current labour situation in india en

7/29/2019 Current Labour Situation in India En

1/29

CURRENT LABOUR SITUATION IN INDIA

C S Venkata Ratnam1

Abstract: This paper is presented in four sections. The first section seeks topresent a brief overview of the current situation with regard to labour force inIndian economy. The second section deals with Government of Indias policy oninternational labour standards and their linkage with international trade. The thirdsection presents a critique of the issues involved in the politics of labour lawreforms. The fourth section offers broad conclusions.

I. CURRENT SITUATION WITH REGARD TO LABOUR FORCEIN INDIAN ECONOMY

BRIEF HISTORICAL OVERVIEW

A study of the Indian economy and its labour force can be divided into threephases: (i) the colonial era (till 1947), (ii) the import substitution era post-independence (1947 to 1991), and (iii) the era of economic liberalization (1991-to date).

At the time of independence, India had a significant industrial base, which wassubstantially diversified under the governments heavy industrialization strategyduring the plan era, particularly from the mid-1950s to the end of the 1960s. Thisperiod saw the public sector being accorded the dominant role in the growth ofthe economy. During the 1970s and the 1980s, the government followed thepolicy of self-reliance and import substitution. In this period several East Asian

(Taiwan and Korea) and Southeast Asian (Singapore, Hong Kong and Malaysia)countries pursued export-oriented industrialization strategies. Domestic industrywas protected in product markets and labour in labour markets. India, therefore,did not grow as fast as the rest of Asia and its economic, industrial and politicalsignificance in the region and in the world declined.

Post-1991, the measures of economic liberalization, privatization andglobalization have resulted in a drastic change in the mind set of labour,management and government. Organised labour became defensive as both stateand central governments became investor friendly. Though labour lawsthemselves have not changed, the attitude of the bureaucracy and the judiciary

has changed. Government has resorted to phased withdrawal of subsidy andselective, but slow privatization through, mostly, disinvestment route. Faced withglobal competition, employers have tried to tighten belt and cut costs, including,particular, labour. Cost plus economy became price minus cost as profit

1 Director Designate, International Management Institute, B 10 Qutab Institutional Area, New Delhi

(Effective from 5 Jan 2005). Currently the author is Professor, IMT, Ghaziabad and Director, GITAM

Institute of Foreign Trade, Viskahapatnam. He can be reached through: [email protected]
mailto:[email protected]:[email protected]


2/29

economy. Table 1 tries to capture some of the paradigm shifts in governmentspolicy. The rate of economic growth, particularly in the industrial and servicesectors has picked up though employment in the organized sector has stagnatedin relative terms. With economic liberalization both labour and capital now feelless protected or unprotected.

The change in government policies is reflected in the difference between theterms of reference of the First National Commission on labour and the SecondNational Commission on Labour appointed in 1966 and 1999 respectively(Annexure 1). While the former was asked to recommend measures to improvethe conditions of labour, the latter was asked to suggest labour law reforms toalign labour policies with the requirements of product market as also recommendan umbrella legislation for unorganized labour.

Table 1: Changes in the Scenario, Before and After Economic Liberalization

Before Liberalization After Liberalization

State-sponsored and state-mediated development

Protected domestic market

Budgetary and directedinstitutional resource allocation

Subsidies and administered priceregime

Welfare state active in labourmarket

Systematic de-casualization ofjobs

Largely government-funded socialsecurity and welfare programmes

for a few

Stable governing structure andpolicy regime

Stable, though obsolete, labour-intensive technologies

Market led and private enterprisedominated

Competitive market

Competitive capital market-ledresource allocation

Rational pricing, including user charges

Labour-neutral and invest-friendly statepolicies

Fast re-casualization andcontractualization of jobs

Crisis of sustainability of social securitywelfare programmes, and pressure forsecurity measures for all

Crisis of governance and fear ofpolitical and economic instability

Micro-electronics-led new-generationcapital and skill-intensive technologies

Threat of deindustrialization and rapidgrowth of the service sector


3/29

Dominant status of manufacturing

Source: Adapted fromC.P. Thakur (2003).

The Indian economy is still characterized by a sharing rural urban divide in terms

of its structure and composition of both industries and workforce.

LABOUR AND ECONOMIC PLANNINGThe objectives of labour policy in economic planning in India in the post-independence period can be classified into two categories: the plan era and thetransition-to-market era.

In the plan era, the first seven Five Year Plans (1951- 91, with some breaks inbetween) focused on the following objectives vis--vis labour:- improving the conditions of labour and their welfare- prevention and settlement of industrial disputes and maintenance of industrial

peace and harmony to avoid disruption of industrial activity which couldadversely affect the realization of plan goals- controlling industrial growth to prevent concentration of economic power in

the hands of a few income disparities among individuals and regions- workers education- workers participation in management

With the transition to a market economy (1991 to date), the need has arisen foraligning industrial relations policies with industrialization strategies. This calls for:- facilitating the growth of enterprise and entrepreneurship and aligning labour

policies with economic policies

- a policy focus 7 per cent organized labour to 93 per cent unorganized labour(Ninth Five Year Plan, 1997 2002, Working Group Report)- reform of labour laws and labour policies in the wake of globalization (terms of

reference of the Second National Commission on Labour appointed in 1999)- a shift in emphasis from job security to income security and social safety

measures- concern for skills development, productivity and competitiveness- reforming of pension- a shift in government role from control to facilitation

Unemployment and underemployment have been major concerns, but it is mainly

in the Tenth Plan (2002-07) document that a strong plea has been made forbringing about a qualitative change in the structure and pattern of employment topromote growth of good quality work opportunities. The growth process alone willnot be able to provide adequate work opportunities for the emerging workforce,let alone reduce the backlog of unemployment. Further, the Tenth Plan documentrecognizes the need for transforming an agrarian economy into a modern,multidimensional economic powerhouse and an egalitarian society.


4/29

The Tenth Plan specifically has as its targets 8 per cent annual economic growth,reduction in poverty from 26 per cent in 2002 to 21 per cent by 2007 and adecrease in population growth from 21.3 per cent in the 1990s to 16.27 per centduring the decade 2001 - 2011. It also aims to provide gainful, high qualityemployment to at least new entrants in the labour force, improve literacy to 75

per cent and reduce unemployment to 5.3 per cent by 2006-07. Further, theTenth Plan envisaged to reduce gender gaps in literacy and wages by 50 percent.

TERITIARIZATION OF THE ECOONOMYEconomic activities are classified into three sectors: primary, secondary andtertiary. To begin with most economies are engaged in primary (agricultural)activities. As industrialization takes place the secondary (manufacturing) sectorcomes to account for the bulk of employment and GDP. Post-industrialization,the tertiary (service) sector becomes the major provider of jobs and the mainsource of GDP and its growth. In India, since the mid-1980s, the service sector

has been growing fast.

Tertiary sector currently accounts for the bulk of employment and GDP. OfIndias one billion population, the workforce is an estimated 400 million. About 58per cent of the countrys workforce continued to be engaged in agriculture andcontributes a mere quarter of GDP. Nearly 18 per cent is engaged in industry andcontributes 26 per cent of GDP. The remaining 23 per cent of the workforce is inthe tertiary sector its proportion is steadily growing and contributes roughlyhalf of the GDP (Table 2). The tertiarization of the economy requires new skillsand new work values and, in some cases, new forms of employment and workorganization.

Table 2: Sector-wise Share in Employment and GDP, 1983 and 2000(%)

Sector Share inemployment1983

Share inGDP1983

Share inemployment2000

Share inGDP2000

Primary (Agricultural) 69 38 60.4 25

Secondary(Manufacturing)

13.8 26 16.8 26

Tertiary (Service) 17.2 36 22.8 49Total 100 100 100 100

Source: Government of India (2001).

Agriculture, which accounts for nearly three-fifths of employment, is expected togrow without any significant increase in employment. During the 1990s it hadzero elasticity of employment and over the coming few decades it may havenegative elasticity of employment. Without a major shift in employment from


5/29

agriculture to other sectors including rural industries, the majority of Indiasworking class will remain poor. However, improvement in productivity can beexpected to increase wage levels in agriculture. If those displaced fromagriculture can have gainful employment in the non-farm sector or ruralindustries, there can be a significant reduction in poverty.

Table 3: Employment Elasticities, 2001

Estimated elasticity

Agricultural 0.00

Manufacturing 0.26

Construction 1.00

Wholesale and retail trade 0.55

Transport, storage and construction 0.69

Finance, real estate, insurance and business services 0.73

Source: Government of India (2001).

Employment of elasticity in manufacturing is higher than in agriculture but lowerthan in the service sector (Table 3). Global competition and extensive use ofmodern technologies have reduced and continue to reduce employment intensityin the manufacturing sector.

The stringent provisions in labour law restraining layoff, plant closure andretrenchment of labour introduced during the emergency in 1976 by way ofamendments to the Industrial Disputes Act, 1947 has resulted in an increase incapital intensity and decrease in labour intensity. Employment intensity inmanufacturing is also declining and there is a virtual stagnation in employment in

organized industry.

The service sector holds the prospects of a major share in new job creation, butsubstantial part of it is expected to remain unorganized in the foreseeable future.The quality of employment in the unorganized sector is usually poor. Growingglobal competition has increased casualization and contractualization of labour.Poverty ratios are declining but quality of employment and quality of the labourforce remain major areas of concern.

The gradual withdrawal of the welfare state role of the government, policy shiftsfrom labour to investor concerns and the assertion of consumer rights and the

pressures of cost-cutting competition portend persistent jobless growth andworsening of labour market conditions. To counter this trend, it is imperative toinvest heavily in basic education and skills training

.LABOUR FORCE IN INDIA: STRUCTURE AND COMPOSITIONThe diversity of the Indian industrial workforce makes it difficult to generalize itsprofile. Only 13 per cent of the labour force is in regular wage employment and


6/29

barely 7 per cent is in the organized sector and 4 per cent unionized. Thegrowing tertiarisation of the economy where the service sector dominates interms of share of employment and GDP is accompanied by casualization.Forty-two per cent of the population is not literate. As a result a substantialproportion of the labour force, even in the organized sector, is illiterate.

Ninety-three per cent of Indias labour force is in the unorganized sector; 55 percent is self-employed; 13 per cent is in regular wage employment. About a thirdof the labour force is in casual employment (Table 4). Casualization of labour isgrowing due to economic liberalization, changes in ownership and technology,cost-cutting competitive strategies of employers and the governments investor-friendly disposition towards the organized sector.

Over one-fourth of the population of the country is below the poverty line.Unemployment is growing. In the absence of unemployment insurance, openunemployment is relatively less in India. The real problem is of underemployment

and disguised unemployment. The really poor cannot remain without jobs.Therefore while the vast majority accept whatever job comes their way and workbelow subsistence level, the few who can afford to, wait for a better job.Therefore, it is little wonder that the incidence of poverty is higher among theemployed than among the unemployed.

Table 4: Labour Force Profile, 2001

2001

Population >1 billion

Labour force/workforce 18 million

Employment in private sector >9 million

Unionized workforce/Union density 4%

Workforce covered by collective bargaining 2%

Self-employment and regular salaried employment declined between 1977 and2000 in rural areas (Table 5). Consequently there was a significant rise in casualemployment in rural areas. In contrast, in urban areas, the situation was relativelystable though there was a 2 per cent increase in casual employment in urbanareas during the corresponding period. Though employment in the organizedsector grew in absolute numbers between 1977 and 2000, it declined marginally


7/29

between 1994 and 2000. Overall, the trend points to a worsening of the quality ofemployment during the period 1997 2000 (Table 6).

Only 5 per cent of the Indian labour force in the age bracket 20-24 years hasobtained vocational training Low literacy, vocational bias against technical skills,

occupational preference for non-production jobs, mismatch between skillsacquired and skills required, dearth of adequately/appropriately trained technicalpersonnel, low competitiveness of labour vis--vis developed nations andemployability and retraining of labour are among the major weaknesses thatcharacterize the macro level situation of labour in India There is a need toforecast marketable skills through labour market intelligence system with focuson linking job seekers with job providers. Competencies for different jobs shouldbe assessed systematically both in the organized and the unorganized sectors.

Table 5: Distribution of Workers (Usual Status)by Category of Employment (1997 2000)

(%)Year Category of Employment

Self-Employment Regular salaried Casual

Rural

1977-7819831987-881993-941999-2000

62.661.059.458.056.0

7.77.57.76.46.7

29.731.532.935.637.3

Urban

1977-7819831987-881993-941999-2000

42.441.842.842.342.1

41.840.040.339.440.1

15.818.216.918.317.8

Rural and Urban combined

1977-78

19831987-881993-941999-2000

58.9

57.456.054.852.9

13.9

13.914.413.213.9

27.2

28.729.632.033.2

Source: Government of India (2001)

Table 6: Employment in Organized and Unorganized Sectors, 1973 - 2000


8/29

YearEmployment Organized as

% of totalOrganized Unorganized Total

(Million)

1973 18.8 217.5 236.3 7.41978 21.2 249.5 270.7 7.8

1983 24.0 278.7 302.7 8.01988 25.7 296.3 322.0 7.91991 26.7 315.2 341.9 7.91994 27.4 344.7 372.1 8.02000 28.1 365.1 393.2 7.1

Note: The organized sector includes all establishments in the public sector andnon-agricultural establishments employing 10 or more persons in the privatesector.Source: National Sample Survey Organisation and Directorate General ofEmployment and Training, Ministry of Labour, Government of India.

The government should invest in basic education, skills formation and training.Apart from achieving literacy for all, vocational skills provision should receiveurgent attention. This is best done through private public partnerships with dueemphasis on vocational skills certification and appropriate funding. Vocationaleducation should be integrated at the school level. Along side, there is need toinstitute special programmes for protecting the interests of vulnerable groups andto enhance income security for those who are adversely affected byunemployment or job loss.

Box 1: Sectors with comparative advantageand Employment Potential in IndiaNo country can have competitive advantage in all sectors. There is a need toidentify and develop, with state playing a nourishing and nurturant role withfairness, firmness and compassion. Several studies suggest the following tensectors have the potential to generate jobs.

Agriculture and food processing and agro-based industries including

organic foods

Bioengineering and biotechnology

Marine resources (India has long coastline) and inland transportation

Pharmaceuticals and chemicals

Education, health, housing and social services

Physical and public infrastructure: roads, irrigation, and public

transportation

Communication, information technology and entertainment

Banking, insurance and financial services

Tourism and hospitality industry

Service sector including IT-enabled services


9/29

TRADE UNION SITUATIONToday there are over a dozen national centres of trade unions in the countrywith five of hem having a membership of over 500,000 in at least four states and

four industries/ sectors. Though the official number of registered unions is around50,000 the actual number may well exceed 100,000. There is a serious problemwith regard to the data base on trade unions, their membership and finances.

In the non-farm sector trade union density is very high. While only 4 to 6 per centof the total labour force in the country may be unionized, in public sectorundertakings it could be well over 80 per cent. Trade unions main problem isinter union rivalry due to multiplicity. While there is usually broad cooperation onwider issues concerning wages and working conditions, on specific issues at thework place level such cooperation is rare.

Collective bargaining takes place at national, sectoral and enterprise level. Inbanks, coal, steel and ports and docks there is good coordination among theunions at the national level and centralized bargaining is the rule. In thesesectors, at least till recently, government has been the sole or the majoremployer. In sectors like jute and textiles where private sector is the mainemployer region-cum-industry wide collective bargaining is common. In otherindustries collective bargaining is usually at the enterprise level. Nationallegislation in India provides for trade union registration, not recognition. Somestate laws provide for recognition through law (Maharashtra for example) orthrough administrative notifications (Orissa and West Bengal). Workersparticipation is provided in Factories Act in the form of mandatory works

committees, joint management councils, etc. Their formation and working variesacross enterprises and the over all situation with regard to representative formsof participation is not encouraging. In several cases, mostly banks and severalpublic sector companies there is worker representation even at the board level. Alaw on the subject is pending since 1990. Through an amendment to theconstitution of India in 1976, the Government of India has included workersparticipation in management as a directive principle of state policy. The secondnational labour commission (2002) recommended statutory provision for thepurpose. Several professionally managed companies, including some of thosewhich follow Japanese management principles and practices have been resortingto greater use of direct forms of worker participation and involvement thorugh 5S,Kaizen, Quality circles, Suggestion schemes, etc.

INCIDENCE OF INDUSTRIAL CONFLICTAs seen from Table 7, the incidence of strikes and lock-outs is generally on thedecline in the post-liberalisation period (1991-to date) as compared to 1980s interms of number of disputes, number of workers involved and number ofmandays lost. Significantly, in recent years roughly two-thirds of the mandayslost is due to lockouts. Some of the lockouts may have taken place in the


10/29

aftermath of a strike and the resultant law and order situation which provokesmanagement to declare lockout in the interest of protecting people, premises andproducts from possible acts of vandalism, arson and sabotage. Whatever be thetruth in it, usually that is the reason that several employers give for declaringlockout. There are several plausible explanations, including the following:

1) Increased used of advanced technologies is making control over work shiftfrom workers to machines and managers thereby blunting the power ofstrike to disrupt work Evidence of this can be seen in printing, banking andmany other industries.

2) Declining membership and union power3) When most of the allowances, etc., are linked to wages and the courts

ruling no work no wage principle, workers are not usually prepared tolose earnings due to strikes. This particularly so because it is usuallydifficult to go on a legal strike due to restrictions on strikes in the form ofnotice and prohibition during the pendency of conciliation, adjudication,etc.

4) Growing fear among workers about the futility of strikes and the possibilityof job loss in view of growing competition, industrial sickness,governments reluctance to support strikes any longer because of theneed to woo investors, etc.

5) A vast majority of the stagnant organized/unionized workers moving fromworking class to middle class are less prepared to take to streets andsupport unions during direct action

State-wise analysis of strikes and lockouts reveal that five states West Bengal,Kerala, Andhra Pradesh, Tamil Nadu and Maharashtra account for over halfthe mandays lost in India over the past several years. In most years over 90 per

cent of the mandays were lost every year in the past decade due to lockouts andless than 10 per cent due to strikes.

It is believed that in India more mandays are lost due to poor work ethic than dueto industrial strife. Workers in the organized sector, work usually 5 hours in a shiftof 8 hours in most establishments. Thus every day the 28 million strongorganized sector workforce account for a loss of one million mandays a day asagainst about 20 million mandays lost every year on average due to industrialstrife during the past 14 years or so.

If the indirect loss of mandays due to minor and major industrial accidents isreckoned, perhaps unsafe workplaces and working habits account for moremandays loss than the number of mandays lost due to strikes and lockouts.

The above observations should not be construed to undermine the seriousnessof the problem of mandays loss due to industrial strife. In fact, in most developedcountries, mandays loss is on the decline. A perusal of the ILO Statistics onmandays loss in developed and developing countries seem to point out thatindustrial harmony and industrial development go in tandem. The importance of


11/29

industrial harmony for planned and uninterrupted industrial development andeconomic and social well being cannot be exaggerated. At the same time, it isnot proper to put restrictions on strike or lockout. Absence of conflict could, insome cases, be a measure of the misery of the workforce concerned.

During the post liberalization period on average over one lakh workers areaffected every year due to closures, lay off and retrenchment. Over 90 per centof the workers thus affected were due to lay offs. Unlike closures andretrenchment, lay off is a permanent removal of worker from work with 50 percent pay. Therefore, it can be said that notwithstanding the fears about theadverse affect of liberalization, privatization and globalization the number ofworkers actually affected by job loss due to closure of business andretrenchment is small. However, this data does not include voluntary retirementand casualisation of jobs.Table 7 : Industrial Disputes, Workers Involved and Mandays Lost in India

during 1986-2003

India Number of Disputes Workers Involved Mandays

Strike Lockout Total Strike Lockout Total Strikes Lock

1986 1,458 434 1,892 1,444,397 200,485 1,644,882 18,823,648 13,2941991 1,278 532 1,810 872,482 469,540 1,342,022 12,428,333 13,999

1996 763 403 1,166 608,673 330,631 939,304 7,817,869 12,4662001 372 302 674 489 199 688 5,563 18,202002 295 284 579 900 804 1,704 9,665 16,92

2003 309 293 602 3,169 804 3,973 3,169 26,52

Notes : * Period (1981-91) ; ** Period (1992-03)

Source : Compiled and Computed from Government of India, Ministry ofIndia, Industrial Disputes in India (2002) and earlier issues

CAUSES AND CONSEQUENCES OF INDUSTRIAL CONFLICT IN INDIA. Asseen from Table 14.5, since 1961 to date, three fourths to two third of the workstoppages in India have been due to four reasons in the following order ofimportance:

1) wages and allowance2) personnel and retrenchment3) Indiscipline and violence4) Bonus

5) Leave and hours of work


12/29

II. INTERNATIONAL LABOUR STANDARDSAs a founder member and one of the 10 countries of chief industrial importance,India holds a non-elective seat in the governing body of the ILO. India has ratified39 of the 182 conventions.

The ILO has influenced India and India has influenced the ILO. A tripartitecommittee on ILO conventions oversees the aspects relating to international labourstandards, proposals concerning new conventions/ratification of old conventions,compliance of the provisions in the ratified conventions, etc.

The Constitution of India and labour legislation uphold all the fundamentalprinciples envisaged in the eight `core international labour standards. India hasalso ratified three of the eight core conventions that constitute the fundamentalprinciples. It also likely to ratify two more of the remaining five core conventions:Convention No. 105 concerning abolition of forced labour and Convention No. 182concerning immediate action to end the worst forms of child labour. Indias record in

this regard is better than that of US, which has ratified only one of the seven coreconventions. Among the Western European countries, France and Germany haveratified all the core conventions. Though some South Asian countries have ratifiedmore core conventions than India, it can be said with certainty that Indian record isno less, if not better, than its neighbouring countries.

India is actively considering the ratification of Convention No.105 concerning theabolition of forced labour. India has not ratified Convention Nos. 87 and 98concerning freedom of association and right to collective bargaining due to`technical difficulties involving trade union rights for civil servants. This, however,is not a major hurdle because the government can always exempt certain

services while ratifying the concerned conventions.

Indias record in respecting freedom of association and collective bargaining ismuch better than that of many other countries in the region, which have ratifiedeither one or both conventions. Mere ratification, however, cannot guarantee theachievement of the underlying objectives. It should be backed by a strong politicalwill and legislative framework and effective vigilance by the other social partnerssuch as NGOs, consumer groups. But these considerations cannot be a

justification for non-ratification. India ratified Convention No.11 concerning Right ofAssociation (1921) for agricultural workers way back in 1923. The Union Ministry ofLabour in association with the National Labour Institute, set up by it in the 1970s,has organised several workshops and rural camps to facilitate the organisation ofrural workers. Still, given the huge social inequities both in terms of caste and landdistribution, the density of unionisation among rural workers is negligible.

In contrast, there are some highly organised and unionised sectors wherecollectively determined labour standards exceed the national and internationallabour standards in some aspects. During the 1920s and 1930s, the private sectorsteel giant Tata Iron and Steel Company, introduced a number of voluntary welfare


13/29

measures long before such measures were incorporated either in the nationallegislation or international labour standards.

In the past, some of the legislative initiatives based on ILO conventions have hadthe opposite effect. For instance, measures to safeguard the interests of women

through maternity benefits and restriction of employment of women in night shiftsin factories and in underground mining have resulted in many employershesitating to employ women. This should not lead to discontinuance of maternitybenefits. Giving paternity leave would perhaps restore the balance and removethe incentive for employers to employ only males. The ILO Convention on nightshift work was revised in the 1990s to enable the employment of women in nightshift. The Government of India is pursuing, although rather half-heartedly,changes to some of the labour legislations. The employing ministries haveapparently been pressing for some of these changes. They Include changes inthe Factories Act to permit employment of women in nightshift, particularly inelectronic units and export zones.

India is actively pursuing 14 projects to eradicate child labour in hazardousindustries by 2002. The All India Organisation of Employers has undertaken aproject in Jalandhar (Punjab) to enter into an agreement similar to the one inSialkot, Pakistan, concerning the abolition of child labour in the manufacture ofsports goods.

India has advocated the promotion of labour standards within the framework ofthe ILO Constitution. It has consistently opposed the proposals to link labourstandards and trade through social labelling, etc. The non-aligned countries

summit organised by the labour minister of India at New Delhi in 1995 adopted aresolution to this effect. India played an active role in Seattle in 1999 to preventlinking trade with labour and environmental issues. All three social partners ---the government, employers organizations and national trade union centresbelonging to different persuasions --- are all united against the linkage ofinternational standards with trade.

Under Article 246 of the Constitution of India, labour is in the concurrent list. Sinceliberalisation there has been a tendency among some state governments to pursuecompetitive labour policies with a view to attracting investments and creating jobs.

III. THE POLITICS OF LABOUR REFORMS IN INDIA

The stark reality about Indias labour policy during the past 50 years is that itcovers only a small fraction (less than 8 per cent) of the labour force. It has along way to go in protecting the vulnerable, maintaining harmony and ensuringproductivity. Neither labour policy nor labour law has kept pace with the changesin society and in the economy. For good governance what is required is a


14/29

firmness to defend traditional values and promote change with dual focus on bothequity and efficiency.

SIX MYTHS1. Are labour reforms politically risky? Bhaduri and Nayyar (1998) stressed the

need for sensible politics and feasible economics. Public policy on labour in Indiahas emphasised, for far too long, feasible politics and unfeasible or expedienteconomics. The World Bank (1995) cited the substantial wage rise the coalminers obtained in 1970s before general elections to ridicule to the link betweenpolitics and pay rise. The V Pay Commission recommended pay rise and job cut.The government accepted the recommendation on pay rise but dithered on jobcut. The economic burden of that unwise pay rise had a more drastic negativeimpact than the cumulative effect of economic and other sanctions imposed bysome industrialised countries. Three times in the past, when comprehensivelabour reforms bill was tabled in Parliament, the latter got dissolved. Labourreforms constitute a deadly political risk. That risk increases disproportionately

when political instability is high. The problem, however, is politicians are lookingat consequences of changes in labour laws/administration. They are not lookingat the consequences of non-change. If we do not move with times, we miss thebus as it happened in early 1970s. Till early 1970s India maintained itsleadership in industrial and economic development in Asia Pacific. Later, itsinsular policies brought down its position to lower than smaller countries likeSingapore despite the sheer size and resource-rich characteristics of India. Thedawn of the new millennium beckons a second opportunity. Should India missthat too? Politicians being short term oriented, they are afraid of risks. We needstatesman to think long term and act boldly. The strength of parliament membersfrom left parties at over 60 is the largest in Indias history. They are supporting

the government from outside. They influenced the drafting of the commonminimum program (but have not signed) which highlights the need to pursue pro-poor policies including the introduction of employment guarantee as a statutoryobligation of the state, restrain liberalization of foreign investment and cautionsagainst privatization and liberalization of labour laws. The economicconsequences of common minimum programme are huge and makes itsimplementation difficult. Even the left front government seems to be concernedabout unabated litigation if the employment guarantee is provided as afundamental right though an amendment to the Constitution. While trade unionsare pressing for the setting up of six central pay commission for revising the payscales and benefits of government employees, several of the political parties,including some left parties, are wary that their governments in states will find it tobear the economic fallout of further revision of pay scales of governmentemployees at state level. They are therefore hesitating to echo or endorse thedemands of the unions affiliated to them.

2. Is there is a political consensus on labour reforms in India? Regardless of thecolour and identity of the party, if it is the ruling party or part of the rulingcoalition, it is in favour of investor friendly labour market reforms. If it is in


15/29

opposition, it is more cautious, if not outright opposed to. This polarization is notnecessarily based on either ideology or any other principles. It is usuallyopposition for the sake of it and endorsement of a particular line because theruling party feels being driven to the wall and is usually clue less about any otherbetter option. The absence of data and devisive tendencies render effective

consensus elusive and perceived political risks made successive governments atthe center feel hesitant to disturb the status quo. The dilemma of political partiesis illustrated best by Bhattacharjee (2001). The consequent dilemmas betweenthe political party and the trade union affiliated to it were documented well withspecific reference to Communist Party of India (Marxist) (CPM) and Centre ofIndian Trade Unions (CITU) in West Bengal. The employers and administrativeministries in the government, both central and state call for flexibility andincreasing the bar, if it is not possible to completely dispense with prioradministrative approvals for layoffs, retrenchment and closures. Unions andlabour ministers prefer status quo, it is not possible to further tighten or expandthe existing protection afford to organized labour. The study group on labour laws

set up by the Second National Commission on Labour virtually endorsed, in2002, the Draft Labour Bill prepared by National Labour Law Association in 1985and substantive provisions of the first National Commission on Labour in 1969.The two employer representatives in the study group opposed and submitted adissent note. The final recommendations of Second National Commission onLabour call for increasing working hours and working days and easingrestrictions on workforce reduction. Significantly, the Commission Memberrepresenting Bharatiya Mazdoor Union which has close links with the BJP, theleader among the ruling coalition, submitted a dissent note while Indian NationalTrade Union Congress (INTUC) which is affiliated to the major opposition atCentre, Congress Party, did not. Continuation of pre-liberalisation labour policies

is not the solution to the problems of labour as many independent analysts agreethat existing labour laws neither benefit workers nor employers.

3. Is it good for a union to have its own party in power? Quite so, during the1950s through the 1970s when socialist ideals dominated the newlydemocratising colonial countries as well as in Central Asia and East Europe. Notany longer. That it is ultimately becoming a liability was demonstrated amply inthe case of both Poland and Australia. Labour parties in oppositions were likeinsurgents. Today, when they become incumbents, they are finding it hard toretain the spirit of insurgency (Miliband, 2002). Miliband says, in the UK Labourwas reelected in 2001 because its policies were largely in tune with the dominantcurrents in British society. But it has yet to succeed in shifting the political centreof gravity in its direction and forging a broad coalition for change. It has tobecome the party of social mobility and economic efficiency. Success hinges onpolicies being driven by convincing ideas.

4. Does the Indian government believe in decision-making, not decision-taking.Decision-taking is a unilateral exercise which is supposed to be an anathema in ademocratic society. Decision-making is a democratic approach to problem


16/29

solving. India Government takes decisions, unilaterally, when it wants to. Onother occasions when it shies away from taking decision, it pretends to bemaking a decision and blames it on either or both labour/unions andmanagement/employers for lack of consensus. During the pre-liberalisation era,Indian Government, particularly under Mrs. Indira Gandhi, protected labour in

labour market and capital in product market. It appeased and kept both partiesguessing. For instance, during the Emergency (1975-77), discipline was enforcedwith an iron hand even as the Industrial Disputes Act was amended by theCommunist in Congress robes, Mr K Raghunadha Reddy, Labour Minister, tomake prior permission mandatory for retrenchment, lay off, and closure.

5. Is there social exclusion in social dialogue and social and labour policies inIndia? In the first five decades of independence labour policy in India hasfocused rather narrowly on the less than 8 per cent organised sector. There is agrowing realisation and firm indications that in future the attention will shift tounorganised sector. The first indication came from Union Labour Minister Mr P A

Sangma in late 1990s when he was addressing the conference of the All IndiaTrade Union Congress in Patna. Then the 9th Plan Working Group Reportprepared under the chairmanship of the then Union Labour Secretary Dr L DMishra. Though much of the concern for the unorganised sector has been thusfar limited to mere lip sympathy and a few crocodile tears, the Second NationalCommission on Labour was asked to, and indeed it did, recommend acomprehensive legislation for the unorganised sector.

6. Do labour law reforms really matter? Not necessarily so, if they are merelyaimed at merely tinkering a few clauses here and there in the Trade Union Actand Industrial Disputes Act. The need is for a drastic overhaul with heavy

emphasis on rationalization and simplification. The need is for changingmindsets. Customs override laws, particularly when we have too many laws andtoo blissfully ignorant about their compliance/enforcement. For instance,minimum wage laws do not matter for the organized labour because any waythey get much more. In the unorganized labour they usually get much less. Giventhe vast and growing unemployment, for every person who will assert his/herright for at least a minimum wage, there are hundreds who will agree to work forhalf that minimum. In a market economy with vast unemployment andunderemployment, there is little that unions can do if the government is neutraland indifferent. This does not mean that there should not be any minimum wagelegislation. It certainly sets the pace and direction and the moderates amongemployers who would like to be constitution bound will like to pay minimumwages as ordained in the law regardless their individual preferences and costcalculations. Also, contexts matter, not laws themselves. In Malaysia, IndustrialRelations Act recognizes right to hire, assign work, adjust workforce, reward,transfer and promote as managerial prerogatives. None of these are employerprerogatives in India. Still, a study of Mumbai and Kualalumpur reveals thatMumbai labour market is nearly as flexible as Kualalumpur. Why? Even thoughthe government gave the employers in Malaysia the freedom to hire and fire they


17/29

did not exercise because labour is scarce. If they fire a skilled, experiencedperson where will they get another equally skilled and experienced person? InIndia because labour is surplus employers, particularly in the private sector, find,through their somehow management- ingenuous ways of exercising prerogativesthat did not exist under the laws of the land.

KEY CONCERNSThe manifestoes of the major political parties in the 1998 general elections hadconsensus in the thrust, though not the tone, of their concerns about labour.Broadly, these can be listed as under:

Job protection and employment creation

Extending legal protection to the unorganized sector

Some promised improvement in living standards while others talked about

linking wages to productivity

Vocational training and skills development Trade union recognition through secret ballot

Workers participation in management at all levels, while some mentioned

workers takeover of sick units through cooperatives and worker ownership

Industrial sickness and attendant problems

Social security benefits, including pension

The agenda of the government should therefore cover, as a basic minimum, theconcerns of the pre-poll political consensus. It should also include some otherissues, which are not necessarily populist. These are:

Paradigm shift in the labour policy environment

Align labour policy with economic policy

Labour law reform

Competitive labour policies at the state level

Reviewing the link between parliament, the judiciary and the bureaucracy

PARADIGM SHIFT IN POLICY ENVIRONMENTThe processes of liberalization, privatization and globalization mean that thegovernments role in social and labour matters has to change, not diminish.Paradigm shifts in governments role and attitude to labour should reflect the

following:

1. The content and the purpose of labour policy and labour law should focus onfacilitation rather than regulation, pro-action, reaction and on the creation ofharmonious relations conducive to social and economic development rather thandispute resolution. A decline in the role of the state in economic activity need notnecessarily lead to a decline in its regulatory/supervisory role in labour andindustrial relations matters. In fact, when the private sector becomes the engine


18/29

of growth, the state may need to play a much stronger role in ensuring a balancebetween the rights of both labour and management.

2. Labour policy should focus more broadly on the entire labour force. It shouldbe developmental, not regulatory. There should be a decisive shift towards

proactive labour market intervention, with the major thrust on development ofskills and attitudes conducive to building a cohesive and productive work culture.Labour policy must be more closely aligned to changes in industrial and otherpolicies. It should provide stimulus to rather than shun job creation.

3. Globalization is leading to decentralized industrial relations. There is a need tocreate and strengthen institutions/mechanisms for information sharing,consultation, communication and consensus development at the enterprise/firmlevel.

4. The labour market is characterized by dualism: an illiterate, unskilled,

unorganized, unprotected and mute majority of the workforce and a literate,skilled, organized, protected and vocal minority of the workforce existing side byside. Political unions acting in unison with the state may force it to pursue labourmarket policies based on political considerations rather than considerations oflabour and product market characteristics. The resultant distortions are contraryto the declared goals of equity and efficiency and may even precipitate state andmarket failures. The state should therefore broad base the scope of labour policyand labour legislation to cover the unorganized sector in a more substantivemanner than is currently being done.

5. The state should give up the negative function and assume positive one of

promotion of sound labour-management relations. Statistics on strikes andlockouts do not always reflect the actual state of industrial relations either at thefirm, industry, state or national level. Here the state can provide mediation andarbitration services. It can also acknowledge the semi-public status of the labourmarket parties, but in democratic tripartite structures.

6. Hitherto public sector enterprises have stressed the need for them to be modelemployers. Now, with growing competition on the context of globalisation, thereis a need for them to be model performers as well.

7. Sustaining growth and fostering competitive labour markets are critical toensuring job and income security. The demand for jobs does not depend on thesupply of labour. There is a need for a fundamental change in employment andincome security measures. The concept of bankruptcy is not accepted in Indiawhere jobs are treated as property with attendant hereditary rights in someemployment contexts. Employment flexibility, recruitment, transfer, promotion,work assignment, workforce adjustment, etc., need to be considereddispassionately with due regard both to employment and social stability as wellas business imperatives, if any. Job security at any cost, regardless of the


19/29

viability of the enterprise, which provides the jobs in the first instance, can lead toa counterproductive work culture. The state should consider it its obligation toeradicate poverty and end unemployment through creation of productive jobs,which do not sacrifice the basics of quality of life. Here labour-intensiveindustrialization strategies are appropriate and the options should be different in

existing businesses vis--vis new businesses. During the transition period,foreign investment may lead to jobless growth. Therefore, paralleldomestic/public investments should target areas where job potential is high.

8. The state should therefore ensure wider social dialogue for broad-based socialconsensus and social cohesion. Tripartism cannot survive without statepatronage. Despite the long tradition of tripartite consultation, in the past quartercentury it was atrophied due to the weak and unrepresentative character of thethree social partners. Traditionally, tripartism is restricted to consultations amonggovernment and organizations of workers and employers in the organized sector.There is a need to extend the scope to other sections of society including the

unemployed, unorganized and even consumers. In South Africa, theestablishment of the National Economic Development Labour Advisory Councilmerits attention for possible lessons. Academicians should be associated withtripartite bodies. While the government has already taken initiatives to rationaliseand restructure tripartite committees, there is a further need to reform the way inwhich tripartite meetings are conducted. They focus on the draft proposalsconcerning the agenda and follow the double-discussion procedure inconsidering ILO conventions. Ministries other than the labour ministry also needto take an active interest in such consultations.

9. There is a growing concern that globalization benefits few and but affects

many in negative ways. Commitment to rural labour, women labour, child labour,bonded labour, and labour in the unorganized sector so far has been largelyrhetorical.

10. The state also has an obligation to make social justice an integral part ofdevelopmental planning. Exhortations like `sacrifice today for a better tomorrowwill not hold much water in societies where the rich continue to get richer and thepoor poorer. As Reich (1995) cautioned, `Persistentunemployment/underemployment, declining wages and living standardsundermine the moral fabric of capital democracy.... In a democracy, people willvote for economic dynamism only if they have a fair chance of benefiting from it.

ALIGN LABOUR POLICY WITH INDSUTRIAL POLICY

Fifty years ago, in the newly independent and industrializing India, the stateavowed its commitment to the welfare of workers. The politically controlledeconomic system required politically oriented economic action by workers. An


20/29

influential section of the union movement tacitly endorsed the states preferencefor adjudication rather than articulate the need to promote collective bargaining.

In todays world the policies of protection, self-reliance and import subsistenceare giving way to policies of competition with a view to integrating the national

with the global economy and to boost foreign investment and exports. To catchup with the other industrialized countries, India needs to attract capital, cut costsand enhance competitiveness. In the sphere of labour, this means a newalignment between industrialization policies and industrial relations policies.

Towards this end, labour policy should stress on: (i) the observance of a minimalnumber of core/basic labour standards; (ii) free trade unions and collectivebargaining; (iii) workplace institutions capable of internalizing enforcement oflabour standards/government regulations and effecting changes at the microlevel smoothly; (iv) investment in education and training; (v) bringing the entirelabour force under the purview of minimal, but effective --- rational and

rationalized --- regulatory/administrative norms; (vi) proactive labour marketpolicies that provide building skills/competencies, reduce/eliminate the existingmismatch between acquired and required skills, facilitate information andcounselling facilities for employment; and, (vii) a culture of non-interference byone party in the affairs of the other.

Labour market flexibility is a factor, not the factor that influences the flow offoreign direct investment. The minimum that foreign investors expect is: (a) aclear enunciation of the rights and responsibilities of employers andworkers/unions; (b) an unambiguous and easily understandable legal andinstitutional framework; (c) predictable arrangements concerning union

recognition, collective bargaining, skills development, flexibility and workforceadjustment; (d) well-defined, clear-cut and time-bound procedures for grievanceredressal; and, (e) an administrative and judicial system that can be trusted for itstransparency, integrity, expediency, efficiency and accountability.

COMPETITIVE LABOUR POLICIES AT THE STATE LEVELLabour is in the concurrent list under Article 246 of the Constitution of India.Given the trend towards accentuation of regional disparities, state governmentsmay consider the pros and cons of competitive labour policies with a view toinducing investment and encouraging job creation. Presently, states can and domake a difference in areas like trade union registration, recognition, minimumwage laws, defining or redefining limits or granting exemptions concerning theapplicability of certain legislations, etc. The labour bureaucracy also can make adifference in matters ranging from inspections and penalties to adjudication andeven the use of force (deployment of police, for instance).

Since 1991 to date, several state governments have made far-reaching changesin their policies. For instance, Uttar Pradesh, requires the labour inspector toobtain prior permission of the labour commissioner or labour minister; and


21/29

Rajasthan granted exemption to several firms and both Rajasthan and AndhraPradesh simplified several forms with regard to labour inspection. Orissa andWest Bengal introduced secret ballot. While Maharashtra proposed a newlegislation, in the mid-1990s, the Maharashtra Industrial Relations Act to replacethe existing Bombay Industrial Relations Act and Prevention of Unfair Labour

Practices Act; and Kerala announced radical moves in labour policies as part ofits 1994 industrial policy.

The desirability, possibility and feasibility of competitive labour policies meritsserious consideration. The industrial relations implications of centre-staterelations, particularly on public sector undertakings, also needs careful review.

LABOUR LAW REFORMIn a global economy labour law as an autonomous subject stands at acrossroads. Some judges feel compelled to interpret law not on the basis of thetext of the clauses, but in the light of the preamble to that particular piece of

legislation and more importantly the Indian Constitution itself. Therefore, theymight sometimes question the new economic policies as inconsistent with theIndian Constitution. Elsewhere in the world, there is another view gaining ground:The social vision of labour law, which went with the old-established institutionsand practices has come under challenge to change or risk irrelevance. Thecurrent scenario requires striking a balance between these two extremeviewpoints.

There is a perception that the existing laws give virtual veto power to unions inthe organized sector to block changes like improvement in plant and machinery,rationalization of manpower, and growth of productivity. Further, there is a

perception that labour legislation has paved the way for multiplicity of unions,growth of intra- and inter-union rivalry, exacerbation of industrial strife andexcessive intervention by the state in industrial relations.

There are as many as 165 legislations --- both central and state --- that addressaspects relating to labour. But more laws mean less when implementation isthinly spread out. Even minimum wage laws have meant little when the wagesfixed are too low and implementation too lax. Study groups of the NationalCommission on Labour and the National Labour Law Association (NLLA)prepared draft labour codes in 1969 and 1994 respectively. The Commission onLabour Standards appointed by the Government of India, in its report submittedin 1995, almost entirely endorsed the NLLAs Draft Labour Code. It suggested afew changes: initiate a national debate or wider consultation on the Draft LabourCode through Project LARGE and simplify the law without further delay.

Labour law reform is not easy. The Korean experience confirms this. When theeconomy was doing well organized labour organized bitter struggles against thenew Korean law which was enacted to make, among other things, workforceadjustment easy. In the wake of the Korean economic crisis, however, a tripartite


22/29

agreement provided for the very changes that were opposed just a year before.Several economies in transition (notably China and Vietnam) and thoseundertaking structural adjustment (many in Africa and Latin America) have beenable to rewrite labour law without much friction.

The Government of India has appointed the Second National Commission onLabour (1999) to address the issue of aligning labour policy and labour laws withthe contemporary concerns of product markets. The contrast between the termsof reference of the first and the second national commissions on labour(Annexure 1) points to the stark shift in emphasis from labour market (FirstNational Commission on Labour) to product market (Second NationalCommission on Labour) and a palpable concern for a separate simplifiedapproach (one umbrella legislation) for the unorganized sector.

The major thrust of changes in labour laws should be along the following lines:

Have fewer laws but ensure better enforcement. It would be still moreexpedient and equitable to have one labour code instead of numerouslegislations, as China and Vietnam did in the mid-1990s. The nature andextent of protection for labour has little to do with the number of laws.

Multiple definitions should be eliminated across different legislations. Wages,

for instance, are defined in a dozen ways in as many legislations, or the legaldistinction between worker, workman and other worker is exclusionary.Unless otherwise defined perpetrates and perpetuates discriminatorypractices and confusion dictionary meanings should be considered adequate.The Labour Code can cover all working people rather than have variations inlimitation of numbers employed, amount of wages/salaries drawn, etc.

There should be have one national minimum wage act for all occupationsrather than separate ones for select notified industries/occupations. It shouldbe made easy to understand, be simple to administer and effective inenforcement.

Several amendments to the Trade Union Act suggested earlier bipartite

committees and subsequently incorporated in the bill prepared by the Ministryof Labour do not serve any useful purpose; they do, however, perpetratedistrust among unions and create strife. Japan and Denmark do not havetrade union acts. In Japan, the union movement is consolidated andmultiplicity reduced without legal intervention. Denmark is one of the countrieswith the highest rate of unionization.

Almost all political parties and many unions favour secret ballot. But it wouldbe prudent to review the experiences of Andhra Pradesh, Orissa and WestBengal before taking any action, since the experience so far suggests that thepresent conditions are not conducive to secret ballot. They have led to anti-establishment vote and destabilising recognised unions, causing strife inindustrial relations and resultant litigation.

The provisions of the Industrial Disputes Act should be reviewed while

preparing the Labour Code. Legislations in some Southeast Asian countries


23/29

as well as China and Vietnam offer valuable insights. In the wake ofstructural changes and liberalization, more than 100 developing countries andtransitional economies have reformed their labour law. The three mostimportant changes in legislation which are necessary in the Indian contextalso well are as follows: (a) Employment can be secure only so long as the

enterprise where they are employed is secure and viable. According to ILOConvention No.168, termination of employment at the initiative of employercan be valid if structural, technical, economic and other changes so require.Workforce adjustment as per business needs is imperative. Notice,consultation, and compensation provisions can be and should be tightened.The requirement of prior permission of the government should be dispensedwith in matters concerning lay-off, retrenchment and closure; (b) Section 9-A,concerning notice of change, should be amended. Notice is required,consultation is to be encouraged, but the employer should have theresponsibility, if not the right, to make changes necessary to maintain andimprove competitiveness; (c) As in Malaysian legislation, which forbids

bargaining in respect of recruitment, transfer, promotion, work assignmentand workforce adjustment, in India also collective bargaining should beencouraged on aspects other than the above.

Industrial relations machinery should be made independent as recommended

by the National Commission on Labour.

Some studies point out that job protection laws impede job creation. Increase

in the price of labour and its relative inflexibility have also been foundresponsible for the stagnation of job opportunities. These studies have alsofound that job loss was less with adjustment than without it. It is necessary toinvestigate the technological determinedness of employment decisions,employment effects of adjustment vis-a-vis non-adjustment and

consequences of job creation on further job creation and the claims of theunemployed and fresh entrants to the job market. The cost of job protectionand its effects on job creation require careful analysis. The ILO-South AsianMultidisciplinary Teams study drew attention to the need to shift the focusfrom job protection to income protection.

Set up a skills development fund and a tripartite national wages council.

LINK BETWEEN PARLIAMENT, JUDICIARY AND THE EXECUTIVEThe process of integration of the Indian economy with the global economystarted seven years ago. Some say it started much before that. Politicalmanifestoes, however, do not realise the need for a linkage between

industrialization strategy and industrial relations strategy. The apparentcontradiction with the preamble to the Indian Constitution --- which still retains themagic phrase, socialist democracy --- leaves the field wide open for a variety ofinterpretations by the judiciary. There is a need to reassess the roles ofparliament, the judiciary and the bureaucracy.

Since Justice Krishna Iyer gave his interpretation of the definition of industry inthe Bangalore Sewerage Company case, there have been couple of other


24/29

landmark judgments on the subject which have reversed and re-reversed theBengal Sewerage judgment. When the Supreme Court declared P&T as not anindustry, but a sovereign activity under the state, P&T officials refused to appearbefore the conciliation machinery of the central government with regard to thedisposal of certain grievances of P&T employees.

Some judgments of the Supreme Court have the effect of prescribing legislation.For instance, in the case of the Food Corporation of India concerningrepresentative union, the Supreme Court ordered that the matter be settledthrough secret ballot and even prescribed the procedure for conducting it.Similarly, in many cases relating to child labour, environment and sexualharassment the judgments prescribed dos and donts.

There have been judgments in recent years that have upset organized labourwhile those concerning unorganized labour including contract labour havegenerally gladdened the hearts of the workers.

Our labour bureaucracy is caught between these two extremes. `Labour policy infuture would be market friendly, a high-ranking official of the labour ministryassured the audience at a conference on globalisation. The labour leader presenton the podium demurred, `If labour policy is not labour friendly what kind of alabour policy is it.

`I am the labour commissioner, not the management commissioner, was thestern reply of a labour commissioner to an industrialist who was pleading hiscase about the rigidities in the labour market of the country.

The labour bureaucracy has, however, enormous powers. It can stall the will ofParliament through delays or notification in the gazette. For instance, theamendment to Section 9c of the Industrial Disputes Act in 1982 has not beennotified to date. In another case, though electronics is not notified for thepurposes of the Minimum Wages Act in one state, a labour inspector who founda lathe machine in a unit chose to classify the unit as an engineering industry andapplied Minimum Wages Act to it also.

It is important that all these three wings --- Parliament, the judiciary and thebureaucracy --- should function in harmony and unison without compromising onthe rationale of their respective roles.

IV. CONCLUSION

In India about seven per cent of the labour force is in the organized sector andthe rest in the unorganized sector. Union density is low if agricultural labour isincluded and high in the organized sector. Globalization and technology havereduced labour intensity. To promote employment, it should stress on improvingthee quality and expanding the base for basic education and skills training. Agro


25/29

industrialization, service sector and self employment will be the main providers ofemployment. India should focus on few sectors where there is competitiveadvantage.

India has ratified four of the eight core labour standards and 39 out of 184

international labour standards. Though convention No.s 87 and 98 were notratified, freedom of association is guaranteed under Consitution and Indiasrecord of freedom of association and right to collective bargaining has been farbetter than that in countries which ratified these convention. There is a serieseffort to bring unified legislation defining and banning child labour. Labour beingbeing in the concurrent list of Constituioin of India the government needs toconsult with and make the state governments to work in tandem. All the threemajor partners government, employers and workers organizations aregenerally one in their opposition to linking international labour standards withinternational trade.

Unlike in the past, the current thinking of Government of India is that labourpolicy should concern itself with the entire labour force. Till not too long ago thelabour policy in India has addressed itself mostly to the eight per cent labourforce in the organized sector. Even salaried workers constitute only a fraction(about 15 per cent) of the total labour force in the country. It is time it paid greaterattention to the issues confronting the workforce in the unorganized sector. Acredible mechanism for providing literacy and vocational skills training to allaspirants in the labour market together with a support mechanism for basichealth and social security are imperative. Further, workplace industrial relationssystems should be put in place that facilitate change, promote flexibility andprepare the workforce to be able, adaptive and atuned to respond to the

challenges of the changes.

REFERENCES

Bhaduri, A and D. Nayyar (1998). An Intelligent Persons Guide to Liberalization,New Delhi: Penguin.

Bhattacharjee, D. (2001). The New Left, Globalisation and trade Unions in WestbEngal: What is to be Done? Indian Journal of Labour Ecoomics, 44(3) July-September. 447-474.

Debroy, B (1997). `Labour Market Reform. Policy Paper No. 22 prepared forProject LARGE (Legal Adjustments and Reforms for Globalising the Economy).New Delhi: Allied Publishers.

Kuruvilla, S. and C.S. Venkata Ratnam (1996). Economic Development andIndustrial Relations: The case of South Asia and Southeast Asia. IndustrialRelations Journal 27 (1), pp. 9-23.


26/29

ILO-SAAT (1996). India: Economic Reforms and Labour Policies. New Delhi:ILO-SAAT and UNDP.

Japan Institute of Labour (1996). `Industrial Relations and Labour Law inChanging Asian Economies. Proceedings of the 1996 Asian Regional

Conference on Industrial Relations. Tokyo: Japan.Miliband (2002). New Labour: A View from Inside, International Politics andSociety, IPG 3/2002, pp.15-25.

Reich, R. (1995). Address to the delegates of the 10th World Congress ofInternational Industrial Relations Association. Washington, D.C. IRRA. May 31-June 4.

Venkata Ratnam, C.S. (1997). `Competitive Labour Policies in Indian States .Working Paper prepared for Project LARGE. New Delhi: Allied Publishers.

Venkata Ratnam, C.S. (1997). `The Role of the State in Industrial Relations inthe Era of Globalisation. Paper presented at the subregional tripartite meeting onGlobalisation and Transformation of Industrial Relations in South Asia at NewDelhi during 15-17, 1997. New Delhi: ILO-South Asia Multidisciplinary AdvisoryTeam (Mimeo).


27/29

Table 1: Terms of Reference of the First and the Second NCL

Terms of Reference of the FirstNational Commission on Labour

(1966)

Terms of Reference of the SecondNational Commission on

Labour1(1999)

1. To review the changes in conditionsof labour since Independence andto report on existing conditions oflabour.

2. To review the existing legislativeand other provisions intended toprotect the interests of labour, toassess their working and to advisehow far these provisions serve toimplement the Directive Principlesof State Policy in the Constitution

on Labour matters and the nationalobjective of establishing a socialistsociety and achieving plannedeconomic development.

3. To study and report in particular on:(i) The levels of workers earnings,

the provisions relating to wages,the need for fixation of minimumwages including a nationalminimum wage, the means ofincreasing productivity, including

the provision of incentives toworkers.(ii) The standard of living and the

health, efficiency, safety,welfare, housing, training andeducation of workers and theexisting arrangements foradministration of labour welfare,both at the Centre and in theStates.

(iii)The existing arrangements for

social security.(iv)The state of relations betweenemployers and workers and therole of trade unions andemployers organisations inpromoting healthy industrialrelations and the interest of thenation.

(a) To suggest rationalisation ofexisting laws relating to labour inthe organised sector.

(b) To suggest an `umbrella legislationfor ensuring a minimum level ofprotection to the workers in the un-organised sector.

While drafting the framework for theabove, the Commission may take into

account the following:(i) Follow up implications of the

recommendations made by theCommission set up in May, 1998 forreview of various administrativelaws governing the industry.

(ii) The emerging economicenvironment involving rapidtechnological changes, requiring

response in terms of change inmethods, timings and conditions ofwork in industry, trade and services,globalisation of economy,liberalisation of trade and industryand emphasis on internationalcompetitiveness and the need forbringing the existing laws in tunewith the future labour market needsand demands.

(iii) The minimum level of labourprotection and welfare measuresand the basic institutionalframework for ensuring the same, inthe manner which is conducive to aflexible labour market andadjustments necessary forfurthering technological change and


28/29

(v) The labour laws and voluntaryarrangements like the Code ofDiscipline, joint managementCouncils, voluntary arbitrationand Wage Boards and the

machinery at the centre and inthe states for their enforcement.(vi)Measures for improving

conditions of rural labour andother categories of unorganisedlabour.

(vii) Existing arrangements forlabour intelligence and research;and to make recommendationson the above matters.

economic growth.

(iv)Improving the effectiveness ofmeasures relating to social security,occupational health and safety,

minimum wages and linkages ofwages with productivity and inparticular the safeguards andfacilities required for women andhandicapped persons inemployment.


29/29

1

current labour situation in india en

Documents