Who are the Labour Laws for?

By Aditya Narayan Mishra, Director & CEO, CIEL HR Services


Aditya Narayan Mishra, Director & CEO, CIEL HR Services

Laws are meant to guide the behaviours of the stakeholders in any engagement. Labour Laws should ideally be a beacon for the engagement among the employer organizations, individual employees, unions, general public and government. All these stakeholders are equally important for the social and economic environment of a country. Hence, the laws must address the needs of each of these blocks or call them clusters and in cases where we have conflicting demands, the overall good of the country has to be kept in mind and accordingly a tight rope balance has to be played. Given the uncertain and fast-paced times that we live in, the needs of each stakeholder group keep evolving. Hence, the Government must have a very thriving system to understand the changes that envelope us and accordingly keep pace with them. Given the complexities of diversity that India has been passing through, unfortunately our Labour Laws have remained what they were many years ago. Recent changes have been at best cosmetic.

Our economy is a part of the global economy because India trades in many goods and services. Changes taking place in certain part of the world impact the supply and demand pattern of economies. Hence, buyers and sellers of goods and services have to keep on adjusting their consumption and production accordingly. This applies to all sectors of economy: financial services, consumer products, telecom, communication, information technology, knowledge process outsourcing, education, healthcare, hospitality, media, entertainment, infrastructure, agriculture, food processing and so on. No sector is immune to these changes. Global financial crisis have proved it already. Classically, people said, education, healthcare, agriculture etc. are inflation-proofed and won’t be impacted when there is an overall slowdown. However, we noticed that a financial crisis injects a sense of panic and it has a negative impact on the spend of individuals, companies and governments on essential items like food, education and health. This proves beyond doubt that employer organizations would like all their input costs to be flexible. While organizations would have some parts of their cost as fixed, they would like to keep them as minimum as possible and make everything as variable as possible. This calls for a tremendous amount of flexibility in hiring and firing. While some western economies have encouraged such practices for the employer organizations, they are also acutely aware of the fact that some organizations could misuse some of these provisions. Hence, they have put in place the measures which regulate hiring and firing. Moreover, such philosophy comes on the way of building an emotional bond with the workplace and hence, the employees have a very mechanistic engagement with their employers. This brings in its own social implications, which are debatable. Keeping that aside, we also notice that the western economies have been able to reach such a stage that they are able to offer superior social benefits to their citizens. Hence, an employee is assured of a minimum safety net from the Government even if his employer could stop employing him. Given this background, let us examine Indian situation.

  • India is a few years away from the time of giving a decent level of social benefit to its citizens and the quality of such services might take a significant amount of time to reach a stage where the citizens feel proud of these benefits.
  • Employer organizations would want more and more flexibility in terms of the tenure, working hours, kind of work, number of employees, place of work, skill levels etc given the fact that they have to compete with their global counterparts in the market.
  • Employees and the Unions would like jobs to be secured, wages to be appropriately high, recognition and rewards to be balanced, work environment to be safe and healthy, a level of empowerment, trust and development to happen continuously.
  • General public would like peaceful environment, stability in prices and supplies, quality of products, adequate variety of choices for each category of products and services that they avail.

Do our Labour Laws address these realities? We are far from them! We have too many laws, too many enforcement authorities and unclear provisions. Agreed that some of the expectations of one stakeholder group is at odds with those of the other. This is no reason why we will have lack of flexibility and clarity in our system. Our lawmakers need to debate these expectations to arrive at a balance between them. One of the studies of CIETT showed a strong correlation between Per capita GDP and flexibility in Labour Laws. So, we need flexibility in our Employment Laws with the right levels of regulation.

Secondly, the levels of enforcement of the laws need to be uniform, objective and transparent. While it is a fact that we have made some progress in the last few quarters, the impact of it on the economy is yet to be felt. I suspect, the changes implemented have been very cosmetic and do not have the necessary power to unleash any economic leverage on neither the employees nor the employers.

What about the following three-point agenda:

  1. We need to have a large scale drive to make the laws simple and relevant to our times. And this drive must also define a process by which these will be reviewed periodically and amended. There should be just one agency to regulate labour rather than so many of them!
  2. Run a campaign to spread awareness of the responsibilities of employees and employers.
  3. Implement a digitization program that would ask the employers to declare compliance levels for everything related to Labour Laws at just one place rather than multiple portals and multiple enforcement.

We do not have such a system in many countries in the world. These ideas might sound radical. However, we can do it if the appropriate amount of intellectual bandwidth is deployed on this!

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