Can we find the right balance in our labour laws?

Chocko Valliappa | Updated on June 04, 2020

The Covid crisis, which has thrown the spotlight on migrant workers, could be the opportunity to formalise our workforce

Just over 100 years ago, my great-grandfather, Kalaithanthai Karumuttu Thiagarajan Chettiar, fought vociferously for the plight of the Tamil immigrants in Ceylon under the clutches of the Kanganies (supervisors of labour). He was inspired by Gandhiji’s fight for the rights of mining workers in South Africa. These workers were taken away from Tamil Nadu by Kanganies and placed to work in tea estates in Ceylon for 30-45 cents per day. They would be given loans to survive which they could not repay and consequently became bonded labour.

Today, a century later, we are seeing a somewhat similar plight of labour in the midst of a pandemic, this time within India. It was horrifying to see migrant workers clinging on to trucks, cycling and walking over 1,000 miles. One has to ask why this happened. The main reason for this fiasco is that 90 per cent of the Indian workforce is unorganised. It is appalling that our labour laws cover just 10 per cent of the Indian workforce.

Today, several State governments have suspended or amended labour laws and there is heated debate for and against the move. The present labour laws are, no doubt, antiquated as they are focused on unionised labour. Industries have either circumvented these laws by employing contract labour or set up multiple small-scale units.

What’s needed today are pragmatic labour laws that balance welfare of worker and smooth running and growth of business. I have been a victim of India’s skewed labour laws. I was running a successful spinning mill with harmonious industrial relations. We spun yarns for binding carpets in Kortrijk, Belgium, sheeting in Bursa, Turkey, suiting in Prato, Italy, prayer mats in Saudi Arabia. In India, we provided yarn to cycle tyre cord units in Ludhiana, super-fine dhoti makers in Ichalkaranji to sari factories in Surat and muslins in Maunath Bhanjan.

Our labour force was treated well, getting paid the highest of wages, three months’ bonus, and free education for their kids. We had modern machinery and a conducive work environment. The machines did most of the work. Labour productivity therefore was naturally high.

Then came a twin tsunami of trade union activists and politicians who brainwashed our employees. The period 1994-1998 was a nightmare, with strikes for six months each year. The unions spun utopian dream of reduced work, plotting the mill land and giving a plot of land for each employee, etc. The union workers set fire to the godown, gutting stock worth ₹35 crore. The then Karnataka Government gave ‘Rasta Roko’ permission on a major highway.

Our employees, who were probably pawns in the hands of politicians, set fire to buses, with three employees succumbing to police firing. Sree Valliappa Textiles ended up becoming the first factory in India to cease operations after following the due process under Section 25 (O) of the Industrial Disputes Act. Over 1,500 employees went jobless. Ask them today and over 99 per cent of them would say they shot themselves in the foot.

What’s needed are labour laws that are fair to both employer and employee. If the labour laws are super-stringent, the capital will flow elsewhere. Companies will be forced to automate. A textile unit invests ₹1-2 crore to replace a machine. Why? To cut down the task done by 12 workers. Today, we as a nation are faced with humongous unemployment. Automation and robots have never been so cheap in the world. If we have just labour laws, it will generate employment as entrepreneurs will be emboldened to set up large enterprises. At the same time, we need to make sure labour is not exploited. We need to have boundaries, fair working conditions, minimum wages, overtime, etc.

The task before India is to have labour laws that can help pull in workers into organised employment. How can this be done? Some simple schemes like mandating an employee safety net where direct saving is given to the employee through Aadhaar card or deposited in Jan Dhan account could be introduced. Akin to the 401k plan in the US. Alternatively, every worker needs to come under Employees’ Provident Fund and every employee needs to be covered under Employees’ State Insurance (ESI). As of January 2020, only 30 million employees were covered under ESI, as against a workforce of 600 million.

The irony is that India is the largest producer of cotton in the world, followed by the US and China. But Vietnam now exports more garments than India. Bangladesh, which imports cotton and yarn from India, earns double our garment export revenues. Interestingly, they both have banned trade unions in SEZ exporting units.

A major reason for this anomaly is our labour laws, which have impeded progress of our enterprises — 600 textiles mills were shut in 2015 alone due to labour issues. Before the Covid-19 pandemic, India needed to generate a million jobs a month. But now millions of existing jobs have disappeared. The existing labour laws create false hope with an illusionary umbrella of protection. Let’s hope the Covid crisis will force proper reforms at a national level that will be far-reaching and just to every employee, and not knee-jerk changes at the State.


The writer is a social entrepreneur and founder of HireMee, a job platform

Published on June 03, 2020

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor

You May Also Like