The old in the new labour codes

THE latest labour codes, released last month, have many new features. Yet, discussions on them in the media and Parliament keep hovering around how best to tame the working class. There are abundant sweeteners in the new laws but the fear of strikes still sticks out like a red chilli. As a result, the emphasis again is on anti-strike mechanisms. This is an uncalled-for overkill, based on habit, not reason, as we shall soon see.

The truth is that over the years, the number of strikes has progressively fallen. Yet, the fear of worker unrest dominates labour laws ever since the first factory horn blared. Strikes were at their highest when, paradoxically, labour laws were at their harshest too. That was when robber barons came charging down the hill with hired blacklegs to beat the stuffing out of protesting workers.

All this has changed over time. The labouring class has grown tamer, but factory laws still have that old mindset. The number of strikes went down sharply by 75 per cent in the decade between 2003 and 2014. In 2019, there were just 59 strikes and only 30 were recorded in 2023. At one time, this figure was in hundreds. Yet, labour laws kept distrusting workers, making the staging of protests and strikes progressively more difficult.

As a result, we see a version of self-fulfilling prophecy at work. Workers and their unions suspect every move of the government, entrepreneurs and the management refusing to see the sweeteners that are introduced from time to time in the labour codes. There isn’t a strike on the horizon, yet labour unions worry that should they want to organise one, it will now get more difficult to do so.

Look at the number of wins the new codes give the worker. They can now get annual leave after 180 days of work and not 240, as was the case earlier. Paid maternity leave has been extended from 12 to 16 weeks. Gig workers are eligible, at long last, for retirement benefits. Men and women will get the same wages for the same work. Retrenched organised sector workers will receive 15 days’ wages for retraining.

Labour representatives see these as sops because the new law allows the management to fire workers without informing the government if the enterprise employs less than 300 people, and not 100 as earlier. Alongside, the advance notice for strikes must now be of 60 days and not 14. These two together, labour unions believe, defang the working class. With their bite gone, their bark won’t matter either.

The new law indeed allows factories with up to 299 workers to retrench employees without government notice, but this is hardly significant. Only about 4.5 per cent establishments employ between 100 and 199 workers. While the management fears more unrest though the number of strikes is decreasing, the workers fear more lockouts even as these figures are falling dramatically too. There were only 34 lockouts in 2022; so why this fear?

The principal reason the two sides have locked horns is because the good parts of the codes are not actionable as most workers are in the unorganised sector. Nearly 50 per cent of Indian factories employ less than 20 workers. In such units, even occupational health hazard rules do not apply. The workers will, therefore, remain vulnerable. It is hard to imagine these outfits scaling up to cross the 300-worker mark.

In fact, Economic Surveys (2017-20) point out that the share of employment in the organised sector has actually gone down over time and it now hovers around a mere 17 per cent. What is really telling is that such jobs are decreasing in Central public sector enterprises too. Between 2016-17 and 2020-21, the number of organised workers in these units fell from 11.29 lakh to 8.61 lakh. If this is so in the state sector, can the private sector be any better?

To add more pixel detail to this picture, the 2023-24 Economic Survey tells us that over 57 per cent of the total Indian workforce is self-employed and, by definition, outside all labour laws. Thus, while the number of organised-sector workers is falling, the count of strikes too is declining. At the same time, lockouts are also dropping, even as unorganised-sector labour is growing. Between 2017 and 2022, their proportion edged up from 80.8 per cent to 82.6 per cent.

To what extent then can the new labour codes make a difference? Much of its newness is notional and cannot be tested as even direct factory employment declined from 61 per cent to 47 per cent between 2011 and 2023. As the organised sector, too, is sourcing out its jobs to the informal sector, even high-end cars have parts produced in petty, informal workshops. The car’s fancy logo is then mostly lipstick!

Business magnates and workers’ unions must know that the new labour codes are a dressing that won’t really count as long as informal workers dominate the Indian industry. Only elite “labour aristocrats” with signed contracts will benefit from them, but they are just a tiny fraction, and unlikely to grow. Both lockouts, which labour fears, and strikes, which capital fears, are getting rarer by the day. Why then all this fuss?

The two sides are playing out their role by rote to a thinning audience. The informal workers in the stands have already left the building.