Shyamal Majumdar: Reforms without labour pain

THE HUMAN FACTOR

Much has been written about how the Left has snuffed out all hopes of a liberal hire and fire policy through the common minimum programme, which has put a lid on any major change in the 47-odd labour laws.

Labour Minister Sis Ram Ola has an unenviable job as his mandate seems to be to continue with the onerous, inflexible labour rules. But Ola would do well to concentrate on some of the "smaller" reforms, which may not be as headline-grabbing as allowing employers the freedom to hire and fire, but would be effective nevertheless.

Thankfully, the minister does not need to set up another committee for guidance in this regard. The roadmap has already been drawn up by the task force on employment opportunities, headed by Montek Singh Ahluwalia, as well as the report of the National Commission on Labour, 2002. So here's an eight-point programme for the minister.

Job content: Section 9 of the Industrial Disputes Act says that the job content and the area and nature of work of an employee cannot be changed without giving him at least a 21-day notice period.

In practice, this provision actually requires the consent of each employer, and is applicable to all enterprises employing more than 100 workers. Some states have made it applicable to firms with more than 50 employees.

This means that employers cannot easily shift workers between different plants and locations, or even shift them to do new jobs within the same plant. At a time when speed is the essence, this provision must go.

Fixed-term contract: The interpretation of the law to extend the retrenchment provisions even to cases of non-renewal of a fixed-term contract of employment doesn't make sense. A system of short-term employment contracts can easily be introduced.

In order to avoid legal challenge to this arrangement on the grounds of equal treatment with permanent labour doing the same job, provisions can be made for paying such labour a premium over normal wage, the Ahluwalia committee has said.

Strike ballot: It is nobody's case to take away the right to strike. But the Act can be amended to introduce the system of "strike ballot", whereby a strike can be called only if it is supported by a qualifying majority of the workers.

At present, any splinter group of a trade union can call a strike under the law.

Union registration: The Trade Union Act, 1926 allows any seven workers to form a union. This has led to multiplicity of unions and intense rivalry among splinter groups.

If you don't have half a dozen unions, you have half a dozen groups within the unions, each vying for a place in the collective bargaining machinery of a factory, says an employer.

The Act could be modified to state that at least 10 per cent of the workers in a company or 100 employees, whichever is less, are necessary to form and register a union.

Outsider members: The Act also allows half the number of trade union office bearers to be outsiders. This hardly is a prescription for encouraging internal union leadership, which is likely to be accountable and responsible.

The experience with outsiders, who have no real stake in the company, as trade union leader has not been encouraging. Which is why there is a case for amending Section 22 of the Trade unions Act to reduce the number of outside office bearers.

Union recognition: The other crucial question is the recognition of trade unions.

The government would do well to accept the recommendations of the National Commission on Labour, which suggested a check-off system (membership based on regular payment of subscription), with 66 per cent entitling the union to be accepted as the single negotiating agent.

If no union has 66 per cent support, then unions that have the support of more than 25 per cent should be given proportionate representation on the college.

Recognition of unions, once granted, should be valid for a period of at least four years. No claim by any other trade union for recognition should be entertained in the intervening period.

Dispute resolution: At present, there is no time limit for filing disputes under the Industrial Disputes Act. This encourages piling up of old disputes leading to delays in courts. A time limit of three years should be stipulated within which a dispute could be referred for adjudication.

Safety net: The Act must provide for a social safety net in the form of unemployment compensation or insurance in the vent of retrenchment.

The scheme should be strictly self-financing, based on compulsory deductions of contributions from wages, with a corresponding contribution from the employer and involving no liability on the part of the government.

The task force set up by the government has said that employees retrenched or otherwise becoming unemployed should become eligible to receive support at a fraction (say, 50 per cent) of the wages drawn at the point of unemployment.

The law should also provide for proper regulation of the scheme by the government or some other suitable agency.