A lot of what is proposed can be done by the states
Given India’s poor labour regulations are one of the biggest sore points when it comes to setting up manufacturing facilities, it is not surprising the government is expending so much capital on trying to fix this; Make-in-India is pretty much a non-starter unless this is fixed. While much of the attention has been focussed on allowing companies more freedom to retrench labour, there are plenty of other low-hanging fruit as well. The proposed Labour Code on Industrial Relations Bill tries to balance worker and management interests though trade unions remain bitterly opposed to it —severance pay, for instance, has been trebled to 45 days’ pay for every year of service. While the Code raises the limit below which government approval is not required for retrenchment to 300 workers—from the current 100—it does not tackle issues such as making it more difficult to form unions; Rajasthan’s law, though, stipulates that every union must have at least 30% of workers as members as compared to 10% earlier.
As Business Standard reported, the proposal on strike notices is an important step forward. Right now, workers do not need to give a notice of strike and can, if need be, go on a flash strike—state governments, though, can declare a particular industry to be a ‘public utility’ and in these industries, a strike notice will have to be given. The new Code makes this applicable to all industries—so, unions will have to give a 2-6 weeks notice to employers. More important, the moment the notice is given, a conciliation proceeding will be deemed to have begun—and once a conciliation process is on, there can be no strike. Penalties for illegal strikes have also been raised hugely and can go up to as much as R50,000, including a month’s imprisonment—the imprisonment clause is there even today. Go-slow, gheraoes, etc are also considered to be a form of coercive action. A very big change, that trade unions are most upset about but industry has been very vocal about, given the past, is that all office-bearers of a union have to be either employed in that unit or in that industry—in several high-profile strikes, it was found that outsiders were playing a big role in fomenting trouble.
There are, of course, some niggling issues—for instance, the definition of ‘employer’ as a person who ‘employs, directly or indirectly, employees’ can mean employees of contractors will also be treated as the unit’s workers.
Employers, similarly, are upset over the immunity from civil suits for members of a union. Eventually, though, while the law is important, what is more important is its implementation—states like Gujarat and Maharashtra had labour laws that didn’t look very progressive, but have granted industry more flexibility than in other states. It is all very well to make conciliation mandatory, but if it fails, the matter has to be escalated to the state government which will decide whether or not a strike is illegal—in several states, this can take months. Similarly, if trade unions decide to slow-down production, this would fall under the rubric of ‘coercive action’, but somebody needs to declare it so.
Indeed, most of the changes being talked of can be done by state governments and, to that extent, the Centre could be making a political mistake by pushing them too hard. Presumably, though, the reason for pushing this is to convince investors that big changes are taking place—those by the states may slip under their radar.