It has been obvious that virtually all sectors of elite opinion, from high-level economic advisers, heads of industry, intellectuals and editors of agenda-setting media, have long been in agreement that India’s labour laws are a hurdle to economic growth. Complying with the demands of a tiny yet powerful minority while ignoring opposition from workers’ unions representing the interests of millions of working people, the Central government recently introduced legislation in Parliament in the form of The Occupational Safety, Health and Working Conditions Code, 2019 and The Code on Wages, 2019. Despite the lofty rhetoric employed by the government to promote the Bills, ten central trade unions have collectively condemned them as an attempt at “bulldozing of codification of labour laws” and demanded they be withdrawn.
I spoke with Gautam Mody, general secretary to the New Trade Union Initiative (NTUI), and discussed the necessity of robust labour legislations, the fraudulent claims of industry that such legislation strangles growth and the poor implementation of labour laws, among other topics. These are some excerpts from the conversation.
Kshitij: The words Indian industry usually uses for labour laws are “archaic, rigid, don’t belong in the twenty first century” etc. Internationally speaking, where do you locate India’s labour laws? Is there any global perspective on labour laws you’d like to share?
Gautam Mody: Ask big Indian industry to point out one country where they can so-called ‘hire and fire’.This [claims of being archaic] can only be done rhetorically. The idea of ‘hire and fire’ is pure humbug. It’s an ideological position that Indian big business has taken, the Indian Right has taken, I daresay the Bharatiya Janata Party (BJP) has taken. No other political party’s position is nearly so articulate and clear on the flexibility that industry needs to grow. If you look at the Statement of Objects and Reasons for the Wage Code, they make it very clear that if there is “ease of compliance,” there will be more jobs. This is truly an ideological commitment.
In any civilised society, workers enjoy rights. They have a right to a job and they have a right to that job once they get it. Then, the process of removing them from that job involves a procedure of law. That procedure is also there to ensure that they are not being victimised for some personal attribute of theirs, they are not being fired because they are being discriminated for being a woman or from a historically discriminated caste or community or religion. But also, that they are being treated fairly insofar as they’re not being fired to deny them an increment and then be replaced by a newer worker who will start at a lower pay, and so on.
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K: In the Economic Survey released just before the budget, chapter 3 takes the example of Rajasthan, where labour laws were amended in 2014, which among other things, made it difficult for workers to form unions. The argument put forward by the Survey is that these amendments increased output, increased the number of factories employing more than 100 workers etc. and should be emulated by other states to achieve economic growth. What do you make of these claims?
GM: As we understand, that data doesn’t actually hold up, it’s thin on the ground. That data needs to be compared to other states, you can’t just hold up one state and put it out, then claim that’s good. Not to evade the question, but no government has been less honest with the truth on data than this one.We now have them lying on budget data, we know they withheld a NSS unemployment report for the election, denied its very existence and then called it faulty on technicalities, and two days after the election they actually put it out in the public domain.
There’s also the question of how much of industrialisation is happening in Rajasthan because of five years of not just labour law changes but also five years of a BJP government, or the fact (and this is about being able to verify it) that there is a certain logical expansion of industrialisation. Industrialisation is taking place along NH 48 and the fact is that everybody wants to be as close to the highway as possible as opposed to go in the inner recesses. What we’re seeing is much higher new investment taking place on the Rajasthan side of the border simply because there is no physical space on the Haryana side.
Turn around to Tata Motors and ask them why did they invest and expand? Or to Ford, or Hyundai, or Renault-Nissan, did they not come to India despite the labour laws? […] Nobody is not investing because of so-called regressive labour laws. There is nothing regressive about them. Businesses are investing and they are making money. Let Indian business point out where are the losses? Which factory could they not shut in 25, 30 or even 50 years due to provisions of Chapter VB of the Industrial Disputes Act? If because of these provisions, they’ve actually had to pay a good redundancy settlement to their employees, that is the natural course of things. […] Their understanding is that the capitalist is the only one who has a share in an enterprise because they own equity. Everybody who puts in their blood, sweat, tears and toil, puts in their experience, their skills, helps the entrepreneur innovate, they all have a share.
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K: In the Economic Survey, they don’t talk about what the impact of these changes in labour laws had on wages in Rajasthan. What has been the effect on wages, and on the labour force broadly, in Rajasthan in the last five years?
GM: We have witnessed the fiercest forms of union busting over the last five years in Rajasthan. Alwar and Jaipur districts, which are the two districts on NH 48 have replaced Gurgaon district as the trade union busting capital of the country, what we’ve seen at Honda, at Daikin, the list is endless. That’s what five years have achieved.
The impact that’s had on wages is very clear because when you can bust a union, then you can replace workers with cheaper and cheaper wage workers. The government of Rajasthan needs to go out and do a survey in order to impress industry of how it helps them bust unions and that’s what makes it labour friendly, as far as entrepreneurs and investors are concerned. […] There’s also a dampening of wages when there is such high unemployment. We are looking at levels of unemployment which are statistically higher than at any other time in living memory. With that if you add the very natural levels of high under-employment in our economy, especially in rural areas, and combine it with the phenomenal level of rural distress, then we’re looking at a wage, that in many parts of the country, would be way below a subsistence wage.
K: When it comes to implementation and compliance of labour laws, what is the ground reality?
GM: The ground reality of any law is that it works when it is monitored and when there is significant deterrence of violations. Labour laws still work where strong unions exist and are not busted.The right to join unions, as employers try to portray…that trade unions are a bunch of muscle men who are extortionists. Nothing could be further from the truth, trade unions perform very vital functions in ensuring that laws are implemented, most importantly in the workplace health and safety laws. […] Where unions don’t exist, what has evolved over the last 25 years is a self-compliance zone. These are beyond the pale of laws, especially in the MSME (Micro, Small and Medium Enterprises) sector, but also in large scale manufacturing where employers are successful in busting unions. So, there is a problem of implementation and the answer is not self-compliance. […] The idea that businesses be allowed freedom from everything is actually the law of the jungle and that is where we’re moving.
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