Government to go slow on labour reforms

New Delhi: The Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) government has hit pause on labour reforms.
It has constituted a high-level committee to forge a consensus among all stakeholders on the blueprint for such reforms. Among the items on the table is the controversial proposal to allow retrenchment of up to 300 workers at one go by an enterprise without prior government approval. This committee will engage national trade unions, industry and political parties, both individually and collectively.
In the process, the NDA seems to have signalled a subtle rethink on a controversial policy initiative. Analysts said this recalibration is an outcome of the opposition that the NDA encountered in its efforts to get legislative approval for the new land acquisition law.
BJP president Amit Shah, in an interview on Sunday, said, “We are in discussion with all labour organizations on the issue of labour reforms. The committee will hold discussions with 11 prominent labour organizations. After that, there will a discussions with industry, then there will be a triangular discussion and following that, there will be a discussion with political parties and only after will the government move towards labour reforms.”
The Economic Times reported the formation of the committee on Monday, quoting a letter sent out by the labour ministry informing trade unions that the Prime Minister’s Office (PMO) had set it up with five ministers—finance minister Arun Jaitley, labour minister Bandaru Dattatreya, power minister Piyush Goyal, petroleum minister Dharmendra Pradhan and minister of state in the PMO Jitendra Singh.
While the consultations may reassure trade unions, including BJP-affiliated Bharatiya Mazdoor Sangh (BMS), it can slow down the reform process in New Delhi and state capitals as opposition parties may not support the measures, with an eye on bottom-of-the-pyramid votes.
“The government has set up a committee comprising five ministers because it is under severe pressure. It seems to have softened but how much will only be known after a couple of rounds of discussions,” said D.L. Sachdeva, national secretary of the All India Trade Union Congress, a central trade union. He said the labour minister had indicated that there would be a two-day meeting in the third week of June.
A labour ministry official said the committee was a welcome move and indicative of the government’s mindset of taking everyone along.
“Some may say it will slow down the process of reform. It may do so a bit, but the other side is: once you have consensus, amendments won’t face a problem getting Parliament’s nod,” said the official, requesting anonymity. “We have always maintained that the labour ministry believes in balance—labour reform and workers’ safety,” said the official, adding that the committee, by holding consultations with political parties and trade unions, would help achieve that balance.
The NDA government faced bitter criticism from both opposition parties as well as civil society for not holding consultations on the contentious land acquisition legislation. Under pressure from the opposition, the amended bill was eventually sent to a 30-member joint committee of Parliament on 12 May.
Sachdeva said the government had been moving arbitrarily so far, and this was the first indication of it coming under pressure. Knowing the NDA government, it could lead “only to words and no action”, he added.
Both analysts and opposition parties concur.
Yatindra Singh Sisodia, a professor at the Madhya Pradesh Institute of Social Science Research in Ujjain, said initially the NDA got carried away by its massive mandate. “This (setting up a committee to steer labour law reforms) is in a way a second thought on its part—that it should meet people and try and evolve a consensus,” he added.
“In the latter part of the past year, there has been serious criticism against the government; people have taken a strong stand and that sentiment has reached the government. This is definitely a rethink. Politically, too, labour reform is a sensitive issue; it is dicey for the government and may not be an easy ride,” said Sisodia, also a part of Lokniti, a research programme of the New Delhi-based Centre for the Study of Developing Societies.
Suresh Kodikunnil, a Congress leader and former minister of state for labour and employment, said the committee could merely be an “eyewash” for the labour class, and added that the government was not serious about protecting the interests of workers.
Kodikunnil said the NDA government had “arbitrarily started labour reforms without much consultation”. Even the BJP-affiliated BMS was against the proposed changes, he pointed out, adding, “They are changing the labour laws to help the corporates instead of protecting the working class.”
The labour ministry official said that contrary to what trade unions were saying, the ministry had several rounds of consultations with them and industries on several labour reforms. Labour laws need to change with the times, labour secretary Shankar Agarwal told Mint last week.
Several labour reform proposals are under consideration. The labour ministry plans to consolidate 44 laws into five broad laws. It wants to allow women to work night shifts and intends to allow small factories to comply with just one labour law instead of 14 central laws. Among other changes, it is working to make the National Pension System an alternative to the Employees Provident Fund, and health insurance an alternative to Employees State Insurance Corporation-driven health services for industrial workers.