The history of slavery ranges from the oldest known civilization up to the 21st century! That's right! Only recently in 2007, Mauritiana, a country in West Africa had criminalized slavery. To this date slavery exists in some form or other even in countries like the USA, UK, or India. According to Pliny, the civilizations of antiquity suffered from something known as "disease of slaves". For example apprentice system under which large numbers of pauper children were working in cotton and woolen mills without education, for excessive hours, under awful conditions.
But who were the slaves? We all can guess those who were not economically well of or those who had been discriminated against based on sex, religion, caste, color, etc. These people were in the lowest rung of society and hardly considered as Humans.
Only in the late 17th century, there was this idea of renaissance that was changing the old world into the modern era. With the rise of capitalist, there was also a rise in human rights because of which the world slowly started to abolish slavery. The free slaves now called themselves "labors".
Even these laborers, just like the slaves had many problems like child labor, bonded labor, inhumane working conditions, extremely high working hours, extremely low wages, etc. Since the supply of laborers was more than the demand they didn't have the bargaining power also.
The world wanted laissez-faire or a free market economy where the capitalist could make the best of the new industrial revolution but the world was also seeing the development of certain ideas like liberty, equality, fraternity, democracy, etc. Thus there arose a need for state interjection to safeguard the rights of the laborers. Western civilizations like the UK and the USA, leading from the front brought certain labor laws that evolved over time giving these laborers the rights they deserved.
Even in India several labor laws have been made with the same purpose. To highlight a few:
But who were the slaves? We all can guess those who were not economically well of or those who had been discriminated against based on sex, religion, caste, color, etc. These people were in the lowest rung of society and hardly considered as Humans.
Only in the late 17th century, there was this idea of renaissance that was changing the old world into the modern era. With the rise of capitalist, there was also a rise in human rights because of which the world slowly started to abolish slavery. The free slaves now called themselves "labors".
Even these laborers, just like the slaves had many problems like child labor, bonded labor, inhumane working conditions, extremely high working hours, extremely low wages, etc. Since the supply of laborers was more than the demand they didn't have the bargaining power also.
The world wanted laissez-faire or a free market economy where the capitalist could make the best of the new industrial revolution but the world was also seeing the development of certain ideas like liberty, equality, fraternity, democracy, etc. Thus there arose a need for state interjection to safeguard the rights of the laborers. Western civilizations like the UK and the USA, leading from the front brought certain labor laws that evolved over time giving these laborers the rights they deserved.
- Factory Act of 1948 provides certain conditions of occupational safety and health like providing labors with a mask(of tested quality and standards) to protect them from hazardous gasses.
- Shops and Commercial Establishments Act, on the other hand, aims to regulate hours of work, payment, overtime, a weekly day off with pay, other holidays with pay, annual leave, employment of children and young persons, and employment of women.
- Minimum wages act of 1948 which sets the minimum wage for both skilled and unskilled workers working in different sectors.
- Industrial Disputes Act, 1947 as it relates to terms of service such as layoff, retrenchment, and closure of industrial enterprises and strikes and lockouts.
- Child labor (prohibition and regulation) act of 1986 prohibits children in the age group of 14-18 y/o from working in hazardous conditions.
- Several provisions have been mentioned in the constitution like Article 23, Article 24 as the fundamental rights of the laborers and a few DPSP, which is the responsibility of the states to make laws to preserve and protect the rights of these laborers from being exploited by the capitalist.
India has seen a downturn in the economy due to the continuous fall of GDP which has been escalated by Coronavirus lockdown. To tackle the job loss situation and the fall of FDI and FII many of the state governments with the support of the centre have decided to do away with the labor laws! The front runners are the Uttar Pradesh, MP and Gujrat followed by a few other states. The degree to which the labor laws will be relaxed varies from state to state.
Since these laws are characterized as "inflexible" it is believed that it discourages the corporates i.e the capitalists. Also if a firm employs more than 100 employees then it requires governments' approval to fire its employees. Due to this reason, even the organized sector is seen hiring more and more contract employees which can be fired easily as most labor laws do not apply to them. For example, Ola and Zomato have recently fired thousands of employees who were contract laborers.
Some believe that there are too many laws that are not being implemented properly whereas some feel that had there been fewer laws the firms could expand and contract based on the market conditions and there would be a greater formalization of jobs. But just because the traffic rules aren't being implemented properly doesn't mean you abolish them.
People in the formal sector are better paid for the same job which is also performed by contract laborers at cheaper salaries. They would get better social securities. But doing away with the labor laws would create an opportunity for an exploitative regime. Also since there is a wide gap between the formal and informal sector employees, the companies can opt to replace the formal sector employees with informal sector employees at much lesser wages. A similar case of the gender pay gap could also be exploited under these conditions. This way even " if " it manages to generate more employment there is a very good possibility of a drastic increase in the inequality of wealth distribution (Laffer cure) which is already gigantic!
On the positive side net labor importing states like TN, Kerala, etc would fall short of labor and might see a rise in the labor wages. It would be interesting to see how much the gender pay gap would make an impact in these states.
On one side the government is requesting the companies not to fire its employees and on the other hand it is removing the labor laws. There is a contradiction within the policies of the government. At a time when all the firms are trying to reduce the cost by letting go of their employees, removing the labor laws will mostly result in job losses.
A compunction like hunger or poverty which is widely prevalent in India might force the laborers to fall prey to these capitalists and accept all their harsh conditions. Setting aside the problems faced by the laborers, will the states be able to attract foreign MNC's to set up manufacturing units in India at this time? There are a few points in favor of this like
Since these laws are characterized as "inflexible" it is believed that it discourages the corporates i.e the capitalists. Also if a firm employs more than 100 employees then it requires governments' approval to fire its employees. Due to this reason, even the organized sector is seen hiring more and more contract employees which can be fired easily as most labor laws do not apply to them. For example, Ola and Zomato have recently fired thousands of employees who were contract laborers.
Some believe that there are too many laws that are not being implemented properly whereas some feel that had there been fewer laws the firms could expand and contract based on the market conditions and there would be a greater formalization of jobs. But just because the traffic rules aren't being implemented properly doesn't mean you abolish them.
People in the formal sector are better paid for the same job which is also performed by contract laborers at cheaper salaries. They would get better social securities. But doing away with the labor laws would create an opportunity for an exploitative regime. Also since there is a wide gap between the formal and informal sector employees, the companies can opt to replace the formal sector employees with informal sector employees at much lesser wages. A similar case of the gender pay gap could also be exploited under these conditions. This way even " if " it manages to generate more employment there is a very good possibility of a drastic increase in the inequality of wealth distribution (Laffer cure) which is already gigantic!
On the positive side net labor importing states like TN, Kerala, etc would fall short of labor and might see a rise in the labor wages. It would be interesting to see how much the gender pay gap would make an impact in these states.
On one side the government is requesting the companies not to fire its employees and on the other hand it is removing the labor laws. There is a contradiction within the policies of the government. At a time when all the firms are trying to reduce the cost by letting go of their employees, removing the labor laws will mostly result in job losses.
A compunction like hunger or poverty which is widely prevalent in India might force the laborers to fall prey to these capitalists and accept all their harsh conditions. Setting aside the problems faced by the laborers, will the states be able to attract foreign MNC's to set up manufacturing units in India at this time? There are a few points in favor of this like
- Reduction of corporate tax.
- Easy availability of laborers under relatively exploitable conditions.
- Support from the government.
- Improved ranking in the Ease of Doing Business during recent times.
- which will attract the corporates but on the contrary the are several issues that still raise doubts in the minds of many economists. For example
- Availability and acquisition of land. (Bullet train project)
- Legal and procedural delays. (High politics)
- Almost the entire world is facing an economic crisis. There is no demand, why would someone want to invest in increasing the supply. Even the FMCG is seeing a downturn in India.
- Poor infrastructure.
- Doing away with labor laws will be questioned by courts, human rights organizations, and the International Labor Organization(ILO).
Because of these the economist question the degree and timing of the changes. Although the intentions have been good, the ordinance passed by the states seems to be a travesty. Removing something outright is not a reform. It's a reform when you make it better by achieving a certain purpose. There are several other measures which India can take to improve its Ease of Doing Business like solving land acquisition problems, labor norms, high tax levels, high cost of power, and red-tapism. There have been several measures taken in this regard but still there is a lot to accomplish even now. However, it is believed that only 10% of the Indian population is employed in the formal sector. So such reforms won't affect a large section of our society.
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