Earlier this year, bank unions threatened to go on a 4-day strike unless they were given a 25% hikes in wages; they finally settled for 15%, but with two additional holidays in a month. Before that, in January, half a million coal miners stayed away from work for a couple of days alleging the government was moving towards de-nationalising Coal India. Now, trade unions across the country have called for a strike on September 2, protesting, among other things, the changes in labour laws and, if you please, the land acquisition bill. That is irresponsible because without more flexible laws, it is going to be difficult to create a more conducive business environment in which companies, whether large and small, can operate efficiently. As part of the reform, the government is hoping to compress 44 labour laws into 4 simplified codes. But it isn’t as though the changes are against the interest of workers; they merely seek to ensure greater discipline. For instance, amendments to the Apprentices Act, 1961 seek to allow the employer to fix the hours of work and leave but, at the same time, it also excludes imprisonment as a form of punishment and specifies the maximum fine payable for an offence. Again, the government is trying to ease the definition of a factory in the Factories Act, 1948; the Centre wants to allow state governments to raise the minimum number of workers employed to 20 and 40 (with or without power, respectively) from 10 and 20 in the Act. At the same time, it puts in stricter rules for pregnant women.
Again, while there is a move to increase the number of overtime hours, provisions for paid leave are being relaxed. Even as the Centre has moved to ease labour laws, state governments are following suit. In July this year, Madhya Pradesh became the third state in the country to reform the rules and regulations after Rajasthan and Gujarat. While the workers may not have realised it yet, any indiscipline will only prod managements to opt for greater mechanisation. A couple of years back, workers at Bajaj Auto were demanding an unreasonable increase in wages apart from 500 shares each in the company at R1 apiece as compared to their market price of Rs 1,875. That dispute was settled after protracted negotiations and court hearings, but the fact is that companies will shy away from setting up fresh capacity. With China’s high wages making manufacturing less competitive, India is hoping to attract foreign investors to set up shop here. But for that, labour laws need to be less rigid. A recent study by CRISIL noted that a push for labour-intensive manufacturing, through changes in labour laws, along with an improvement in physical infrastructure and power can create nearly 11 million jobs by 2020 compared with a loss of four million under status quo. In a damning comment, RC Bhargava, chairman of Maruti Suzuki, recently observed there was no link between wages and productivity. The labour unions need to behave far more responsibly, else they stand to lose the most.