The three labor codes passed in the Lok Sabha in the last week of September are deemed to be sweeping changes aimed at increasing productivity exponentially and reduce the restrictions that many of the erstwhile pre-colonial legislation had on the labor market. However, a closer analysis reveals that all these labeled ‘reforms’ have one motive in mind – to dilute the rights of the unorganized sectors and protections accorded to them. 

While the codes have predictably invoked criticism from the near nonexistential trade unions in our country, supporters of the reform argue that India’s labor laws were memories of its archaic and colonial past – ineffective for workers and overly burdensome on the employer – and therefore, change was long due. But for us to meaningfully analyze both sides on the contentious issue of labor reforms, we must first ask ourselves three prime questions – what do labor laws do, or what are they meant to do? What role do they play in a globalized economy?

The answer to the first question prima facie seems quite obvious. The function of labor law is to provide stability to the lowermost rungs of the society, protect workers from wage fluctuations, below-average working conditions, and insecure employment. 

Without labor laws, workers and employers would enjoy unrestrained ‘freedom of contract’ as simply buyers and sellers of labor. From an ethical point of view, this seems preposterous

Secondly speaking from a commercial point of view, it seems equally undesirable, as the two parties to the contract are not on an equal pedestal. This can lead to undue influence as the stronger party will indiscriminately turn the contract against the weaker party who does not have the resources nor the understanding of what they are giving up when they sign it.

 In a perfectly ‘elastic’ labor market, one without any labor protections, discriminatory employment, unfair wages, underage labor, etc. could all be justified under the umbrella of a single vague term: ‘market forces of demand and supply’. By putting limitations on the freedom of employers to negotiate indefensible employment contracts, labor laws such as the Industrial Employment (Standing Orders) Act, 1946, to some extent, try to bridge the inequality between workers and employers in a free capitalist market. In Layman; terms, they redistribute legal power between individual workers and employers.

On the flip side if we look at the recently passed  Code on Social Security, 2020 that seeks to consolidate existing social security and welfare legislation, we notice that it leaves out large chunks of the workforce from its purview including migrant workers,(especially after the impediments faced by them during the pandemic) does not even specify a date for its enforcement and imposes only frivolous penalties for non-compliance. Consequentially, this will leave workers vulnerable without adequate safety nets.

An important provision Industrial Relations Code Bill 2020 doesn’t permit workers from going on strike without providing at least a 60-day notice and allows companies with up to 300 workers (increasing the earlier threshold of 100 workers) to fire their workers without prior government approval.

Labour laws give bargaining power to the voices that remain unheard of. They are a toolkit for redistribution. The problem with the continuous dismantling of labor laws is only one part of the problem that makes working conditions of a section of the workforce worse. More importantly, what it does is that it intentionally forfeits the possibility of demanding better working conditions and instead, cements the existing status quo.

– By Aarushi Prasad,

Writer, Bharat Bhagya Vidhata