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Towards social partnership

THE REPORT OF the Second Labour Commission headed by Ravindra Verma serves mainly as a reminder of missed opportunities for labour law reform and the need to act before it is too late. Many of its major proposals, including the promotion of unionisation, bilateralism and arbitration, setting up of Central and State Labour Commissions and a mechanism for recognising bargaining agents, have been recommended in the past by several committees. Noteworthy among these was the G. Ramanujam Committee, whose exemplary report of 1990 got lost in the political realignments then taking place in the country. Hence the Verma report serving as a timely reminder of these suggestions should be given due consideration, despite some flaws in its proposals. The report rightly points out the weakening position of trade unions in the post-1991 decade in the wake of globalisation and loss of jobs in the organised sector. In seeking to use labour laws to strengthen the country's competitiveness in the global market, it exposes myths about "hire and fire" obtaining in China and about the absence of "flexibility" in labour laws being the main hurdle to competitiveness. However, while calling for a "change of mindset" towards developing social partnership between employers and workers through bilateralism, it assumes that permanent jobs are a vanishing species. It is only as a measure of "transition" to a labour market dominated by non-permanent jobs (or a "different concept" of job itself), in the absence of wholesome social security, that it has recommended certain safeguards. It is not surprising, therefore, that the report seeks to keep retrenchment and lay-off in continuing industries out of the ambit of bilateralism, thereby raising the risk of heightened industrial unrest. It is perhaps advisable to keep this issue subject to bilateral agreements, just as in the case of outsourcing of non-core jobs. However, no one can quarrel with the report's suggestion that closures of undertakings (for which it wants the provision for state permission to continue) be allowed as a matter of course within 60 days, subject to justiciability of the compensation to be paid to workers. The harm done (by way of "asset stripping" of enterprises by managements and uncertainty of employment and terminal benefits to workers) thanks to the inaction of State Governments in responding to applications for closure of non-viable industries is too well known to warrant elaboration.

Bilateralism is also sought to be promoted through the setting up of unit-level grievance committees and expanding the subjects covered in Standing Orders through agreements. Near-unanimity is likely to greet the idea of a separate and comprehensive labour law for enterprises with less than 20 workers. In respect of the ticklish issue of "essential services", in which society as a whole is perceived to have a great stake, the proposal to scrap the controversial ESMA (Essential Services Maintenance Act) is a positive and bold step. But the alternative suggested, viz., the concept of a deemed strike, based merely on a majority strike ballot, may turn out to be an illusory solution. It should be understood that contrary to popular perception, employees, irrespective of where they work, do not consider strikes a tea party and do not opt for strikes except as a last resort. Thus, the only way of avoiding strikes in such services is still greater emphasis on fairness, dialogue and bilateralism and there is no short cut.

The Verma report also suggests that a national single minimum wage should be the main instrument of protection of the working conditions of unorganised labour. This suggestion should be taken seriously. The Commission has avoided the temptation of relying wholly or mainly on a contributory and private sector-led social security system for unorganised labour. Any approach of outright rejection of the report out of ideological posturing would only harm the cause of workers. Indian employers facing competition from cash-rich and technology-rich multinationals have an equal stake in labour-intensive production and thus in learning to live amicably with an expanding workforce.

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