10 highlights
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For all its octopus-like tentacles, Indian labour regulations are more honoured in the breach than in the observance
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This disparity between a needlessly complex and potentially employer-unfriendly regime on paper and a deeply exploitative and definitely employee-unfriendly regime in practice needs to be kept in mind while evaluating labour law reforms in India.
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The Industrial Disputes Act, 1947 in Chapter V-B states that any industry (and industry is defined broadly enough to include even software companies, as per a recent judgment) that employees more than a 100 people needs to get permission from the government for lay-offs, retrenchment and closure.
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Even when Chapter V-B applies, there’s no real bar to firing someone, given the redressal mechanism. The workman is fired in any case, citing any number of reasons, and disputes in this regard can take up to 8 years and beyond to be resolved.
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Companies use contract labour whenever they require flexibility. An average of 25 per cent of all employees and upto 50 per cent of employees in establishments that have more than 5000 employees are contract labour.
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Trade unions have been painted villainous by the media, and the bogey of “militant unionism” is often cited as the reason why unions are, if not outright evil, at the very least an unnecessary “market distortion”.
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As far as militant unionism being a drag on productivity goes, data available shows that in the period of 1999 to 2008, more than double the number of man hours have been lost due to lockouts (a labour dispute initiated by management) as compared to strikes, suggesting that it is the employers that have been a greater cause of productivity loss than the employees.
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It’s also worth considering here that, in the recent past, a combination of circumstances, both internal and external, have worked to undermine the efficacy of trade unions. Amendments to legislations such that it is now easier for outsiders to control unions (permitting political parties and even the management to hijack unions) is one of these reasons.
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Any reworking of labour laws would have to have trade unions and collective bargaining at their core, with provisions to prevent, to the extent possible, hijack of unions by political parties and management itself.
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As with many other policies in the country, poor-to-zero enforcement means that while employers continue to suffer the bureaucracy, employees continue to be grossly underpaid and exploited.