Abstract
This edited volume comprising of 16 articles from academics, retired government officials, employers and business consultants, and representative of trade unions is dedicated to labor economist late Prof Lalit Deshpande. This is an excellent collection of essays regarding contemporary reforms of labor laws in India and a worthy tribute to Prof Deshpande, who is one of the highly respected scholars of labor issues both within and outside India. His intervention in enquiring into the structures of the labor market, the mobility of workers, and other issues using the segmented labor market approach, along with the contributions made by late Prof T. S. Papola, paved the way for labor studies in India.
The first four chapters, the first of which provides a preview of all contributions to the book, are all authored by K. R. Shyam Sunder, the editor, and contain a thick description of the changes in labor law that have recently been, or are being, proposed by the current regime. It makes a very good compilation of the relevant details of all the important labor laws and governance systems in India, such as the Trade Unions Act (1926), the Industrial Disputes Act (1947), the Factories Act (1948), the Contract Labour (Regulation and Abolition) Act (1970), the ESI Act (1948), the EPF Act (1952), the Payment of Gratuity Act (1972), the Payment of Wages Act (1936), the Minimum Wages Act (1948), the Employees Compensation Act (1923), the Payment of Maternity Benefit Act (1965), Payment of Bonus Act (1965), the Unorganised Worker Social Security Act (2008), and issues of labor inspection and social dialogue. The editor and author also compiles beautifully the labor law reforms and the reform strategy of the central government and various state governments in two separate articles and elaborates the institutional changes in the neoliberal regime in order to accommodate the renewed needs of global and domestic big capital. He explains how reforms are not always done by means of government passing a new law but also through judgment by the Apex courts and the overturning of results of long struggles, and how the dominance of ministries such as finance over labor has pushed the pro-reform agenda further.
Chapter 5 by L. Mishra, former secretary of Labour Ministry, sets out the difference between “labour reform” and “reforms in labour law” and puts forward some important questions concerning the labor law reforms in India. He cuts through the “pro-reform arguments” which hold that laws are “numerous,” “age-old,” or affecting productivity or employment, citing both premises laid out in Indian Constitutions and from various findings and official data sets.
Rahul Sapkal, in Chapter 6, the first of the two consecutive chapters by economists, critically reviews several empirical studies on labor market regulation in India and sharply criticizes the still widely used Besley and Burgess restricted codification or Dougherty’s elaborate codification. He concludes that the empirical studies have ignored the distinction between de facto and de jure or supply-side aspect of flexibility and seem to be operating on “priors and design methodologies,” which are erroneous. He quotes the World Bank Enterprise Survey of 2006 to show that, even by taking the employers’ account, only 23% of Indian manufacturing firms perceive labor laws as a major institutional constraint. For more than 60% of the employers, it is the lack of accessible formal credit and lack of infrastructure that causes the primary constraints.
Anamitra Roychowdhury and Nivedita Sarkar, in Chapter 7, go deeper toward understanding “what do we know from theory” in the debate on labor market regulations. They examine the claims of “institutionalist” and “distortionist” schools on the impact of employment protection legislation and the popular “insider-outsider theory.” They conclude that labor regulations can actually produce efficiency by resolving market failures arising out of uncertainty, especially when labor regulations develop endogenously, incorporating preexisting practice/norms. They also debunk the central claim of the distortionist school that employment protection legislation causes unemployment by defending existing workers, saying that these have been derived from the assumptions of a perfectly competitive market, which is far from the real economic scenario.
The three chapters by representatives of central trade unions offer different perspectives. Saji Narayan of the Bhartiya Mazdoor Sangh, the trade union affiliate of the ruling party’s ideological mentor, Rashtriya Swayamsevak Sangh, attacks the left forces and the Congress; but it also criticizes the Bharatiya Janata Party (BJP) government’s initiative for labor law reform. Tapan Sen of Centre of Indian Trade Unions, affiliated to Communist Party of India (Marxist), in his chapter argues against the discourse that organized sector workers are monopolizing the resources and labor rights and are the cause of distress for the unorganized sector. He rather sees this argument as an apology for snatching away rights of organized sector workers by the state, instead of doing anything substantial for the unorganized workers. He raises important issues—such as the plea by the National Commission for Enterprises in the Unorganised Sector for separate legislation for agricultural laborers, the fact that the minimum wage criterion of ILC 1957 (and subsequent SC additive criterion) has never been legalized by any government, the state not implementing judgments of courts that are favorable to the workers—to show that successive governments in the state are working decisively in favor of capital and against the interests of labor. Sanjay Singhvi from the Trade Union Centre of India affiliated to the Communist Party of India (Marxist-Leninist) opines that labor laws are an assault on the “law of contract” of capitalist society and provide workers with some rights which are not always possible for individual workers to bargain with employers due to skewed power relations. Hence, the root of every labor law can be traced back to some struggle by workers, not always at the same geographical place of lawmaking, broadly because of the process of stabilization of the capitalist system through concession and control. Singhvi cites the relationship between the mid-nineteenth-century Chartist movement and the development of the Factories Act, the huge impact of Paris Commune (1871) and Chicago workers struggle (1886) on lawmaking, and the often unsaid effect of the Russian Revolution on the formation of the International Labour Organization itself. He also discusses the massive impact of strikes in 1928–1929 in Bombay and elsewhere on the Trade Disputes Act (1929) and other subsequent laws in India. He argues that with the decline of the combined strength of the worker’s movement, the wind has started turning in the opposite direction pushing the working class struggle to “defend” its hard-earned rights.
The employers’ perspective comes in the two chapters by Michael Dias and R. Krishna Murthy. Both authors blame the state for being too skewed toward the workers and penalizing the employers for the slightest aberrations and see the laws made in the era of colonial or command economy unsuitable for the present global economic scenario. While Dias argues that present labor laws encourage capital flight from India and are unable to help millions of unorganized sector workers and will ultimately drive employers toward more robotization, artificial intelligence, and job cuts. Krishna Murthy cites the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practice Act (1971), and acts for manual workers (1969) and private security guards (1981) as dampening the interest of Maharashtra as a whole and welcomes the reform measures taken by the present regime. Another chapter by two members of a business temporary staffing company argues sharply against the Contract Labour (Regulation and Abolition) Act of 1970 and concludes that changes in such “regulatory cholesterol” will ensure formal job creation, rather than the present condition where these are for more small-scale and informal employment.
The three papers by retired government officials share their own experience. Hittanagi, in absolute contradiction to the above opinion, cites the serious deliberate limitations in the implementation of the Contract Labour Act (1970) and concludes with suggestions for paying equal wages and benefits to contract workers as that of the permanent and for being absorbed in the regular workers’ category within specific periods. Sharath Babu elaborates through a range of issues/details that the draft Labour Code on Social Security and Welfare is a mere theoretical postulation rather than an effective instrument, not an extension of the Second National Commission on Labour (2002), which it has claimed to represent. BN Som, however, sees the same draft code as a positive measure by the BJP government and elaborates on its better aspects.
The volume endeavors to put together sharply opposing opinions in favor of “ease of doing business” and “labour rights” in a single volume. The editor seemingly finds substance and strength in arguments of all sides and represents opinions of both sides with due sincerity. One may wonder whether such an exercise is fruitful toward “creating dialogue,” because these opinions are not always addressing the same issue, they are deliberated with completely different concerns which often embody a fundamental contradiction between the interest of labor and the interest of capital. KR Shyam Sunder, in trying to maintain a “balanced view,” has brought forth the Keynesian argument of “aggregate demand,” while concluding in his first four chapters that the well-being of workers is in synchronization with the growth of the industry. Also, the title of the book claiming the scope as “labour market and Industrial relations system” is a bit misleading, except for the chapters by Roychowdhury and Sarkar and of Sapkal, which push us to enter into larger debates regarding labor markets, the book explicitly focuses on the details of changes in labor law. The book, however, provides an elaborate ensemble of facts, figures, and arguments for understanding the recent changes in labor laws in India and gives us a rich and comprehensive view within that scope.