Context

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.

Background:

• 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.

Analysis

What’s in the Bill?

• 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 a 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’.  

Significance of the Bill:

• Legal framework on fixed-term employment: Apart from offering some degree of flexibility on government permissions for retrenchment, the most important aspect of the Bill is that it presents the legal framework for ushering in the concept of ‘fixed-term employment’ through contract workers on a pan-India basis.
• Flexibility: Currently, companies hire contract workers through contractors. With the introduction of fixed-term employment, they will be able to hire workers directly under a fixed-term contract, with the flexibility to tweak the length of the contract based on the seasonality of the industry.
• Wider reach: The move to include it in a central law will help in wider reach, and states are expected to follow similar applicability.
• Pan-India impact: The government had tried a move last year to apply fixed-term employment across “central sphere establishments” in all sectors, but it failed to elicit the desired results as states did not notify similar provisions for it. The Bill now ensures a pan-India impact of this move.

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 workforce 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 the 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 the 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 a maximum of eight hours of work a day.

The “untouched” part:

• The committee has left it to the government to find a way to make a distinction between ‘employees’ and ‘workers’, the two categories of the workforce in the bill, by ensuring the deserving sections of workers won’t be left out of the benefits of the code.
• Five members of the committee — Husain Dalwai, Dean Kuriakose (Congress), Elamaram Karim (CPM), K Subbarayan (CPI) and M Shanmugham (DMK) — have given a joint note of dissent in which they, among other things, said the working hours can’t exceed eight hours a day for all sections of workers and instead of categorising as ‘employees’ and ‘workers’ everyone in the workforce should be called ‘workmen’ to safeguard against any of them being excluded from the benefits of the code.
• The dissent note also said that while the code replaces the Plantation Labour Acts, workers of plantations with a size of less than five acres be excluded from its purview so that such workers continue to get the pre-code benefits.

The need for 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 setup sug­gests how far the Indian labour market is seg­mented.

Importance of the 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.

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.