Can’t justify attack on workers’ rights

Biswajit Dhar/Ramaa Arun Kumar | Updated on May 21, 2020

Their rights are set to erode post lockdown. Without decent job conditions that boost demand, the economy can’t recover

Over the past six weeks, the spectre of countless migrant labourers struggling on the streets of our cities, without any means of livelihood or a roof over their heads, has been the most wrenching commentary of the human cost that the Covid-19 lockdown has extracted from our society. Most businesses that provided the workers their means of livelihoods refused to support them after the lockdown came into effect. Workers were easily retrenched as they did not enjoy protection under the labour laws; they did not have the right to protect themselves.

The Government of India, too, is under no obligation to protect workers’ rights. India has not ratified the two Core Conventions of the International Labour Organisation (ILO) dealing with labour rights, that would have brought upon the government the obligation to protect workers’ rights. In fact, these are the only two Core Conventions of the ILO that India has not ratified.

Retrenchment of workers

The condition of the workers post-lockdown has cruelly exposed yet another myth that has been perpetrated, which is that labour laws in India do not allow the employers to downsize their workforce at will. The argument is, therefore, made that in times of economic uncertainty, labour laws must be made flexible, implying that businesses must be able to retrench workers automatically in order to protect their bottomlines. It is by now all too evident that the businesses which had locked out their workers after the government took measures to prevent the spread of coronavirus, did so without incurring any liability — in other words, the “rigid” labour laws did not prevent the retrenchment of workers.

Governments, both at the Centre and the States, could only appeal to the employers to protect the interests of their workers by keeping them on the payrolls. The large numbers of workers trying to exit the cities at a heavy personal cost are an eloquent testimony that these appeals were not heeded to by most employers.

The discussion on the post-lockdown dynamics have brought out a particularly disappointing response from industry associations and some State governments. There have been suggestions that workers’ rights should be suspended for three years to help the industry resume its operations. There is as yet no clarity about the specific workers’ rights that would be suspended, but one suggestion that has gained currency is to ‘allow’ workers to work for longer hours, by at least 50 per cent more than the eight-hour working-day that is currently written into domestic laws and international conventions. There are no suggestions for suspension of minimum wages, but the increase in the working day would effectively mean a de facto lowering of wage rate.

Should this scenario become a reality, the concept of “decent work”, which, according to the ILO, sums up the aspirations of people in their working lives and involves, among others, opportunities for work that is productive and delivers a fair income, would surely become passé.

Practice of exploitation

There is no doubt that the post-lockdown scenario being proposed for the future of work in India would contribute to a further increase in workers’ exploitation, which has been the most prominent feature of India’s labour market. Official reports and statistics have periodically provided evidence that over time, workers’ conditions have worsened both in the formal and informal sectors. This should hardly be surprising given that in times of economic stress, owners of capital have always had the tendency to carry out adjustments at the expense of the workers’ rights.

Growing informalisation and casualisation of the workforce have significantly contributed to undermining the interests of the workers. The employers have used these modes of engaging workers, for labour laws can easily be circumvented. Thus, in practise, the labour market has become significantly “flexible”, in which workers cannot aspire for stability of employment. The labour codes that are in the making are meant to be a step towards according statutory sanction to a flexible labour market in India.

The functioning of the labour market in India has shown that the interests of the workers have not been safeguarded. The Periodic Labour Force Survey (PLFS), the latest report of the National Statistical Office covering the period up to 2017-18, provides several indicators showing that since the beginning of the previous decade, labour market conditions have turned against the workers.

The first indicator is the falling labour force participation rate (LFPR). In 2017-18, less than 50 per cent of the country’s population in the working age group (15-64 years) currently employed or seeking employment was participating in the labour market. This was for the first time that less than half of the working-age population was employed. The LFPR was nearly 56 per cent and 64 per cent in 2011-12 and 2004-05, respectively, and had thus fallen sharply in a span of a decade-and-a-half.

It may be noted that the decline in the LFPR occurred when the Indian economy had registered the fastest growth since independence. The inference, therefore, is that the high growth of the economy was unable to increase labour force participation; in other words, labour was unable to partake to the benefits arising from a growing economy.

Wages and demand

Casualisation, by its very nature, impinges on the rights of the workers, and the labour force surveys provide two telling evidences in this regard. The first is the increase in the share of regular wage/salaried employees in the non-agriculture sector who had no written job contract. These workers, who have no job security, had a 71 per cent share in 2017-18, and this figure had increased from nearly 65 per cent in 2011-12 and 59 per cent in 2004-05.

The second evidence of casualisation is the increase in the share of employees not eligible for paid leave. In 2017-18, 54.2 per cent of these employees were not eligible for this benefit; this figure had increased from 50 per cent in 2011-12 and 46.2 per cent in 2004-05. The only redeeming feature in the labour market in 2017-18 was that social security benefits were available to a slightly higher proportion of the regular wage/salaried employees engaged in the non-agricultural sectors as compared to the earlier periods.

The PLFS made headlines, for it had announced that the unemployment rate in the country had increased from below 3 per cent in 2011-12 to 6.1 per cent in 2017-18. The doubling of the unemployment rate within a relatively short time period was a particularly disturbing piece of evidence for an economy that has had a chronic problem of underemployment due to an over-reliance of the workforce on the rural economy. As one of the largest reverse migrations from the cities unfolds itself in post-Covid India, the toxic combination of unemployment and underemployment would become a bigger scourge for India’s labour force.

Adverse labour market conditions have contributed to suppression of wages in every segment of the labour market. In the organised sector, where one expects that labour rights would be the best protected, wages as a share of value added have slumped from almost 30 per cent in the early 1980s to around 11-12 per cent in recent years. When wages are continuously depressed, sustaining demand can be a formidable challenge, which India had painfully learnt before the pandemic broke. As it prepares to draw up its post-Covid economic plan, the government must recognise that a stable recovery is not possible without stimulating demand through the creation of decent jobs.

Dhar is Professor, Centre for Economic Studies and Planning, JNU. Kumar is Assistant Professor, Institute for Studies in Industrial Development, New Delhi

Published on May 21, 2020

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