Workers are most adversely hit under Modi rule

The government’s latest bid to amend labour laws and regulations, including overtime work rules, in order to improve the ease of doing business in India mostly concerns the highly organized sector workforce and where bipartite and tripartite wage settlements hold the key to good industrial relations. However, before Parliament approves such bills, it is important that the government clearly explains how existing labour laws and practices are standing in the way of a good business environment in India and also what are the other factors that are choking organised sector industrial production. Labour as a factor of production plays little role in the country today in improving an organised sector firm’s top and bottom lines. 

Indirect and direct taxes, import dumping, poor and high-cost infrastructure, high power rates, non-availability of important industrial inputs, shrinking export markets and falling local investor sentiment are playing a much bigger role in choking the country’s industrial production and growth. The economy is becoming increasingly dependent on foreign direct investors. For the first time, the government is under serious pressure from these investors to ease the ways in which business is done in the country.

In fact, since the economic reform was initiated 25 years ago, Indian labour has constantly been on the receiving end – from both employers and the labour departments of the Union and state governments. In most sectors, labour laws and regulations exist only on paper. Almost all new jobs are contract jobs. Even some of the government and semi-government jobs no longer attract the pension rule. Although the Central government has raised the minimum monthly pension for its lowest order employees to Rs. 9,000 per month, the same for industrial workers making a visible contribution to the country’s GDP growth is fixed only at Rs. 1,000.

In several services sector jobs, including shops and establishments and highly demanding security agencies, a 12-hour job is routine. In smaller two or three-star hotels even in the national capital, Delhi, a room attendant is made to work sometimes 72 hours at a stretch if and when the person’s shift reliever is suddenly absent. Most small and services sector employees, including high-skilled ones, are get paid up to Rs.6,000 per month as salary. In terms of labour as a factor of production, if such practices still don’t help the ease of doing business in India what else will?

Employees in India are under constant pressure from their employers as their jobs are becoming increasingly uncertain in the face of growing unemployment of educated and skilled persons. The job practices in start-ups and e-commerce ventures have raised eyebrows of even eminent institutions of technical education. For instance, IIT Bombay, one of India’s leading engineering and technical institutes, has banned more than a score of start-ups for campus recruitment. Jobs in even big e-commerce firms such as Flipkart, Myantra, and Snapdeal offer little security. This may explain why the massive growth of e-commerce and startups had failed to bring many cheers to the employment market.

Data available from both the government’s Labour Bureau and International Labour Organisation (ILO) present an interesting analytical conclusion that the trend of India’s employment has remained far behind the country’s GDP growth. A recent quarterly survey by the Labour Bureau showed that India has never created so few jobs, since the survey started in 2009, as in 2015: only 1.35 lakh jobs compared to more than nine lakhs in 2011 and 4.19 lakhs in 2013 in the country’s eight labour-intensive industries (the only ones that are surveyed). Considering that almost one million new people enter the job market in India every month, these Labour Bureau figures are particularly alarming. The Indian economy needs to generate 115 million non-farm jobs over the next decade to gainfully employ its workforce and reap its demographic dividend. That is not the direction in which India is going.

Unfortunately, the government under pressure of ensuring the ease of doing business seems to have ignored its own reports of employment while bringing about new amendments in labour laws and practices. This year’s pre-budget Economic Survey hardly had worthwhile mention on labour though 2015 Survey showed that during the last decade (2001-11), the growth rate of the labour force (2.23 percent) was significantly higher than the growth rate of employment (1.4 percent), which itself was several-fold less than the GDP growth rate. According to Census 2011, the average annual economic growth rate was 7.7 percent, when it was only 1.8 percent for employment. 

The growing unemployment and insecurity, apart from poor wages, in most private sector jobs are increasingly driving the educated unemployed to government jobs even under the lowest category (Class IV) that offers a monthly emolument of around Rs.14,000, which is sweetened further by the new pay commission award for central government employees. A recent report from UP’s Amroha municipality superintendent Fiaz Alam said 19,000 people applied for 114 sweepers posts, including graduates in arts and sciences, post-graduates engineers, and MBAs. Last year, in BJP-ruled Chhattisgarh, the State Government’s Directorate of Economics and Statistics reported that there were 75,000 applications for 30 posts of ‘peons’ and a good number of them highly qualified.

 In a country where almost 20 percent of the youth are unemployed and nearly an equal portion are under-employed and seasonally-employed, the government and labour department would do well to frame or amend such laws that guarantee eligible citizens right to employment to protect their right to life under the Constitution and offer unemployment doles -- like many other democratic countries do -- and offer social security, including living pensions, housing, and free medical facilities, to the old and superannuated. For now, the expanding non-labour intensive manufacturing industries seem to have little complaints about the country’s easy, non-regressive, generally employer-friendly labour laws. IPA