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"Never waste the opportunity offered by a good crisis"-Niccolò Machiavelli

While most of the citizens are using the opportunities offered by this pandemic to develop and build on their skills, whether personal or professional, some state governments of India are busy suspending and diluting the already weak labor law protections of the workers.

It seems like the ideologies have taken a back seat while the government drafted the labor law revisions. The Uttar Pradesh government gave the green light to the 'Uttar Pradesh Temporary Exemption from Certain Labor Laws Ordinance, 2020' which will end up scrapping all the labor laws for a period of three years, except:

  • The Building and Other Construction Workers Act, 1996;
  • Workmen Compensation Act, 1923;
  • Bonded Labor System (Abolition) Act, 1976; and
  • Section 5 of the Payment of Wages Act, 1936 that provides the right to receive timely wages

On the other hand, the Madhya Pradesh government has started changing the labor laws as well. The duration of shifts has been increased from 8 hours to 12 hours a day, with a permitted overtime of over 72 hours a week. This goes directly against the guidelines given under the Factories Act, 1948 which permit overtime of only 48 hours a week.

Radhicka Kapoor of ICRIER[1] stated that these changes would go towards creating an enabling environment for exploitation. All these changes will lead to the employers not following basic safety norms or maintaining minimal working conditions or compensating the workers for industrial accidents.

The workers will also not have the right to organize unions to improve the conditions they will be subjected to, as trade union activity and the right to organize have been suppressed by the government pursuant to the new ordinance.[2]

The biggest opposition to these labor law changes has come from the Bharatiya Mazdoor Sangh (BMS), which is one of the largest labor unions in India. A BMS statement on 6th May, 2020 said “The government should desist from any anti-worker amendments in labor laws to facilitate shifting of companies from China or other countries. China is notorious for not having democracy, any respect for human rights, labor law protection, or active trade unions. Hence India cannot be a good substitute for such undemocratic characteristics in the mad run to provide cheap labor.”[3] Moreover, these changes being implemented nation-wide go against the basic tenets of the International Labor Organization (ILO) Conventions and existing Indian Labor Laws.

When asked the reason behind such harsh anti-worker measures, the answer received is: ‘to attract foreign investments.’ The government is under the mistaken belief that reducing protection for the workers and making them work extra-long hours at cheap rates is something that will attract foreign companies from China to India in the post- pandemic world. This venture is not only morally foul, but also economically foolish. Recent research [4] has revealed the misconceptions of such logic and if this is still taken seriously, that simply goes to show the power of employers’ lobbies.

India already has one of the cheapest, most exploited labor forces in the world. According to the Annual Survey of Industries[5], in 2017-18, the wages of workers were less than 3 percent of total input costs for India as a whole; in Uttar Pradesh, they came to 2.6 percent, and in Gujarat and Madhya Pradesh, only 2 percent.

For four decades, the wages in India have been continuously lower than that of China and the labor protection laws have been much worse. Yet, India has not been able to attract even the smallest amount of the FDI going to China.

The Centre is under the false impression that all the measures undertaken regarding labor laws will attract an investment of over 20-25 lakh crores into the nation’s production market. However, they are failing to take into account the factors based on which a company makes their investment decisions. Companies base their decisions on efficient logistics, decent infrastructure transparent government procedures and vibrant markets. But they also prefer a healthy and productive workforce instead of a poorly paid, unhealthy lot of people working in terrible exploitative conditions. The former delivers higher productivity and lower wage costs compared to the latter. Moreover, suppressing wage incomes and harming workers’ protection will further reduce the aggregate demand during this time-period.

It is simply because of this cockeyed logic, that most foreign companies from USA, UK, Japan, etc. seeking to move out of China, are looking towards countries like Thailand and Vietnam. Even though these countries have a smaller workforce compared to India, they still have higher wages and effective worker protection in place.

Instead of creating such exploitative conditions for the workers, the government should have taken the reasonable step of partnering with the industries and allocating 3%-5% of the GDP towards ensuring health of the laborers and sharing the wage burden.[6]

Prime Minister Narendra Modi in his address to the nation on 12th May, 2020 stated that the government would be providing a Rs. 20 lakh crore package to revive the economy and to create more job flow. However, this is just a temporary fix to a problem that requires more work put into it. The labor laws need to be revamped to match with the times. Then only can we, with a clear conscience, repeat the saying ‘Local ke liye Vocal.’

  • [1] Indian Council for Research on International Economic Relations
  • [2] “Other labor laws like those related to settling industrial disputes, health and working conditions of workers and trade unions, contract workers and migrant workers will be frozen for three years.”
  • [3]
  • [4]
  • [5]
  • [6] Ravi Srivastava, Director, Centre for Employment Studies at the Institute of Human Development.

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Category Labour & Service Law, Other Articles by - Muskaan Gopal 


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