Focus on content in labour reform without wasting political capital on mere form

It is welcome that the government intends to act on labour reform. It has been reported that the process will begin with the labour inspectors losing the freedom to arbitrarily select which units to inspect and by reducing the number of labour-related reports that companies have to file from 16 to 1. At the same time, employees will have portable accounts for their compulsory provident fund. These are significant procedural reforms. However, it is not just the form that needs to change. Essentially, the content of industrial relations need to undergo a radical change. And that is essentially a political, rather than a procedural, change.

India operates in a globalised economic context. All its laws and policies must internalise and articulate the inner dynamics of such globalised production, while making sure that the gains from growth are shared equitably. Of all India’s major central trade unions, only the Hind Mazdoor Sabha supports globalisation explicitly — the rest oppose globalised growth as some kind of anti-people conspiracy. Unless this is squarely addressed and changed, how can industrial relations ever focus on increasing production and productivity?

Simultaneously, workers need reassurance that their welfare has its place in policymaking priority. One enterprise’s workforce is a cost for it but the market for the rest of the economy. If and when all enterprises try to squeeze their costs to the minimum, the aggregate market for industry’s produce as a whole will remain squeezed. It is in industry’s collective interest for individual enterprises to pay their workers decent wages. Unions are the means to make individual managements see the logic of collective self-interest. In return for unions accepting the logic of globalised growth, complete with flexibility and constant upgradation of skills, employers must offer workers what the International Labour Organization calls decent work. Discriminatory wages and work terms for a section of employees must go. It is this grand bargain that must be the basis for viable labour reform.