The Great Lockdown | Volume 1 | Issue 5
The last few weeks have seen a number of amendments being made to labour laws affecting and impacting the bottom of pyramid of an organization’s resource structure. While Covid19 has impacted the economy and globe as a whole, it has put the labour markets in hand-to-mouth situation or even worse. Amidst increasing Covid19 cases and struggling to maximise the benefits of lockdown, State Governments have decided to make changes to application of labour laws. The changes have been of key interest not only to the labours but have also kept interested the employers, investors and critics alike.
What’s the Deal?
Labour Laws:
The chain of changes to and abolishment of labour laws was kicked-off by BJP led states and was also followed by few other Congress led states; although the changes were relatively smaller in scope. The boldest change was initiated by Gujrat and UP by abolishing almost all of labour laws. While Gujarat has institutionalized amendments for 1200 days UP has done it for the next three years.
End of Inspection Raj and Ease of Doing Business:
Madhya Pradesh has abolished the necessity of multiple registers and returns for getting business permit. Also, state has made provision that ensures licence will be issued within 24 hours and renewals will now be given for 10 years instead of one year.
Madhya Pradesh has also removed the requirement for inspections at factories for next 3 months employing less than 50 labours. Also, inspection of SMEs can now only be done with prior approval of labour commissioner or if there is any compliant.
Changes in Working Hours:
What it means — Our Point of View…
Historically, labour laws have been stringent and taxing for employers. Organized sectors have drifted towards hiring workers without formal contracts as cost of compliance proves to be higher than the cost of non-compliance. In view of same, relaxation of labour norms has been a welcome move. But there are caveats…
Non-compliance to International Labour Organization (ILO) norms: While the increase in weekly hours from 48 hours to 72 hours will result in reduced manufacturing costs for companies, the same is against the ILO norms which mandates 48 hours working week for labours. While the centre has been pushing state towards labour norms, there have been backlash from labour unions and critics. Will that yield any changes to the reforms is yet to be seen.
Contradicting the very intent of increased requirement: While revitalising the demand for labours has been touted as primary reason for reforms, increase in working hours to 12 hours will prove to be detrimental as more man-hours would be allocated to an individual.
Reduced labour confidence: Abolishment of labour laws may also aggravate the already existing pay disparity among rural and urban and men and women. The reforms might not only strip labors of their basic rights but also lead to reduced wages, ease of ‘hire-are=fire’ rules, reduced job security and increased seasonal unemployment.
What could have been done differently?
We believe that the reforms could have been timed better. Further, central government could have pushed for collaboration with industry and introduce strategic reforms by sharing wage burdens. Bottom line pressure and opportunity provided by abolishment of labour norms could result in exploitative situation for labours.
