Opinion | Formalizing labour is the ideal way to provide worker welfare
4 min read . Updated: 03 Aug 2020, 08:42 PM ISTIndia should simplify its labour laws into a few codes, reduce business compliances and grant all workers an identity for aid
The world of work, wages and livelihoods is being deeply impacted by the pandemic. In addition to the direct health threat to workers and their families, the disruption threatens their physical, emotional, social and economic well-being. It is no exaggeration to say that the policy response for worker welfare and jobs will be among the most important responses to the current covid crisis.
The immediate responses to the pandemic related to public health, including lockdowns, social distancing, hand washing and quarantine rules. The economic responses included cash grants and macroeconomic liquidity measures. Around the world, and particularly in developed economies, workers have been assisted through various measures, such as unemployment insurance and a worker wage subsidy. Many European countries, including Denmark, Germany, France, the Netherlands and the United Kingdom, subsidized companies to keep workers on their payrolls. The US Federal Pandemic Unemployment Compensation Program under the Cares Act raised the unemployment insurance payment by an extra $600 a week (that programme lapsed over the weekend). European nations have also actively facilitated job-sharing programmes among workers, reducing the requirement for retrenchment. Some 10 million German workers stand to benefit from a scheme called Kurzarbeit, which literally means “short-work". Workers are paid nearly full wages for partial work without a need to lay people off. These work sharing programmes appear to be the most effective way (in terms of cost per employee) to manage a crisis from the worker’s point of view, and they address the mental, economic and social impacts of the crisis.
The International Labour Organisation (ILO), which came into being in 1919, brings together the governments, employers and workers (GWE) of its 187 member states to help set labour standards, develop policies, and devise programmes that promote decent work for all women and men. The ILO has catalogued responses to covid-19 by four pillars: 1) Stimulating the economy and jobs 2) Supporting enterprises, employment and incomes 3) Protecting workers in the workplace, and 4) Dialoguing among the GWE to promote solutions. The ILO exhorts its members to “tailor their support packages so as to save businesses and jobs, prevent layoffs, protect incomes and leave no one behind".
The pandemic is like no other crisis in recent times. Some workers in the technology, finance and consulting sectors have been able to mitigate the effects because of work-from-home (WFH) policies. The pain, however, is being felt quite widely, and vulnerable workers are bearing the brunt of it. Among the most deeply affected are women, who hold 70% of all jobs in the health and social care sectors, informal and temporary workers, including some in the gig economy, and young workers who are currently seeking employment. Migrants within a country and international immigrants have also been disproportionately impacted, with the degree of their adversity varying by the sustainability of their jobs and the coverage of their health care burden. Micro, small and medium enterprise (MSME) workers, particularly those who are employed in their own micro businesses, have suffered the most acutely.
India has undertaken several measures to rescue its economy, including doses of fiscal and monetary stimulus and an MSME support programme. Direct measures related to the formal and informal labour market have been chaotic and uncoordinated. According to Schedule VII of the Indian Constitution, labour is a concurrent subject between the states and the Centre. The central government response has largely been restricted to repatriation transportation. After a complete snafu with respect to migrants, a semblance of order has been restored with Shramik trains letting migrants travel to and from their homes. Due in part to labour shortage caused by mismanagement, a dozen states have relaxed labour regulations by issuing ordinances. Uttar Pradesh (UP), Punjab, Gujarat and Karnataka have increased the maximum factory work hours per day to 12, and from 60 to 72 hours per week (the ILO specifies a maximum of 9 hours per day and 48 hours per week). UP and Gujarat have further specified that the extra hours are not eligible for overtime payment. Many of these regulations are in violation of the draft labour codes proposed by the central government, which are currently in various rounds of discussion in Parliament. It seems likely that the President will not sign these and that they will be struck down under the principle of subsidiarity.
India’s task is complicated by the fact that only 10% of its labour force makes up the formal labour market. Add to this another 12-15% working as contract labour, and it means that only about 22-25% can be identified and provided specific support. Large segments of unorganized labour, particularly in the MSME sector, agriculture, household activities and construction, are not part of the formal system, and therefore can only benefit from generalized subsidies or direct government-to-resident transfers, rather than as workers. So “welfare" becomes a general rather than specific idea. By collating and simplifying labour laws into a few codes and reducing labour compliances at the Centre and in each state, a concerted effort should be made to give workers a financial identity. Only then can the ILO’s notion of dialogue be conducted and marginalized workers be given a voice that translates to welfare in times of crisis.
P.S: “The future depends on what you do today," said Mahatma Gandhi.
Narayan Ramachandran is chairman, InKlude Labs. Read Narayan’s Mint columns at www.livemint.com/avisiblehand
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