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Labour laws changed in India, Know the after effects

Labour Laws are changed to incentivize the economic activity


Some state governments made significant changes in the application of labour laws as the economy struggles with the COVID-19 lockdown and thousands of companies and workers stare at an uncertain future. The most significant changes were made in three BJP-ruled states – Gujrat, Uttar Pradesh and MP. Smaller changes were made in Congress-ruled Rajasthan and Punjab as well BJD ruled Odisha. Yogi government has made the most significant change by summarily suspending the application of almost all labour laws except 3 laws for the next three years.

These changes are brought to incentivize economic activity in the respective states. Although, the labour falls in the Concurrent List and there are many laws enacted by the central government which cannot be suspended by the state government.

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What Labour law has in its kitty?

There are about 50 central and 200 state laws related to labours in India. We cannot discuss every law but to understand what labour law is all about, let’s look into few. The Shops and Commercial Establishments Act aims to regulate the payment, hours of work, overtime, weekly day off with pay, annual leave, other holidays with pay, employment of children and young persons and employment of women. The Factories Act ensure safety measures in factory premises, promote health and welfare of workers. Similarly, there are acts for minimum wages and terms of service like layoffs, retrenchment, and closure of industrial enterprises and strikes and lockouts.

How it will impact the workers now?

It is believed that the government has now created an enabling environment for the exploitation of workers. The decisions seem far from reform, which means an improvement in the status quo. The changes in labour law will strip the labour of its basic rights along with decreasing the average wages. Now, firms might fire the existing workers and hire again at a lower wage.

Read more: COVID-19 Pandemic Is Hitting Hard On Pregnant Women

From the labour’s perspective, the government has completely turned its stand from asking firms to pay full salaries and not to fire workers at the start of lockdown, to stripping workers from their bargaining power now.

Experts believe that the new move, instead of pushing for a greater formalization of the workforce, this move might turn the existential formal workers into informal workers as they won’t get social security. The rise of informal workers will lead to a decrease in the wage rate sharply and workers won’t be able to seek grievance redressal.

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