I was associated with an academic institute that has multiple centres in different parts of India. Historically, the institute employed cooks and gardeners in-house as full-time employees, with inevitable perks. In an attempt to be competitive and efficient, many organisations, including the corporate sector, have decided to outsource services.
For instance, our outfit does not have drivers anymore, except for a few who were recruited many years ago and will soon retire. Drivers have been outsourced through contractors. The centres of that academic institute, except for the centre in Kolkata, outsourced cooks and gardeners with no hullabaloo. But when the same initiative was attempted in Kolkata, there was a furore. Workers went to court, and the judge ruled that outsourcing was not permissible.
There used to be a statute known as the Contract Labour (Regulation and Abolition) Act of 1970, now subsumed under the Occupational Safety, Health, and Working Conditions Code of 2020. This act prohibited the employment of contract labour in certain occupations and regulated it in others. Notifications issued under this never ceased to bemuse. For instance, in 1994, contract labour was prohibited in ONGC for typists, clerks, steno typists and attendants/helpers/peons. Most government offices have now outsourced multi-tasking staff (MTS), earlier known as attendants/helpers/peons. What is wrong with that? Why must they be employed in-house full-time, as with ONGC?
How many labour laws are there in India? It’s not an easy question to answer, given that labour falls under the Concurrent List. Not every labour law is administered by the Ministry of Labour and Employment (MoLE). If we are interested in labour and employment, shouldn’t we also talk about the Apprentices Act and MGNREGA? If we count everything, there were around 55 labour laws at the Union government level. Remember that the Shops and Establishments Act, which largely governs services, are completely State subjects. Out of the 55-odd labour laws, 29 were administered by MoLE. Between 2019 and 2020, these were unified into four codes on Wages, Industrial Relations, Social Security and Occupational Safety, Health and Working Conditions.
Standardisation and harmonisation are good things. They unify definitions, reduce confusion caused by case law, reduce compliance costs and litigation, and also curb the much-maligned inspector raj. At the very least, there are fewer inspectors operating under fewer statutes. This sounds good in theory, except that states have to publish rules (draft rules, at the moment), under these four codes. The track record varies across states and across codes. Among major states, one which has not published draft rules under any of the four codes (as of April 2024) is West Bengal.
Did you read the recent news item about Britannia Industries closing down its iconic factory (established in 1947) in Taratala, Kolkata? All permanent workers have accepted VRS. There are corporate reasons behind this closure, linked more to the company’s restructuring. But this closure underscores a broader point: West Bengal’s labour laws and overall environment have been deterrents to investing in West Bengal. Also note that flexibility brought in through the four codes is being undermined by states, both through their specific rules and through the Shops and Establishments Act.
A recent news report highlighted the pre-budget meeting between ten Central trade unions and the finance minister. These unions reportedly want the four labour codes repealed, advocating for a return to the 29 statutes. But what exactly constitutes a Central trade union? To be classified as such, a union must have a verified membership of at least 500,000, spanning four states and four industries.
ILO tells us there are 12 Central trade unions in India. How old are their membership records? While robust figures exist for 2002, with some fragmentary data available for 2013, more recent information is scarce. This begs the question: why are these unions so reluctant to disclose their current membership? Could it be that the numbers would reveal a lack of representativeness? After all, their combined membership hovers around 25 million, a stark contrast to India’s total labour force of approximately 480 million. While trade unions undoubtedly play a vital role in advocating for workers’ rights, one might argue that workers derive greater value from local, enterprise-based unions than from these larger, centralised bodies.
Whose interests are these Central trade unions trying to protect? They may claim to protect the broader interests of labour, but their actions often suggest a focus on their own members – a crucial distinction. Whose interests did the judge in Kolkata protect? He may have thought he was protecting the interests of workers in general, but he was actually protecting the interests of some 10 cooks and 10 gardeners. The two interests are not the same. The unreserved railway compartment serves as a fitting, if somewhat overused, metaphor. As long as you are outside, on the platform, you are desperate to get in. But once you are inside, you do your level best to ensure that no one else gets in.
Central trade unions, reflecting the interests of formal/organised labour, are like that. The bulk of labour is informal/unorganised. Labour laws affect the entry, functioning and exit of enterprises. Rigidity deters entry and this isn’t about the Industrial Disputes Act alone. Rigidity leads to an inspector raj at the functioning stage and is a deterrent too. If we are concerned about employment, as everyone is, we must strike at root causes.
The author is the chairman of the Prime Minister’s Economic Council and a well-known Sanskrit scholar. Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect News18’s views.
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