It is quite apparent now that India is headed towards big labour reforms, like equal minimum wage across the country, allowing women to work in night shifts and changes in rules regarding gratuity, etc. Union Finance Minister Nirmala Sitharaman has announced that the Government is working in this regard. On the other side, while many Indian states have already declared major changes in their labour laws, few are in the process to do so. Indeed, labour reforms are one of the most important demands of the apparel manufacturing industry, which have been waiting to be passed, and fortunately they are being accepted now. Though none of the trade bodies of the textile and apparel industry has reacted officially so far, the industry is happy with these steps. From the industry point of view, these reforms were urgently required, and especially during the ongoing coronavirus pandemic, these were ineluctable. These changes will help the Indian apparel industry to inch towards world-class manufacturing. As usual, labour unions are raising their voices against these initiatives, but the need of the hour is competitiveness, as now the situation is more about stepping ahead than the survival of the fittest.
Who came forward?
Uttar Pradesh, Madhya Pradesh, Gujarat and Maharashtra – boasting of textile and apparel production hubs – are the four major states to have taken a step ahead in this direction. Few other states like Odisha, Assam, and Goa have also implemented some changes, which have influenced Bihar and some other states to walk the same path.
Now that Uttar Pradesh’s Ordinance has been sent to President Ram Nath Kovind, the Central Government has to work towards it. Kovind’s approval is required for the new law to come into effect. He will seek the opinion of the Union home and labour ministries before taking a decision on the draft Ordinance.
But there are many complications and it will not be cleared immediately, as on 16 May it was reported that the UP Government withdrew an order increasing the daily working hours from 8 to 12 hours. This move came as Allahabad High Court issued a notice to the State on a public interest litigation challenging the order.
India is a signatory to the ILO convention of 1919 on working hours. While all countries which signed it had to reduce working hours to 48 hours a week, India was given an exemption to keep it at 60 hours. So, the move by the State Governments in India is in contravention of the ILO convention too.
What changed exactly and what is gained?
Uttar Pradesh – having apparel and textile manufacturing hubs like Noida, Ghaziabad, Varanasi and Lucknow – has come up with an ordinance and exempted all factories and establishments engaged in manufacturing process from operations of all the labour laws for 3 years, including laws related to industrial disputes, contract workers and trade unions.
35 major labour laws will not be applicable now. Weekly working hours will be 72 as compared to 48 under previous rules, and after routine working hours, overtime will be paid on normal rates, while earlier it used to be double the rate. As per media reports, Karnataka is considering to increase the current overtime working hours to 100 hours per quarter from 72 hours.
Increasing the working hours is one of the most common decisions among various states like Madhya Pradesh (MP), Himachal Pradesh (HP), etc. Amendment in the act regarding Contract Labour (Regulation & Abolition) is also a common thread among states.
10 states including Maharasthra, Rajasthan, Gujarat, Goa, MP, Uttarakhand, Assam, Punjab, Haryana and Himachal Pradesh have increased the working hours in India from 8 to 12 hours.
MP – which has thousands of apparel units at Indore, the big plant of giants like Vardhman Group, Trident Ltd., Maral Overseas and Pratibha Syntex amongst many other leading companies – has offered to relieve employers of the responsibility of virtually all provisions of the Factories Act. The State barred the raising of complaints and disputes under the Industrial Disputes Act save for on the question of closure for establishments with more than 300 employees all for 1,200 days.
Textile State of India, Gujarat with hubs like Surat and Ahmedabad, is planning to give any new investor a holiday that makes an investment that lasts at least 1,200 days of all labour legislation except for the Minimum Wages Act and the Workmen’s Compensation Act. They have to follow only the Minimum Wages Act, The Employee Compensation Act and Industrial Safety Rules.
Karnataka, boasting of having India’s leading apparel manufacturing hub, Bengaluru, is also reviewing minimum wages and labour law compliance.
One has to see it from the perspective that any change in labour laws will force the labour to become more disciplined and dedicated to work, as now there will be no space for unproductive or less productive workers. Despite a lot of efforts for skill development and training, India’s apparel manufacturing sector still lacks high productivity and efficiency. Clearly, as compared to China, Vietnam and Bangladesh, India definitely needs more flexible and supporting labour laws.
As textile and apparel companies don’t wish to come on the radar of unions, they are avoiding to come on record but in the off-record discussion, they shared that the biggest but unseen benefit is the changed sentiments. With changing laws and intention of the Government, rules and administration are in favour of the industry, so from local NGOs to international buyers, nobody will be able to create unnecessary pressure on the industry, as the industry has to majorly follow law of the land. “Everyone has to understand the law and respect that, be it industry, union, NGO or buyers. We have been facing the heat since decades, but now we anticipate that with these changes, we will have the actual ease of business and the much required comfort zone,” said a top-level exporter on the condition of anonymity.
“No doubt, this is a welcome step, but I feel for something concrete to materialise, we have to wait for proper notifications and its implementations. There are various media reports making different and contrary statements.”
While few are still of the opinion that it is a good beginning, but also too early to say so, as things can take different shape once the lockdown is over.
“We have to see that how union and labour react after conditions become normal,” says the HR head of a Bengaluru-based export house.
Unions’ point seems valid that in this critical time when workers are struggling to get back to their homes, Governments are changing rules. It is also pertinent to mention here that only 30 per cent of workers have got official minimum wages so far.
Despite all the laws that are being changed, with more to change in the future, in addition to the impacts these will have on all the stakeholders, majority of the industry which is into the unorganised sector will remain unaffected by the changes – especially considering they have hardly been impacted by any specific labour law so far. Extreme labour laws are also a reason for the increasing unorganised segment, as nobody wishes to take ‘pain’ of labour handling until it is a must. Increased outsourcing/job work is also an example of the same.
Whatever is in favour or against these changes, one should not forget that due to 200 laws of Union and various State Governments, conditions have become critical now, as neither the industry nor the labour and trade unions are happy with the overall conditions/laws.
Where there’s a change, there will be oppositions, but it’s time to realise that change in labour law reforms is the need of the hour, as it will lead to development of the industry and everyone will survive only when the industry will grow.