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Trade Unions protest against Modi’s “pro-corporate” and “anti-people” labour reforms

On 3 January this year, the union cabinet cleared an amendment to the Trade Union Act, 1926, eliciting protests from ten out of 13 of the country’s central trade unions, who termed it “an attempt to retain arbitrary power in their hands in order to interfere in the trade union functioning.” Since the Bharatiya Janata Party came to power in May 2014, Prime Minister Narendra Modi has consistently claimed reform of labour laws as one of his central agendas. Speaking at the 46th Indian Labour Conference, in July 2015, Modi said, “As part of the concept of minimum government, maximum governance, obsolete and unnecessary laws are being weeded out.” Concurrently, in 2015, the labour ministry decided to consolidate 44 existing central labour laws into four labour codes—Wages; Social Security; Industrial Relations, or IR; and Occupational Safety, Health and Working Conditions, or OSHW.

In his July 2015 speech, Modi asserted that reforms in labour laws would be made with “the concurrence of the unions.” However, just three months later, the All India Trade Union Congress, or AITUC, wrote a letter to the undersecretary of the labour ministry, SK Tripathi, saying, “The so called consultation process appears to be completing a formality.” Modi’s efforts, have met stiff resistance from ten central trade unions across the political spectrum, including the Indian National Trade Union Congress, or INTUC, AITUC and the Centre of Indian Trade Unions, or CITU. According to Sanjeeva Reddy, the president of INTUC, “The government is attempting to reduce workers’ rights in favour of employers in the name of codifying laws.” The tussle between the central government and trade unions escalated in July 2018, when almost all major unions boycotted the consultation meetings for the labour codes. Things came to a head on 28 September when ten central trade unions called for a nationwide-strike on 8 and 9 January 2019 against what they termed were the Modi government’s “pro-corporate” and “anti-people” polices.

Four representatives of the central trade unions that I spoke with said important labour policies implemented under the Modi regime go against interests of workers. They said that even when the unions were consulted to formulate these policies; it was only in letter but not in spirit. These reforms include the labour codes, three of which are at the pre-legislative stage while one has been tabled in the parliament. The codes will have a far-reaching impact on the country’s labour force of over 45 crore people.

The BJP’s quest to reform labour laws, which fall under the concurrent list, began in August 2014 when the Vasundhara Raje-led Rajasthan state cabinet amended four labour laws—the Industrial Disputes Act, 1947, the Factories Act, 1948, the Contract Labour (Regulation and Abolition) Act, 1970 and the Apprentices Act, 1961. Among other issues, the amendments made formations of unions more stringent while diluting regulatory oversight of employers. Rajasthan paved the way for other states such as Haryana, Madhya Pradesh, Maharashtra and Uttar Pradesh, to introduce similar amendments which diluted the rights of workers and relaxed rules for employers.

In 2015, the RSS’s labour wing, the Bharatiya Mazdoor Sangh, or BMS, published a booklet titled “Labour Law Amendments: Trade Union Perspective,” co-authored by the BMS’s president, CK Saji Narayanan, and a former president, B Rajagopal. Criticising the Rajasthan model, the authors wrote, “The central government took the arbitrary Rajasthan amendments and circulated it among all other state governments.” The booklet claimed that the government did not convene a mandatory tripartite meeting before introducing the amendment and thereby violated the International Labour Organisation’s Convention 144, which mandates consultation with workers’ unions in framing and modifying labour policies.

These amendments were not the only time the government seemed to circumvent the consultation mechanism. The Industrial Employment (Standing Orders) Central (Amendment) Rules, 2018 allow fixed-term employment in all industrial sectors, which was earlier restricted to the apparel sector, and has a provision that lets the employer cancel a contract on two weeks’ notice. This amendment was first notified in 2003 under the BJP led National Democratic Alliance, and withdrawn by the United Progressive Alliance government in 2007, following protests by trade unions. When the notification was issued one more time in January 2018, trade unions again opposed it, but they claim that the amendment was “stealthily” included in the finance bill and passed in the budget session.

Amarjeet Kaur, the general secretary of AITUC, told me that the government called the unions for a consultation only after the bill was presented in the parliament. “We boycotted it,” said Kaur. But, she claimed, “They wrote in the minutes that most of the trade unions have attended and agreed to the amendments.” According to Kaur, fixed-term employment implies that there will be no regular employment in the government, public and private sectors. In March 2018, the BMS also called this “highly objectionable” and said that “hire and fire will become the legalised rule in the labour sector.”

The BMS had voiced its objection against the central government’s actions earlier that year, in February as well. The union had threatened to boycott the 47th ILC, saying that the 2018-19 union budget was silent on the issues raised by the trade unions. The ILC is the apex level tripartite consultation committee in the ministry of labour that advises the government on issues concerning the working class. It comprises representatives of all central trade union organisations, central organisations of employers, state governments, union territories and union ministries or departments. Ten other unions had also written a letter to the minister of labour expressing their dissatisfaction with the non-fulfilment of recommendations adopted in the previous ILCs. According to a Business Standard report, the conference was postponed indefinitely just a few days before it was scheduled to be held to “avoid an embarrassment, as central trade unions had threatened a boycott of the event.”

The rift between the centre and the central trade unions increased when the government started holding consultations regarding the labour codes. The Code on Wages Bill, which was introduced in the Lok Sabha in August 2017, amalgamated four labour laws to ensure appropriate wages and just remuneration, without discrimination on the basis of gender. It had provisions applicable to all employees, in both the organised and unorganised sector.

Representatives of the trade unions that I spoke with said that while they welcomed the inclusion of the unorganised sector, they had major objections to various clauses of the bill. For instance, the bill allowed wages to be deducted based on reasons ranging from performance to participating in strikes, and allowed employers to alter hours that constitute a normal working day. The bill’s definition of overtime was also a point of contention, as was a provision stating that “audited accounts of companies shall not normally be questioned.” Tapan Sen, the general secretary of the CITU, also said that there were separate definitions of “employees” and “workers” in the bill, which could give employers leeway to discriminate against either of the categories.

One of the main points of contention in the bill was that it allowed the government to use an arbitrary process to fix minimum wage. For long, trade unions have demanded that the national minimum wage be fixed in accordance with the formula that the 15th ILC declared in 1957. This formula considered factors such as minimum food requirement, clothing, rent for housing, as well as expenditure for fuel and lighting, among others. In 1992, the Supreme Court reiterated this formula by providing more specifics in the case of Secretary vs Management of Reptakos Brett. According to Sen, as fixing minimum wage could vary from “time to time,” and is left to the discretion of administrators, the code allows for arbitrariness.

When I spoke to Narayanan, the BMS’s president, in December 2018, he said that while minimum wage should be fixed according to the Reptakos Brett judgment, he supported the passage of the bill in its current form. According to him, the government told the BMS that it will bring in subsequent rules according to the judgment but not provide for it at this stage. He told me, “At least let the right to minimum wages for all workers including unorganised sector be established first. It will give minimum wages to the last working person in the country.”

In a tripartite consultation meeting to discuss the draft of the bill in March 2018, the central trade unions, including the BMS, said that they were not given enough time to examine the bill. The unions approached the parliamentary standing committee on labour with their apprehensions and objections about the bill. The committee, which presented its report on 18 December 2017, considered a number of issues raised by the unions and included objections of its own—for instance, to deter employers from committing offenses, the committee suggested increasing the penalty levied from Rs 50,000 to Rs 10 lakh. It recommended strengthening the inspection process and enforcement mechanism in line with norms of the International Labour Organisation. But Kaur told me, “Until the bill is presented in the parliament, we wouldn’t know whether our suggestions have been accepted or not.”

The second labour code was to combine 15 laws related to social security and welfare, including the Employee Provident Fund, or EPF, maternity benefit and pensions, according to its second draft, released in March last year on the labour ministry’s website. In November 2018, a letter by the ten central unions addressed to Santosh Kumar Gangawar, a minister of state with independent charge in the labour ministry, said that the code now combines 11 laws, probably because of the unions’ “continued opposition” to the merger of laws.

Among other changes, the code proposes to reduce the existing contribution of employers towards payment of gratuity from 4.8 to 5 percent of the wages to 2 percent. For the organised sector, the code proposes contributing 30 percent of the monthly wages towards the social-security scheme—17.5 percent by the employers and 12.5 percent by the employees. The contributions by employees from both the unorganised and organised sector will be consolidated together in the State Social Security Fund.

The representatives from CITU, AITUC and INTUC that I spoke with said while they support the inclusion of the unorganised sector in the code, contributions of both the sectors in the same pool will have disastrous effects. They said that while the scheme for the organised sector can be financially self-sustaining, the government will have to constitute a new scheme and subsidise the contributions required for providing social security benefits to the unorganised sector. This is because salaries in the unorganised sector are generally irregular and there is frequent discontinuation of employment.

Additionally, AITUC avers that it may not be feasible for workers in the unorganised sector to “pay such regular contribution.” According to Narayanan, bringing both the sectors in the same pool would result in “cross subsidising”—workers in the organised sector are likely to be regular contributors as they have steady incomes and may end up providing social security benefits to workers in the unorganised sector.

The draft code also had detailed clauses regarding maternity benefits for women workers. It said, “[Employer] is also bound not to employ pregnant woman in arduous work, provide nursing break to woman, provide paid leave for (extended) period in case of illness arising out of confinement.” A website which publishes legal opinion, The Leaflet, also pointed out that the code proposes that only establishments with 50 or more employees should have crèches “within such distance as may be prescribed” by the National Social Security Council, or the NSSC, as opposed to the existing Factories Act, 1948, which requires crèches to be “in every factory.”

The unions also objected to a clause which allows state governments to engage private firms as intermediary agencies “for enabling PPP (Public Private Partnership) system in administering social security.” Sen told me that in a tripartite EPF board meeting, the government brought up a proposal to increase the percentage of EPF which can be invested in the stock market, which stands at 15 percent right now. He said, “International experience is that wherever collective money is put in stock market, it has turned into loss. You cannot gamble with lifelong savings of employees.” While the BMS has also objected to this, Narayanan thinks the benefit dispersal could be done through private agencies.

The code would bring in a three-tier administration structure consisting of the NSSC, headed by the prime minister, a Central Board of Social Security and state boards of states and union territories. Sen and Kaur claimed that the dissenting central trade unions oppose this structure as it consolidates power in the hands of the central government and dismantles the existing tripartite nature of welfare schemes like the Employee’s State Insurance, or ESI and the EPF. The AITUC also wrote in its suggestions to the labour ministry there is no clarity on whether the central and state governments would continue to pay their share of contributions to the Employees Pension Scheme and the ESI, among other schemes.

In June 2018, the BMS claimed that none of its major objections to the first draft of the social-security code were taken into consideration to create the second draft. It said, “Such a way of handling important legislations will defeat the very spirit of tripartism under which our labour system is functioning.”

After the government invited the trade unions for a third round of consultation on the social-security code in July 2018, five central trade unions—AITUC, INTUC, CITU, Hind Mazdoor Sabha and All India United Trade Union Centre—wrote a letter to Gangawar which claimed, “No cognisance was taken of suggestions given by central trade unions in the first two rounds.” Further, they stated the government refused to provide logistical support to participants who come from far off states. “The central trade unions have, therefore, collectively decided to boycott the sham consultations,” said the letter.

Kaur told me that only the BMS, the National Federation of Indian Trade Unions, or NFITU and a split group of Trade Union Coordination Centre, or TUCC, continue to attend the consultation meetings. The dissenting unions released a statement saying that the BMS, along with the NFITU and the breakaway groups of INTUC and the TUCC have formed a Confederation of Central Trade Unions. The confederation has been slammed by the rest of the unions as “a political instrument formed in a desperate attempt to manufacture consent to the anti worker policies of the BJP led government at the centre.”

During my conversation with Narayanan in the last week of December 2018, he said that the government’s attitude has considerably changed and “now they have started to listen and take our suggestions on board.” Even so, he, along with all the trade unions representative I spoke to, objected to the IR and the OSHW codes proposed by the government. The IR code, which was recently sent to the union cabinet for consideration, consolidates and amends three of the 44 existing laws. The representatives expressed concern about a majority of the clauses in the code, such as, how it allows employers to change service conditions unilaterally, restricts freedom of association and the right to strike, and gives arbitrary powers to state governments to interfere with the workings of unions.

During the 46th ILC, Modi said “India has just 3 lakh apprentices… it has to be increased to at least 20 lakh.” Accordingly, the IR code promotes apprenticeship. But the unions’ representative I spoke with pointed out that hiring contract labour and apprentices is hugely exploitative and lack basic benefits. The AITUC said in its letter to Tripathi that the amendment will allow employers “to replace regular and contract workers with apprentices with payment of stipend which is less than the minimum wage.” Narayanan told me, “This casualisation of labour sector is going to destroy the entire industrial sector in the country.”

In the letter, the AITUC claimed central trade unions were not involved from the preliminary stage of consultation for the IR code. When it raised this issue, the government constituted a “totally inadequate” tripartite sub-committee. The AITUC’s request to consider “whether the consolidation should at all be undertaken” was also ignored.

The OSHW code, whose first draft was published in March last year, brings together 13 labour laws. The BMS has commented on the draft saying there should be separate codes on safety and working conditions as they are two separate issues. Kaur of the AITUC said, “The safety needs of sanitary workers, mine employees, electricians, and gas plants are entirely different.” According to her, there should not be uniform guidelines for these entirely different jobs.

The ten central trade unions have cited the ruling dispensation’s “anti-labour” policies, as well as its ignorance towards their 12-point charter of demands, as the reason behind the 8 and 9 January strike. Explaining the BMS’s stance on the strike, Narayanan said, “In the labour sector, when the government is drafting law, we have to go and re-shape it. Otherwise, if they pass it, the government could say we had called and you didn’t come.” But in Kaur’s experience, there is no point in attending the meetings. She said, “The government prepared drafts without talking to the trade unions. Then they called us and ask for suggestions, but the second drafts also didn’t reflect our suggestions.” Kaur said. “Why don’t they call meetings and ask employees and employers which of the current laws are problematic [while preparing draft itself]?”


Las opiniones y conslusiones expresadas en el siguiente artículo son de exclusiva responsabilidad del autor y no necesariamente reflejan la posición del CETRI.