4TH YEAR B.B.A., LL.
B – SEMESTER-7
1ST -INTERNAL ASSESSMENT
LABOUR LAW
NAME: Tushar Patidar AND Sukhjeet Singh
DIVISION: B
PRN: 20010126134 AND 20010126150
COURSE: BBA LL.B. (H)
BATCH: 2020-2025
UNVEILING THE DANCE OF ECONOMICS AND WORKERS' RIGHTS: NAVIGATING
NEO-LIBERALISM WITHIN INDIA'S LABOR LAWS
ABSTRACT
India's economic policies have undergone a transformation that aligns with the Neo-Liberal
school of thought. Under the current administration, labor rights are gradually being
undermined with the introduction of capitalist-oriented laws. This paper aims to identify the
key concerns in the government's labor laws, explore the mounting resistance to agricultural
laws, and examine the political origins and impact on labor-related policies.
Keywords: EoDB, Wages Code, IR Code, Social Security Code, OSHWC Code, Labour
Reforms, BJP, Farm Laws, Protests, etc.
INTRODUCTION
In November 2020, a nationwide protest unfolded as over ten central trade unions stood
against the ruling party (BJP) due to their enacted anti-working class policies. The primary
points of contention were the four labor codes that were approved at the center. The
government's novel economic policies have encountered opposition from every stratum of the
working populace, leading to adverse output growth and an unparalleled surge in national
unemployment rates.
Originating from neo-liberal ideology, these laws stem fundamentally from the advocacy of
private capital interests, entailing the withdrawal of the state from the policy sphere.
Embracing trickle-down economics, they subscribe to the notion that a surging tide elevates
all vessels. This intellectual framework has wielded its influence over India for decades,
underpinning reforms like promotion of the free trade, reduction in tariffs, increasing private
sector participation, and creation of newer market areas for private sectors such as in water
and infrastructure, etc. Evidence of its impact manifest in the privatization of coal, aviation,
and railway sectors within India. Labor reforms seamlessly align with this ideological stream,
representing a natural progression. This is sought to be achieved by way of reduced wages,
lengthy working hours, restriction of the worker’s rights, reduced flexibility, etc. 1 This has
been incepted since the former prime minister’s regime as he once noted in his speech “ …
Consider, for example, many of our labour laws. Several expert groups have studied them
and conclude that some of these laws have hurt working class interests by discouraging
1
Bhaduri, A. (2005) Development with Dignity: A Case for Full Employment. New Delhi: National Book
Trust.Second National Commission on Labour (SNCL) (2002) Report of the Second National Commission on
Labour, Vol. I and II.
investment in labor-intensive industries.”2 Consequently, the absence of stable pension
benefits is no longer a surprising phenomenon, and the casual outsourcing of public sector
jobs has become a norm. Voluntary retirements have led to the gradual elimination of regular
employees, while the private sector has witnessed a significant decline in its service
conditions. Addressing this issue, the SNCL (Second National Commission on Labour) of
2002 emphasized the prioritization of rationalizing the existing labor laws within the
organized sector. The international impact of this decline is exemplified by the EoDB (Ease
of doing business) ranking, which Favors capital interests over labor rights. This bias is
particularly evident in the labor-related aspects of the EoDB ranking. For instance, the
adoption of fixed-term employment, instead of permanent positions, results in the removal of
minimum legal wage requirements. This alteration facilitates an environment of unrestricted
hiring and firing practices and abolishes the standard 8-hour workday. 3 The Prime Minister
has openly embraced these concepts in his speech, expressing his commitment to enhancing
India's standing in the EoDB rankings while readily acknowledging the need to promote these
ideas.
“ We are just a few steps away from breaking into the top 50 in the [EoDB]
rankings. India has improved on 8 out of 10 markers ... Our country is on a
path of reform and improvement.”
The current regime's intended path for the nation is demonstrated by this, highlighting how
labor laws merely obstruct the pursuit of an improved EoDB ranking. Moreover, the
pandemic accelerated these reforms for the state, capitalizing on the trade unions' lack of
awareness—an action that breached the tripartite agreement where the trade unions had not
been involved in the consultation regarding these reforms.4
ANALYSIS OF THE LABOUR REFORMS
The combination by the Union Government resulted in the consolidation of 29/44 of our
labor laws into 4 distinct labor codes: the Wages Code, the Industrial Relations Code (IR
Code), the Social Security Code, and the Occupational Safety, Health, and Working
Conditions Code. All these codes were enacted with the president's consent. In terms of
secured/regular jobs, the labor codes impact them significantly through the following three
avenues.
1) Previously, government permission was mandatory for manufacturing establishments
employing a minimum of 100 workers to carry out layoffs. However, this threshold
has now been increased to 300 workers. As a result, organizations with worker counts
ranging from 100 to 299 are granted the freedom to terminate employees without
2
Singh, M. (2005) PM’s address at 40th Indian Labour Conference.
https://archivepmo.nic.in/drmanmohansingh/speech-details.php?nodeid=236
3
World Bank (2020) Doing Business 2020: Comparing Business Regulation in 190 Economies.
https://documents1.worldbank.org/curated/en/688761571934946384/pdf/Doing-Business-2020-Comparing-
Business-Regulation-in-190-Economies.pdf
4
The Print (2020) Too Little Democracy is Why India’s Reforms and Progress are Stymied.
prior approval. According to data from the 2017-2018 organized manufacturing
sector,5 44% of workers will no longer have safeguards against unexplained job loss,
while 90% of firms will be able to embrace this unrestricted adaptability.
2) Earlier, firms and contractors employing twenty or more contract workers had an
obligation to adhere to specific regulations outlined in the Contract Labour Act 1970.
However, by the OSHWC code, these particular requirements will now apply solely
to establishments and contractors that engage fifty or more contract workers. As a
result, companies that hire between twenty and forty-nine contract workers will no
longer fall within the scope of these regulations. This shift is likely to promote the
adoption of non-standard employment arrangements. Notably, the proportion of
contract workers within the organized manufacturing sector has witnessed a
significant surge, rising from 12 percent in 1990-1991 to 33.6 percent in 2013-2014.
3) The treatment of retrenchment shall change for the termination of fixed-term workers
when their contracts expire. The IR code permits unrestricted utilization of fixed-term
employment (FTE). Nevertheless, numerous nations impose strict regulations on FTE.
They establish limits on the count of contract renewals and the overall duration for
which a worker can engage in fixed-term employment. India lacks such distinct
guidelines, possibly leading FTE to entirely deregulate the labor market.
4) Furthermore, the machinery for enforcing the minimum wage has suffered a reduction
in its effectiveness. The individuals who once held the title of inspectors, now referred
to as inspector-cum-facilitators, find themselves unable to carry out unannounced
visits to establishments, despite possessing knowledge of law violations. This action
distinctly contravenes Convention C-81 of the International Labour Organization, a
pact that our nation has ratified. A significant alteration is that the control will now be
centralized. Moreover, the authority of inspector-cum-facilitators will be restricted to
scrutinizing solely the establishments designated to them, a selection made through a
random lottery system. Another noteworthy update is the introduction of web-based
inspections, which can be complemented by the electronic submission of required
information.
5) Shifting our focus, we now delve into non-wage provisions, which manifest as social
security benefits accessible to laborers. While the definition of unorganized-sector
workers was expanded by the SS code to encompass home-based laborers, self-
employed individuals, and gig/platform workers, its effectiveness in standardizing
social security universally across sectors and for all laborers through legislative means
was lacking. This deficiency arises from the utilization of the "establishment"
concept, a prerequisite demanding a workforce of ten or more employees, employed
for diverse social security schemes. Consequently, the entirety of the unorganized
sector, characterized by workforces of fewer than ten employees, becomes excluded
from the umbrella of social security coverage. To illustrate, women engaged in
unorganized sectors would find themselves devoid of maternity benefits, a privilege
exclusively extended to the organized sector.
5
Sundar, K.R.S. (2020a) What is Wrong with the Centre’s New Labour Codes https://www.newsclick.in/what-
wrong-centre-new-labour-codes
Finally, we look at the provisions on working conditions available in the OSHWC code. Once
again stipulations apply only to firms employing at least ten workers and exclude anyone
engaged in a unit with less than ten workers.
CONCLUSION & SUGGESTIONS
To ensure the safety of the working environment and the protection of workers from
hazardous operations, the Factories Act of 1948 established specific regulations that are
relevant to any manufacturing facility that has a workforce of ten or more employees (in
cases where machinery is utilized) and twenty or more employees (when machinery is not
used). The OSHWC code, however, revises these criteria to encompass situations where there
are twenty or more employees (using machinery) and forty or more employees (without the
use of machinery). As a result, a segment of workers who were previously safeguarded from
perilous manufacturing activities will now find themselves exposed to such operations in an
unregulated fashion.
Safety norms have been diluted even for those still protected under the OSHWC code. The
maximum permissible limits of exposure to chemical and toxic substances in various
manufacturing processes, which were explicitly stated in the Factories Act before, are now
absent from the new code. Instead, the appropriate government has the authority to determine
these limits, and there is even a chance that they might be raised competitively. This scenario
persists, even though the proportion of fatal accidents to total accidents has risen significantly
from 3 percent in 2003 to 20 percent in 2013.
Nonetheless, the line of hope lies in trade unions collaborating with farmers' unions,
providing their complete backing to the farmers' protests. This could potentially revive class
politics and reinstate democratic operations at the forefront of the republic. The alternative is
rather bleak—a future reminiscent of the Wistron Corporation incident in Karnataka. 6 In
December, thousands of laborers turned to violence due to sweatshop-like conditions
engineered by the corporation. These conditions encompassed twelve-hour work shifts,
partial wage payments, and the rejection of overtime compensation. Strikingly absent were
avenues like trade unions or the employee grievance redressal system. As a result, Apple
opted for a cautious approach by withholding new orders from the corporation. Undisturbed
industrial advancement relies on harmony within the industrial sphere. Those advocating for
the "Make in India" initiative must swiftly internalize these lessons.
6
The Indian Express (2020) Rapid Expansion, Random Wage Cuts: Behind the Wistron Violence.
