Provide income support, restore jobs (The Hindu)

Mains Paper 2: National
Prelims level: Labour laws
Mains level: Constitutional and political questions raises concern the abrogation of labour laws

Context:

• Following the adage, “never waste a crisis”, the government of Uttar Pradesh, last week, introduced an ordinance that has scrapped most labour laws for three years — ostensibly for creating jobs and for attracting factories exiting China following the outbreak of the novel coronavirus.
• These laws deal with the occupational safety, health and working conditions of workers, regulation of hours of work, wages and settlement of industrial disputes. They apply mostly to the economy’s organised(formal) sector, that is, registered factories and companies, and large establishments in general.
• Madhya Pradesh and Gujarat have quickly followed suit. Reportedly, Punjab has already allowed 12-hour shifts per day (72 hours per week) in factories without overtime payment to overcome worker shortage after the migrants have left in the wake of the national lockdown.

Snatching away labour rights:

• Snatching away labour rights in the midst of a global pandemic and national lockdown is distressing and shocking. Over the course of the last seven weeks, we have witnessed unheard of human distress as lakhs of migrant .............................................

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Opposition from trade union:

• Employers’ associations have urged the central government to do away with most labour rights to address temporary labour shortages.
• Trade union leaders from the Bharatiya Mazdoor Sangh to the Centre of Indian Trade Unions, and Opposition leaders in Uttar Pradesh have condemned the ordinance. It will face a challenge in courts, legal experts say.

Constitutional and political questions:

• The abrogation of labour laws raises many constitutional and political questions. But will it expand employment and output growth, as claimed by its proponents?
• Such a step, by popular belief, will reduce wage costs, increase profits and augment productive investment and growth. Improved supply is expected to create demand (following Say’s Law in economics). Such (simplistic) reasoning assumes that labour laws are the binding constraints on expanding output.
• Surely, the lockdown has disrupted supply, but only temporarily. There are no inherent shortages at the moment as the inflation rate remains moderate.
• Agricultural produce is rotting in farms for lack of transport. Industrial production is held up as migrant workers have fled for their lives.

Income support:

• Before the lockdown, annual GDP growth rate had plummeted to 4.7% during October-December quarter of 2019-20, from 8.3% in the full year of 2016-17. The slowdown is due to lack of demand, not of supply, as widely suggested.
• With massive job and income losses after the..................................

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More questions:

• The rationale for scrapping labour laws to attract investment and boost manufacturing growth poses two additional questions.
• One, if the laws were in fact so strongly pro-worker, they would have raised wages and reduced business profitability. But the real wage growth (net of inflation) of directly employed workers in the factory sector has been flat (2000-01 to 2015-16) as firms have increasingly resorted to casualisation and informalisation of the workforce to suppress workers’ bargaining power, evidence suggests.
• Two, is it right to blame the disappointing industrial performance mainly on labour market regulations? Industrial performance is not just a function of the labour laws but of the size of the market, fixed investment growth, credit availability, infrastructure, and government policies.
• In fact there is little evidence to suggest that amendment of key labour laws by Rajasthan and Madhya Pradesh in 2014 took them any closer to their goal of creating more jobs or industrial growth. The role of labour market regulations may be more modest than the strong views expressed against them in the popular debates.

Rationalise labour laws:

• Surely, India’s complex web of labour laws, with around 47 central laws and 200 State laws, need rationalisation. However, now more than ever before, reforms need to maintain a delicate balance between the need for firms to adapt to ever-changing market conditions and workers’ employment security.
• Depriving workers of fundamental rights such as freedom of association and the right to collective bargaining, and a set of primary working conditions (such as adequate living wages, limits on hours of work and safe and ..............................................

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Conclusion:

• As India battles the economic and social consequence of the COVID-19 pandemic, many State governments have seized the opportunity to scrap labour laws on the pretext of encouraging employment.
• Such a decision makes little economic sense currently, as it will reduce share of wages in output, thereby reducing growth in domestic demand and hurting output expansion. Significantly, exports cannot be an option for now as the global economy is staring at the possibility worse than the Great Depression.
• Hence, the Uttar Pradesh government’s move will only result in a race to the bottom on workers’ pay and labour standards, making workers worse off, without creating additional jobs, as it is a lack of demand that is currently holding up output growth. The Uttar Pradesh ordinance needs to be revoked, lock, stock, and barrel.

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Prelims Questions:

Q1. With reference to the ‘silent’ or ‘happy’ hypoxia, consider the following statements:
1. Hypoxia is a condition wherein there is not enough oxygen available to the blood and body tissues.
2. It will be only affected to the heart.

Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

Answer:......................................

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Mains Questions:
Q1. What are the constitutional ...................................................?