The Madhya Pradesh, Uttar Pradesh, and Gujarat state governments have relaxed labour laws in a bid to attract investment and restart economic activity that was paralysed by the nationwide coronavirus-induced lockdown. Punjab, Himachal Pradesh and Gujarat have also amended their Factories Acts and increased the work hours from 8 to 12 hours a day or 72 hours per week.
The industry is divided over the new rules. The Micro, Small and Medium Enterprises who spoke with Firstpost chose to focus on the challenges they face as the government has begun lockdown relaxations and allowed certain industries to function.
Entrepreneurs said paying salaries, as mandated by the government when there was no production; getting back the workers who have left for their home towns; sanitising factories and workplaces besides getting raw materials and supply chain in place—these are among the various huge challenges for the sector, they said.
Industry points to challenges, need for ease of labour laws
“The new rules are tough, but are needed as these are extraordinary circumstances," said Mahesh Singhi, founder, home-grown merger and advisory firm, Singhi Advisors. He terms the three state governments rules easing labour laws as ‘a right step at the right time’. Singhi said if more rules were formulated even as others were made redundant, it would hamper each state’s plan to resume economic activity.
“Rules and laws are alright for normal times. But this is a war-like situation and the primary aim is to generate employment, create a demand for the products and services and narrow the demand-supply gap,” he said. But should it come at the cost of worker’s health, their rights? Singhi said that any revolution calls for changes in rules. “You have a right to earn and that comes from a responsibility to work.” But would that mean stretching work hours to 12 instead of the ILO mandated 8 hours? “The need of the hour is to ensure there is money flow in the system. Both the employer and employees need to go through some tough times before things ease back to normalcy,” he said.
The work hours established in the ILO convention are 48 hours per week. Labour regulations such as 8 hour workdays were brought in after years of protests against exploitation. But, labour is a concurrent subject and states can amend certain labour laws for their regions.
Chandrajit Banerjee, Director General, Confederation of Indian Industries said in a statement: “The labour changes initiated in UP and MP, are both steps that will give huge flexibility to industry in their labour practices.”
With a huge number of employees having left their workplaces due to coronavirus and lockdown measures, there is a need to reskill and map workers who have been displaced and re-employ them as per the needs of the industry, Banerjee said. The ordinance in UP and relaxations in norms in MP will help industry to adapt and rise to new economic realities swiftly, he said.
The other recourse is for government to pitch in with a relief package. Arjit Rawal, Director, Logistech India Private Ltd, suggested the government follow what the Canadian government is doing for industries. The Canada Emergency Wage Subsidy encourages employers to recruit workers who lost their jobs due to the coronavirus. The CEWS offers a subsidy of 75 percent of an eligible employee’s weekly earnings, to a maximum of $847 per employee per week to eligible employers, for up to 12 weeks. The funding is retroactive to 15 March.
Rawal wants the government to ease the pressure on employers by giving them some reliefs. “Consider extending the financial year,” he suggested. The industry has been demanding extension of fiscal year by three months in view of the economic impact caused by outbreak of COVID-19. But says Rawal, “Companies still have to file annual income tax returns. Where will the entrepreneur who does minuscule business be able to do this in these circumstances?” he asked.
Labour has migrated in huge numbers back to their villages and home towns, and to get them back will be a huge task, he said. “The government should offer a holistic solution and incentivise industry till it comes to a normal curve,” Rawal said.
The entire efforts of the government and the hardships borne by people for a 40-day lockdown has been somehow diluted by the talk on labour laws, absence of labour as they have migrated to their villages, said Siddharth Shenoy, president, Bombay Industries Association. He said the MSME sector is faced with challenges—no transportation, disruption of supply chains, shortage of labour, among others. “The large companies can take care of themselves as they have a lot of subsidiaries. But what about us,” he asked.
Some believe the relaxation of labour laws are temporary as stated by the state governments. Conceding that labour is a very essential part of the ecosystem, Ashok Mohanani, Chairman Ekta World, Vice President, NAREDCO, said the laws are being relaxed as an emergency measure to give a much-needed boost to the economy. Availability of land, flexibility in labour laws and a welcoming administration will be attractive to global markets looking to rationalise supply chains. "However, it is also essential to ensure that the labour is not exploited and this is a positive move for them as well along with the businesses," he said.
Some industrial associations see the lockdown relaxations as the most crucial period. It is almost a COVID-19 Part 2 situation, said KR Gopi, president, TMIA-The TTC-MIDC Industries Association. With a significant percentage of labour in Maharashtra hailing from Uttar Pradesh, Rajasthan and Madhya Pradesh, the TMIA now fears that the workers may prefer to stay back in their home states.
“With a large base, second only to China, the MSME sector contributes over 28 percent of the GDP and more than 40 percent of India's exports, while creating employment for about 11 crore. The sector is called the backbone of the economy, but the government ignores the sector when it comes to stimulus packages,” Gopi said. “We have to pay wages for month of April and May during the lockdown when there was zero production. There is no relief on electricity bill payments, interest on loans taken for working capital."
He said labour laws can be relaxed temporarily but these cannot be made permanent and are best short-term solutions. The safety and health of workers have to be taken care of and it cannot be an either/or option, Gopi said.
On Monday, Nitin Gadkari, the Minister for MSME, and Road Transport and Highways said he expects the Centre to unveil a financial package in two-three days, observing that the situation "was very bad" despite the three-month moratorium on loan repayments announced by the Reserve Bank of India (RBI).
But some are unconvinced of these packages percolating to the ones who need it. “The government announces reliefs—bank loans for the MSME sector, for instance, but the banks are loathe to give it. Rules are made and passed by the Centre but nothing takes off on the ground level,” said Siddharth Shenoy, President, Bombay Industries Association.
Whither workers rights?
In the frenzy to get investments and the economy going, the State governments have over-stepped on labour laws that have been painstakingly fought and mandated for the health and safety of workers. KR Shyam Sundar, labour economist and professor in Human Resource Management (HRM) Area, XLRI, Xavier School of Management, Jamshedpur said it is unfathomable how a State Government can amend labour laws justifying labour shortages and the need to kickstart the economy. He termed this as ‘labour market anarchy’.
He said, these labour law changes are based on three key principles, viz., labour laws are not needed in the society which means no role for the State in the labour market; workers should solely rely on the goodwill of the employer, and labour rigidities are the principal irritants that halt investment and hence economic growth. He fears the UP Model ‘will probably’ become the defining labour market governance norm.
Concurring with Sundar, Rama Kiran, assistant professor and head of the department of commerce, SK Somaiya College, Mumbai and a research scholar said the changes brought about in labour laws are a ‘slap in the faces of workers who were forced to walk home hungry’. Kiran has worked extensively on female labour working in garment factories. “Around 90 percent of workers in garment factories are women. By relaxing labour rules and not providing them basic amenities like toilet facilities, canteen, drinking water, what is the management offering them? You want them to work for 12 hours, but you don’t want to provide them with amenities,” she asked.
Are the state government's action in sync with human rights and labour rights laws? But the goal is to kickstart the economy and in the present time, any action that meets with it is par for the course.
Maansi Parpiani, a researcher with Aavjeevika Bureau, a non-profit working with migrant labour in Gujarat, Rajasthan and Maharashtra, said terms like organized labour and migrant labour is a false binary. “Only a very small fraction of workers have full rights in organisations. Many semi-permanent workers are employed in big industrial sectors, and MSMEs on short-term contracts.” Parpiani said, contract labour has already diluted existing laws and limited the number of workers they actually protect.
The state governments by their latest move has, with its stated focus, brushed away labour's rights. It is time then for the government to step in before the remaining States take this route. Vishal Kumar, co-founder and Financial Advisor, MSMEx-an online micro advisory platform for small business owners, said labour reforms have been long-pending and much-needed for a densely populated country like India. The Uttar Pradesh government's striking down labour laws is a two-pronged decision, he said: "From a business angle, it would be welcome with easing of norms and compliances. But India cannot be seen as a country that exploits its labour, especially when health is the big challenge in these times," he said.
Do labour laws in India need amendments? Most of the peeople who spoke with Firstpost said, it was unnecesary. They said the BJP-ruled states have passed rules. "The BJP central government may support state governments that pass these rules," said advocate Saju Jakob, practising in Supreme Court and High Court, Delhi. He termed the easing of labour laws ‘misguided’ and a new low. “Capital will only flow where labour standards are good. Investment does not depend on cheap labour and potential investors will look at infrastructure. The focus should be on that,” he said.
The easing of labour laws has thrown open the proverbial Pandora's Box for the labour in the country. They may have to trudge a long road before they can take back what they had until the rules were reversed.
However, all is not lost, said Gayathri Vasudevan,Executive Chairperson and Co-Founder, LabourNet Services. When the dice is cast against the favour of labour, it is better to focus on what can be prised away for the benefit of labour insted.
Gayathri said, the losses to industry due to the pandemic is 'massive' with resultant job losses, according to news reports. In the circumstances, she suggested it would be better for activists and others who fought for rights and protection of labour to ride this wave by focussing on employee health, safety and protection given that India has a 'miserable' record in this matter. A win-win proposition, perhaps, given that labour shortage would imply they have to be compensated, if not immediately but in the long-run. That could be a happy outcome of the amendment of labour laws. Perhaps.
Updated Date: May 12, 2020 14:56:04 IST