 "Labour reforms will lead to job creation: Bandaru Dattatreya")
In its first year, the National Democratic Alliance (NDA) government has introduced a slew of labour reforms, some of which have been strongly criticised by trade unions. Labour and Employment Minister Bandaru Dattatreya tells Somesh Jha and Indivjal Dhasmana the government is in no hurry to bring in contentious labour reforms, adding it will first try to get labour unions on board. He says trade unions have to adapt to the new environment, as only then will there be employment generation. Edited excerpts:
How has the first year of the labour ministry under the NDA government been?
The first year has given a clear indication that this government is committed to safeguarding the interests of workers. At the same time, employment generation, employability and ease of doing business are also necessary. The thrust is to create harmonious relations between employers and employees and this message has been clearly given by the government in its first year. Both industry and trade unions need more transparency and accountability, which had been declining by the day earlier. The Modi government wants to protect workers’ rights and create employability. For that, we need to take steps towards ease of doing business.
Trade unions are saying they’ll call for a strike on May 26.
Last week, we held a meeting with them at our ministry. Earlier, they had presented us a charter of demands. We called a meeting to inform them of the government’s actions in the past 10 months. They told us all the national trade unions are meeting on May 26. There were a lot of issues and we are sorting those out.
Trade unions say the government organised a meeting only to stop them from calling a strike.
These meetings are an ongoing process. This time, we had called two Union ministers (Power Minister Piyush Goyal and Petroleum Minister Dhamendra Pradhan) to participate because some issues were relevant to them, too. I will take up this matter with the prime minister after his return. I will bring to the notice of the PM a summary of the meetings and our action on those.
Will you do that before May 26?
Naturally! We are already doing this exercise. Three ministers have examined their demands but trade unions have already scheduled a national convention. We can’t do anything about that. We can only explain. I will first talk to the PM and then see till May 25.
Do you think it is fair on the part of trade unions to call for a strike on May 26? Will you convince them against it?
It is not a question of convincing them. In terms of their 10-point charter of demands, we are close to fulfilling four-five. A few other demands need lengthy discussions. We have been working on these for the past six months.
Among the labour reforms suggested by your ministry, trade unions are against relaxation in the hire-and-fire provisions. How will you persuade them on this front?
This is a continuous process. There should be some consensus. Trade unions want their suggestions to be taken into account at the time of amending the laws. We’ve told them we will examine the laws once again and a final decision is yet to be taken. At our tri-partite meetings, most state governments and employers were in favour of our labour law changes. Trade unions are very apprehensive about changes to the new small factories Bill and the industrial relations Bill. We have to bring them on board slowly. We are not putting much pressure right now. They are very friendly with me and we have always had good discussions. I feel they will come on board slowly, not immediately. This is a win-win situation for both employees and employers.
Recently, the government announced a lot of labour reforms, primarily based on the recommendations of the second labour law commission in 2002. Are these steps a continuation of the measures taken by the previous NDA government?
The second national labour commission had recommended codification of labour laws - one each on wages, industrial relations, social security and welfare, safety and working conditions, employment training, and miscellaneous. Today, the employer needs simplification and rationalisation. If he wants to set up a factory, he needn't run from pillar to post; he can merely do it by filing an online application. This codification is still under discussion. The consultation is ongoing; we are not in a hurry.
But industry is pressing for this proposal for years and keenly watching the government. How will you bring them on board?
We will give a final structure after taking their views into account and send the proposals on which there is consensus to the Cabinet.
Is there scope to reconsider the laws, particularly a provision of relaxation in recruiting and sacking workers?
I can't say anything about that. Trade unions are very adamant. They are very concerned about relaxation in the hire-and-fire policy. But they shouldn't do this so much. The unions fear if the law is enforced, a majority of the workers will be retrenched. So, we will have to find a way to convince them. We have to explain to them the benefits workers and employers will get out of the proposed Act. Before the Cabinet takes it up, we will talk to trade unions individually, if needed. I am told many non-Bharatiya Janata Party-ruled states are coming forward with sets of reforms. So, every state government is thinking on these lines. Trade unions are against the whole process of codification alone and have asked us to re-consider the move.
When would the industrial relations Bill come before the Cabinet?
There is no deadline. It could happen anytime. Our priority is to build consensus. The proposals will go in phases.
Wouldn't a better retrenchment package, as proposed by the Centre, help workers?
Even after the enhanced retrenchment package, they are worried about the protection of workers' rights. Recognition of trade unions was one of their main demands. Our proposal says within 60 days, unions will be deemed registered if no action is taken by our officer. Clearly, this is in the interest of workers. They will have to have more faith on us. Today, there is a changing environment and it will take time to explain to trade unions to take up a new approach. If you take a new path, only then will it lead to employment generation. We will need to educate them that simplification and codification will create jobs. Industries often complain they invest a lot of money but aren't able to do business. In fact, unions praise some of our initiatives. For instance, firms with 10 employees will get EPF (employee provident fund) coverage, instead of the current 20. So, our focus is on providing workers a social security net.
Do you think the industrial relations code will help workers?
Only after the industrial relations Bill is passed by Parliament, will there be an environment conducive for them. With industrial harmony, there will be increased productivity, which will lead to employment generation. We want to make it clear this is not an anti-labour government. Previous governments have always worked in favour of the organised sector but we are here to give social security to workers in the unorganised sector, too. We need the support of the workers for this.
One of the proposals by your ministry is not allowing outside entry into trade unions. In the past, an ally of the previous NDA government, George Fernandes, had successfully organised the biggest railway strike, despite being from outside. Don't you think your proposal will make unions tame?
We have restricted outsiders, not put a ban on them. Only two outsiders will be permitted in the unorganised sector. This was recommended by the second labour law commission. In the organised sector, we did propose a ban, but that is just a proposal, not a final decision. We have formed a sub-committee to look into it.
Labour is as sensitive a subject as land. Will this not draw severe opposition from other parties and labour unions?
Our labour reform initiatives need different thinking. Trade unions are very apprehensive about our perspective. But we will have to allay their apprehensions.
Experts have criticised the government for diluting the child labour Act.
There is no question of dilution. We have put a total ban on their employment till 14 years of age. During non-school hours and vacations, they can only help families. We have further aligned this with the Right to Education Act.
But wouldn't helping a family after school hours take away their leisure time?
Social-economic conditions have to be taken into consideration. What is the harm in helping a family? I helped my mother in the evening, after school hours. Else, she would have to give wages to someone else. Also, children in age group of 14-18 cannot work in hazardous occupations.
Employees' Provident Fund Organisation (EPFO) trustees have always opposed the investment of its corpus in stock markets. What prompted you to change your stance?
For the EPFO, we have to manage the risk but at the same time, we need rewards for the worker. Earlier, our priority was not to take any risk. Now, a worker demands a higher rate of interest. If you invest in equity, the return is higher. Pension funds across the globe invest more in equity. Looking at the guidelines of the finance ministry, we will slowly invest in equity. Taking the result of this into account, we will move ahead. In the long term, we do not see any risk. It will only benefit workers.
What steps did the labour ministry take in terms of increasing the ease of doing business?
The government has taken up a very innovative programme, 'Shrameva Jayate'. This was inaugurated by the prime minister in October last year and a series of steps have been taken. We launched a Shram Suvidha portal, through which labour identification numbers have been allocated to 934,669 units so far. Portable universal account numbers have been allocated to 44.2 million active users of the EPFO and a computerised transparent labour inspection scheme has been started. The system generates random inspections and inspection reports have to be uploaded within 72 hours. As many as 72,452 inspections have been carried out and 61,479 reports have already been uploaded. So, the system removes discretion on the part of the inspector.
How has the first year of the labour ministry under the NDA government been?
The first year has given a clear indication that this government is committed to safeguarding the interests of workers. At the same time, employment generation, employability and ease of doing business are also necessary. The thrust is to create harmonious relations between employers and employees and this message has been clearly given by the government in its first year. Both industry and trade unions need more transparency and accountability, which had been declining by the day earlier. The Modi government wants to protect workers’ rights and create employability. For that, we need to take steps towards ease of doing business.
Trade unions are saying they’ll call for a strike on May 26.
Last week, we held a meeting with them at our ministry. Earlier, they had presented us a charter of demands. We called a meeting to inform them of the government’s actions in the past 10 months. They told us all the national trade unions are meeting on May 26. There were a lot of issues and we are sorting those out.
Trade unions say the government organised a meeting only to stop them from calling a strike.
These meetings are an ongoing process. This time, we had called two Union ministers (Power Minister Piyush Goyal and Petroleum Minister Dhamendra Pradhan) to participate because some issues were relevant to them, too. I will take up this matter with the prime minister after his return. I will bring to the notice of the PM a summary of the meetings and our action on those.
Will you do that before May 26?
Naturally! We are already doing this exercise. Three ministers have examined their demands but trade unions have already scheduled a national convention. We can’t do anything about that. We can only explain. I will first talk to the PM and then see till May 25.
Do you think it is fair on the part of trade unions to call for a strike on May 26? Will you convince them against it?
It is not a question of convincing them. In terms of their 10-point charter of demands, we are close to fulfilling four-five. A few other demands need lengthy discussions. We have been working on these for the past six months.
Among the labour reforms suggested by your ministry, trade unions are against relaxation in the hire-and-fire provisions. How will you persuade them on this front?
This is a continuous process. There should be some consensus. Trade unions want their suggestions to be taken into account at the time of amending the laws. We’ve told them we will examine the laws once again and a final decision is yet to be taken. At our tri-partite meetings, most state governments and employers were in favour of our labour law changes. Trade unions are very apprehensive about changes to the new small factories Bill and the industrial relations Bill. We have to bring them on board slowly. We are not putting much pressure right now. They are very friendly with me and we have always had good discussions. I feel they will come on board slowly, not immediately. This is a win-win situation for both employees and employers.
Recently, the government announced a lot of labour reforms, primarily based on the recommendations of the second labour law commission in 2002. Are these steps a continuation of the measures taken by the previous NDA government?
The second national labour commission had recommended codification of labour laws - one each on wages, industrial relations, social security and welfare, safety and working conditions, employment training, and miscellaneous. Today, the employer needs simplification and rationalisation. If he wants to set up a factory, he needn't run from pillar to post; he can merely do it by filing an online application. This codification is still under discussion. The consultation is ongoing; we are not in a hurry.
But industry is pressing for this proposal for years and keenly watching the government. How will you bring them on board?
We will give a final structure after taking their views into account and send the proposals on which there is consensus to the Cabinet.
Is there scope to reconsider the laws, particularly a provision of relaxation in recruiting and sacking workers?
I can't say anything about that. Trade unions are very adamant. They are very concerned about relaxation in the hire-and-fire policy. But they shouldn't do this so much. The unions fear if the law is enforced, a majority of the workers will be retrenched. So, we will have to find a way to convince them. We have to explain to them the benefits workers and employers will get out of the proposed Act. Before the Cabinet takes it up, we will talk to trade unions individually, if needed. I am told many non-Bharatiya Janata Party-ruled states are coming forward with sets of reforms. So, every state government is thinking on these lines. Trade unions are against the whole process of codification alone and have asked us to re-consider the move.
When would the industrial relations Bill come before the Cabinet?
There is no deadline. It could happen anytime. Our priority is to build consensus. The proposals will go in phases.
Wouldn't a better retrenchment package, as proposed by the Centre, help workers?
Even after the enhanced retrenchment package, they are worried about the protection of workers' rights. Recognition of trade unions was one of their main demands. Our proposal says within 60 days, unions will be deemed registered if no action is taken by our officer. Clearly, this is in the interest of workers. They will have to have more faith on us. Today, there is a changing environment and it will take time to explain to trade unions to take up a new approach. If you take a new path, only then will it lead to employment generation. We will need to educate them that simplification and codification will create jobs. Industries often complain they invest a lot of money but aren't able to do business. In fact, unions praise some of our initiatives. For instance, firms with 10 employees will get EPF (employee provident fund) coverage, instead of the current 20. So, our focus is on providing workers a social security net.
Do you think the industrial relations code will help workers?
Only after the industrial relations Bill is passed by Parliament, will there be an environment conducive for them. With industrial harmony, there will be increased productivity, which will lead to employment generation. We want to make it clear this is not an anti-labour government. Previous governments have always worked in favour of the organised sector but we are here to give social security to workers in the unorganised sector, too. We need the support of the workers for this.
One of the proposals by your ministry is not allowing outside entry into trade unions. In the past, an ally of the previous NDA government, George Fernandes, had successfully organised the biggest railway strike, despite being from outside. Don't you think your proposal will make unions tame?
We have restricted outsiders, not put a ban on them. Only two outsiders will be permitted in the unorganised sector. This was recommended by the second labour law commission. In the organised sector, we did propose a ban, but that is just a proposal, not a final decision. We have formed a sub-committee to look into it.
Labour is as sensitive a subject as land. Will this not draw severe opposition from other parties and labour unions?
Our labour reform initiatives need different thinking. Trade unions are very apprehensive about our perspective. But we will have to allay their apprehensions.
Experts have criticised the government for diluting the child labour Act.
There is no question of dilution. We have put a total ban on their employment till 14 years of age. During non-school hours and vacations, they can only help families. We have further aligned this with the Right to Education Act.
But wouldn't helping a family after school hours take away their leisure time?
Social-economic conditions have to be taken into consideration. What is the harm in helping a family? I helped my mother in the evening, after school hours. Else, she would have to give wages to someone else. Also, children in age group of 14-18 cannot work in hazardous occupations.
Employees' Provident Fund Organisation (EPFO) trustees have always opposed the investment of its corpus in stock markets. What prompted you to change your stance?
For the EPFO, we have to manage the risk but at the same time, we need rewards for the worker. Earlier, our priority was not to take any risk. Now, a worker demands a higher rate of interest. If you invest in equity, the return is higher. Pension funds across the globe invest more in equity. Looking at the guidelines of the finance ministry, we will slowly invest in equity. Taking the result of this into account, we will move ahead. In the long term, we do not see any risk. It will only benefit workers.
What steps did the labour ministry take in terms of increasing the ease of doing business?
The government has taken up a very innovative programme, 'Shrameva Jayate'. This was inaugurated by the prime minister in October last year and a series of steps have been taken. We launched a Shram Suvidha portal, through which labour identification numbers have been allocated to 934,669 units so far. Portable universal account numbers have been allocated to 44.2 million active users of the EPFO and a computerised transparent labour inspection scheme has been started. The system generates random inspections and inspection reports have to be uploaded within 72 hours. As many as 72,452 inspections have been carried out and 61,479 reports have already been uploaded. So, the system removes discretion on the part of the inspector.