Abstract
The article takes stock, along with the key arguments that have animated labour regulation and deregulation debates (leading to the recent developments), of the changes that have come to characterise the world of work in terms of industrial organisation (the extent and kinds of outsourcing arrangements between enterprises and companies, the profiferation of the service economy), employment arrangements (short term, irregular, contract, and various other kinds), and spatiality (work from home, gig work, digital work) in India. It addresses the following questions: Does the world of labour deregulation interact with the ways in which work and employment are structured and changes that have occurred in an industrial organisational sense in India? Can labour regulations, as they have unfolded in recent times, protect labour in the context of a multiplicity of organisational changes that have occurred in recent years?
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Notes
The Wage Code was passed in 2019 and the remaining three in 2020. In February 2021, the Ministry of Labour and Employment announced that the rules for the implementation of the four codes have been finalised, awaiting implementation from October 2021.
The size of India’s informal sector and the percentage of its working population engaged in informal work have been the subject of a lot of discussion, especially from when a central government appointed National Commission for Enterprises in the Unorganised Sector published its findings in 2008 (NCEUS 2008). The NCEUS found that 92% of the workforce was employed as informal workers and more than 95% of the total number of enterprises in India were in the unorganised or informal sector.
Trade unions argue that the raising of the limit for seeking government permission for closure, layoffs or retrenchments from the existing 100 workers to 300 in the Industrial Relations Code will ease arbitrary firing of workers in a large majority of enterprises. The introduction of a new form of short-term labour—fixed term employment—in the Industrial Relations Code will reduce further the employment of long-term workers with statutory protection and benefits. The recognition provided to specific kinds of work such as gig work and platform work in the Code on Social Security implies their employment as self-employed and is not consistent with the definitions of the terms ‘employee’ and ‘workmen’ in the other codes.
On Conditions of Work, a. Factories Act, 1948 b. The Contract Labour (Regulation & Abolition) Act, 1970 c. Shops and Commercial Establishments Act (State Act).
2. On Wages and Remuneration, a. The Minimum Wages Act, 1948 and b. Payment of Wages Act, 1936.
3. On Social Security, a. Employees’ Provident Fund Act, 1952 b. Workmen’s Compensation Act, 1923.
c. Employees State Insurance Act, 1948 4. On Employment Security and Industrial.
Relations a. The Industrial Disputes Act, 1947 and b. Industrial Employment (Standing Orders).
Act, 1946.
Papola and Pais 2007.
The organised and unorganised sectors are distinguished from each other in terms of the number of workers employed and whether they use power or not for production. Enterprises employing ten workers and more with power and twenty without power are considered part of the organised, factory or registered sector (also synonymous with the formal sector). All those employing less are defined as part of the unorganised, non-factory or unregistered sector (considered synonymous with the informal sector.
Damodaran (2007) found that security workers did not come under any specific category such as an industry, an establishment or a shop and were thus not bound by any specific laws such as the Factories Act 194 or the Shops and Establishments Act 1954, which govern the manufacturing sector (for more than 10 employees with power and 20 employees without power and shops and similar establishments in the service sector respectively). The only concrete piece of legislation that covered security agencies at the time of the study was the Private Security Agencies Regulation Act 2005, that lays down the conditions under which such employment can be offered by companies or persons, but which does not contain any provision for protection of labour rights.
The Factories Act 1948 requires enterprises employing more than 10 workers (with power) or 20 workers (without power) to abide with several regulations, including those on labour.
NCEUS (2008) pointed out that more than 95% of enterprises in the manufacturing sector in the period 2004–05 belonged to the unorganised sector, employing less than ten workers.
Langille 2005.
People may be covered under a law dealing with conditions of work but may be excluded from the scope of a social security law because their income is above the maximum income coverage limit (Sankaran 2016).
For example, India and Pakistan have federal Constitutions where both the central and provincial legislatures can legislate on labour matters. As a result there is considerable variation across states/provinces in some labour questions (Sankaran 2016).
One reason for this, according to Sankaran (2016), is the reluctance of the government to lose control of the industrial relations machinery, which is seen as pivotal in insuring industrial peace and growth; the other is the concern among trade unions that in sectors where they are weak, reliance on collective bargaining may make them vulnerable.
Mehrotra (2019) has estimated that informal employment remained between 85.2% and 83.5% of total non-farm employment (including manufacturing, construction and services) in the period 2004–05 to 2017–18, even as employment in the formal non-farm sector increased from 28.3% in 2004–05 to 34.4% in 2010–11, to decline to 29.5% in 2017–18. In other words, the formal sector contributed less than 30% of non-farm employment in 2017–18, and the additions to employment were informal in nature.
An earlier preoccupation in the industrial clustering literature, drawing from categories coined by Pyke and Sengenberger (1992) was whether countries or sectors were engaged in the high road or the low road to flexible specialisation, with the high road corresponding to increased productivity and economic performance along with better conditions for labour and the low road consisting of poor employment conditions and also not very impressive production and productivity gains. With the research on Global Value Chains and the role of developing country industrial clusters in them, economic upgrading came to refer to moving up the value chain in terms of better products, superior processes, improved technology use and greater productivity. Social upgrading came to refer to better conditions for labour.
In commercial subcontracting, the role of the principal firm is limited to marketing and distributing the subcontractors finished product. The principal firm itself may not be engaged in the manufacture of that product.
Ratios of company performance such as asset weight (defined as the ratio of the company’s undepreciated operating assets to its annual sales) or the ratio of price (market value of equity) to operating assets, or profits and returns on assets are seen to improve drastically with the adoption of asset-light models (Kachaner & Whybrew 2014).
For example, luxury hotel chains enter into tie-ups with real estate companies for the latter to provide the physical facilities and get the advantage of participating in the luxury hotel segment while the former does not own any of the facilities. Similarly, retail corporations like Amazon have entered into several arrangements with companies in the finance and entertainment segments under their brand.
Airtel first outsourced all business processes to IBM to manage. By using IBM’s information technology (IT) infrastructure and standardised business frameworks, it reduced capital expenses and increased the quality of customer experience. Further, it outsourced telecom networks to Ericsson and Nokia. Ericsson agreed to receive payment through the usage of its network infrastructure instead of upfront payment. This again reduced Airtel’s capital expenses.
In addition to network infrastructure outsourcing, arrangements were also made with software service providers, including those providing ‘value-added services’ (the major players include Microsoft, Verisign, Tech Mahindra, Subex Azure, Logica, CanvasM and Amdocs), content developers (like Rediff, Mauj Tel, Google, Onmobile), which provide services under three broad categories—entertainment, information and m-commerce, and call centre operators (like IBM Daksh, Hinduja TMT, Mphasis, Aegis, and Firstsource, among others).
Section 25FF applies if three conditions are met:
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The transfer is of an entire and independent "undertaking" (that is, where all assets, plants/machinery and employees are being transferred).
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The workmen are offered continuity of service by the transferee (that is, past service with the transferor is recognised by the transferee while calculating all statutory payments and contributions).
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The workmen are offered employment terms that are "no less favourable" by the transferee.
If these conditions are met, it could be argued that a workman's consent is not required to transfer employment.
-
For example, if the transferee does not intend to recognise past service, the transferor could terminate employment (or the employees resign) and a fresh employment agreement could be signed with the transferee.
Legal challenges to the perspective of treating gig workers as independent contractors have taken place in different parts of the world and in India as well most recently. In the third week of September 2021, a petition was filed in the Supreme Court of India by The Indian Federation of App Based Transport Workers (IFAT), seeking to define them as ‘workers’ in an employment relationship in with unorganised or informal conditions of work. The petition also argues that the failure of the State to register them as unorganised workers or to provide them social security under the existing law is in violation of their rights under Article 21 of the Constitution of India, which guarantees the right to work, the right to livelihood and the right to decent and fair conditions of work, Kakkar (2021).
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The author is thankful for discussions with Gautam Mody and Anurag Saxena, and comments from Babu. P. Remesh, Krishna Menon, and Ari Sitas.
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Damodaran, S. Industrial Organisation, Employment and Labour Regulations: Understanding Recent Changes in India. Ind. J. Labour Econ. 66, 495–512 (2023). https://doi.org/10.1007/s41027-023-00437-6
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DOI: https://doi.org/10.1007/s41027-023-00437-6