No significant outcome of labour law changes in four States: Study

Have the recent labour law reforms in four States for furthering the ease of “doing business” spurred more investments and created more jobs, or worsened exploitation of labour?

The impact has by far been ‘symbolic’ in nature, according to a research study published by the VV Giri National Labour Institute.

“On their own strength, these amendments in labour laws have neither succeeded in attracting big investments, boost to industrialization or to job creation nor have these amendments singularly resulted in enhancing exploitation of labour and deterioration of service and working conditions of the working population,” says an impact assessment study by Sanjay Upadhyaya and Pankaj Kumar, which was released by Labour Minister Bandaru Dattatreya on May Day this year.

The study covered recent labour law amendments by Rajasthan, Madhya Pradesh, Uttar Pradesh and Andhra Pradesh in the Industrial Disputes Act 1947, Factories Act 1948, Contract Labour Act 1970 and a few other Acts, allowing greater flexibility in closures, hiring and firing, inspection, online registrations, and union recognition, wage compensation, among others.

For instance, in Rajasthan, the ‘lab of labour reforms’, industry was ‘euphoric’ with self-certification and removal of other hurdles, such as frequent inspections, but trade unions in the BJP-ruled State said the amendments had led to a rise in casual and contract labour, wage disparity and violation of labour laws.

The Rajasthan Chambers of Commerce and Industry was particularly pleased with the amendment in the I.D Act, 1947, which has “helped in removing the resultant time consuming litigative processes.”

But, trade unions were upset. Mukesh Mathur of Hind Mazdoor Sabha said “the amendments in Section 25 K of the ID Act and Factories Act have virtually resulted in 90 per cent establishments/units being let-off from coverage of the law.”

The RSS- affiliated Bharatiya Mazdoor Sangh was also critical of the new labour inspection policy coupled with self-certification scheme which, it said, had resulted “virtually in a stage of no inspection at all.”

In the other three States, too, the reactions from stakeholders were on similar lines.

The CITU in AP alleged that against investments of ₹4.67 lakh crore for which MoUs were signed, only ₹5,461 crore could materialise. “In 2015-16, additional employment of only 42,880 could be generated, whereas 67,134 workers lost their jobs in the same year owing to closure of factories, particularly jute and ferro-alloy industries,” it said.

In its conclusion, the study, while commending certain labour reforms, such as online submission of applications for registration and returns, self-certification etc, which have been useful for all stakeholders, noted the ‘virtual’ absence of tripartite consultations, especially in Rajasthan and Andhra Pradesh, as also the proliferation of contracterisation.

“Contractualisation and casualisation have come to stay but as per the accepted policy, exploitation of contract labour is not permissible. Contract labour has to be paid at the same rates at which regular workers doing same and similar works are being paid,” it noted.

While accepting that the outcomes of labour law amendments would take more time to show up, the study concluded that: “Vigorous and multifarious efforts are required on so many other levels and fronts before actual gains could materialise and be visible.”