Don’t call it a reform

Context: Indian labour laws needed serious reform, but not at the cost of unleashing a whole-scale assault on labour.

Need of Reforms

• Irrelevant to 90% of India’s labour force and created enough distortions to prevent greater formal protections for the labour force.
• Did not increased labour’s bargaining power: Massive decrease in strikes and lockouts since the 1980s, experience variability in employment.

• Excessively complex: created rigidities that had nothing to do with labour protection and Disincentivised industry investment in human capital, They created a political economy of rent-seeking. 

Issue with Recent amendments

• Contempt for democracy: Abusing the ordinance route to suspend important provisions of the law
• Overriding central legislation, without justification which will create future problems for federalism.
• Repealing many of these provisions will put India in contravention of ILO conventions.
• Refusing to provide adequate social support and Increase work hours without increasing rate of compensation.
• Cultivation of authoritarianism: no grievance redressal mechanism
• Ideological assault on Indian labour: narrative has been built up that India could not attract MNC because of labour only. Now with amendments, it can be done.

Reform must include protection of core interests of workers, respect their bargaining power and at the same time rescue distortions in capital allocation.

No country can develop that does not invest in human capital of its citizens, that does not increase the share of labour in the country’s wealth and does not get the balance between capital and labour right.