June 29, 2022
Good morning. In today’s either/view, we discuss whether the new labour codes are good or bad for India’s workforce. We also look at the invitation of bids for solar projects in Jharkhand, among other news.
📰 FEATURE STORY
New Labour Codes – Good Or Bad For India’s Workforce?
Work has taken on a different connotation over the past couple of years. Across many sectors, the pandemic has changed how people work and where they work. It’s also something of an inflection point. The pandemic rendered millions without jobs in India as businesses shut down or halted their operations.
The timing of the new labour codes set to take effect from July 1 is striking. Unemployment is a drag on India’s economy currently. They’ll have far-reaching effects on India’s working population. Will the labour codes be positive or negative?
Context
India boasts a workforce of almost 440 million in the organised and unorganised sectors. According to the Centre for Monitoring Indian Economy, India’s labour force increased by 8.8 million to reach 437.2 million in April. It was one of the most significant monthly increases. It came in the wake of a 12 million decrease in the preceding three months.
With such a vast resource, there’s potential to convert it into efficient human capital and reap the full benefits of economic growth. However, one thing that has prevented this is overlapping labour laws and regulations. So far, they’ve struggled to include all sections of the country’s workforce. The World Bank has previously criticised India for its complex and inflexible labour laws.
The government has been trying to bring in some order. Since 2019, they’ve tried to implement reforms through four new labour codes – the Code on Wages, Industrial Relations Code Bill, the Code on Social Security Bill, and the Occupational Safety, Health & Working Conditions Code Bill. Tried being the operative word here since many states weren’t happy with the proposals. In India, labour is a concurrent subject in the Indian constitution. It means both the Central and State governments can legislate on it.
Last February, the Ministry of Labour and Employment released the draft rules for all four labour codes. In December, the push to implement them gained momentum as at least 13 states had pre-published draft rules on the new codes. In April, it was reported that all states and Union Territories except four had their draft rules in place.
What constitutes the labour codes? The first is the Code on Wages. Notified in 2019, it applies to all establishments and employees in the organised and unorganised sectors. It outlines the uniform applicability of timely payment of minimum wages. The second is the Code on Social Security. It empowers the Centre to notify social security schemes like EPF and maternity benefits.
Then there’s the Occupational Safety, Health and Working Conditions Code, 2020. It’ll regulate the health and safety conditions of workers in establishments with 10 or more employees. The Code on Industrial Relations, 2020 aims to improve the business environment by reducing the labour compliance burden of industries. It expands the definition of a worker to include persons in skilled, unskilled, and clerical capacities.
The time has finally come as they’ll be implemented on July 1. Will the new codes help India’s workforce? Or are they a step back?
VIEW: A game-changer
The government is all in on the new codes. In Prime Minister Narendra Modi’s 2021 speech, he spoke of lowering India’s “regulatory cholesterol.” He spoke of a vision for an India where the government doesn’t interfere with the lives of citizens. The new labour codes were designed with this in mind. They’ll ensure that the interests of both businesses and their employees are protected.
India has more than 100 million informal workers suffering from the pandemic. The government has worked to register them so that they can access benefits. The new labour codes are flexible, given the changing labour market dynamics. It accommodates the minimum wage requirement and welfare needs of the unorganised sector. These include self-employed and migrant workers.
A part of the changing dynamics in the labour market is the emergence of gig and platform workers. In countries like France, the UK, and Denmark, orders have been passed that recognise platform workers as employees. It has affected companies like Uber, in particular their business model. The labour codes formally recognise gig workers and have provisions for them. As Pooja Prabhakar of BCP Associates stated, the new labour codes will help India become more business-friendly.
The new labour codes will bring some peace of mind for businesses since penalty clauses have been removed. Balancing that out, to ensure that an employer has a well-oiled operational mechanism to check non-compliance, the monetary fines have been increased. This should put to rest any concerns that the new codes are lenient and would allow employers to commit offences.
COUNTERVIEW: Undermines worker rights
While the stated goal of the new labour codes is to simplify current labour laws and promote digitisation, questions remain on whether companies are ready. Many Indian companies aren’t able to adapt to recent changes to tax laws concerning employee benefits. In a survey of 74 companies, most of them are planning to review their retirement and long-term benefits policies.
Most companies expect the codes to have an impact on their bottom line. From a workers’ point of view, the new codes could be harmful. In March, members of the All India IT and ITeS Employees’ Union launched a nationwide campaign, #FridayProtest against the new labour laws. The Union’s president Suman Das Mahapatra said the new laws are detrimental to workplace safety and the right to unionise.
Collective bargaining will become unitary as one big trade union will be the sole agent. Other smaller ones will become redundant as they won’t be recognised by the employer per Section 14(3) of the Industrial Relations Code. The IT industry is segmented in terms of working hours and conditions. This goes for large IT companies too. Unions are often the only place where employees can air their grievances.
India’s labour market is exploitative as supply far exceeds demand. The four-day work week proposal based on 12-hour workdays would violate international standards. As Dr Kingshuk Sarkar, former labour administrator, wrote, the world of work is witnessing the proliferation of non-standard and precarious employment. The new labour codes will undermine basic labour rights in India.
What’s your opinion on this?
(Only subscribers can participate in polls)
a) The new labour codes are a step in the right direction.
b) The new labour codes undermine the rights of workers.
🕵️ BEYOND ECHO CHAMBERS
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🇮🇳 STATE OF THE STATES
Help for road accident victims (Punjab) – The AAP government unveiled a scheme for free treatment of road accident victims. It came as part of the government’s first budget. The scheme is similar to what’s in Delhi where a road accident victim can be admitted to any hospital. The person will be given treatment free of cost. Also, Mohalla clinics will be set up across the state.
Why it matters: Earlier this month, the Delhi government announced 100 more Mohalla clinics. There are currently 519 such clinics across the city. As part of its first phase, 75 clinics will be opened in Punjab by August 15. The government wants to open 16,000 clinics in the state.
Developing Amaravati (Andhra Pradesh) – The state is looking at opportunities to raise funds to expedite development projects in the Amaravati capital region. Part of the government’s plan is to lease out residential quarters built for Group-D employees. A proposal was submitted to Chief Minister YS Jagan Mohan Reddy by the Andhra Pradesh Capital Region Development Authority (APCRDA). A private university with a campus in the city volunteered to take on the lease.
Why it matters: The government’s move is in the wake of a High court order directing the state government to develop Amaravati per the Master Plan. The court also asked the government to develop plots with basic amenities for farmers. The CRDA proposed to construct six towers with 120 flats each. In April, construction work resumed on the MLA and MLC quarters in Rayapudi.
Bids for solar projects (Jharkhand) – The Damodar Valley Corporation (DVC) has invited bids to install and commission solar power projects at its thermal power station in Koderma. The successful bidder will operate and maintain it for ten years. The DVC has so far issued tenders for 62 MW of solar power projects for the state. The state has plans for a 100 MW floating solar plant and an 80 MW solar park.
Why it matters: Previously, DVC invited bids from consultancy firms to survey 200 acres to develop solar photovoltaic projects in and around thermal power plants. The state has among the lowest installed capacities of renewable energy in eastern India. In a 2015 policy document, the state government set a 2,650 MW target for solar energy by 2020. So far, it hasn’t even met half of this.
Mandatory Sanskrit for students? (Gujarat) – The Rashtriya Swayamsevak Sangh (RSS) has reportedly asked the Gujarat government to make Sanskrit mandatory from class 1. RSS members met with Education Minister Jitu Vaghani and other senior officials to discuss the implementation of the NEP, where they also put forward this demand. They asked the department to instruct schools to allocate at least six periods for Sanskrit every week. They didn’t want schools to teach English at the expense of Indian languages.
Why it matters: The NEP’s three-language formula doesn’t outline any language as mandatory. Their argument is that despite the NEP’s guidelines, English is being taught in schools. The RSS has previously also demanded that Gujarati be taught as the first language, Sanskrit as the second, and the government can decide on the third language.
SHGs for persons with disabilities (Nagaland) – An MoU was signed between the Nagaland State Rural Livelihoods Mission (NSRLM) and the State Commissioner of Persons with Disabilities (PwD) to support and strengthen self-help groups (SHGs). The new policy will be piloted in four model blocks to support people with disabilities and help raise awareness and promote acceptance. The SHGs will help people with disabilities build relationships within the group and the wider community.
Why it matters: Per the 2011 census, Nagaland has more than 29,000 persons with disabilities, which is 1.5% of its population. Women with disabilities face more difficulties due to existing gender biases and barriers. They’re also at risk of gender-based violence, sexual abuse, and neglect. Disabilities also prevent people from getting employment and accentuate poverty. Currently, there are 765 exclusive Elderly SHGs and 59 exclusive SHGs for Persons with Disabilities.
🔢 KEY NUMBER
1% – The TDS charge on cryptocurrency transactions from July 1. The deduction will apply to all virtual digital asset (VDA) transfers, including NFTs worth more than ₹10,000.