It allows employers to extend unlimited advances to workers and charge an unspecified interest rate on such loans
Debt bondage is a form of slavery that exists when a worker is induced to accept advances on wages, of a size, or at a level of interest, such that the advance will never be repaid. One of India’s hastily-passed Labour Codes — the Code on Wages, 2019 — gives legal sanction to this horrifically repressive, inhuman practice, by allowing employers to extend limitless credit advances to their workers, and charge an unspecified (and hence, usurious) interest rate on them.
Despite previously existing legal protections, vulnerable agricultural, informal sector and migrant workers were already becoming trapped in a vicious cycle of mounting debt and dwindling income, stripping them, their families and future generations, of their most basic rights. It remains one of the most pernicious sources of control and bondage in India, and is incompatible with democracy.
What is shocking is that instead of preventing such enslavement of workers and protecting their fundamental rights, the present government appears to openly abet the practice, by undoing even the weakest safeguards earlier in place under the Minimum Wages Act, 1948 (now subsumed in the Code).
A free pass to debt bondage
Rule 21 of the Minimum Wages (Central) Rules, 1950 (corresponding to the Act) spelt out certain ‘deductions’ permissible from the wages of workers. The sub-rule (2)(vi) allowed for “deductions for recovery of advances or for adjustment of over payment of wages, provided that such advances do not exceed an amount equal to wages for two calendar months of the employed person”.
Additionally, it stated, “in no case, shall the monthly instalment of deduction exceed one-fourth of the wages earned in that month”.
Compare this with Section 18(2)(f)(i) of the Code on Wages, which introduces two major changes to the foregoing.
This section allows deductions from wages for the recovery of “advances of whatever nature (including advances for travelling allowance or conveyance allowance), and the interest due in respect thereof, or for adjustment of overpayment of wages”.
The subtle manipulations introduced have huge implications. One, it has done away with the cap of ‘not more than two months’ of a worker’s wages under the earlier Act, that an employer can give as advance. This allows employers to lend unlimited advances to their workers, tightening their grip.
Two, it has legalised the charging of an interest rate by the employer on such advances, by adding the clause on interest, and with no details on what might be charged. The net impact is an open sanction for the bonded labour system to flourish.
Moreover, the Code increases the permissible monthly deduction towards such recovery, up to one-half of the worker’s monthly wage, as compared with one-fourth under the earlier Act.
Not that the presence of any law under our Constitution even before the Labour Codes — such as The Bonded Labour System (Abolition) Act, 1976 — or various Supreme Court judgments, have ever deterred the bonded labour system from being widespread across sectors, from agriculture to quarrying, spinning, and more.
Cases in Rajasthan
In Baran district, Rajasthan (2011-12), a series of Sahariya (a primitive tribal group) families boldly came out one after the other and spoke of their harrowing experiences of violence and even rape at the hands of Sikh, caste Hindu, and Muslim landlords, for whom they had worked as ‘halis’ for generations. The mostly upper-caste government officials from the Collector onwards put up a wall of resistance in acknowledging them as bonded labourers as per the Act, thereby denying them any sort of relief or rehabilitation, till pressure was mounted.
In a large-scale primary survey in a mining cluster of Nagaur district, Rajasthan for the Mine Labour Protection Campaign (2015), we found that one in three workers interviewed had taken advances from their employers ranging from ₹1,000-₹1,50,000 at the time of joining work. Of them, about 50% said they took the amount “to pay off the earlier employer or a moneylender”.
But in Parliament, the existence of bonded labour has simply been denied among elected representatives, or grossly understated.
Debt bondage and forced labour flourish because the Government has done nothing to ensure the economic security of labourers. And it is set to worsen if this labour code provision is allowed to take shape.
Need for state intervention
It is no coincidence that the disproportionate effect of this huge regression in the Labour Code will fall on Dalits and the landless. In the Nagaur study, for instance, we found that 56% of the workers were Dalits, as contrasted with only 3% of the mine owners.
The vast proportion of landless agricultural labourers in India, to date, are Dalits.
Anand Teltumbde powerfully writes in Republic of Caste, “The dominant castes understood that if dalits came to own the means of survival, they would repudiate their servile status and its attendant social bondage… Economic independence is an aspect of liberty and its absence, as a corollary, spells slavery.”
Indeed, this is exactly what B.R. Ambedkar feared would play out in India, and hoped to prevent, through his pamphlet, States and Minorities, released in the 1940s (see Article 2). In her Ambedkar Lecture, 2018 at the University of Edinburgh, Rupa Viswanath, Professor of Indian Religions at the Centre for Modern Indian Studies, University of Göttingen, expounds on Ambedkar’s later-age line of reasoning that “what makes the translation of ‘one-man-one vote’ to ‘one-man-one-value’ possible, is the worker’s economic freedom”.
Ambedkar understood that economic enslavement was an extreme form of coercion that rendered political freedom meaningless, and that democracy itself required state intervention in the economic structure to prevent such practices, she says.
While he proposed a complete recast of rural and agrarian land structures, and state ownership of land as crucial to this, she explains, he also defined democracy as resting on two premises that required the existence of economic rights.
The first, relevant to the present discussion on Labour Codes, was that “an individual must not be required to relinquish his Constitutional rights as a condition precedent to the receipt of any privilege”. But that is exactly what the unemployed are forced to do — merely for the sake of securing the ‘privilege’ to work and to subsist, she notes.
The larger picture we must keep in mind, therefore, is this. Government after government, under the garb of being pro-worker, has schemed to intervene in exactly the opposite direction as desired — by maintaining and deepening economic inequality to the advantage of the privileged castes and classes, thereby keeping true political freedom out of the workers’ reach. And it is this line that the Central government has pursued with even more gusto, in the recasting and passing of these retrogressive labour codes.
If the farm laws could be repealed, then these anti-labour codes, with numerous other dilutions that snatch away the mostly non-existent rights of the far more vulnerable class of workers, must surely go.
Sowmya Sivakumar is an independent writer