“Only 1 in 63 million enterprises in India are formally organized” according to government data.
Due to this lack of formalization, majority of the Indian workforce doesn’t enjoy social protection that every worker deserves. Under coverage of the workforce under social security benefits coupled with exemptions of several industries from labor laws had left a huge portion of the workforce to fend for itself.
Having the objective to protect the workers from unethical practices followed by several employers in mind, the Indian government has recently passed three laws- Code on Wages Bill, Code on Occupational Safety, Health & Working conditions and Code on Social Security.
Changing nature of work
Currently, only 1 in 3 workers gets minimum wage and only 90% of the workers are covered under any social security net. Several new kinds of employment like gig work, contractual work and fixed term employment, hitherto confined to the informal sector, have been introduced even to the white collar jobs. These workers are much less protected than the permanent employees of a company. The pandemic, in particular, has been a major contributor to employers adopting these new mechanisms.
Important features of the Codes
- National Minimum Wage- is the major highlight of the Codes. It implies that no state can fix its minimum wage below the floor wage rate set by the Centre.
- Mandatory annual health checkups- to protect workers working in hazardous situations
- Appointment letters of all workers will now have information regarding statutory rights that a worker is entitled to.
- Heavy penalties, minimum 50%, will be levied in case of an accident and these funds can be used to provide relief to families of those injured.
- Journey and displacement allowances- have been proposed for interstate migrants. Need for such provisions was felt when the nation witnessed mass migration of workers to their hometowns when the lockdown was first announced, most of them did not have personal vehicles or even money to travel.
- The Code on Social Security has widened the categories of workers to be given social security benefits to include workers involved in all kinds of employment like casual workers, freelancers, gig workers, home based workers and even domestic helps. The law also also aims to introduce a transparent and fair financial setup to ensure the implementation of these provisions.
Ease of doing business
“The objective of the Codes is not to stifle employers by overprotecting the workers but at the same time to provide them with necessary protection and promote formalization of jobs, thereby increasing coverage of social security benefits to as much of the workforce as possible”, said Labour Minister Santosh Gangwar
These reforms will help tackle various issues like multiplicity of laws, no uniform minimum wage and gender discrimination in terms of wages. It will be easier to implement laws and it will ensure a uniform standard of living across the country.
Concerns expressed by industrialists
The industrial associations have lauded the government for providing protection to the workers but at the same time have also expressed some concerns. According to the President of All India Organization of Employers, an allied body of FICCI, “Due to the new wage definition, there will be a substantial increase in statutory payments that will be an additional burden on the employer”.
Provisions might prove to be ineffective
Some critics have pointed out that the national minimum wage will be ineffective as most states already have their wages much above the floor wage set by the government which is mere Rs178 per day. There’s a demand for moving from minimum wage to living wage (the difference is that minimum wage is subsistence wage whereas living wage takes into consideration other basic needs like that of housing and one which is enough to not just support oneself but the entire family). Minimum wage should be updated in light of latest available evidence relating to per capita consumption, food and nutritional requirements.
To really protect the country’s workers, the government will have to bring more radical reforms. It should also be ensured by the Centre that states implement all the current provisions of the laws. Otherwise, such irresolute attempts might end up benefiting no one.
Komal is an English literature student with a keen interest in economic developments and politics amongst others. She is a part of Research & Content team at HrNxt.com