Bharat Bandh, the pan-India strike observed by trade unions on Friday, epitomises the lack of preparedness of the Narendra Modi-government in dealing with the workers' body, especially in the context of the issues pertaining to unskilled labour in India.
For an international investor, who is looking at India, buying the promise of Prime Minister Modi that this is ‘the place to be at this point of time’, the Bharat Bandh is a clear turn-off.
The fact remains that trade unions continue to be a formidable force in the country’s labour segment, which can take on the whole establishment by causing disruptions in normal way of life, if not paralyzing the entire system. The government doesn’t yet have a plan to actively engage with these unions representing vast numbers of unskilled workforce, as evident from today’s strike.
Trade unions demands
Until the government gets this issue right, the fate of PM Modi's Make in India plan, and his ambition to change the country to the world’s manufacturing arena, will be seen with skepticism. The problem arises with the trade unions’ point of view that is typically centred around employee welfare and the larger reform-agenda of the government. Some of the demands raised in the 12-point charter by the trade unions are entirely justified, while some others simply do not go in line with the larger reform needs of the country.
In the context of today’s pan-India strike, let’s examine these issues. One of the key points of difference between the trade unions and government was the issue of minimum wages. Union Finance Minister, Arun Jaitley’s announcement of increasing the minimum wages for unskilled non-agricultural labourers to Rs 350 from Rs 246 a day (works out to Rs 9,100 a month) and a two-year bonus simply didn’t go well with the employees since the government hardly offered any methodological evidence to show how it arrived at this figure.
"There was no consultation on the wage issue. We don't know how the government arrived at Rs 350 figure. With this wage (around Rs 10,000 a month) no worker can feed his family of 3-4 members, " said C H Venkatachalam, chairman of United Forum of Bank Unions, which is part of the strike.
The whole process lacked transparency. Also, the Rs 246 per day was nearly half of what the employee unions had demanded— Rs 692 per day or Rs 18,000 per month, which was largely a just demand given that even the 7th Pay Commission had proposed minimum pay to regular employees around that level.
As Firstpost highlighted in this article, there are mainly two problems here — the absence of a uniform wage structure between the Centre and the state spheres and also a comparative index of wages across different segments of labour such as construction, sweeping and cleaning and those work in stone mines, among others. Wages need to be decided with the backing of scientific consultations and wide deliberations and also consider inflation trends. This should not be through announcements which is mostly done unilaterally. Instead, the government chose to resort to the issue through an appeasing strategy with a wage increase and bonus announcements which backfired.
‘There is a lack of transparency and uniformity in the way this government has dealt with the trade unions' demand,” said Anshul Prakash, associate partner at Khaitan & Co, who deals with labour issues.
Need to overhaul labour laws
There is a need to overhaul the archaic labour laws as well. Existing regulations that govern contract workers, mainly the Contract Labour (Regulation & Abolition) Act, 1970, are not in sync with the new realities of society. The rules as of now cover only those establishments and contractors that employ 20 or more workmen on any day of the preceding 12 months. In fact, there is no convincing estimate of the total number of contract labourers across the country except in the central sphere.
Going by the available figures from the government, as on 31 March 2015, there are 19,03,170 contract workers engaged in the central sphere while that in the state sphere is not centrally maintained.
Given the sharp increase in the cost of living even in rural areas, especially the skyrocketing prices of essential food items such as pulses and vegetables, it is only logical that contract workers demand higher wages. Trade unions, which have remained a corrective force through decades to press the just demands of their members are fully within their rights to seek clarity in the methodology and consultation on the wage issue.
Clearly, the Modi government handled this issue poorly. Similarly, the demand of the trade unions that government should take urgent measures to control price rise by managing the public distribution system and banning speculative trade in commodity market and creation of a social security net for unskilled workers too merit attention.
Not all demands valid
That isn’t the case with certain other demands. Trade unions have argued against the divestment in central PSUs and foreign direct investment in certain sectors such as insurance and railways. These are demands that go against the reforms road map the country requires to ensure it doesn’t miss the development bus. This is important, especially at a time when the world economy is passing through an uncertain phase and India’s chances to emerge as an economic power is considered high.
Reducing government control in state-run entities (wherever possible) and getting foreign investments are crucial if India needs to progress to a convincing high growth trajectory.
The trade unions’ decision to stay in the way of these issues is counter productive in this context. Unlike the past, trade unions are also engaged in fight to stay relevant to the needs of the new generation and a radically changing world. Had this strike happened a few decades back, nothing would have moved. But, today in the new age of technology, the effectiveness of the trade union strikes has diminished considerably.
“In this backdrop, unions are also fighting to stay relevant,” Prakash of Khaitan said.
Govt, trade unions should co-exist
While the strength of trade unions has arguably weakened over decades, they still remain a hard-to-ignore force in the public sector. Attempts to curtail trade unionism have backfired especially in state-run banks. One example is the U-turn State Bank of India had to take in Year 2013 on its decision to withdraw the check-off facility, which the unions use to collect monthly fee from their members using a standing instruction. The bank had to fight the case in the court and had to later agree to reinstate the facility to pacify the unions.
Trade unions also have had their share of setbacks. For instance the merger of SBI associates with the parent was opposed by the trade unions but ignored by the government which went ahead with its decision.
While it is a fact that in the Indian context, it is almost impossible to suppress trade unionism, the governments will have to find a way to co-exist with them addressing their just demands, but ensuring trade union movement doesn’t hamper the reform process is the challenge. Particularly for the Narendra Modi-government, which came to power chanting the reform mantra and the ambitious ‘Make in India’ initiative, dealing with trade unions and progressing on labour reforms is a major task.
Except certain populist measures such as increase in the maternity leave period, this government hasn’t made any serious progress on labour reforms. Even at the state levels, except few states like Rajasthan, no states have taken any serious approach to labour reforms.
This time around, the unpreparedness of the government while approaching the issue is more than evident, especially on the minimum wage issue. It’s high time that the Modi-government works out a road map to address the trade union issue through continuous consultations. There isn’t a magic formula to ward off trade unionism.