開催報告（インド）：第1回海外委託調査員連絡会議・国別報告会
The Role of Labour and Managemant under the Change in the Labour Market and Employment Structutre in India
（2003年11月19日）

Speaker

Professor C.S. Venkata Ratnam / Professor, International Management Institute

Abstruct

An attempt is made in this Paper to outline the profound changes taking place in the world of work in relation to labour market and employment structure in India in recent times. The issues challenged by both labour and management and the aspirations of all the players in the field in the context of the ongoing labour law reform exercise in the country have been indicated and discussed during the elucidation. Inter alia, particular reference has been made to the deliberations of the 39th Indian Labour Conference recently held in New Delhi. As emphasized therein, the current employment strategy has to be “reviewed and reassessed”, taking into account the ground realities of the new economic order. Regulatory reform in the field of labour market policy in consequence, it is underlined, is also beset with many complexities and compulsions, economic, social and political. The emerging trends in the labour market field with the focus on employment structure and pattern, proliferation and diversification and work lifestyles and their implications for the future also stand highlighted. The issues which have been raised for debate and discussion at the end in the context of labour market reform in the main include wage policy employment security and labour redundancy. In conclusion, the following pointers are stressed for evolving a suitable labour market policy and programme : Policy reforms are meant to minimize and not add to social costs of structural adjustment. A positive and careful effort is required to bring about painless labour reform in the country which could be achieved through a welfare approach. The Vision of the Future rests in achieving the goal of “Decent Work” as propounded by the ILO in order to promote healthy and harmonious industrial relations in the labour market and employment arena in the country.

Report

LABOUR MARKET SCENARIO

The agenda for reform as reflected by the various official documents such as the Economic Survey of the Government of India and the Second National Commission on Labour (SNCL) has highlighted the fact that labour market reforms have not kept pace with ongoing economic reforms.

As a prelude to an analysis of the labour market scenario, the basic structural characteristics of the Indian economy are worthy of attention.

1. A high degree of unemployment
2. strong dualism between organised and unorganised sectors
3. The impact of such dualism in turn affecting the manufacturing sector, which sometimes, (but not always) translates into the dualism between large-scale and small-scale
4. The continuing significance of agriculture as a major employer
5. The emergence of services as the largest employer often as a refugee sector and
6. The involvement of by far the larger share of the workforce in what is essentially low - productive employment

In short, “the broad diagnosis of the Indian labour market is one of dualism and labour market segmentation”. The organised vis-a-vis unorganised dichotomy also reflects clearly a gender bias, much of the female employment having embraced the unorganised sector.

FOCUS ON EMPLOYMENT CREATION

The Tenth Five Year Plan (2002-07), taking the cue from such trends, is committed to employment generation as a central objective in the overall process of socio economic development. Its objective is to generate 10 million jobs per year so that at the end of the Plan period i.e. by 2007, the country could achieve full employment.

DIVERGENT PERSPECTIVES

It is significant to mention herein that as regards the change in the labour market and employment structure, the two official Reports of the Planning Commission of India viz. the Task Force on Employment Opportunities (July 2001) under the chairmanship of Montek Singh Ahluwalia and the Special Group on Targetting Ten Million Opportunities per year over the Tenth Plan period (May 2002) had come out with different, nay, ‘contrarious’ perspectives.

The Task Force had estimated unemployment in 1999 at 2.2 per cent on the basis of the Usual Principal and Subsidiary Status (UPSS) method of the National Sample Survey and put the number of unemployed persons at 8.97 million.

The Special Group, in contrast, had observed that the unemployment rate had increased considerably since 1993-94 and was above 7.3 per cent in 1999-2000 compared to 6 per cent in 1993 - 94 on Current Daily Status (CDS) basis. In terms of the number of unemployed, the figure had worked out to 26.56 million.

The Task Force had stressed on priority for accelerating the growth of the oganised sector as it provided better quality jobs.

However, the Special Group was of the view that the thrust should be on the unorganised sector where the potential for creation of new job opportunities is much greater, if the GDP growth is stepped up to 8 per cent or so. The unorganised sector is currently contributing nearly 59 per cent in GDP, 92 per cent in employment and also substantially to exports. The organised sector is expected to generate some 30 million jobs over the Tenth Plan period against the target of 50 million. The Special Group had, therefore, suggested that another 20 million jobs should come from labour intensive sectors during the Tenth Plan period. (i.e. in agriculture and allied activities, small and medium industries, information technology, construction, tourism, financial sector, education and health etc.)

The Deputy Chairman of the Planning Commission, K.C. Pant, adopting a middle path, had clarified that the high growth process (i.e. 8 per cent) as recommended by the Task Force was likely to take time and should be seen as a medium term solution. And it needed to be complemented by specific short-run strategies which would deliver results within the Tenth Plan period. As such, while the Task Force goes into macro-economic policy reforms that were needed to increase the rate of growth in the country, the Special Group has focussed on the more micro-aspects of increasing labour intensities in the different sectors and region. “The two reports are complementary and should be taken together to get a holistic picture of employment prospects”, K.C. Pant had asserted.

Quite apart from the perceptions of the Government, it is needless to add that employment creation is a big challenge before the nation.

ISSUES CHALLENGED BY LABOUR AND MANAGEMENT

Economic Policy and Employment

The labour unions have been consistently opposing the Government’s economic policies which have been based on the marketist neo-liberal economic paradigm hampering harmonious industrial relations.

They have also pointed out to the absence of a precise employment policy and well-defined programmes of generating more employment. The Hind Mazdoor Sabha (HMS), for instance, has regretted that while it has been focussing year after year on the need for employment - oriented budget, the budgets of the past few years were out and out unemployment - oriented.

Labour Law Reform

It is instructive to note in this regard that the Special Group on Employment had termed the proposed amendments to the Industrial Disputes Act (IDA), 1947 as needless and had urged the Government to go slow on labour reforms. It had maintained that the amendments to the IDA and the Contract Labour Act (CLA) are to be sorted out on a long-term perspective and not for immediate employment in the country. It had further underscored that in the absence of a proper social security cover, overhauling the labour laws could lead to more casualisation of labour.

It is also to be recalled here that the Union Cabinet had in principle decided to amend the IDA so as to allow companies that employ up to 1000 workers to close down or retrench employees without the government’s permission even before the Report of the Second National Commission on Labour (SNCL) was to see the light of the day. At the same time, it had also clarified in the Rajya Sabha in March, 2002 that it’s stand was ‘flexible’.

The union’s disenchentment, in such a context, had only grown more, when the Report of the Second National Commission on Labour (SNCL) was made public on September 7, 2002 (Vide Annexure for Highlights).

The trade unions, in the main, have questioned the specious arguments justifying ‘labour law reform’, which according to some, is nothing but a new nonenclature for an ‘exit policy’ under the ‘second generation reforms’. They have, in fact, declined to buy arguments such as the following which remain hardly substantiated.

1. The labour laws are rigid and, therefore, they impede growth
2. Flexibility in labour laws will lead to generation of more employment
3. Flexibility is needed for attracting more Foreign Direct Investment
4. The labour laws are too harassing and cumbersome for the employers.

The labour unions have further felt that the present thrust on “labour law reform” is only intended to facilitate the adoption of new strategies such as:

1. Re-engineering (measures aimed at cost culting through labour shedding)
2. Downsizing of workforce
3. Early retirements
4. Substitution of skilled, often hitech workforce, replacing unskilled workforce
5. Search for flexible labour utilisation arrangements through casualisation etc.

“This is however, presented, attaching some sort of social and economic justification”, a veteran labour leader has asserted.

ANNEXURE
SECOND NATIONAL COMMISSION ON LABOUR (SNCL) RECOMMENDATIONS
HIGHLIGHTS

• No prior permission necessary for lay-off, retrenchment in establishment of any employment size.
• No need for any wage board, statutory or otherwise, for fixing wage rates for workers in any industry.
• Restricting holidays to three National holidays and two more, besides ten restricted ones a year.
• Contract labour shall not be engaged for core production / services activities. However, for sporadic seasonal demand, the employer may engage temporary labour for core production / service activity.
• The “single negotiating agent” should be that Trade Union which has a minimum membership of 66 per cent.
• Setting up of a Grievance Redressal Committee for organisations employing 20 or more persons.
• Evolving of a policy framework and enactment of law for unorganised sector workers to ensure generation and protection of jobs, protection against poverty, lack of organisation, arbitrary dismissals and denial of minimum wage.
• Creation of a high-powered National Social Security Authority, preferably under the chairmanship of the Prime Minister.
• Enact an “indicative law” on Child Labour to replace the existing Child Labour (Regulation and Prohibition) Act.
• Appoint an Expert Committee to study the pros and cons of National Minimum Wage and make suitable recommendations for fixation of minimum wage.
  (Source : New Indian Express, 8 September, 2002)

The labour leaders at their meeting with the Prime Minister Atal Bihari Vajpayee on 18 October, 2002 on the issue of labour reforms had apprised him that any attempt to dilute the labour laws to allow hire and fire by the employers as well as contractualisation of jobs of perennial nature as proposed by the SNCL would be resisted jointly by the workers and their organisations.

They had further insisted that a tripartite body be set up by the Government to examine the changes in labour laws suggested by the SNCL to protect the interests of the workers.

MANAGEMENT’S STAND

Neo-liberal economists, in support of managements, have argued that reforms have been inadequate and have not addressed some of the more politically difficult areas such as labour market policies and institutions, which constitute a major impediment to private investment. It is stressed that investment has been constrained and employment growth has been insufficient. It is all because of rigidity in the labour market that adversly affects employers’ sentiments particularly as regards organised sector activities.

Three types of regulations are said to constrain the employers :

1. First and foremost, fairly stringent rules relating to firing of workers and also for closing down enterprises along with requirements of reasonable compensation for retrenchment
2. Secondly, laws governing the use of temporary or casual labour which enforce permanence of contract after a specified time of employment
3. Thirdly, minimum wage legislation which raises the cost of hiring workers.

Such restrictions result in a dualism which is characterised by an organised (or large-scale) sector which has relatively low employment, and an unorganised (or smaller scale) sector which has low investment. It is, in fact, necessary to get rid of the constraints put on large employers on hiring and firing of workers in the matter of labour relations, if the advantages of both the sectors are to be reaped, it has been argued.

Set in the above background, industry circles have clamoured for changes particularly in two pieces of legislation viz. the Industrial Disputes Act (IDA), 1947 and the Contract Labour (Abolition and Regulation) Act, 1970. Under the former Act, Chapter V. B. requires that employers got permission from the Government for closure of industrial units employing more than 100 workers. The industrial lobby has urged for the withdrawal of provisions relating to the control and use of contract labour under the latter Act.

The SNCL has suggested, quite significantly, in this context, that prior permission is not required in respect of layoff and retrenchment in an establishment of any employment size. Thus the demand of the industry for flexibility has been most favourably viewed by the Commission.
However, the Employers Forum ASSOCHAM (Associated Chambers of Commerce and Industry) had felt that the SNCL had not done enough! It is reported to have complained: “The Second National Commission on Labour has not effectively and squarely dealt with the strategic areas that need labour reforms”. What it had meant was, for instance, that the limit for exemption under the Industrial Disputs Act was not kept at 1000 as decided earlier by the Government. As a union leader has commented in this connection, “That would have freed the employer class from any obligation to seek government clearance in respect of over 96 per cent of the establishments in the country from whatever protective arm of the law that exists to less than 4 per cent of the workforce”.

EFFORTS OF LABOUR AND MANAGEMENT AGAINST THE CHALLENGED ISSUES

The ‘pro-employer’ labour reform measures have forced the working class to rise in revolt by organising a series of strikes against the economic policies of the Union Government. The All India General Strike organised by them on 21 May, 2003 was in fact claimed to be ‘a rosounding success’, following the Workers’ March to Parliament on February 26. An eight point demand jointly was formulated by all the Central Trade Union Organisations, Independent Unions and Federations in this connection.

Further, the Central Trade Union Organisations have strongly reacted to the Labour Ministry’s Draft Bill on Unorganised Workers.

They have refuted the Ministry’s claim that the Draft is based on the recommendations of the Second National Commission on Labour and also on the conclusions of the National Seminar on Unorganised Workers held on 7- 8 of November, 2002. They have argued that none of the basic factors of the two instruments viz. regulation of employment and service conditions including minimum employment earnings etc. are reflected in the Draft which only harped on contributory Social Security and Welfare Measures.

They have also pointed out to the absence in the Bill of the SNCL recommendation that wherever the employers are identifiable and the workers are incapable of making their contribution due to their insignificant earnings, the State should bear the burden of the contributor for both the workers and the employers.

In sum, the Bill would require complete redrafting to which they are prepared to render any assistance in view of its importance.

The assesment of C.P. Chandrasekhar and Jayati Ghosh as regards the SNCL’s proposal to enact an umbrella legislation for unorganised workers, in this context, is also significant. To quote :

“But the real problem, that of ensuring that such laws are actually implemented and that the incentives within the economy are such as to ensure that the laws are functional, has not been systematically addressed”.

“This means that the only part of the Labour Commission’s proposals are likely to get genuienly implemented are those relating to easier conditions of hiring and firing in the organised sector. While the condition of the bulk of workers is not likely to improve in consequence of this, those of workers in the organised sector may actually deteriorate as a result”.

Indian Labour Conference (ILC)

While inaugurating the 39th Session of the Indian Labour Conference (ILC) in New Delhi on 16 October recently, Prime Minister Vajpayee had called upon the players in the economy to embrace change by changing their mindset.

He had also underscored that the current employment strategy had to be “reviewed and reassessed” taking into account the realities and complexities of the new economic order.

He had further emphasised that in the new scenario, it was not possible to expect companies to gurantee life-long employment, but what they could perhaps do is to gurantee ‘employability’. “This is a concern that many potential VRS seekers have skills and capabilities of workers, displaced in the process of restructuring, is important for their re-intergration into the mainstream of the economy”.

It is significant to add here that the Labour Conference, could not succeed in evolving a consensus on proposed amendments to labour laws viz. the Industrial Relations Bill and the Contract Labour Act.

The Committee which was set up to go into the issue of labour laws had revealed the unamious view of the employers to go ahead urgently with the reforms. However, the unions had reiterated that the SNCL’s recommendations had “immensly harmed” the cause of the workers even while granting the right to hire and fire them.

On the key of issue of contract labour, the employers had urged that such labour should be allowed to be engaged in all sectors and shouldn’t just be confined to non-core areas. But the trade unions apprehend that coming in the wake of recent changes to service rules, the development is a preamble to removing the distinction between core and non-core sectors.

The employers had also opposed the proposal that contract labour should be given at least 25 per cent more salary than regular workers. They had contended, in this regard, that this would “create serious industrial relations problems”.

EVALUATION OF THE INCREASE IN PART-TIME, TEMPORARY OR DISPATCHED WORKERS

It is pertinent to underscore, in this connection, that the organised sector accounts for less then one-tenth of the total employment in the country. Due to restructuring pressure, it is stated to account for just 8.9 per cent of the main workers, compared to 9.6 per cent a decade back.
The decline in organised sector jobs in the last five years actually reflects the grave impact of closures of industrial units and a wave of Voluntary Retirement Schemes (VRS).

Statistics reveal that nearly 90,000 employees in various Public Sector undertakings alone had availed of VRS in 1999-2000 which was followed by another 54,000 employees in 120 Public Sector units during the year 2001-02.

As regards job losses in major companies, metal industries have had the major impact.

All the same, service sector employment is reported to have gone up by 6.3 both during the last four years.

Employers’ search for escape routes has led to greater use of casual and contract workers and industrial employment has declined sharply due to the ushering in of the “Age of the Pink Slip”.

Future Trends

It is useful in this regard to take note of the following seven trends which have been identified by an ongoing research study, carried out by Totus Consulting, the Chennai based Human Resources Consulting firm, which has launched “Employment 2010 - a Participation Event”.

1. Employee rights - The issue here is not just who will take care of the employee rights in the future but also what the consequences of not taking care of employee rights are. “Will this neglect result in white collar activism・” is another moot question to think about.
2. Career longevity - It is likely to emerge as a major source of concern for those over 45, who will may have to embark on a second or even a third career in their middle years. Retirement for them in the traditional sense will soon disappear, making it necessary for society to have appropriate coping mechanisms.
3. Increasing work - life imbalance - This is quite visible even now among women who continue to work under pressure, trying to balance their own needs and expectations with those of society. Growing concepts such as ‘free-agency’ and ‘tempting’ would offer the required options to women, who themselves would be responsible to find solutions to their problems driven by the increasing work-life imbalance.
4. Emergence of professional employer organisations - Organisations would be increasingly driven only by performance and as such a ‘no-frills’ employee proposition will emerge. Most businesses will not invest in developing talent and will instead look at ‘buying’ it, by turning to intermediaries such as professional employer organisations, who will gain in influence.
5. Change in HR function - The HR function too will be influenced by the persistent focus on the bottomline and on ensuring performance. Traditional HR skills such as managing ‘employee relations’ will no longer be part of the HR vocabulary.
6. Educational change - Education would increasingly become a prerogative of the private sector with porus boundaries between industry and education.
7. Gaining work experience by youth before completing higher education - Many young people, as part of this process, will join the workforce after completing high school (10+2) and will work for a while before returning to college for a graduate degree.

The research organisation Totus Consulting is reported to be currently working on identifying the strategies required to cope with these above seven trends, which should be of much interest to all concerned in the labour market field.

All the social partners including labour and management are thus poised on a wave of change in the labour market sphere in terms of modifications in employment structure and pattern, proliferation and diversification in work life styles, calling for innovative approaches on their part to face the challenges ahead.

HAVE UNIONS SUCCEEDED IN ORGANISING PART-TIME, TEMPORARY OR DISPATCHED WORKERS?

As the above trends have indicated, the labour unions are quite conscious of their uphill task in organising the part-time, temporary or dispatched workers. However, the measure of success in their efforts in this direction depends on various factors, especially on the Government’s and employers’ respect for tripartite consulation and social dialogue and routine meetings with labour representatives and not only with employers.
In fact, Hasubai Dave, National President of Bharatiya Mazdoor Sangh (BMS), has lamented that labour is being sidelined everywhere, in all the Committees and Task Forces or Advisory Committees on employment constituted by the Government.

Again, what these Committees recommend has been found to be against the interests of workers.

All the same, it is felt by the trade unions, that they have to takeup the cause of unemployment in a big way, as unemployed people are always ready to work for less and it certainly affects unions’ bargaining strength. “A rise in unemployment is harmful to the trade union movement”, a veteran trade unionist has cautioned. “Any movement we launch in the unorganised strata, our movement also gets strengthened. With this perspective in mind, we will carry forward trade union action all over the country”, he has affirmed.

Such then is the reaction of the labour unions who have till date have had only very limited success in organising the different catagories of workers, espeically the unorganised or the informal sector workers. The future beckons them, without doubt, for greater galvanisation and united action.

REGULATORY REFORM AND ITS IMPACT ON LABOUR MARKET POLICY :
AN ASSESSMENT

Regulatory reform in the field of labour market policy, as the above narration has revealed, is beset with many complexities and compulsions, economic, social and political.

The Government, for its part, is yet to decide and finalise labour reform measures and suggestions by the Second National Commission on Labour (SNCL) and others. But as a union leader has crisply indicated, “The process may be delayed but the implementation is on”.

Major Issues for Consideration

The International Labour Organisation (ILO) in a Report released recently, has pinpointed, in this context :

“The economic reforms and structural adjustment policies, currently being implemented in India, have major social costs associated with them. However, a large part of the social costs are attributable not to the economic reforms per se but to the rigidity of the labour market in India”.
The Report, in this connection, has investigated three major issues of labour policy - wage policy, employment security and labour redundancy with a view to generate broad ideas for reform.

An analyst has summed up the recommendations of the Report thus :

“Four basic principles underlie the suggested reforms in the area of wage policy prepared by the ILO. First, statutory minimum wages should set a minimum price of labour in the economy in such a way that a wage-worker is able to attain a minimum acceptable standard of living. Second, while labour market dualism exists and will undoubtedly persist for quite a while, State policies must not legitimise and institutionalise this. Third, in the organised sector, ways must be found to link wages with productivity and profitability without rendering labour incomes highly unstable. Finally, collective bargaining must be assigned an important role in the wage determination process”.

“In the area of employment security, the reform proposals derive from the judgement that income security of workers needs to be and can be delinked from employment security. But development of an income security system involves development of new labour market institutions, which is why employment flexibility can only be a medium-term goal”.

“The problem of labour redundancy carried over from the past is to be distinguished from frictional unemployment that is expected to arise in the normal course of industrial growth. The NRF programmes need to be redesigned with this basic fact in view. Given the nature and magnitude of the problem, there is also an urgent need to increase the resource allocated to these programmes substantially. And yes, you need a political will for the same. But is anybody listening・”.

While the above suggestions are worth pondering over, what is most important to realise at the same time is that labour policy reforms are meant to minimise, and not add to, social costs of structural adjustment.

Emphasis on Welfare Approach

The Vice-President of the Taj Group of Hotels Ltd., in this regard, has cautioned that neither an indifferent management approach nor trade union militancy is going to lead to labour reform. A positive and careful approach is required to bring about painless labour reform in this country and the mainstay has to be “Welfare Economics”.

In the considered view of the former Minister of State Muni Lall, labour market flexibility is relevant but only in the medium term. This is fortunate, since labour market flexibility cannot be increased overnight.

He has also cautioned that hasty attempts to reform the legal framework without creating institutions appropriate for a new regulatory regime will themselves generate social costs and are likely to create anarchic conditions in the labour market. A programme of labour reforms has, therefore, to be formulated with these considerations in view.

These are indeed grey areas which do require considerable research and innovation.

CONCLUSION

Last but not least, the role of labour and management in the interest of promoting healthy and harmonious industrial relations under the change in the labour market and employment structure, has to be focussed, without doubt, on bringing down the “Decent Work Deficit”, i.e. a) Employment Gap b) Rights Gap c) Social Protection Gap and d) Social Dialogue Gap which the Director General of the ILO, Juan Somavia has aptly highlighted in his report on “Decent Work”.

Herein lies a Vision of the Future.

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