(Counterview: More than five years after Parliament approved them, India’s four labour codes are now in force from 21 November. The Codes on Wages, Social Security, Industrial Relations, and Occupational Safety & Health replace 29 laws, which has been lauded by several experts, and criticised by others. Read the view by Rejimon Kuttappan here.)
To understand the significance of the new, sweepingly simplified set of labour codes notified by Prime Minister Narendra Modi’s government this month, you may want to take a walk around the Noida industrial area, as I often do.
Contrary to Opposition parties and staunch labour-loving critics who speak of widespread unemployment and labour problems, I see posters or signboards at every 100 metres, offering jobs for a wide range of high-skilled, semi-skilled, light-skilled or barely skilled workers. From truck loaders to Uber drivers, from telecallers to embroidery experts and digital marketers.
To see this as a sign of “Viksit Bharat" would be grossly wrong, but to dismiss the new reality as a crisis of unemployment would be equally so.
The new labour codes are essentially an exercise in progressive pragmatism that reflects this reality to balance the pressing needs of low-wage workers on the one hand and the growth hunger of small and medium businesses on the other.
India's Labour Journey
To get a deeper insight we have to go back to 1991, when India began an economic reforms programme that tried to embrace a globalising market economy, even as it struggled to shake off the weighty legacy of the previous two decades marked by the nationalisation of banks, tough, labour-friendly laws that tied down old businesses and dissuaded new ones to come up, rampant trade unionism and a shortage of capital.
Industrialists and chambers of commerce in their newfound enthusiasm in the 1990s asked for hire-and-fire laws and an “exit policy” to shut down losing enterprises without a care for workers. This logjam eased slowly as confrontation gave rise to a new consensus that proved workers and industrialists alike must descend from their rigidly high pedestals to strive together.
Much else happened over the next two decades that led to slow-grinding but firm realisations and negotiations in the political, bureaucratic, and industrial spheres. The latter also witnessed new realities: Foreign Direct Investment-led multinationals showed that motivating employees was a key “human resource” problem—not a “labour demand”.
The rise of knowledge workers and an information technology boom showed that incentives mattered as much as job security.
A new wave of growth showed that training and upskilling of employees was as important, if not more, to keep up with global competition and not just count pennies on wage bills. Smokestack industries realised this to a lesser degree, but, as “personnel officers” evolved into “HR business partners” in job titles, we could see a matching degree of a shift in attitudes everywhere: from business and media to bureaucracy and Parliament.
New technologies have now not just upgraded companies but engineered a veritable overhaul of the employment ecosystem: from women entering the workforce in large numbers to night-shift demands, from work-from-home possibilities to gig work to serve e-commerce customers.
The new labour codes take in all this but there is also a word of caution. We could say that progressive pragmatism oils the engine but a labour-friendly utopia is a work-in-progress at best, and a distant dream at worst (if one were to take into account the scenarios painted by the International Labour Organisation, the World Health Organisation or the everyday realities of advanced economies in Western Europe or Scandinavia).
While “Viksit Bharat” may be an aspirational goal for 1947, though largely undefined so far, a “Viksit Shramik” is still a far cry.
Such a preamble is necessary because in India, what preceded reforms was a follow-up to the “Summer of ‘69”, when a wave of bank nationalisation marked the start of a new era in times during which child labour was common.
Inter-generational bonded labour required a special legislation in 1976 to be abolished and became a reality after much effort by activists like Kailash Satyarthi, who went on to win the Nobel while India evolved from an economy of “population explosion” to one in which it became cool to talk of a “demographic dividend.”
Do the kids of Gen X, Y, Z and Alpha even know this?
Some Welcome Measures
Yet, beyond the difficult stages of the past, the list of welcome measures in the new labour codes shows so much promise that it would be a bad idea to diss them.
The codes consolidate close to 30 Union labour laws into a mere four, define workers into legally enforceable categories—from gig workers and contract employees to migrant workers.
They make appointment letters with clearly identified wages and their timely payment enforceable and begin to pay attentions to the little but vital details of workplace security: from canteens and occupational safety to health check-ups, easy electronics-based compliance, an easier dispute resolution mechanism and social security. Enforcing these with proper compliance by employers is itself going to probably trigger a new wave of jobs and growth: for bureaucrats, NGOs, and lawyers alike!
Women workers are the new normal in India’s vast and growing workforce that now supplies nurses to Germany, innovators to Silicon Valley, and even cyber-thieves to illegal rackets in Southeast Asia.
The labour codes increase the risk appetite for entrepreneurs and employment prospects for new entrants to the workforce, which, according to rough expert estimates, is at one million a year. We can’t expect all of them to get Google-grade jobs overnight.
When call centres arrived in India, women were among the worst-hit, as old-age factory laws stood in their way on grounds of safety. The new code tries to balance safety with growth prospects, throwing in transport arrangements. Laws against sexual harassment in the workplace are already in place. The new codes even mandate that establishments with 50 or more employees must provide a fundamental political climate in which objectives and obstacles often march together.
It is best to describe the new labour codes as half-full and watch it hard so that it sets the stage for further improvement, not decline.
(Madhavan Narayanan is a senior journalist and commentator who has worked for Reuters, Economic Times, Business Standard, and Hindustan Times. He can be reached on Twitter @madversity. This is an opinion piece and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)