From UPSC perspective, the following things are important :
Prelims level : Labour Code Bills
Mains level : Paper 2- Issues with the labour laws
Increase in the jobs without employment security
- Between 2004-05 and 2017-18, the share of salaried workers outside agriculture without any written contract increased from 60 per cent to 71 per cent.
- Even in private and public limited companies, this share increased from 59 per cent to 71 per cent.
- In the government and the public sector the share of such workers increasing from 27 per cent to 45 per cent over the period.
- Many of the wage jobs in the organised sector came through contractors.
- In organised manufacturing, the reported share of contract labour increased from 13 per cent in 1995-06 to 36 per cent in 2017-18.
- A policy to deal with the problem of employment security was much needed.
- The response came in the form the three revised labour Code Bills — on Industrial Relations, Occupational Safety, Health and Working Conditions, and Social Security.
- These were introduced in Parliament in the Monsoon Session, and approved on September 23.
- These three labour codes, along with the Code on Wages approved earlier, touch the lives of every Indian worker.
“Fixed term” worker
- In 2018, the government amended the Standing Orders on Employment Act and introduced the category of “fixed term” worker.
- That category creates a permanent cadre of temporary workers, with no prospects of career growth and job security.
Changes and issues with the Bills
- 1) Government had rationalised fixed-term employment by arguing that industries had resorted to the third-party engagement of contract labour to get around the rigidities in firing workers.
- But that has not stopped the Codes from further liberalising the provisions relating to employment of contract labour and making their regulation applicable only in establishments employing 50 or more workers, instead of 20 or more.
- 2) The key provisions which regulate the employment of inter-state migrant workers have been further diluted and made applicable only to establishments employing 10 or more such workers, compared to five earlier.
- 3) Along with the provisions of retrenchment, the applicability of the Standing Orders, which regulate the categorisation as well as the terms of employment of workers in establishments, has also been raised from 100 to 300 workers.
- 4) The threshold for factories has now been doubled — from 10 to 20 workers with power — thereby eliminating a large number of important regulatory provisions for the smaller factories.
- 5) Relevant governments have been given much more leeway in exempting establishments from the applicability of a whole range of provisions in the Code.
- 6) Inspection provisions have been diluted in all the Codes and will no longer even be complaints based.
- 7) The changes have also made legal industrial action a virtual impossibility, and the presence of unions less possible.
Informality contributes to inequality and to conditions which make sustainable growth impossible, and economic recovery more difficult. It also creates conditions in which employers under-invest in workers’ capacities and workers are not invested in a company’s future — leading to low productivity and lack of competitiveness.