In the second of a two-part series, RAJA VK DANDAMUDI and SREERAM VG analyse the reforms sought to be achieved by the introduction of the four new Labour Codes. Their analysis over the series seeks to place a refined understanding of the political economy at the centre of any analysis of labour welfare in general, and labour reform in particular, to demonstrate that Indian labour legislation has always prioritized the State’s economic vision over labour welfare.
While the Wage Code was passed by the Parliament in 2019, the three other Labour Code bills were passed by the Rajya Sabha exactly a day after the Lok Sabha passed them in 2020. Notably, the Rajya Sabha passed the three remaining Labour Code bills, which were to change the entire course of Indian labour laws, after less than two hours of debate, as the Opposition boycotted the House in order to protest the farm bills, which were also enacted later.
Not only did this raise fundamental questions about the role played by democratic processes and the very purpose of a counter-majoritarian institution such as the Rajya Sabha, but also demonstrated the regard the Indian elite had for one of the most important aspects of social life — labour.
Some changes sought to be implemented by the labour codes
The new Labour Codes go a long way in not only harming the interests of labour, but also nearly eviscerating several important and yet rudimentary rights and protections that the labour movements have struggled for, in the last couple of centuries. A comprehensive piece on the new Labour Codes is, considering their enormous scope, beyond the scope of this piece. Nonetheless, some of the areas in which labour protection has regressed as a result of the introduction of the new Labour Codes need to be highlighted.
The right to strike, an important tool of the collectivised labour to express their demands and views, has significantly suffered under the new regime. Under the erstwhile Industrial Disputes Act, 1947 (the ID Act), workers were allowed to launch a strike without a prior notice to the employer, except in the case of public utility services. However, the new IR Code, which seeks to replace the ID Act, drastically changes this legal position, and now prevents workers from going on a strike unless they serve a notice to the employer sixty days prior to the strike.
This “reform” radically chips away the autonomy of the workers to call for a strike and their ability to make a strategic call for strike abruptly, and at a time that workers deem most suitable for pursuing their cause—both of which are integral to the right to strike itself.
The reforms have also naturalised one of the most prominent evils of the Indian labour sector, i.e., contract labour. Although the Contract Labour (Regulation and Abolition) Act, 1970 (the CLRA Act) was enacted with the intention that contract labour is to be abolished “wherever possible and practicable”, it has largely failed to enable major strides towards the abolition of contract labour.
Under the CLRA Act, contract labour could be abolished, and the employment of contract workers could be regularised if (a) the employment of contract labour is incidental or necessary for the establishment, (b) the employment of contract labour was “perennial” in nature, (c) the job performed by contract labour is performed by “regular” workers in the establishment concerned or in a similar establishment, and (d) the employment of sufficient number of “regular” workers would do away with the need for contract labour.
If any of the above grounds were met, the state government was empowered to abolish contract labour in an establishment. However, under the OSH Code, only the employment of contract labour in the “core” activities of the establishment is prohibited, and even this norm is almost entirely engulfed by the wide exceptions, which make it possible to retain contract labour even in the “core” activities of the establishment.
The new regime under the OSH Code is problematic because it turns the understanding on contract labour on its head, and restricts its prohibition of contract labour to only those areas that are considered to be “core” activities of an establishment, which will unsurprisingly exclude a large majority of blue-collared workers who are said to perform “inessential” jobs which are not at the “core” of the establishment.
The new Labour Codes also excessively delegate several of the crucial norm-making powers to the union government, including on issues which strongly implicate hard-fought labour rights. For instance, the eight-hour working day, which is one of the most hard-fought labour rights, was considerably diluted because the Parliament, through the OSH Code, delegated the task of identifying the contours and modalities of working hours.
The union government, which has prodded the state governments to obliterate the eight-hour work rule in the name of the pandemic, has also enacted the provision pertaining to working hours in the OSH Code in such a way that it can require longer working hours from workers, if required. While the OSH Code provides that a worker should not be allowed to work for more than eight hours per day, the permissible period of work in each day, with such intervals and spread overs, is left to be fixed by the appropriate Government.
The union government has notified a draft of the Occupational Safety, Health and Working Conditions (Central) Rules, 2020 under which it has proposed that the period of work of a worker shall be so arranged that, inclusive of the worker’s intervals for rest, it shall not spread over for more than twelve hours in a day. In this manner, the present Government is trying to make the temporary exemption from the eight-hour work rule permanent by stating that working hours per day, including intervals for rest, could effectively be spread over twelve hours.
What is particularly invidious about this arrangement is that the Parliament is not willing to set the eight-hour working day rule, which is a basic human right, in stone and finds it appropriate to leave certain important aspects of it to the vagaries of the Government.
Underlying agenda governing labour reforms
The above discussed aspects of the new Labour Codes are only some of the ‘reforms’ that were brought about in the last two years, and do not even come close to giving a full picture of the same. But they represent the direction that the ‘reforms’ are cajoling Indian labour law towards. That these ‘reforms’ do little to advance collective bargaining and labour welfare is obvious and well documented.
What is noteworthy here is not just the question of whether the new regime regresses with respect to its predecessor, but also what this regression is clothed as. As we have tried to explain in the previous part, the considerations dominating the post-colonial legislations concerning labour welfare were hardly about worker welfare. They were about cannibalising war-time economic controls for the country’s economic (and notably, not its social justice) commitments.
As the zeitgeist of the country’s economic philosophy and its economic ambition has moved rightwards and taken shape closer to the ideas advocated by the notable American free-market advocate and economist Milton Friedman, and the Austrian economist Friedrich Hayek, this change is watermarked all over the nation’s labour reform.
The neoliberal conception of economic growth informs its followers that it is in vesting control and guaranteeing freedom of operation to corporations that wealth would be created and thereafter, it would only be a matter of time for welfare to follow. Not only has the political elite of the ruling dispensation routinely made their commitment to this ideal clear, they have planted this belief in the Labour Codes as well.
As explained above, the new labour regime whittles down strikes, makes it easier to close factories and fire workers without consequences (removing any economic incentive alive to protect workers in small factories), and institutionalises a hire-and-fire regime by introducing fixed-term contracts and diluting contract labour abolition. The regime also adopts a remarkable degree of delegation, leaving the nuts and bolts of key protections, like working hour restrictions, to the executive as well as employer control and manipulation.
This bears a degree of resemblance to the much-exalted virtue of “flexibility” that neoliberalism requires, to extract growth indicators. As the erstwhile Union Labour Minister S. Gangwar clarified, on multiple occasions, these reforms assist the nation in attracting investment and reducing the “cost of compliance”. They aim to take away a “complicated structure” to make it “easier for small firms to grow” by allowing them to retrench workers without government permission. Simply put, according to him, these reforms help us improve our “ease of business” ranking.
Bleak reality of political economy of labour welfare
The regulation of work and the dignity of the worker is one of the most important projects of the liberal democratic state. As we have tried to show, this project is one that is, and has been, fighting to stay relevant in the wake of the economic agenda of the state and its benefactors.
In the old regime, the labour legislations of post-colonial India, the rhetoric of “nation-building” and the aspirations of a new independent state were superimposed upon the question of labour welfare. This created a legal and sociological regime, whose primary objective was to ensure “industrial peace”, and it attempted to secure the same by taking labour power away from the worker and towards the State. This centripetal movement of power towards a “centre” occupied by the State is evidenced by the broader economic objective of the embryonic Indian State.
Famously, the Bombay Plan, a set of economic proposals made in the mid-1940s by a gathering of major Indian industrialists, called for significant state presence in the Indian economy, so as to make its development viable. Although the Nehru Government did not officially accept the Plan, as history professor V. Krishna Ananth noted,
“[t]he Nehruvian era witnessed the implementation of the Bombay Plan; a substantially interventionist state and an economy with a sizeable public sector governed in the political sphere by a Constitution that provided for a multi-party parliamentary democracy was put in place.”
What is of significance here is that the old regime clearly instituted a structure where labour power, by which we mean the power to bargain for welfare and dignity, was drained from the workers and put into the hands of the State.
In our submission, a similar appropriation of labour welfare is presently underway in the form of the new Labour Codes. Once again, it seems clear that under the aegis of a particular economic vision of the country, labour welfare is being treated like a commodity. Numerous scholars have already demonstrated how these Codes engender a reality where workers would be easy to terminate, would struggle to bargain and be subjected to intensead-hocism.
While that criticism is accurate and valid, it stops one step short of recognising the political economy of labour reform. It is not just the case that these Codes are purportedly being introduced for and by a pro-employer regime. These Codes are being introduced in a political economy that has and continues to commodify labour welfare.
Labour, treated as a tradeable commodity in the supply chain for development, only serves as a factor of production in the nation’s economic agenda, and its existence as the everyday lived experience of millions of citizens is cannibalized. As the Bombay Plan shows, early post-colonial India and its labour regime was built around the expectations of an oligarchy of its great industrialists working in conjunction with the State and working to the exclusion of the concern of workers. With remarkable similarity to the way the old labour regime dovetailed with the economic vision of the then government, the new labour regime serves to do the same.
The rhetoric of nation-building and economic revolution has now been replaced with the grammar of the virtues of the free-market and removing obstacles, like rigid labour laws, from the realisation of the said freedom. In our submission, while much has changed (and we would argue, for the worse) in the new labour regime, what has not changed is the distribution of power in labour relations.
The conclusion that the fate of workers is much worse than before and that the new Codes bring about a reform that hurts labour interests is one that we agree with and that is well documented. But where that critique falls short is in recognising that framing this narrative as a story of how things are getting worse reinforces a peculiar reality.
The baseline imagination of labour welfare in India, from the old (post-colonial) regime, was one that was never committed to labour welfare. It was committed to what the employers wanted – the lack of abrupt stoppages in production. While the laws did very little to assist workers, they appropriated their contribution and exalted it as “nation-building”.
Essentially, the largest benefactors of the said nation building, that is, the working-class Indians, were told to do the nation building work, but on terms set for and by the elites. This is the peculiar reality of the political economy of labour.
What this series aims to do is to show that while the grammar of our politics has changed, the structure of the political economy remains firmly in place. The present labour reform replaces the country’s nation building aspirations with the country’s “economic superpower” aspirations.
Given that this conception of development, called neoliberal development, is traditionally defined by handing over the reins of the economy to private owners of capital, the new labour reform dutifully engenders this aspiration. While ostensibly being carried out in the name of worker welfare, the Labour Codes are in fact a reproduction of the same hierarchical relations that necessitate the need for welfare legislations.
From this vantage point, this vicious circle seems to have no end in sight.
(Raja VK Dandamudi is an LL.M (Legal Theory) student at New York University School of Law. Sreeram VG is a labour and human rights advocate at the Bombay High Court. The views expressed are personal.)