1. mention the various codes proposed – and their purpose
2. discuss various problems faced by Indian labor
3. articulate how the proposed laws address these issues and where they remain silent
Labor is in the concurrent list and more than 40 central laws and more than 100 state laws govern the subject. The central government is keen to consolidate the central laws into four codes – relating to wages, industrial relations, social security and welfare and occupational safety, health and working conditions – and bring about reforms to ensure ease of business.
Following are the four proposed labor codes-
1. It is expected that the laws related to social security, including the Employees’ Provident Fund and Miscellaneous Provisions Act, Employees’ State Insurance Corporation Act, Maternity Benefits Act, etc will be merged to create a single social security law or code.
2. Several industrial safety and welfare laws such as the Factories Act, the Mines Act and the Dock Workers (Safety, Health and Welfare) Act, will be merged to create a single category on industrial safety and welfare.
3. The Minimum Wages Act, the Payment of Wages Act, the Payment of Bonus Act, the Equal Remuneration Act etc will be merged to create wages code.
4. The Labour Code on Industrial Relations will combine Industrial Disputes Act, 1947, the Trade Unions Act, 1926, and the Industrial Employment (Standing Orders) Act, 1946.
Following are the significance of proposed labor code which envisages to over ride issues due to present labour laws:-
o A large number of firms in labour intensive sectors report that finding skilled workers, hiring contract labour and firing employees was a major obstacle.
o On an average it took enterprises about two years to resolve a legal dispute and there is wide disparity across states.
o On an average, firms faced around 46 hours of power shortage in a typical month. It took firms 118 days to set up a business.
o The World Bank’s Doing Business survey shows that it takes 26 days to set up a business but this is restricted to Delhi and Mumbai.
Demographic dividend if upgraded through skill development, and supported by labour market flexibility, will help to attract investments and create jobs.
o Only a minuscule proportion of the total workforce, which is part of the organized sector, enjoys some protective coverage.
o Except for the Minimum Wages Act in some states, informal sector activities remain unaffected by the labour laws which were enacted to address the organized sector.
o For workers in informal employment, there is an urgent need to ensure universal social protection that improves their conditions of work and helps them live a life with dignity.
Countries with more practical labour laws such as Bangladesh have been growing their share in the global textile market at India’s cost.
However, the proposed consolidated labor codes has been criticized that it will not resolve the problems of Indian workers for following reasons-
1. Membership and composition of trade unions: The Industrial Relations Code provided that a minimum of 10% of workers or 100 workers employed in an establishment or industry would be needed – from seven at present – to register a trade union.
It also restricted outsiders to an establishment/industry from becoming a member to two and prohibited a minister or a person holding an office of profit (outside of establishment) from becoming a member or office bearer.
2. States have to ensure that minimum wages set by them are not lower than the national minimum wage. If existing minimum wages set by states are higher than the national minimum wage, they cannot reduce the minimum wages. This may affect the ability of states to reduce their minimum wages if the national minimum wage is lowered.
3. The time period for revising minimum wages will be set at five years. Currently, state governments have flexibility in revising minimum wages, as long as it is not more than five years. It is unclear why this flexibility has been removed, and five years has been set for revision.
4. The Equal Remuneration Act, 1976, prohibits employers from discriminating in wage payments as well as recruitment of employees based on gender. While the Code prohibits gender discrimination on wage-related matters, it does not include provisions regarding discrimination during recruitment.
5. Ban on strikes: The Industrial Relations Code also restricted strike by (a) requiring prior notice of 14 days and striking within two months of such notice (now prior notice is required only for essential services), (b) but banning strikes during the pendency of the conciliation process which starts from the day of the notice and (c) increasing fine up to Rs 50,000 in addition to one month's imprisonment for violations
6. Hire and fire: The Industrial Relations Code further sought to increase the limit for prior permission of the government for lay-off, retrenchment and closure to 300 workers, up from 100 at present
Labour laws need to be simplified and brought in line with contemporary economic realities, including especially current international practice. But, at the same time it must be aimed at protecting the rights of labour e.g. to form unions for purposes of collective bargaining, laying down minimum obligations which employers must meet with regard to social benefits, health and safety of workers, provision of special facilities for women workers, establishing grievance redressal mechanisms, etc.