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The Issue of Labour Reform in India: A Perspective from Indian Culture


The issue of labour law reform in India has been gaining increasing prominence, over the last few months since it was brought to the forefront of the NDA’s electoral agenda. With the labour reforms that were recently approved in Rajasthan along with the consistent pursuit of labour laws by the central cabinet, the issue has become cardinal to the current process of economic reform in India.

In a country like India, the issue of labour reform is not simply a technical, legal or political matter, concerning typical industrial disputes, bargaining or demand over work facilities and the state’s electoral-political calculus. While these are the forms that the conflicts over labour reform assume in any country, in India, the study of the roots of the problems and solutions at hand require a much deeper historical and cultural perspective.

Therefore, in order to put the perennial deadlock over labour reforms in perspective, we will proceed through an analysis of the following issues:

First, we will look at the mutually conflicting arguments that underlie the politico-economic debate over labour reform in India and a brief international comparison.

Second, in order to assess the relevance of the present conflicting arguments, we will see how the question of labour was actually shaped in India’s cultural context in the past.

The issue of labour reform in India has followed a contentious and politicized trajectory of development. It has been characterized by a conflict or confluence of interest between three major actors: the state, the management/industry and the labour, with the state mediating the conflict between the management and the labour.

The role of short-term ideological mobilizations in impacting the policies of successive governments has had a major impact on how the question of labour has come to be shaped politically. Impacted by electoral interests, the policy of the governments – mainly Congress or Congress-led governments or the ‘secular’ and ‘socialist’ governments at both the central and state levels – has primarily been socialist or pro-labour. Various political parties have also had their own powerful trade unions. Moreover, the process of state-led industrialization, import-substitution and aversion to free market economics has worked in favour of shaping strong labour laws at the centre.

However, at present, we are at a juncture where neither labour nor the capital is satisfied with the state of labour legislation and its implementation in India. The labour-capital relations in India, especially in industries in the automobile sector, have been in a state of disarray. While the period after Independence saw the rigid labour laws working towards stifling the free market incentives available to the industries, the neo-liberal economy that has been gaining ascendance since the 1990s has witnessed the labour-capital conflicts taking different forms. With the boost given to the capital and the strengthening of the new incentives-based system, industries are finding ways to bypass the archaic socialist labour protection laws through various means. For instance, industries often employ contract labour to bypass stringent laws and keep the workers indefinitely in training or apprenticeship periods without any prospects for permanent employment. This allows industries to maximize their advantage and promotes corruption due to the fact that the environment of liberalization has allowed the government to manipulate the laws. While unionization among contract workers has been low till now due to various factors like regional and linguistic differences, disparities between contract/casual workers and permanent workers and laxity and politicization of trade union activism, increasingly there are attempts being made to organize the majority of contract workers around common demands related to working conditions, wage structure and social security.

A report on the recent international comparison of labour laws in India with those of other countries serves to highlight the fact that India’s labour laws are archaic. China particularly has been able to attract FDI in labour intensive sectors due to its flexible labour laws. In India, colonial laws such as The Trade Unions Act (1926) have failed to keep pace with changing times, while laws governing contract labour and industrial disputes have resulted in a web of self-contradiction, harming both employers and employees. This is markedly different from the situation prevalent in advanced countries where contract labour is the preferred mode of employment even for the employees.

The reforms launched by the government recently promise to bring new changes, by announcing the two key reforms of the ‘unified labour and industrial portal’ and ‘labour inspection scheme’. The new proposed overhaul of labour laws has brought changes in the Factories Act, 1948, Apprentices Act, 1961 and the Labour Laws Act, 1988. These changes take care of ease of doing business, social security demands of workers, removal of corruption by lower government officers and penalizing industries which violate laws. Moreover, these reforms, and others which are expected to soon follow, at both central and state levels, are a part of the government’s ‘Make in India’ campaign in order to boost domestic manufacturing and employment generation in the country.

The current reforms, thus, look promising from the point of view of both the labour and the capital. They also signal the intent of the government to eliminate corruption in this sector. However, does this mean that reforming laws is the answer to the current deadlock in industrial relations?

In order to put the effectiveness of labour legislation in perspective, it is important to note its biggest limitation. Labour law reform is merely an institutional instrument and the manner in which it is currently conceived imposes this instrument from the top. Such an imposition is based on the assumption that labour-capital relations are necessarily defined by the principle of conflict. This was how the radicalization of labour took place in India since the time of freedom struggle. The imported Proletarian valorization from the West shaped the labour movement in India. However, this is not how the ideal of labour is originally conceived in the Indian culture.

At the heart of the problem lies the fact that the operation of an incentives-based system, in both socialist and capitalist ideologies, has defined the labour-capital relationship in the modern economy. Materialism is the key-word that has shaped the modern category of labour even in the Marxist philosophy which valorizes the proletarian tradition. The extremely narrow demands-based labour struggles in current times testify to this fact. Also, the segmentation of labour into various categories, including the contentious contract labour, is a product of how the modern economic activity is inherently structured, in all countries, including those with a successful track record. The current idea of labour and the labour-capital relations are based on the same assumptions that lie at the heart of the culture of consumption and materialism in both socialist and capitalist societies. Such a culture, by dividing activity in accordance with material, especially monetary, benefits, has fostered a perverted and fragmented idea of service, characterized by class divisions, community superiority, social status and individual self-interest. The very category of labour has itself become an artificial construct alienated from the larger idea of service. Both labour and capital are mere categories tailored to achieve the short-term goal of macro-economic expansion. Thus, the industrial relations are not grounded in any deeper unifying aim that can produce harmonious relations. Similarly, mere institutional labour reform does nothing to contribute towards any improvement on this front, as it too looks for ways to balance the industrial relations so as to maximize output.
This is in marked contrast to the true meaning and spirit of service, out of which the idea of labour is born. Indian culture recognizes precisely that kind of a spirit of service, which is not rooted in deriving material benefit and is at the same time deeply democratic and equal at the collective level. It recognized that institutions and regulations can only be effective if they become a natural part of the communal life, while communal life, as governed by larger institutions, can only be successful if relations at the individual level are shaped in a harmonious spirit and the society and political system are governed according to a higher guiding principle. This was how the political system in ancient India was governed. Social and individual action was based on a gradation of institutions of knowledge, warriorship, mercantile activity and service, with each institution being governed by its own spirit. Gains from mercantile and economic activity or degradation of those performing service did not form a part of the system. Nor was the imposition of a single, arbitrary law for all the administrative principle, which was responsive to the life of the community in the political and economic system.

Idealistic as such a system may sound; it was yet governed, at the same time, by collective principles of true socialism and democracy. Unlike in the present system, these principles were not institutionalized but formed an intuitive part of social life. One of the biggest shortcomings of the current system of legislation is how this system has itself become proletarianized; instead of seeking to raise the citizens or social groups to a higher level of conscious improvement, the current system of rules is based on the typical modern democratic assumption that institutions need to be tailored or watered down to meet the fragmented interests and demands of various competing social groups. Such a functioning of institutions can never foster legislation that can be even remotely progressive in the long-run. Thus, under modern conditions, it is important to revive the spirit that motivated the earlier system. At present, we have an extremely narrow and interest-based view of political and economic activity and our conception of labour-capital relations is grounded precisely in such a view. At this juncture, it is important that the public focus should not only be on short-term goal of labour reform, but also on awareness that goes beyond the goal of economic output and employment and focuses on realising the true spirit of service.

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