R Srinivasan

Flogging labour isn’t good for capital

R. Srinivasan | Updated on November 25, 2020 Published on November 25, 2020

Labour tangle: Longer working hours may not mean more productivity

India’s new draft labour Codes may make a bad situation worse. Are we moving from ‘Licence-Permit Raj’ to ‘Exemption Raj’?

South African law prohibits anyone from being asked to work more than 45 hours a week, but it is actually at the top of the charts among developed and strong emerging economies as far as working hours go, with a national average of over eight-and-half hours a day and one in five workers clocking in more than 50 hours a week.

However, if the draft rules notified last week (November 19, to be precise) under the Occupational Safety, Health and Working Conditions Code, 2020 by the Ministry of Labour and Employment are anything to go by, India will soon comfortably beat that record, with a legal work shift proposed to be extended to 12 hours per day.

That, plus the fact that a six-day week is standard across most manufacturing enterprises, means that India’s hard-working and already quite hard-worked labour will be potentially be clocking a staggering 72 hours a week. Add a minimum one to one-and-a-half hours commute time and a mandatory half-hour meal break and India’s working class could end up getting less than 10 hours a day to rest, eat and actually have something resembling a life.

Astonishingly, all this is being done in the name of reforms. The three laws passed by Parliament — both the Lok Sabha and the Rajya Sabha passed them on successive days in September — have been touted as India’s most serious attempt yet on labour reforms.

The three laws — The Industrial Relations Code, 2020, the Code on Social Security, 2020 and the Occupational Safety, Health and Working Conditions Code, 2020 — together with the Code on Wages passed last year, amount to a sea change in India’s regulatory landscape for labour.

India probably has more laws concerning labour — the three Codes passed recently alone subsume as many as 24 State laws — and there are over 100 different laws in force at the State level in addition. However, what most of these regulations ended up achieving over time was questionable. Employers were hampered by lack of flexibility in hiring or shedding labour, onerous compliance requirements leading to massive rent seeking from an ever-present inspector raj, and unviable costs if they did observe the letter and spirit of the law.

Unorganised drift

On the other hand, while these laws may have protected a very small and select section of organised labour, the fact that over 85 per cent of India’s labour is still in the informal sector and does not get any protection at all means that these reforms were badly needed. Prime Minister Narendra Modi has articulated his desire for formalisation of the economy more than once — in fact, he has often cited the GST Act as a major contributor to this end and the government also uses EPFO data to not only buttress employment numbers but also growing formalisation of the economy.

However, in typical bureaucratic fashion, the pendulum appears to have swung from one extreme to the other. Some of them — like raising the threshold limit to 300 workers for a unit to be required to formally define conditions of employment or for an enterprise to seek government permission for retrenching workers — were probably needed in terms of providing employers with some flexibility in a fast paced world. But other provisions — including one allowing wholesale exemption to any new industrial unit from any and every provision of the three new Codes (including those preventing employers from deploying workers in hazardous conditions or tasks) in the “public interest”— are sweeping in nature and give enormous discretionary power to the political/bureaucratic establishment. The earlier ‘Licence-Permit Raj’ will simply be replaced by an “Exemption Raj”.

In fact, the new laws, in several places, have deliberately refrained from defining terms and conditions, instead allowing the government to actually set these in [place by notifying rules. While this definitely makes the system more flexible, by-passing the need for fresh legislative approval every time something has to be changed, allowing babudom to set the rules of play without restrictions is asking for trouble. Also, the raised thresholds (in most cases, the minimum limit before compliance kicks in is at least 250 workers), does not take into account sweeping changes in manufacturing taking place.

I have myself seen the assembly line of a major car manufacturer turning out a car every 90 seconds with less than 150 personnel on the shop floor. AI, robotics and computer aided manufacturing mean that the thousands of workers streaming in to work with the shift siren will soon — if not already — be a thing of the past. Allowing large scale manufacturing to work without any kind of legal restraint or oversight is a recipe for disaster.

There is a similar inability to recognise the reality of the modern workplace in many other provisions of the new Codes. To come back to where we started, take a look at the working hours provision, for instance. By allowing the work day to be stretched to 12 hours, employers can theoretically reduce an entire eight-hour shift — and thus save on labour costs — but that is only in theory.

Myth of longer working hours

A number of studies have repeatedly shown that longer work hours do not increase productivity. On the contrary, productivity dips and accidents and errors mount. Even before the pandemic enforced sweeping changes, Microsoft attempted a radical shift in work pattern in its office in Japan, a nation of legendary workaholics. Productivity actually jumped 40 per cent. Employer after employer has found that work from home flexibility enhanced productivity and not the other way round. Germany has the lowest average working hours per week among OECD countries but is one of the strongest economies.

However, we are not, despite the size of our economy, anywhere near being a developed economy in the labour sense. Our workers need the protection of the law to ensure that they at least get their minimum rights. Simply abolishing such rights cannot be considered reforms.

Like many other ‘rights’ (Right to Food, Right to Education, etc.), the right to work under decent conditions for a fair wage may also well be one that exists only on paper. This is something which will help neither employers or employees — capital or labour — in the long run.

The writer is former Editor of BusinessLine

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Published on November 25, 2020
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