Both industry and trade union representatives should welcome the reported proposals to introduce a provision in the draft labour code making it mandatory for factories to recognise a trade union as the "principal bargaining agent" for settling a dispute or engaging in a discussion with employers. This provision, together with a formally specified threshold of 10 per cent of workers or 100 workers (whichever is less) for union registration, is likely to impart a more robust structure to labour relations, currently bedevilled by a multiplicity of trade unions and arbitrary managements. Other suggested reforms should also be taken forward. For example, the draft Labour Code on Industrial Relations Bill 2015 would correct serious legacy problems. It would loosen retrenchment laws by raising the decades-old threshold for government intervention from 100 workers to 300. An earlier proposal, under the previous iteration of the National Democratic Alliance (NDA), foundered on the lack of political will, and in the face of fierce opposition from the Bharatiya Janata Party (BJP)-affiliated Bharatiya Mazdoor Sangh. However, the successful amendment of labour laws in BJP-ruled Rajasthan raises hope that the Centre will in fact push this proposal through Parliament. By raising the retrenchment/closure compensation to 45 days for every completed year of service from 15 days, the government has sought to balance industry's needs with labour's demands.
Taken together with proposals in the code to merge multiple wage-related Bills and subsume a welter of labour laws into five broad codes - and other proposals to raise the minimum wage and make it mandatory for all states - it can be said that the NDA's attempts to reset labour relations mostly suggest that steps will be taken in the right direction. Still, the magnitude and speed of the steps are both as yet unknown. The draft code is yet to be introduced, and some states have seen their local reforms held up at the Centre. Some tweaks to labour law are on Parliament's agenda in the coming session - and their fate will be closely watched.
However, there are several challenges to significantly altering the dynamics of India's labour relations and governance. Labour is a concurrent subject under the Constitution - so the current dispensation's greater achievement would be to create the political capital to encourage states to align their individual laws to the code. This may be possible in the 13 states ruled by the BJP or its central coalition partners. The other dimension lies in the possible dilution of labour rights that could vitiate the spirit of the code. For instance, the Industrial Disputes Act had laid down strict conditions including stiff penalties that made it difficult for workers in public utility services from going on strike. The code has extended these conditions to all workers, which could seriously curb labour's right to strike against legitimate grievances. Finally, the code addresses a minuscule portion of workers in the organised sector. Over 90 per cent of India's workers toil in the unorganised sector. The Left parties' attempts to introduce much-needed amendments to the Contract Labour Act fell victim to coalition politics. If the NDA is serious about making a measurable impact on labour governance it would do well to resurrect those proposals too.
