India’s unorganised sector is subject to exploitation significantly by the rest of the society.

Model Answer

The unorganised sector, including contract workers, must be brought under the purview of the bill on the Labour Code on Occupational Safety, Health and Working Condition of Workers, the Parliamentary Standing Committee on Labour has proposed.

India’s Informal Sector:

• The informal sector is an unorganized one which is neither taxed nor monitored by any form of government.
• The Economic Survey of 2018-19, released in July, 2019, says "almost 93%" of the total workforce is 'informal'.
• But the Niti Aayog's Strategy for New India at 75, released in November 2018, said: "by some estimates, India's informal sector employs approximately 85% of all workers".
• Meanwhile, as per the International Labor Organization, over 80 per cent of the Indian economy is in the informal sector, while only 6.5 per cent constitutes the formal sector. 
• Clearly, India’s unorganised sector is not the residual sector of the economy. In fact, it is the dominant sector.
• To bring labour reforms in the country, the bill on the Labour Code on Occupational Safety, Health and Working Condition of Workers was introduced in 2019 in the Lok Sabha.
• Then it had been referred to the Standing Committee on Labour which held meetings with stakeholders.
• In its report tabled in the Parliament, the Standing Committee on Labour said there should be uniform definitions and clarity in interpretation of the provisions contained in the Code.

The need of labour reforms in India:

• In the case of India, Labour law reform is necessary as jobs in the manufacturing sector have reduced by 5 millionbetween 2011-12 to 2017-18, and economic growth was at a 26-quarter low of 4.5% in the July-September 2019 quarter.
• Currently, 44 labour-relatedlaws enacted by the central government deal with wages, social security, labour welfare, occupational safety and health, and industrial relations.
• Labour is on the concurrent list, giving both central and state governments the power to legislate, resulting in more than 100state labour laws.
• Most companies in the country find it difficult and impossible to follow this myriad of laws and find ways to subvert them.
• No job security: Organised sector is stringently regulated while the unorganized sector is virtually free from any outside control and regulation with little or no job security.
• ‘too low’ wages: Wages are ‘too high’ in the organised sector and ‘too low’, even below the subsistence level in the unorganised sector. This dualistic set up sug­gests how far the Indian labour market is seg­mented.

Importance of informal sector:

• In India, the informal sector generates income-earning opportunities for a large number of people and contributes a sizeable portion of the country's net domestic product.
• The sector plays a vital role in providing employment opportunity to a large segment of the working force and contributes to the national product significantly. 
• The share of the formal sector is around 12 -14 percent in our national income while that of the informal sector is more than 30 percent. 
• The informal forms of organizations are major players in such activities as manufacturing, construction, transport, trade, hotels and restaurants, and business and personal services. 
• Moreover, the sector plays a significant role in the economy regarding employment opportunities and poverty alleviation.

Steps Taken by Government

• Labour Codes: Labour Codes aims at simplification, amalgamation and rationalisation of Central Labour Laws. Currently, there are about 44 central labour laws and over 100 state labour laws. The labour ministry has taken steps to codify the existing central labour laws into four codes:
  • Labour Codes on wages Bill, 2019: It seeks to consolidate laws relating to wages by replacing- Payment of Wages Act, 1936; Minimum Wages Act, 1948; Payment of Bonus Act, 1965 and Equal Remuneration Act, 1976.
  • Labour Code on Industrial relations, 2019: It aims to create greater labour market flexibility and discipline in labour – to improve upon ease of doing business and also to encourage entrepreneurs to engage in labour-intensive sectors.
    • It would replace three laws i.e. Trade Unions Act, 1926; Industrial Employment (Standing Orders) Act, 1946 and the Industrial Disputes Act, 1947.
  • Labour Code on Social Security & Welfare, 2017: Almost 90% of the current workers are not covered under any social security. The Code aims to provide social security.
  • Labour Code on Occupational Safety, Health and Working Condition of Workers seeks to regulate health and safety conditions of workers in establishments with 10 or more workers, and in all mines and docks.

The Labour Code on Occupational Safety, Health and Working Condition of Workers:

• The Labour Code on Occupational Safety, Health and Working Condition of Workers seeks to regulate health and safety conditions of workers in establishments with 10 or more workers, and in all mines and docks.
• It subsumes and replaces 13 labour laws relating to safety, health and working conditions. These laws include: Factories Act, 1948; Mines Act, 1952; Dock Workers Act, 1986; Contract Labour Act, 1970; and Inter-State Migrant Workers Act, 1979.
• Conditions: Welfare facilities, working conditions and work hours for different types of establishments and workers will be prescribed by the central or state governments through rules.
• Occupational safety board: The Code sets up occupational safety boards at the national and state level to advise the central and state governments on the standards, rules, and regulations to be framed under the Code.
• Special provisions: The Code creates special provisions for certain classes of establishments such as factories, mines, dock workers, and constructions workers. These include separate provisions on licenses, safety regulations, and duties of employers. 
• Coverage: The Code applies to establishments employing at least 10 workers, and to all mines and docks. It does not apply to apprentices.  
  • Further, certain provisions of the Code such as health and working conditions, apply to all employees. 
  • Employees include workers and all other persons employed in a managerial, administrative, or supervisory role (with monthly wage of at least Rs 15,000).  
• Establishments covered by the Code are required to register with registering officers, appointed by the central or state governments.

Key-issues in the Bill:

• Rationale for some special provisions unclear: The Code replaces 13 laws regulating health, safety and working conditions of workers. While the Code consolidates existing Acts, it falls short of simplifying their provisions.
• Certain workers not covered under the Code: The Code covers establishments with 10 or more workers.  It excludes establishments with less than 10 workers.  This raises the question of whether workers in smaller establishments should be covered by health and safety laws.  
• Civil Court barred from hearing matters under the Code: The Code bars civil courts from hearing any matters under the Code.
• Wages not defined: The Code refers to “wages” in provisions relating to overtime work and calculation of leave.  However, it does not define the term.  Different laws contain varying definitions of the term ‘wages’.  

Major recommendations of the Committee:

The major recommendations of the Standing Committee on Labour are as given below:

• Inclusion of all: While the original bill said the code will not apply to contract workers of the Centre and state governments. The committee has proposed to include all unorganised work force under the purview of the code.
  • It would mean extending the code to an estimated 50 crore unorganised workers, including railway porters, construction workers and security guards who do not come under the memberships/purview of most trade unions.
• Inter-state migrant workers: The committee has also recommended that inter-state migrant workers be given benefit of the proposed safety-health-working conditions under the code bill.
• Extending the line: Trade Unions work only in the organised sectors and account for only around 8 crore workers. The committee has recommended streamlining and expanding government’s labour department to reach out to the unorganised sectors and bring such workers under the code purview.
• The committee has also asked the government to find ways to ensure enough rest and safety measures for workers in highly mechanised sectors such as software industry, textile, hospitality and media who may need to work more than eight hours a day due to the nature of their work.
• In other sectors, the panel is for going by ILO norms that stipulate maximum of eight hours work a day.

Reforms are needed for the organised sector as well as the unorganised sector at the earliest to recognise their rights and promote better working conditions.