Silence over labour reforms during state elections signals a deeper shift – The Economic Times

Clipped from: https://economictimes.indiatimes.com/news/economy/policy/view-silence-over-labour-reforms-during-state-elections-signals-a-deeper-shift/articleshow/82375994.cms

Synopsis–In a scenario where access to oxygen cylinders, medicines, hospital beds is near impossible, none of the usual issues — GDP guesstimates, spiralling inflation, plunging index of industrial production, the schizophrenic stock market — have any meaning. Not when stacked against the life and death issues confronting us. But in my hunt to find a positive development in all this glom, there is one: the mind-shift on labour reform.

By any reckoning, this is the worst of times. Sitting in a highrise, next to two large hospitals in the National Capital Region, the silence of the curfew broken only by the incessant wail of sirens as ambulances go racing past, the desperate shortage of ambulances on the ground seems almost dystopian. Except, it’s frighteningly real.

In a scenario where access to oxygen cylinders, medicines, hospital beds is near impossible, none of the usual issues — GDP guesstimates, spiralling inflation, plunging index of industrial production, the schizophrenic stock market — have any meaning. Not when stacked against the life and death issues confronting us. But in my hunt to find a positive development in all this gloom, there is one: the mind-shift on labour reform.

As always, the just-concluded assembly elections were marked by fierce electoral battles on issues across the socio-political-economic spectrum. Save for one surprising omission: GoI’s ambitious labour reforms.

Given the number of jobs lost in a pandemic year — Centre for Monitoring the Indian Economy (CMIE) puts the number of salaried jobs lost in the period to March 2021 at 10 million — the silence is puzzling, to say the least. Especially when juxtaposed with the fact that two of the states where elections were held — Kerala and West Bengal — are bywords for militant labour. A third, Tamil Nadu, tops the charts for the number of strikes (51) in the past three years, according ministry of labour and employment data. Contrast this with the hue and cry over farm reforms. These will most definitely be the focus when Punjab goes to elections early next year.

So, why did the new labour codes on wages, industrial relations, occupational safety and social security fail to raise the hackles of regional political parties traditionally eager to label BJP as excessively centrist, the very anti-thesis of cooperative federalism?

Remember, ‘labour’ figures in the concurrent list of the Constitution. Both states and the Union government have the right to frame laws and rules. Remember also, that trade unions, including the RSS-affiliated Bharatiya Mazdoor Sangh (BMS), have already upped the ante against several provisions of the new labour codes — especially the increase in the threshold (from 100 to 300 workers) for businesses to retrench workers or close units without prior government permission.

True, implementation of the codes, originally slated to come into effect from April 1, 2021, has now been deferred for ‘some time’. So, trade unions have got a breather. But make no mistake. There will be no going back on labour reform. Indeed, it is part and parcel of GoI’s efforts to ensure India moves into the top 50 ranks in the ease of doing business league tables. (We are presently ranked 63rd.)

All of which makes the relative silence of political parties on labour reform only more puzzling. Like the curious incident of the dog that did not bark in the night a racehorse was stolen in the Sherlock Holmes story, ‘Silver Blaze,’ could the Opposition parties’ silence on labour reform offer a clue to a subtle, but distinct, shift in mindset? Is opposition to labour reform a thing of the past?

Possibly. For starters, for all the noise and muscle-flexing by trade unions, less than 10% of India’s labour force is in the organised sector and, hence, can potentially belong to unions. The overwhelming majority is in the unorganised or informal sector. And though trade unions claim some success in attracting workers from the informal sector, the reality is unions no longer have the clout they had in India’s socialist past.

Even within the organised sector, their clout has been declining as India increasingly becomes a services-led economy. Services today account for close to 60% of our GDP, while manufacturing, typically the catchment area for trade unions, is about 18-19%.

Moreover, as more and more processes in the manufacturing sector get automated, blue-collar workers are being replaced by highly skilled technical personnel. The latter are less amenable to unionisation. Clearly, the day is not far when trade unions, as we know them today, will cease to matter. The rise of the gig economy is bound to hasten this trend. Trade unions and the political parties to which they are affiliated have, perhaps, read the writing on the wall.

That explains why labour reforms were not an electoral issue. And why we might finally reach that golden mean — one where we have much-needed labour flexibility, without which we cannot become globally competitive, and at the same time, have workers’ rights protected by unions whose only affiliation is with labour, not political parties.

Yes, you could say I am clutching at straws. But if straws are all you have, best hang on to them. Stay safe, everyone.

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