Abolishing the so-called ‘inspector Raj’, specially relating to labour laws, has been a longstanding demand of industry.

This is something the BJP government has been supportive of. The commerce ministry has issued a circular asking the State governments to liberalise their inspection systems. Since then, several State governments have introduced self-certification schemes, generally applicable to factories, shops and commercial establishments covering several labour laws.

Employers are expected to benefit from this scheme in several ways: a firm will be inspected only once in the stipulated time cycle (three or five years), there will be no special targeting due to randomised selection of the firm, and a shift is expected from penal inspections to guidance inspections. Employers have been allowed to submit consolidated annual returns in lieu of multiple returns.

The State governments are doing this in a competitive manner for two reasons — to project a reform-oriented image to investors and to achieve a better score on the index of ease of doing business initiated by the Centre.

Problems with self-certification There are two sets of problems with the self-certification scheme. First, the scheme in some States demands compliance assurance in the form of an affidavit, which is a self-imposed legal burden for the employers — the provisions in the labour laws covered are numerous and the firm could be faulted for non-compliance even in a minor matter. The threat of removal from the scheme or forfeiture of security deposit discourages them. They prefer the conventional labour inspection system wherein there is scope for “managing” labour inspectors. Second, employers contend that several laws are huge and complex and contain absurd and even oppressive provisions, and unless labour laws are rationalised and simplified, there is no point opting for self-certification.

There are several assumptions underlying self-certification which are questionable. The first is that employers will be naturally law-compliant. The stories of violation of labour laws, especially the Minimum Wages Act and the Contract Labour Act, and the frequent incidences of fatal accidents belie the assumptions.

The second is that employers “perceive” labour inspections as excessive and believe that self-certification would greatly minimise them. The reality is that there has been a steep decline in inspections and prosecutions . In the absence of adequate inspectorate staff and with resources at their disposal being extremely limited, very few inspections take place. Since there is no database on the universe of firms to be covered under each labour law, a fewer number of firms are visited more frequently, which creates the image of excessive inspections.

The third assumption is that trade unions would act as “watchdogs” and file violations so there is a regulatory check. But union formation itself has become a bone of contention; so this does not work.

ILO norms violated These schemes have international ramifications which the governments ignore. India has ratified the ILO’s Labour Inspection Convention (No 81), 1947. Some of the non-negotiable principles are: as frequent and as thorough as possible inspections, free entry of inspectors, free access to workplaces, no prior authorised inspections, and an adequate and well-resourced and independent inspectorate.

Measures such as self-certification system, complaint-driven inspections, randomised inspections, prior authorised inspection systems, and the poor inspection record in India are violative of various provisions of the ILO Convention No 81.

Since India has ratified the ILO convention, it is answerable to the ILO’s supervisory institution, the Committee of Experts on Application of Conventions and Recommendation (CEACR) which acts on complaints raised by trade unions/employers to it. The matters handled by CEACR move to the International Labour Conference’s Standing Committee on Application of Standards (CAS).

Inspection reforms have figured in the committee’s deliberations held in June 2015. Acting on the complaints from trade unions in India, the committee has requested information from the government on the self-certification system, such as frequency and thoroughness of inspections, results of labour inspections, verification of information supplied by the employers under the self-certification system, and so on.

It is clear that the ILO is perturbed by the inadequacies that arise out of reforms of labour inspection system in India. In sum, the inspection system has not been excessive, with hardly any takers for the self-certification system in the open sector. Also, since we are attracting the ILO’s attention, there’s little logic in persisting with self-certification.

The writer is a professor at XLRI, Jamshedpur