States are going ahead with labour reforms, even if Modi govt is finding it hard to do so

The labour ministry has told a parliamentary panel that over 10 states have reformed some labour laws over the last year or more. A dozen more are considering them.

A manufacturing plants for trains (representational image) | Udit Kulshrestha | Bloomberg

New Delhi: The Narendra Modi government might be finding it hard to reform the archaic labour laws in the face of strong opposition, but many Indian states are slowly ushering in small changes to their laws in a bid to attract investments and spur economic activity.

In a communication to a parliamentary panel, the Union Labour and Employment Ministry said at least 10 states have implemented some labour reforms — despite opposition from central trade unions, including RSS affiliate Bharatiya Kisan Sangh — over the last year or more. A dozen more states are also considering making changes.

The states include opposition-ruled Punjab and Jharkhand too.

The ministry’s response came as BJD MP Bhartruhari Mahtab-led parliamentary standing committee on labour sought some clarifications after several states — Uttar Pradesh, Madhya Pradesh, Gujarat, Punjab, Maharashtra, Goa and Odisha, among others — diluted their state labour laws, said a government official who didn’t wish to be named.

Some of these states, like UP, MP and Gujarat, have brought in the changes amid the Covid-19 pandemic and the subsequent lockdown.

For instance, the Uttar Pradesh government proposed an ordinance this month exempting companies in the state from all labour laws for three years. Besides this, UP, MP, Punjab and Rajasthan allowed for an increase in daily working hours in manufacturing units from eight to 12 hours. This invited widespread criticism from trade unions. The UP government was later forced to withdraw the working hours after the Allahabad High Court issued it a notice.

Labour issues are part of the concurrent list, so states can frame their own laws, but require Presidential assent to amend the central law.

The Narendra Modi government has been batting for labour reforms ever since it first came to power in 2014. PM Modi has spoken about the need to reform the archaic laws, especially over the last three months, as these are considered a major hurdle in attracting industries and businesses to India.

Early in his first term, Modi had initiated the process to convert the existing 44 central labour laws into four codes — on wages, industrial relations, occupational safety, health and working conditions, and social security. While the Code on Wages was passed by the Parliament, the other three are still awaiting approval.

States’ reforms to major labour laws

On 22 May, the labour ministry informed the parliamentary panel that reforms is a “continuous process and various state governments are taking measures from time to time keeping in view the economic scenario of the state as well as welfare of the worker”, government sources told ThePrint.

In its communication, the ministry listed states that have already implemented changes to various laws, as well as the ones that are considering them.

In the Industrial Disputes Act, 1947, the ministry said six states — Rajasthan, Madhya Pradesh, Haryana, Jharkhand, Andhra Pradesh and Assam — have increased the threshold for seeking prior permission from appropriate governments in cases of retrenchment, layoffs and closure of industrial establishments, from 100 to 300 workers.

This applies only to sectors relating to factories, mines and plantations.

Besides these six, eight more states — Bihar, Goa, Gujarat, Himachal Pradesh, Karnataka, Meghalaya, Punjab and Uttarakhand — are thinking about this reform, the ministry said.

In case of the Factories Act, 1948, Andhra Pradesh, Maharashtra and Rajasthan have increased the threshold from 10 to 20 workers (with electricity), and 20 to 40 workers (without electricity) by amending the law in their states.

As a result of this change in threshold, small industrial units won’t need to register themselves with the authorities, a mandatory requirement under the Factories Act.

Ten states are considering implementing these changes — Assam, Bihar, Goa, Gujarat, Haryana, Himachal Pradesh, Karnataka, Madhya Pradesh, Meghalaya and Uttarakhand.

The labour ministry mentioned the Contract Labour (Regulation & Abolition) Act, 1970 too. Andhra Pradesh, Haryana and Rajasthan have already amended the central law, increasing the threshold of workers for applicability of the Act from 20 to 50 workers.

Assam, Bihar, Goa, Himachal Pradesh, Karnataka, Madhya Pradesh, Meghalaya and Uttarakhand are looking at making these changes.

Other reforms

The labour ministry also informed the parliamentary panel that various states are bringing in administrative reforms by implementing fixed term employment rules in the schedule to the Industrial Employment (standing orders) Act, 1946.

The Centre had notified the rules in March 2018, allowing industries to hire contractual workers directly for a fixed tenure, instead of going through contractors.

However, companies have to provide contractual workers the same social security benefits as they do to permanent workers.

The parliamentary panel was informed that so far seven states — Gujarat, Haryana, Jharkhand (only in apparel made-up sector), Madhya Pradesh, Odisha, Rajasthan, Uttar Pradesh (textile) — have implemented these changes. Assam, Bihar, Goa, Himachal Pradesh, Karnataka, Punjab and Uttarakhand are considering them.