One Year of Modi

Sacrificing Labour before the God of Corporate Profit

Satyaki Roy


Modi government had been very keen to implement labour reforms that the industries had been demanding for long. Introducing the new spell of reforms on October 2014, the Prime Minister underlined the importance of labour in making India and argued for viewing the issues related to labour from the perspective of workers rather than that of the owners. However the genuine concern was never to address the appalling condition of workers in India, the so called shramayogis. Rather, it was meant to pamper ‘India Inc.’ who are looking forward to have their best times under a resolute government. Since the country has a large unutilized labour force it has to explore the advantage of labour surplus; people are ready to work at sub-human conditions and at low wages. Hence India seems to be an ideal candidate to win the ‘race to the bottom’. Labour reforms are meant to dismantle the institutional and legal rights of the working class in India and showcase unfettered profit making as our unique selling point to the capital of the world. 

The first step was to introduce the Small Factories (Regulation of Employment and Other Conditions of Service) Act, 2014. This act tries to exempt factories employing upto 40 workers from 16 labour laws including the Factories Act, the Industrial Disputes Act, the ESI Act and the Maternity Benefits Act. The recent moves to increase the threshold limit of number of workers from 10 to 20 (with power) and 20 to 40 (without power) for Factories Act to be applicable is in this line only. This means that roughly 12.6 lakh workers in the organized manufacturing sector who are employed in factories comprising a large share of 65 per cent of the total number of factories in India that employ less than 40 workers would be out of the purview of labour laws governed by the Factories Act. Furthermore, according to the Industrial Disputes Act, factories having 100 workers have to seek prior permission from the government to retrench workers. This threshold limit of number of workers has been raised from 100 to 300. The suggested change implies that about 93 per cent of the factories in India can retrench workers without seeking any permission from the government. The amendment to the contract labour Act raising the threshold level of employment under any contractor from 20 to 50 workers would allow the employers to avoid almost all the labour laws applicable for contracted workers in private sectors as well as in public sector undertakings. The government is keen to enhance ‘ease of doing business’ at the cost of relaxing monitoring of the implementation of labour laws. How does one expect that employers in this country would voluntarily furnish correct information on compliance of labour laws when non-compliance is the easiest route of increasing profitability? But the government in the name of simplifying forms of returns and registers exempted employers from obligations under 16 major labour laws. This is the kind of freedom industries were aspiring for long and the Modi government relies on the goodwill of Indian corporates!

India has the largest number of child labour under the age of 14 in the world. Children are employed in agriculture, small workshops, on the streets as rag pickers, porters, vendors as well as in hazardous industries such as glass making, mining , construction , carpet weaving, zari making and fireworks. The government proposes Child Labour (Prohibition and Regulation) Amendment Bill that seeks to amend the Child Labour Act, 1986. The proposed Bill while suggesting a blanket ban on child labour below the age of 14, keeps provision for child helping his family after school hours. In fact employing child labour in home based contracted and out sourced work would be easier by this provision. In India there are lot of variations regarding legal definition of a child. The Child Labour Act defines child as a person having age below 14 years. According to United Nations Convention on the Rights of Child a child is a person who has not attained the age of 18. The proposed Bill however introduces the term ‘adolescent’ meaning a person who is between 14 and 18 years. The Bill prohibits the employment of adolescents in hazardous occupations or processes (mines, inflammable substances or explosives, or hazardous process) as defined in the Schedule. In other words it actually allows children between age 14-18 to be employed in non-hazardous industries which is in contravention to the UN Convention and also leaves loopholes to employ children below 14 years in household units. The Bill however is silent about making provisions for rehabilitation of child workers and also remained unclear about settling disputes relating to wages and working conditions for workers having age between 14 to 18.

Labour reforms have hardly been debated in middle class discourse. The apparent silence in the society at large perhaps manifest that neo-liberal regime and its cultural machine seems to have managed a social sanction to these reforms. But this commitment to reforms is actually highly ideological rather than driven by immediate objective necessity as has often been argued. The government is pushing reforms in order to ease out existing ‘rigidities’ in the labour market. But how rigid is the labour market actually? According to ILO, proportion of persons employed in informal employment (including informal and formal sector) in non-agriculture in 2009-10 is 83.6% which is much higher than China (32.6%) or Brazil (42.2%). This means that vast majority of the workers employed in India are actually not at all covered by any labour rights. If we include agriculture, roughly 93 per cent of the workforce are denied of any legal rights relating to their work. Secondly, in the factory segment (those covered under the Factories Act, 1948) or in the organized sectors according to the Annual Survey of Industries (ASI), average share of contractual workers is roughly one-third of total workers. Therefore for one-third of the workers even in the formal segment the employers had already been able to avoid the legal liabilities applicable for permanent workers.

What is the average labour cost that the employer would like to push down further? According the latest ASI data the average share of wages and other benefits in gross value of output comes out to be as low as 2.17 per cent in 2012-13. So the cost accounting for labour in a product value of 100 rupees is only Rs 2.17! Do we really need to push it down further in order to be globally competitive?

During the 1980’s the share of wages in gross value added (addition to output) in manufacturing was 26% which has come down to 10% during the latter half of this decade and during the same time the share of profit in gross value added increased from 5.3 per cent to 21.3 per cent. These figures precisely show that the labour has already lost a significant share of the wealth it has created over the years. In this milieu it is hardly tenable that the relentless drive towards labour reforms has anything to do with the objective necessity of bringing down ‘high’ wages. Rather, it is the naked service of greedy capitalists clamouring for increasing control over the labour process.