Labour Reforms - Fixed Term Employment

Why in news?

The Finance Minister advocated “fixed term employment” in the budget speech.

How have the labour laws evolved?

• Present labour laws are a carryover from war-time legislation promulgated by the British to protect industry from disruption.
• These laws were incorporated into the Industrial Disputes Act in 1947.
• The crux of the law is government intervention in industrial disputes to balance between labour and management.
• This never worked well and succeeding labour ministries tried to end this war-time anachronism.
• The role of the State in essentially an issue between labour and management was sought to be reduced.
• The aim is to ensure bilateral resolution of conflict, as happens in every liberal democracy.
• During the emergency period it was ruled that permanent workers cannot be sent away.
• Nor were the places of work be closed down without the consent of the state.
• Industry’s response to the rule on permanent workers has been a massive shift to contract labour.

How is contract employment in India?

• There are firms which employ no permanent workers at all, except for a small clutch of officers.
• Industries are also increasingly diluting the law that forbids the employment of contract labour in core processes.
• Permanent workers are unconcerned with these changes so long as their interests and emoluments are secure.
• The trade unions are just beginning to organise contract workers.
• The unions at most ask for minimum wage for the contract labourers.
• The unions cannot call a strike because permanent workers will not back it.
• The contract workers themselves cannot go on strike because they risk losing their jobs.
• Employers will in any case not pay more.
• Although employers are the driving force behind the shift to massive contract employment, the government also seems to be supporting this.

How can fixed term employment help?

• The present unfixed contracts can be terminated any time.
• Organised industry is riding on cheap contract labour, due to immortality on the enterprise.
• In this backdrop, the fixed-term employment does not promise lifetime employment.
• However, it will be a clear tenure, as a company or an enterprise hires an employee for a specific period of time.
• The contract can be renewed or terminated according to the performance of the worker.
• A fixed term contract will enhance workers’ security and remuneration.
• It will also allow the employers the flexibility they desire.

What is the way forward?

• The fixed contract could raise opposition from both labour and management.
• Fixed contracts will push up the wage bill, which employers will resist.
• These are important considerations and challenges before working on labour laws.
• But India cannot continue to rely on an insecure and impoverished labour force, for it to become a manufacturing powerhouse.
• The insensitive exploitation of the weak and vulnerable in the formal sector cannot be justified in a society striving for equality.
• Well thought out labour reforms are crucial to address all these.

Source: BusinessLine