The Madhya Pradesh, Uttar Pradesh, and Gujarat state governments have relaxed labour laws in a bid to attract investment and restart economic activity that was paralysed by the nationwide coronavirus-induced lockdown. Punjab, Himachal Pradesh and Gujarat have also amended their Factories Acts and increased the work hours from 8 to 12 hours or 72 hours per week.
The industry is divided over the new rules. The Micro, Small and Medium Enterprises who spoke with Firstpost chose to focus on the challenges they face as the government has begun lockdown relaxations and allowed certain industries to function.
Entrepreneurs said paying salaries, as mandated by the government when there was no production; getting back workers who have left for their home towns; sanitising factories and workplaces besides getting raw materials and supply chain in place—there are huge challenges that stare in the future of the sector, they said.
Industry points to challenges, need for ease of labour laws
“The new rules are tough, but are needed as these are extraordinary circumstances,” said Mahesh Singhi, founder, home-grown merger and advisory firm, Singhi Advisors. He terms the three state governments rules easing labour laws as ‘a right step at the right time’. Singhi said if more rules were formulated even as others were made redundant, it would hamper the state’s plan to resume economic activity.
“Rules and laws are alright for normal times. But this is a war-like situation and the primary aim is to generate employment, create a demand for the products and services and narrow the demand-supply gap,” he said. But should it come at the cost of worker’s health, their rights? Singhi said that any revolution calls for changes in rules. “You have a right to earn and that comes from a responsibility to work.” But 12 hours instead of the ILO maintained 8 hours of work? “The need of the hour is to ensure there is money flow in the system. Both the employer and employees need to go through some tough times before things ease back to normalcy,” he said.
The work hours established in the ILO convention are 48 hours per week. Labour regulations such as 8 hours workdays were brought in after years of protests against exploitation. But, labour is a concurrent subject and states can amend certain labour laws for their regions.
Chandrajit Banerjee, Director General, Confederation of Indian Industries said in a statement: “The labour changes initiated in UP and MP, are both steps that will give huge flexibility to industry in their labour practices.”
Banerjee said with a huge number of employees having left their workplaces, there is a need to reskill and map workers who have been displaced and re-employ them as per the needs of the industry. The ordinance in UP and relaxations in norms in MP will help industry to adapt and rise to new economic realities swiftly.
Arjit Rawal, Director, Logistech India Private Ltd, suggested the government follow what the Canadian government is doing for industries. The Canada Emergency Wage Subsidy encourages employers to recruit workers who lost their jobs due to coronavirus. The CEWS offers a subsidy of 75 percent of an eligible employee’s weekly earnings, to a maximum of $847 per employee per week to eligible employers, for up to 12 weeks. The funding is retroactive to 15 March.
Rawal wants the government to ease the pressure on employers. “Consider extending the financial year,” he suggested. The industry has been demanding extension of fiscal year by three months in view of the economic impact caused by outbreak of Covid-19. “Companies still have to file annual GST returns for FY19 till September 2020. Where will the entrepreneur who does minuscule business be able to do this in these circumstances?” he asked.
Labour has migrated in huge numbers back to their villages and home towns, and to get them back will be a huge task, he said. “The government should offer a holistic solution and incentivise industry till it comes to a normal curve,” he said.
The entire effort of a 40-day lockdown has been somehow diluted by the talk on labour laws, absence of labour as they have migrated to their villages, said Siddharth Shenoy, president, Bombay Industries Association. He said the MSME sector is faced with challenges—no transportation, supply chain broken up, shortage of labour. “The large companies can take care of themselves as they have a lot of subsidiaries. But what about us,” he asked.
Some believe the relaxation of labour laws are temporary as stated by the state governments. Conceding that labour is a very essential part of the ecosystem, Ashok Mohanani, Chairman Ekta World, Vice President, NAREDCO, said the laws are being relaxed as an emergency measure to give a much-needed boost to the economy. Availability of land, flexibility in labour laws and a welcoming administration will be attractive to global markets looking to rationalise supply chains. “However, it is also essential to ensure that the labour is not exploited and this is a positive move for them as well along with the businesses,” he said.
The TTC-MIDC Industries Association (TMIA) chose to call the post-COVID-19 relaxation of norms as a second COVID-19 situation for the MSME sector. With the maximum labour coming to Maharashtra hailing from Uttar Pradesh, Rajasthan, Madhya Pradesh, the TMIA now fears that the workers may prefer to stay back in their home states.
“With a large base, second only to China, the MSME sector contributes over 28 percent of the GDP and more than 40 percent of exports, while creating employment for about 11 crore and is called the backbone of the economy but the government ignores the sector when it comes to stimulus packages,” said KR Gopi, president, TMIA.
“We have to pay wages for month of April and May when there was zero production. There is no relief on electricity bill payments, interest on loans taken for working capital. Labour laws can be relaxed temporarily but these cannot be made permanent. The safety and health of workers have to be taken care of,” he said.
Nitin Gadkari, the Minister for MSME, and Road Transport and Highways on Monday said he expects the Centre to unveil a financial package in two-three days, observing that the situation “was very bad” despite the three-month moratorium on loan repayments announced by the RBI.
“The government announces reliefs—bank loans for the MSME sector, for instance, but the banks are loathe to give it. Rules are made and passed by the Centre but nothing takes off on the ground level,” pointed out Siddharth Shenoy of Bombay Industries Association.
Whither workers rights?
How can any state amend labour laws justifying labour shortages and the need to kickstart the economy, asked KR Shyam Sundar, labour economist and professor in Human Resource Management (HRM) Area, XLRI, Xavier School of Management, Jamshedpur. He termed as ‘labour market anarchy’ the sweeping exemptions offered by the UP government and the rather detailed but not sweeping changes made by MP and Gujarat.
He said, these labour law changes are based on three key principles, viz., labour laws are not needed in the society which means no role for the State in the labour market; workers should solely rely on the goodwill of the employer, and labour rigidities are the principal irritants that halt investment and hence economic growth. He fears the UP Model ‘will probably’ become the defining labour market governance or its lack in the times to come.
Concurring with Sundar, Rama Kiran, assistant professor and head of the department, SK Somaiya College, Mumbai and a research scholar said these changes in labour laws were a ‘slap in the faces of the workers who were forced to walk home hungry’. Kiran has worked extensively on female labour working in garment factories. “Around 90 percent of workers in garment factories are women. By relaxing labour rules but not providing them basic amenities like toilet facilities, canteen, drinking water, what is management offering them? You want them to work for 12 hours but you don’t want to provide them with amenities,” she asked.
Maansi Parpiani, a researcher with Aavjeevika Bureau, a non-profit working with migrant labour in Gujarat, Rajasthan and Maharashtra, said terms like organized labour and migrant labour is a false binary. “Only a very small fraction of workers have full rights of organizations. Many semi-permanent workers are employed in big industries and MSMEs on short-term contracts.” Parpiani said contractualisation has already diluted existing laws and limited the number of workers they actually protect.
It is time the government stepped in before the entire country take this route. Vishal Kumar, co-founder and Financial Advisor, MSMEx, online micro advisory platform for small business owners said labour reforms have been long-pending and much-needed for densely populated country like India. The Uttar Pradesh government striking down labour laws is a two-pronged decision, he said: “From a business angle, it would be welcome with easing norms and compliances. But India cannot be seen as a country that exploits its labour especially when health is the big challenge in these times,” he said.
Labour laws in India need no amendments. The BJP central government may support state governments that pass these rules, said advocate Saju Jakob, practising in Supreme Court and High Court, Delhi. He termed the easing of labour laws ‘misguided’ and a new low. “Capital will only flow where labour standards are good. Investment does not depend on cheap labour and will look at infrastructure. The focus should be on that,” he said.
The losses to industry due to the pandemic is ‘massive’ with resultant job losses, according to news reports. In the circumstances, said Gayathri Vasudevan,Executive Chairperson and Co-Founder, LabourNet Services, it would be better to ride this wave by focussing on employee health, safety and protection given that India has a ‘miserable’ record in this matter. A win-win proposition, perhaps, given that labour shortage would imply they have to be compensated, if not immediately but in the long-run.
Find latest and upcoming tech gadgets online on Tech2 Gadgets. Get technology news, gadgets reviews & ratings. Popular gadgets including laptop, tablet and mobile specifications, features, prices, comparison.