Labour Law, Governance Reforms, and Protests: Are They Legitimate?

Author(s): K R SHYAM SUNDAR and RAHUL SURESH SAPKAL

Source: Economic and Political Weekly, Vol. 52, No. 38 (SEPTEMBER 23, 2017), pp. 59-66
Published by: Economic and Political Weekly
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 SPECIAL ARTICLE

Labour Law, Governance Reforms, and Protests

Are They Legitimate?

K R SHYAM SUNDAR, RAHUL SURESH SAPKAL

Employers and critics of labour regulation have been

arguing for the liberalisation of labour laws, and for has been accompanied by shrill and persistent demands
The liberalisation of the
for deregulation product
of the labour market since
market to the
enable 1990s
firms to
governance and compliance systems, following the
respond to market forces more effectively and reap the bene
liberalisation of the product market to enable firms to
fits of product market reforms. Employers and critics of labour
respond swiftly and suitably to fast-changing market regulation have been stridently arguing for several labour law

conditions. The trade unions opposed this even as the and governance reforms. We mention here the most important
ones. First, the radical demand to scrap Chapter vb in the
government was seemingly favourably disposed
Industrial Disputes Act, 1947 (henceforth, the id Act) as it is
towards employers' demands. The countrywide strikes highly restrictive of employers' freedom. Along with this, there
that have taken place since 1991 have become is the soft demand to raise its applicability from 100 workers to

controversial not merely due to their high frequency but at least 300 workers to provide flexibility to more firms, and
freedom to management to introduce technological changes
also for their lack of legitimacy as reforms appear to be a
without issuing a notice of change under Section ça of the id
foregone conclusion and the protest politics seems to be
Act (which stalls the process of change in work organisation in
vain and economically hurting the nation. This paper a firm thanks to litigation). Second, employers desire greater

explores the dynamics of the countrywide strikes and freedom to hire contract workers in peripheral work as well as
core work depending on market conditions and seek removal
examines whether some of the demands of trade unions
of the "abolition" clause in the Contract Labour (Regulation
arejustified.
and Abolition) Act, 1970 (henceforth, clraa). Third, employers
demand liberalisation of inspection and administrative system
of labour laws compliance (the "inspector raj" argument). Last,
critics argue for full-scale privatisation and easy procedures
for foreign capital inflows, both of which are expected to pro
duce benevolent economic outcomes such as faster growth and
employment generation.
Trade unions predictably oppose these proposed reforms in
the first instance as they see these measures taking away the
hard-won labour rights, causing a decline in labour welfare.
They have begun to put forth their own "charter of demands."
These are not mere demands in the collective bargaining
context but represent a "perspective" which argues that in the
context of uncertain and crisis-ridden globalisation, the role
of the state becomes more important in protecting and even
expanding the basket of "labour and human rights."
The central government, irrespective of the party in power,
has been keen to initiate labour law and governance reforms
as demanded by employers. However, they could not do so, as
unlike capital market or trade reforms, labour law reforms
belong to "mass politics" and can hurt the political fortunes of
the government in power as they reportedly did in the 2000s.
K R Shyam Sundar ([email protected]) is with the XLRI, Xavier It is significant to note that trade unions resisted the reform
School of Management, Jamshedpur. Rahul Suresh Sapkal (rahul@
initiatives via countrywide strikes and other forms of protests
mnlumumbai.edu.irO teaches economics at the Maharashtra National
in various fora, including in the Indian Labour Conference
Law University, Mumbai.
(ilc) (Shyam Sundar 2015b).

Economic & Political weekly DB53 September 23, 2017 vol lii no 38 59

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SPECIAL ARTICLE

The central government has adopted three strategies to get reform agenda. Three, mainstream trade unions have widened
around this problem. It has constituted commissions and task the reform agenda significantly to include economic, labour,
forces (for example, the Second National Commission on Labour) and enforcement policies, issues of unorganised sector workers,
to shape public opinion, introduced piecemeal reforms, and and also contract workers, apart from those concerning labour
primarily shifted the critical hard reforms onus onto the state laws (Table 1). Four, they have also coordinated with a number
governments. Various state governments have introduced of global industrial federations like IndustriALL Global Union,
varieties of measures concerning inspection procedure (self domestic industry federations like that of banking and insur
certification or randomised inspections), and forms and returns ance, unorganised sector unions, and associations like street
(combined and e-forms of returns and maintenance of records), vendor unions, autorickshaw unions, and so on. However, the
and introduced or amended select clauses in critical labour strikes since 2012 have involved millions of workers covering
laws for business efficiency (Shyam Sundar 2015b). both the organised and the unorganised workers. The large
Contrary to the popular perception, the post-reform period numbers of workers participating in the strikes is the compelling
was not characterised by industrial peace thanks to the weak feature of these recent strikes.

ening of bargaining power of labour as against capital. Indus Table 1:

1 :Charter
Charterof
ofDemands,
Demands,All-India
All-IndiaStrikes,
Strikes,2015
2015and
and2016
2016
trial protests have manifested in several ways, namely, formal 1 Urgent measures for containing price-rise through universalisation of public
distribution system (PDS) and banning speculative trade in commodity market.
work stoppages (like strikes and lockouts), workplace protests
2 Containing unemployment through concrete measures for employment
(like go-slow, gate meetings), physical assaults (sometimes
generation.
leading to death), and so on, trade union conventions, morchas,
3 Strict enforcement of all basic labour laws without any exception or exemption,
dharnas, marches to Parliament, protests in the tripartite and stringent punitive measures for violation of labour laws.

forums, and so on (Shyam Sundar 2015a). 4 Universal social security cover

il security coverfor all workers.
for all workers.

The government and critics of trade unions see the latter's jes not
5 Minimum wages of of not
less less
thanthan ?18,000
?18,000 per per mo with provisions of
month
indexation.
strident opposition to labour law and governance reforms as
6 Assured enhancediced
pension
pension
not not
less less
thanthan
?3,000
?3,000
per p«
month for the entire
wasteful (because reforms are inevitable) and politically moti
lation.
working population.
vated, and question the legitimacy of the charter of demands 7 Stoppage of disinvestment
sinvestmentin
in central/state public
central/state public se sector units.
of trade unions and that of the protest politics (because the 8 Stoppage of contractualisation
jntractualisationin
in permanent perennial work and payment
permanent peren

government is taking measures to address their demands and ; andbenefits

of same wage and benefitsfor forcontract
contractworkers
workersas regular workers for
same and similar larwork.
work.
their demands are inflated). It is in this context that this paper
9 Removal of all ceilings
ceilingson
on payment and
payment and eligibility
eligibility of of bonus, provident fund;
seeks to (i) understand the dynamics of trade union move
jantum
increase the quantum of of gratuity.
gratuity.
ment in the post-reform period; (ii) analyse the immediate 10 Compulsory registration
igistration
oftrade
of unions
trade unions
withinwithin
a period
a pei
of 45 days from the
causes of 2 September 2016 strike despite the widely reported date of submitting application; and immediate ratification of International
Labour Organization (ILO) Conventions C87 and C98.
government concessions; and (iii) assess the legitimacy of the
11 No unilateral amendmentto labour laws.
charter of demands by looking at the statistical facts and
12 No foreign direct investment (FDI) in railways, defence, and other strategic
empirical realities for some of the major demands. sectors.

Dynamics of All-India Strikes The message is clear that the conventional trade unions have
Since 1991, 16 countrywide strikes of different magnitudes realised the pragmatic and existential need for broad-based
and differing union sponsorships have occurred, including the unity. While the ctus are critical of the labour and employment
strike on 2 September 2016. However, the trade union move policies of the ruling party—be it Congress-led United
ment was a divided house for quite some time, largely due to Progressive Alliance (upa) or the Bharatiya Janata Party (bjp)
differing ideologies and political affiliations. In particular, the led National Democratic Alliance (nda)—there have been
so-called all-India strikes till 2011 were mostly left-of-the-centre some problems in sustaining the united front on the issue of

affairs. Bharatiya Mazdoor Sangh (bms) and Indian National national strikes. But the withdrawal of the intuc or bms on

Trade Union Congress (intuc) did not participate in the strikes occasions does not dilute the strident opposition of these unions

till 2010 and they accounted for about 40% of the verified against the labour and employment policies of their respective
trade union membership in 2002. Hence, the strikes called by political parties. Sustaining the protest-front unity will be the
the so-called left front were somewhat less popular. Since biggest challenge to the working class movement.

2010, all the major Central Trade Unions (ctus) have come to
Critiquing Big Strikes
gether on a "historic unity front" and conducted strikes on five
occasions, though on occasions bms or intuc did not partici Radical organisations see conventional trade unions entrenched

pate for some reasons. in capitalistic political democracy, protecting their leadership

Four major reasons could be attributed to the "functional unity" and organisational interests even at the cost of workers. Further,

at least on the protest front. One, the aggressiveness of all they advocate empowerment of the workers by spontaneous

political parties to initiate labour law reforms has caused dis struggles which according to them reflect real workers' power
sociation between political and industrial interests in politically (Radical Notes 2013). They also argue that limited duration of

leaning trade unions. Two, social dialogue largely failed general strikes stifle the revolutionary consciousness of the
thanks to the use of that forum by the government to push its working class (Kumar 2013).

60 September 23, 2017 VOL Lii no 38 QB5S Economic & Political weekly

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 SPECIAL ARTICLE

Some trade union leaders think that demonstrative stop maternity benefits and increasing the compensation to workers
pages do not exert any pressure on the government. Even under the Employees' Compensation Act, 1923.
labour sympathising academics see this as nothing more than
Government Efforts to Avert the Strike
"tokenism" of unity by ctus (though progressive given their
divisions), and worry about the sustainability of the protest The government hurriedly held consultations with the bms to
movement. These strikes at worst help the opposition political avert its participation in the general strike. Participation by the
parties, are not militant enough, and do not involve the really bms would lend unassailable legitimacy to the failure of the nda
exploited, that is, contract workers (Thozhilalar Koodam 2016). government in terms of labour image. The partial consultation
In some instances, a few big companies fearing violence and was rightly dubbed by other trade unions as "divisive" tactics of
damage to property declared holidays on the strike days, and the government. The government held a meeting of all trade
the workers had to do compensatory work on other working unions just a few days before 2 September 2016, but not much
days (Kumar 2013). Further, in a few instances, workers com came of it. Eventually bms did not participate in the strike.
pensate the loss of production prior to the strike. In other The government made several so-called concessions to placate
words, these safe responses defeat the spirit of the strike. the trade unions and bms was suitably impressed to withdraw
from the strike. The concessions included, strict implementa
September 2016 Strike tion of the Bonus Act amendment; bonus to central govern
It is necessary to discuss the developments surrounding the ment employees on revised norms; hiking minimum wages for
2 September 2015 strike to understand the provocation for the non-agricultural unskilled workers to ^350 per day; promise of
strike in the following year. On 1 September 2015, the labour strict implementation of clraa; examination of social security
minister assured the ctus that the government would consult extension to anganwadi and accredited social health activists
them while formulating the reform processes and made a few (ashas) workers by a committee; "advisories" to the state gov
promises regarding revisiting minimum wages as per ilc 1957 ernments to complete registration process of trade unions
norms and the Supreme Court judgment (in the Raptakos Brett within 45 days; reiteration of government's commitment to tri
case), revising bonus eligibility to ?2i,ooo and so on. The bms partism.1 The Centre of Indian Trade Unions (citu) and the
did not join the strike in 2015 on the basis of these assurances. other ctus rebutted every claim of the government.
The central government amended the Payment of Bonus The critical question that needs to be analysed is whether
Act, 1965 to enhance the wage eligibility limit from ?io,ooo to the demands of the trade unions are backed by empirical and
?2i,ooo and the calculation ceiling from ^3,500 to ?7,ooo. statistical facts. Owing to space constraints, we take four of
This was one promise the central government carried out, the 12 demands for critical examination.

though the sanction of bonus for government employees was

cleared on the eve of the 2016 strike. Strict Enforcement of Basic Labour Laws

The trade unions have reasons for going on strike on 2 Sep The trade unions demanded strict enforcement of all basic labour
tember 2016. First, the offer of the government through the laws without any exception or exemption, and stringent punitive
communication of the labour minister prior to the 2016 strike measures for their violation. The government mentioned the
was no different from what was assured prior to the 2015 strike. following measures in response to this demand. The govern
Second, between the two strikes, the central and the state ment has (i) launched of Shram Suvidha Portal (on 16 October
governments have carried out several pro-business labour reforms 2014) to ensure transparency and accountability; (ii) deployed
without consulting the trade unions. For example, the central information technology for higher level of compliance and en
government framed the Labour Code on Industrial Relations forcement; (iii) strengthened inspection system through the
Bill and a bill on small factories with clauses affecting labour use of technology and filling up vacancies; (iv) conducted five
rights (Gopalakrishnan 2015); introduced "fixed term em regional labour conferences and the labour minister has issued
ployment" in the textile sector; brought a pro-business Model demi-official (do) letters to chief ministers and chief secretaries
Shops and Establishments (Regulation of Employment and of states to sensitise the state governments on enforcement of
Conditions of Service) Bill and so on. Third, proposals of anti labour laws; and (v) conducted at the central level two special
worker labour law reform measures on a continuing basis cre drives in 2015-16. The responses by the government betray
ated insecurity amongst workers. For example, the central insensitivity to the serious issues involved.
government proposes to amend clraa to remove the "abolition" India has ratified the International Labour Organization (ilo)
clause from the law (Sharma 2016). Fourth, responding to the Labour Inspection Convention (C081), 1947. The convention
conducive neo-liberal policy environment, several state gov requires the ratifying countries to devise labour inspection
ernments have introduced core labour law reforms and liber
system amongst others to ensure efficient, qualified, well
alising inspection measures (Indian Express 2016). Fifth, even equipped and independent enforcement system and that they
though the government constantly affirmed the positive role should conduct inspections "sufficient" enough to secure "effective
of tripartism and assured the trade unions that they would be discharge" of inspection duties, wherein the inspectors are
consulted on labour law reform measures, little was happening free to enter without prior notice, at any time of the day or
on this front (Rajalakshmi 2016). The trade unions were not night. The Labour Inspection Recommendation, 1947 requires
unduly impressed with a few pro-labour reforms like enhancing creation of a database on labour inspection system and spells

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SPECIAL ARTICLE

out in detail the reporting system. Further, the ilo has bench Table 2 clearly shows the inadequacies of the enforcement
marked the ratio of a labour inspector per 40,000 working system. The number of establishments covered per inspector
population in less developed countries. We cannot estimate the under the Minimum Wages Act, 1948 is so high, that amidst
adequacy of labour inspectorate for India as we do not have duties of enforcement of other labour laws, it is impossible for
complete national data on labour inspection system, for example, the inspector to make even a single visit in a year.
out of, only 13 and 18 states and union territories for 2009 and
Provisions for Indexation
2010 respectively have supplied data on factory inspections to
the Labour Bureau as per the Indian Labour Year Book 2011-12. The next trade union demand we look at is that of minimum

The field realities with respect to labour inspection can be wages of not less than ?i8,ooo per month to workers with pro
summarised thus: (i) randomised inspection systems have visions for indexation. The government responded as follows:
been introduced both at the national and several state levels in (i) it is "seriously" considering to extend minimum wages to
the name of removing discretion of the inspectors and intro "all" workers through an amendment to the Minimum Wages
ducing transparency; (ii) a number of states and union territo Act; (ii) minimum wages for skilled, semi-skilled, and un
ries have introduced self-certification and consolidated annual skilled workers will be prescribed "on the basis of the formula
returns system; (iii) third-party accreditation systems have given by the ilc and Supreme Court judgment"; (iii) enhance
also been introduced; (iv) based on data from the Directorate ment of penalty for better implementation of the act; (iv) state
General Factory Advice Service and Labour Institutes (dgfasli) government's minimum wages should be higher than the na
for 2011,37.44% of the registered factories have been inspected tional minimum wage.
in 2011, in several states the ratio of filling up of sanctioned In India, the Minimum Wages Act covers "two-thirds of all
posts were low (57% for West Bengal, 38% for Bihar, 32% for wage-earners and a total number of about 116 million work
Punjab, and 55% for Maharashtra in 2011);2 (v) various re ers" who are casual, and hence assumes great importance
searchers have used limited available data on enforcement to (Besler and Rani 2010). The central government, as noted be
show a considerably weakened and highly inadequate inspec fore, raised the minimum wage for the non-agricultural un

tion system and argued the failure of self-certification system skilled worker from ^246 to ^350, which is around half of what

(Shyam Sundar 2015b). trade unions demanded. If the government is serious about
Trade unions like the crru and bms had complained to the ilo implementing what it states, that is, implementing the recom
monitoring bodies on the dilution of labour inspection system. mendations regarding minimum wages by ilc and the Supreme
The ilo had raised some concerns. However, the Ministry of Court judgment, then the offered minimum wages of around
Labour and Employment revealed, based on the response by ?9,ioo falls terribly short of the estimate that ranges from
the Government of India, that the government is trying to intro ?i8,ooo to ?26,ooo (Sampath 2016). In fact, as trade unions
duce a more efficient system and showed that inspections have observed in several states, the minimum wages are already
risen, ilo dropped the complaint made by citu (Hindu 2016). higher than ?9,ioo.3
But the perusal of the Report of the ilo Committee on the Appli The norms formed at the 15th ilc in 1957 and the Supreme

cation of Standards (cas) reveals that the committee has sought Court norm added to them in the Reptakos Brett v Workmen

clarifications on (i) the impact of labour law reforms and regula case in 1991 are conservative in nature as it takes into account
tions on the labour inspection system; (ii) the system of computer critical minimum prices and needs.4 The Seventh Pay Com
generated inspections and place of complaints-based and dis mission has fixed the minimum wage for the low-ranked gov

cretion-based inspections by labour officers; (iii) inspections to ernment employee on the basis of the ilc and Supreme Court

be undertaken without prior notice, and so on. It further has guidelines at a lesser rate of ?i8,ooo. India has been skirting

asked the government to clarify on its earlier request on whether on this critical issue since the 1960s.5

under the Factories Act, 1948 the inspectors will have the powers The neoclassical theory argues that statutory minimum
to enter freely and without prior intimation, and insisted on a wages as a price variable will depress employment (the quan

detailed and complete annual report on labour inspection tity), and worse, will hurt the younger and unskilled workers

(ilo 2016). The enforcement system is under global scrutiny. (or the informal sector workers) whom the minimum wages
should be protecting. A comprehensive review of studies on
Table 2: Statistics Relating to Inspection under the Minimum Wages Act,
1948 forSelected
1948for SelectedStates,
States,2012-13
2012-13 the impact of minimum wages on employment (especially low
States Percentageof Establishments EstablishmentsCovered skilled workers) covering older models, new minimum wage
Covered under the Act Inspected per Inspector
Andhra Pradesh 21.48 612.59 literature (natural spatial studies), time series studies, and
Haryana 199 635.10
21.48

meta-studies show that "modest" increase in minimum wage

Karnataka 4.40 1,744.31
1.99

Odisha 718 1,239.96

4.40
will have little or no impact on employment prospects of low

Punjab 63.55 138.35

7.18
skilled workers. This is because of the existence of adjustment

Rajasthan 143 2,932.31 channels prescribed even by the competitive models (so long

Tamil Nadu 85.97 371.08 quantity or employment is not the adjustment/response varia
ble to a rise in minimum wages). These adjustment channels
Statistical compliance by states to Labour Bureau is low and of poor quality. We have chosen
those states for which information is available for 2012 and 2013.
are higher prices to consumers, reductions in non-wage costs,
Source: Report on the Working of the Minimum Wages Act, 1948 (for 2012 and 2013), Labour
Bureau. including training cost, reduction in hours, acceptance of lower

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 SPECIAL ARTICLE

profits (by competitive models), a rise in productivity, boosting Developments like determination of non-statutory national
effective demand, efficiency wage effects (by institutional minimum wages, rise in labour struggles, and proactive collec
models), and reduction in search costs and turnover (as rise in tive bargaining, to link wages with productivity and a rise in
minimum wages will raise the wages in a monopsony model to aspirations of workers are some of the factors that can create
the competitive level as opposed to the original model wherein tendencies for convergence between the two. It is in this con
wages are less than the marginal product, and hence worker text that the demand for rise in minimum wages has to be
attraction and retention will be higher even in a dynamic seen. It is a baby step to provide a basis for more equitable dis
monopsony model).6 tribution of income. The compounded annual growth rate
There is enough scope to Table 3: Frequency Distribution of (cagr) of real wages in Table 4 validates this possibility.
Industries by Percent Share of Labour
raise minimum wages as the Table 4: Compound Annual Growth Rate (CAGR) of Real Wages per Worker,
Cost in Total Cost of Production, 2011-12
share of labour costs in total 1990-91 to 2013-14
Class Intervals (%) No of Industries at
Period CAGR of Real Wages CAGRofRealSalary
costs/revenue is not high Three-digit Level (NIC 2008)
per Worker (%) per Non-worker (%)
Less
Cii IIthan
Id I I 5J 23
enough to warrant the ap 1990-91 to 1994-95 1.14 2.86
5.01
.01 to
to 10.00
10.00 28
prehension, either by in 10.01
0.01 to
to 15.00
15.00 17
1995-96to 1999-2000
399-2000 -3.55 2.09

dustry or by size, the shares 004-05

2000-01 to 2004-05 -0.87
15.01
5.01 to
to 20.00
20.00
(mean or median) hover 20.01
0.01 to
to 25.00
25.00
2005-06 to 2009-10
009-10 -0.07 3.74

around s%-8%, though in 2010-11 to 2013-14

113-14 2.79 2.80
25.01
5.01 to
to 30.00
30.00
some select industries it 1990-91 to 1999-2000
399-2000 -0.42 2.71
30.01
0.01 and
and over
over
2000-01 to 2009-10 -0.70 2.84
stretches beyond 20% (for Total 82
2000-01 to 2013-14 0.56 3.13
example, wearing apparel; Sou rce: Report on Absenteeism, Labour Turnover,

Employment&Labour Cost, Annual Survey of 1990-91 to 2013-14 0.31 3.53

air, spacecraft and related Industries, 2011-12, Vol II, Labour Bureau,
Emoluments = wages and salary of employees; Salary = Emoluments - wages; Employees
Government of India.
machinery, etc) (Table 3). -workers = non-workers.
Source: Annual Survey of Industries, various years.
Since many firms pay just the minimum wages for contract
workers, a hike in minimum wages will raise their compen We see that cagr of real wages per worker have remained
sation. This demand should be seen as complementary to negative for most of the periods but picked up considerably
the equal work equal pay for contract workers. Minimum during 2010-11 to 2013-14; in the latter period average
wages form the basis of wage negotiations for even regular real wages grew at an impressive growth rate of almost 3%.
workers, and thus will increase the base rate for negotiations. However, the cagr of salary of non-workers have remained
A hike in minimum wages assumes added importance as positive in all the periods, and higher than that of real wages
the share of flexi-category workers in the total has been rising of workers. Only from 2010-11 to 2013-14, have the two
steeply. Hence, wage hikes would take place for all workers growth rates converged. The inequity between two classes,
which would arrest the declining share of wages in gross the workers and the non-workers, is clear and a hike in mini
value added (gva) and alter the relative distribution of wages mum wages can alter the distance.
and profits.
Hiring and Wages of Contract Workers
Figure 1:
1 :Trends
Trendsin
inIndices
Indicesof
ofReal
RealWages
Wagesper
perWorker
Workerand
andReal
RealGross
GrossValue
Value
Added per Worker (1990-91 =100) for the Organised Factory Sector, The trade unions have demanded for eliminating the use of
1990-91 to 2013-14
contractual labour in permanent perennial work and payment
of same wage, and benefits for contract workers as regular
workers for same and similar work.
While clraa provides for "abolition" of contract labour sys
tem for work that is perennial and of regular nature, it does
not, as held by the Supreme Court deal with contract work
ers' employment status post-abolition. This is problematic for
these workers. Rule 25 (v) (a) of the central rules provides for
the aforementioned demand of trade unions; all that the trade
unions demand is converting the rule into a law. Trade unions
50

demand stoppage of contract labour system due to the

IIIIIIIII
~<T\0>0\C7>OnOOOOO
r— fomr^ON*— romr^ON
a»ONo\o\avoOooo
OfN^^OOOO«N^-vOCO
On<^CT\CT\OnOOoOO
i— m exploitative element inherent in it.
The central government assured the ctus in August 2015
«—«— I— <— «— CM fN rsj (N fN that a committee would be constituted to look into the issue, if
Source: Annual Survey of Industries, various years.
required. Clearly, the economic bite of such a move is with
The declining share of wages naturally indicates significant holding a law on this. Industry is clear that contract labour is
gap between real labour productivity (gva per worker deflat necessary for two reasons—cost effectiveness and dispensa
ed by wholesale price index, 1993-94=100) and real wages bility of contract labour—in a competitive environment. Em
(nominal wages per worker deflated by consumer price index, ployers oppose equality between regular and contract workers
1982=100) (Figure 1). doing same work on three grounds: differences in port of entry

Economic & Political weekly E33S3 September 23, 2017 vol lii no 38 63

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into jobs, experience differential, and cost arbitrage (Shyam Figure 2: Labour Cost (per man-day) for Directly Employed and Contract
Workers in the Organised Factory Sector, 2011-12
Sundar 2011). At best, fair employers could ensure that the
1,200
1,200
"differences" between the two appear to be "reasonable
and fair." 965.79

J The share of contract workers in total workers in the organised

600 - - - -
800
factory sector has increased from 12.26% in 1990-91 to 42.27%
in 2013-14. As is widely known and evidenced by press reports,
in some industries, especially in medium- and large-scale

400"tS|" 31525
Directly
industries, the share of contract labour could be much higher

0'India
- r—
than the official figures (for example, Baggonkar 2016).
There is another form of substitution that has been taking
H Contract I
PSPS PRI
place—non-workers (employees) substituting for manual
workers. It has been reported for long that the management, India
Source: Annual Survey of Industries, various years.
in order to avoid unionism and labour legislation, promotes work
ers to supervisory categories so that they belong to non-bar Figure 3: Net Employment Increase, 2009-15
2009-1S
gain category (Shrouti and Nandkumar 1995). Table 5 shows that
the cagr of direct workers lagged much behind those of con
tract workers and non-workers during the post-reform period.
The absolute number of direct workers declined in time peri
ods, 2000-01 to 2004-05 and 2010-11 to 2013-14, while con
tract labour employment and non-workers grew at an impres
sive rate. The growth rates of non-workers (even their rate of de
cline was slower during 1995-99) and the contract workers
were always higher than of the directly employed workers.
Table 5: CAGR of Different Categories of Employment, 1990-91 to 2013-14
Period TotalNumber Numberof Directly Employed Numberof
ofWorkers Contract Workers Workers Non-workers 2009 2010 2011 2012 2013 2014 2015
1990-91 to 1994-95 2.53 6.13 2.00 3.54 For 2015, the coverage is up to the third quarter (July-September).
6 1999-2000
1995-96to to 1999-2000 -4.76
-4.76 2.38 2.38 -6.23 -2.67 Source: Quarterly Report on Changes in Employment in Selected Sectors (July 2015 to

■1 to 2004-05 1.84
2000-01 to 2004-05 184 856 8.96 -0.44 0.02
September 2015), Labour Bureau, Ministry of Labour and Employment.

6 to 2009-10 6.43
2005-06 to 2009-10 6.43 9.77
9.77 4.90 7.76
growth (as measured by growth in gross domestic product or
2010-11 to 2013-14 1.79 8.84 -2.36 3.58
gdp) has been accompanied by poorer growth rates of employ
1990-91 to 1999-2000 -0.05 5.79 -1.13 2.29
ment. Indian economy in terms of real national income has
2000-01 to 2013-14 4.18 9.63 1.77 4.13
been on high growth trajectory since 2003-04 with a growth
1990-91 to 2013-14 2.22 7.87 0.37 2.14
rate of over 7% (and reached a peak growth rate of over 10% in
The Supreme Court in a judgment7 clearly lashed out at the 2007-08), and though the growth rate has slowed down after
managerial practice of employing contract labour: that, it is still around 7% (goi 2016: A4, Table 1.2).

[I]n order to deny the rights of the workmen under various labour statutes
Various commentators have observed the poor and declin
by showing that the concerned workmen are not their employees but are ing employment elasticity (the ratio of employment growth to
the employees/workmen of a contractor, or that they are merely daily growth in value added) based on nsso data in the post-reform
wage or short term or casual employees when in fact they are doing
period (Misra and Suresh 2014). It has been observed that for
the work of regular employees.
the post-reform period as a whole (1993-94 to 2011-12),
The apex court termed it as a "new technique of subterfuge." employment elasticity was at 0.18 (Misra and Suresh 2014);
It further observed: "This Court cannot countenance such this means that a 10% change in real gdp creates 1.8% change
practices any more. Globalization/liberalization in the name of in employment in the economy. Our calculations based on
growth cannot be at the human cost of exploitation of workers." cagr method taking the ratio of cagr of real gva and of total
It needs no reiteration that contract workers face poor working workers show that employment elasticity of the organised
conditions, perform the same kind jobs as regular workers, but factory sector was negative (-0.01) during the 1990s, but
do not receive equal wages, and are are larger in numbers than picked up during the 2000s (0.42) and declined during 2010
officially reported (Labour Bureau 2011). Figure 2 shows the 13 (0.30). But if we keep in mind the cagr of directly em
differences in labour cost per manday (sic) worked for public and ployed and contract workers, then it will be clear that the in
private sectors for 2011-12. The differences are very high in crease in total worker growth rates were due to the higher
the case of public sector due to higher pay in the public sector growth rates of the contract workers.
as compared to that in the private sector. The Labour Bureau has been conducting quarterly surveys
Various analysts using the National Sample Survey Office covering eight selected sectors, namely textiles, including ap
(nsso) data have dubbed the growth-employment relationship parels, leather, metals, automobiles, gems and jewellery, transport,
as "jobless growth," that is, faster and higher rate of economic information technology (iT)/business process outsourcing,

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 SPECIAL ARTICLE

and handloom/powerloom from October 2008 onwards, ever Dispute Act to resolve their disputes or grievances has been
since economic slowdown occurred. These provide some idea recently dispelled by the Tamil Nadu government.
of employment creation in the industrial sector in general, but Several strategies are used by management to deny union
are not comparable with the nsso rounds in terms of the ism such as having alternative collective bodies in the organi
latter's rigour and coverage, and conceptual richness. Figure 3 sations (worker committees, groups of workers like "houses"
(p 64) shows the annual net changes and that net employment created in schools, work groups), creation of a company
generation in recent years has been dismal compared to the backed union, negotiations for dispute resolution with the
post-recession period. company union despite the presence of larger unions, discipli
The withdrawal of the state from employment creation is nary actions like suspension or dismissals against main union
further visible from the fact that organised public sector employ leaders and members, personnel actions like transfers, denial
ment in India has witnessed negative annual growth rates in of promotions, stay order against registration application, de
13 years during 1992-2012 and especially continually during lay in registration of trade unions (Shyam Sundar 2016; Pat
1998-2005. During this period, even the private sector employ wardhan 2016).
ment dipped for four years, though the private sector has done The two recent disputes—strike in lg Electronics in Greater
somewhat impressively, generally (Economic Survey, various Noida GSanhati 2016), and Honda Motorcycles and Scooters in
years). The number of employees in the central public sector Tapukara in Alwar district in Rajasthan (Kumar 2016)—revive
enterprises in India has declined by 8.88 lakh from 21.79 lakh tales of anti-unionism. It is in these contexts that the trade un

in 1991-92 to 12.91 lakh in 2014-15. ions have raised their demands of compulsory registration of
It is well-known that around one million people enter the trade unions within a period of 45 days from the date of sub
labour market and the nda government has initiated several mitting application, and the immediate ratification of ilo Con
new schemes such as Make in India, Skill India, Digital India, ventions Nos C87 and C98.8
Pradhan Mantri Mudra Yojana, Startup India, National Career Meanwhile, the government has informed the protesting
Service (ncs), and new infrastructure projects like Smart City trade unions that 18 states/union territories have already fixed
Mission, and so on to create more employment. Doubtlessly the time limit for registration ranging from 15 days to four
these are worthy initiatives but their impact on employment months. What is surprising to note is that the central govern
generation needs to be critically assessed. Some of the measures ment could have amended the Trade Unions Act, 1926 to pro
like ncs will take time to show results as more firms will reg vide for time limit for registration and deemed registration to
ister on it over the years. Out of 16.53 million establishments, appease the trade unions. On a larger note, every claim and
according to the Sixth Economic Census (goi 2016) a mere application by workers should be treated with similar urgency
9.67 lakh establishments have registered at ncs. Press reports with which the government treats employers' applications to
indicate that start-ups depend on "temporary jobs" to sail attract investment.

through initial hiccups, and e-commerce is showing signs of The government has in its official communication with re
starting troubles (Saraswathy and Pawha 2016). Further, if spect to the proposed strike to the ctus remained silent on the
sustainable, these jobs absorb only a minor fraction of new ratification of two core ilo Conventions concerning freedom
entrants in the labour market. of association and right to collective bargaining. On a couple
The trade unions are perturbed by growing informalisation of occasions (for example, in 2010 and 2013), senior govern
of jobs. It is reported that between 2004-05 and 2011-12, total ment officials assured that the government is committed to,
employment in India rose from 457.9 million to 472.4 million and is in the process of, ratifying the remaining four funda
and the employment in the unorganised sector rose by 24.2 mental ilo conventions9 at high-level meetings.10 It may be
million while that in the organised sector rose by 18.9 million noted here that C87 and C98 have been ratified by 153 and 164
(Chandrasekhar 2014). An analysis of unit-level data of the 68th countries respectively as on 17 September 2016, and several of
nsso shows that 77.1% of the workers in the non-agricultural our neighbouring countries have ratified them.11 Critics may
sectors do not even have a job contract and nearly 70% of them argue that ratification need not ensure labour rights as evi
do not enjoy social security benefits (Narayanan 2015). So, it is denced in some of our neighbouring countries but progressive
not employment generation per se but the quality of jobs cre thinking would refute this reasoning. However, progressive
ated that matters to the trade unions. reasoning would not entail not to ratify the ilo conventions
and ratification would lead to wider application of trade union
Registration of Trade Unions
and collective bargaining rights more significantly than it does
The series of industrial conflicts marked by industrial violence now. The hesitancy to ratify by the government is a testimony
to deny the right of forming trade unions (for example, in Pricol, to the potential systemic effects of these conventions.
Hyundai, Maruti Suzuki, Rico, and lg Electronics) have marred
A Few More Words
the industrial relations scene in the post-reform period
(Shyam Sundar 2015a). The problems have been peculiarly This paper has attempted to study the dynamics of country
acute in the multinational companies and emerging sectors, wide strikes and enquire into some of the demands of the
including automobiles. The policy illusion that it sector em trade unions. In the post-reform period, 17 strikes have taken
ployees cannot form trade unions and cannot use the Industrial place that have effectively put the labour law reforms on hold

Economic & Political weekly D2Q September 23, 2017 vol lii no 38 65

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SPECIAL ARTICLE

at the national level, sensitised public opinion, provided am semblance of unity at the national level, while the manage
munition to sustain the working class movement, brought the ment is able to achieve labour flexibility that could not be
non-committal government to the dialogue table, gradually provided by law.
built broad-based unity within the working class movement, However, the demands of the trade unions are not "greedy"
managed to get several concessions though not sufficient, (Shashank 2016) or arbitrary. These demands represent aspi
pushing the frontiers of dialogue to large systemic issues, and rations of workers to promote a decent work regime wherein
articulated the aspirations of the new working class. Howev work and employment would abound, workers' rights would
er, strains exist within the working class movement. Labour be protected, social protection would exist, and social dia
law and governance reforms are happening at the decentral logue would be active. These constitute steps towards a new
ised levels. Union rivalries revel at the micro level despite social pact for ushering in fair globalisation.

NOTES Kumar, Amit (2016): "Honda Workers to Go Centre for Economic and Policy Research, http://
on Indefinite Strike in Fight for Justice," cepr.net/documents/publications/min
1 Based on the press release by Brijesh Upadhayay,
TwoCircles, 15 September. wage-2013-02.pdf.
General Secretary, BMS on 30 August 2016.
Kumar, Arun (2013): "Indian General Strike Ends Sharma, G K (1982): Labour Movement in India (Its
2 http://wvm.dgfasli.nic.in/infoi.htm.
with No Demands Met," World Socialist Web Past and Present from 1885 to 1980), New Delhi:
3 http://labourbureaunew.gov.in/UserContent/ site, 23 February. Sterling Publishers.
MW_2013_final_revised_web.pdf, see Table 4. Sharma, Yogima (2016): "Labour Reform in the
Labour Bureau (2011): Report on Working Condi
4 Fbr details of norms, see http://www.ntui.org.in/ tions of the Contract Workers in Petroleum Works to Give Legal Backing to Contract
what-we-do/minimum-wage/a-just-minimum Refineries and Oil Fields, 2009-11, Labour Workers," Economic Times, 18 July.
-wage/. Bureau, Government of India. Shashank, Bengali (2016): "Why Millions of Indian
5 See, Sharma (1982) for details. Misra, Sangita and Anoop K Suresh (2014): "Esti Workers Just Staged One of the Biggest
6 See, Schmitt (2013) for a comprehensive theo mating Employment Elasticity of Growth for Labor Strikes in History," Los Angeles Times,
retical and empirical review of studies on em the Indian Economy," RBI Working Paper No 6, 14 September.
Reserve Bank of India. Shrouti, A and A Nandkumar (1995): New Economic
ployment effects of hike in minimum wages.
7 Bhilwara Dugdh Utpadak Sahakari Samiti Ltd v Narayanan, Abhinav (2015): "Informal Employ Policy Changing Management Strategies—Im
Vinod Kumar Sharma, (2011), 15 SCC 209, ment in India: Voluntary Choice or a Result of pact on Workers and Unions, New Delhi/Mum
Labor Market Segmentation?" Indian Journal bai: Friedrich Ebert Stiftung/Maniben Kara
1 September 2011, https://indiankanoon.org/
of Labour Economics, Vol 58, No 1, pp 119-67. Institute.
doc/294074/
Patwardhan, Vivek (2016): "The Employees' Strike Shyam Sundar, K R (2011): Non-regular Workers in
8 1LU L87: Freedom ot Association ana protection
at LG Electronics," Vivek's World, 24 July, India: Social Dialogue and Organizational and
of the Right to Organise Convention; ILO C98:
vivekvsp.com/2016/07/empl0yees-strike-lg Bargaining Strategies and Practices, Social Dia
Right to Organise and Collective Bargaining Con
electronics. logue, Geneva: ILO.
vention.
Radical Notes (2013): "Nagpur: A Leaflet for the — (2015a): "Industrial Conflict in India in the
9 India has not ratified four of the eight ILO Core
20-21 February All India Workers Strike," Post-reform Period: Who Said All is Quite on
Conventions. These are ILO C87, ILO C98, ILO the Industrial Front?" Economic & Political
19 February.
C138 (Minimum Age Convention), ILO C182 Weekly, Vol 50, No 3, pp 43-53.
Rajalakshmi, T K (2016): "Striking at Apathy,"
(Worst Forms of Child Labour).
Frontline, Vol 33, No 19, pp 37-42. — (2015b): Labour Law and Governance Reforms
10 http://www.ilo.org/actrav/media-center/pr/ in India: Some Critical Perspectives, New Delhi:
Sampath, G (2016): "Do We Need a Minimum Wage
WCMS_222729/lang-en/index.htm; http:// Law?" Hindu, 1 September. Synergy.
www.industriall-union.org/sites/default/files/
Sanhati (2016): "Noida: Report on Strike at LG — (2016): Aspects and Dynamics of Collective Bar
migration/imf/RelatedFiles/10090711110166/ Electronics," 25 July. gaining and Social Dialogue in the Post-reform
RES0LUTI0N_2-final.pdf. Period in India, New Delhi: Synergy.
Saraswathy, M and Patanjali Pawha (2016): "Start
11 http://www.ilo.org/dyn/normlex/en/f?p=NO ups Lean on Temporary Jobs to Sail through Thozhilalar Koodam (2016): "General Strikes: A
RMLEXPUB:iooii:o::NO::Pioon_DISPLAY_ Tough Times," Business Standard, 30 July. Survey of Recent Strikes and What They Mean
BY,Piooii_CONVENTION_TYPE_CODE:i,F. Schmitt, John (2013): "Why Does the Minimum Wage for the Working Class Movement," 24 March,
Have No Discernible Effect on Employment?" http://tnlabour.in/?p=3440.

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65 SEPTEMBER 23, 2017 vol Lil no 38 DSO Economic & Political WEEKLY

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