Labour Law deregulation in India

A threat to the application of international labour standards and workers’ rights.

The Indian labour law reforms are wide ranging and will significantly affect economic and social policy. They cover industrial relations, wages, social security, welfare, labour inspections, trade unions, and special economic zones. With the reforms, the government is also hoping for an improved rating on the World Bank’s “Ease of Doing Business” ranking to catalyse.

Labour Law deregulation in India

The drive for a more flexible labour market in India can be traced to the 1990s. The objective has been to liberalise the economy, ease restrictions on business, and boost investments. The government of Prime Minister Modi stepped up these efforts when he assumed power in 2014. Through the adoption of the “Make in India” policy, the government is intent on “clearing the field” for business to thrive but in a manner that leads to increased labour insecurity, decreases the capacity of trade unions to protect members, and reduces the social accountability of business to the workplace. The human insecurity situation for many Indian workers and their families is feared to worsen.

In 2014, the government announced major legislative reforms involving the review of about 150 labour laws. As the Modi government has returned to power after winning the May 2019 elections, there are concerns that they will embark on a ruthless drive to push through these reforms. According to the government, they aim to consolidate and modernise labour laws in order to build a robust manufacturing sector in line with the “Make in India” policy. The central trade unions and other civil society organisations do not see it this way. In their view, the proposed reforms would increase labour flexibilisation, deepen fears of employment insecurity, increase labour market vulnerability leading to a supply of indecent jobs and the withdrawal of time-tested health and safety safeguards that protect workers. The role of the unions as a genuine, autonomous, and independent representative of the economic and social interests of workers in a democratised labour market will systematically decline.

This comes at the cost of neglecting India’s international labour standards obligations. The government has failed to recognise that focusing on economic growth for its own sake leads to jobless growth and socially unaccountable prosperity. This leaves workers and communities poorer, uncertain, unstable, vulnerable, insecure and unprotected against business harms. The Constitution of the International Labour Organization (ILO) enjoins the government to improve labour conditions by effectively regulating hours of work, labour supply, unemployment, adequate living wage, work-related sickness, disease and injury, and by enforcing principles of freedom of association and collective bargaining, among other issues, impacting social and economic policy. The ILO Constitution is clear that failing to address these issues threatens the peace and harmony of society and undermines other nations that “seek to improve the conditions for workers”. India is a founding member of the ILO and has been a permanent member since 1922. India has ratified forty-seven Conventions and one Protocol. These include six out of eight fundamental Conventions, three out of four governance Conventions and thirty-eight out of 178 technical Conventions. Thirty-nine of these instruments are in force in addition to the guidance provided by the recommendations of the ILO. As a member, the government is under obligation to, in law and practice, ensure that its laws and actions comply with the standards directly ratified and principles enunciated in the Constitution and Declarations of the ILO.

India’s Central and State governments have taken various steps to reform labour legislation to fit the “Make in India” policy. This report draws attention to the risk to workers and the ways in which the measures proposed and adopted are contrary to international labour standards.