Labour laws' fairness challenge

Just having a 12-hour workday does not necessarily constitute exploitation. If implemented properly and without causing harm to workers, it could create a win-win situation

Any change in labour laws typically leads to heated debates, and the recent move by a few states to allow 12-hour workdays is no exception. In February, Karnataka made a few tweaks to its labour laws — allowing 12-hour workdays, an increase in overtime from 75 hours to 145 hours in three months, and finally allowing women to work in the night shift. These changes, however, remain subject to a cap of 48 hours of work in a week.

Then in April, Tamil Nadu made similar amendments, though it withdrew the changes on Monday after sustained criticism from Opposition parties and trade unions. Several other states, including Uttar Pradesh, are also reported to be contemplating similar amendments to their own labour regulations. Reports suggest that the 12-hour work shift — as opposed to the eight or nine hours a day that was earlier allowed — has been at the request of several global contract manufacturing firms that have set up shop.

There are primarily only two issues that need to be considered when discussing whether an amendment to the labour law is good or bad. One is whether the change leads to improved productivity, and is instrumental in getting more investments, and by extension, creating new jobs. The second factor to be considered is whether such a change in regulations will lead to worse working conditions or labour exploitation. 

Policymakers need to ensure that the interests of the investor or factory owner are balanced with that of the workers. And that is often a difficult proposition because they sometimes seem to have opposing goals.

Let us look at the 12-hour workday, therefore, through those two filters — productivity and labour protection — to see how the new changes stack up. Global contract manufacturers, such as Foxconn, have long argued that the flexibility to institute a 12-hour workday — as is prevalent in several other countries — improves productivity. The subtext is that without these, a factory in India may not be competitive with its counterparts in countries like China or Taiwan or Korea, say, if all other things are equal. (Of course, all other things are not equal — cost of capital, logistics, other issues such as taxes, overall input costs and proximity to big consumer markets all matter when it comes to making the final decision to set up a production unit in a particular geography.)

Based on their own experience in other countries, Foxconn and others may well have a case for recommending the 12-hour workday. Existing research on labour productivity vis-a-vis hours of work sheds no light on the debate. The evidence of multiple studies over the decades has been decidedly mixed. A set of researchers and studies have found that longer hours do improve productivity because workers need to settle down in a shift before his/her productivity hits its peak. But an even larger number of studies have found evidence of decreasing returns to hours beyond a point because worker fatigue sets in. What is the exact number of hours before fatigue sets in is also not absolutely certain. Neither side has managed to conclusively prove their case.

Newer studies have suggested that absolute hours worked are not as important as several other factors. Conditions at work, attributes of labour, and finally scheduled work rather than ad hoc overtime play a much bigger role in increasing productivity. Beyond that, the nature of the industry, external factors like climate change, etc, also need to be taken into account. What is ideal for the automobile industry in Delhi may not be the best for the electronic assembly of mobile phones, say, outside Bengaluru.

However, if manufacturing majors do think that two shifts of 12 hours, four days a week is better than three shifts of eight hours each, six days a week in ramping up productivity, one can trust their experience in the matter.

The important question that arises is whether this change is unfair to labour, and will lead to their exploitation. Per se, it is hard to argue that 12-hour workdays coupled with four-day work week is unfair, compared to eight hours daily, six days a week. The absolute number of hours (including overtime) for a worker remains capped at the same 48 hours a week after all. The labour exploitation question would arise if the total number of hours per week were to also change.

In this writer’s opinion, what is more important are other protections for workers (wages, hiring and firing practices, insurance, etc) and workplace conditions (safety norms, proper facilities and training etc). It is here that a lot needs to be done because today factories tend to hire far more contract workers, and often the terms and conditions for these workers are lower than those who are on the company’s rolls. These are the things that the state should be most concerned about — and should regulate and monitor carefully.

If tweaks in labour laws help attract investment and create new jobs without harming labour, it is a win-win situation.

The writer is a former editor of Businessworld and Business Today, and the founder of ProsaicView, an editorial consultancy