled down their shutters without giving any notice to the workers. Their salaries are struck for a long time. Despite the promises, no government had come forward to help them.
Then why the talk about the great labor reforms? Let not the government be over enthusiastic about it since it will have a huge backlash.
Business Economics & Services Team
