CURRENT LABOUR SITUATION IN INDIA C S Venkata Ratnam1

Abstract: This paper is presented in four sections. The first section seeks to present a brief overview of the current situation with regard to labour force in Indian economy. The second section deals with Government of Indias policy on international labour standards and their linkage with international trade. The third section presents a critique of the issues involved in the politics of labour law reforms. The fourth section offers broad conclusions. I. CURRENT SITUATION WITH REGARD TO LABOUR FORCE IN INDIAN ECONOMY

BRIEF HISTORICAL OVERVIEW A study of the Indian economy and its labour force can be divided into three phases: (i) the colonial era (till 1947), (ii) the import substitution era postindependence (1947 to 1991), and (iii) the era of economic liberalization (1991to date). At the time of independence, India had a significant industrial base, which was substantially diversified under the governments heavy industrialization strategy during the plan era, particularly from the mid-1950s to the end of the 1960s. This period saw the public sector being accorded the dominant role in the growth of the economy. During the 1970s and the 1980s, the government followed the policy of self-reliance and import substitution. In this period several East Asian (Taiwan and Korea) and Southeast Asian (Singapore, Hong Kong and Malaysia) countries pursued export-oriented industrialization strategies. Domestic industry was protected in product markets and labour in labour markets. India, therefore, did not grow as fast as the rest of Asia and its economic, industrial and political significance in the region and in the world declined. Post-1991, the measures of economic liberalization, privatization and globalization have resulted in a drastic change in the mind set of labour, management and government. Organised labour became defensive as both state and central governments became investor friendly. Though labour laws themselves have not changed, the attitude of the bureaucracy and the judiciary has changed. Government has resorted to phased withdrawal of subsidy and selective, but slow privatization through, mostly, disinvestment route. Faced with global competition, employers have tried to tighten belt and cut costs, including, particular, labour. Cost plus economy became price minus cost as profit
1

Director Designate, International Management Institute, B 10 Qutab Institutional Area, New Delhi (Effective from 5 Jan 2005). Currently the author is Professor, IMT, Ghaziabad and Director, GITAM Institute of Foreign Trade, Viskahapatnam. He can be reached through: csvratnam@rediffmail.com

economy. Table 1 tries to capture some of the paradigm shifts in governments policy. The rate of economic growth, particularly in the industrial and service sectors has picked up though employment in the organized sector has stagnated in relative terms. With economic liberalization both labour and capital now feel less protected or unprotected. The change in government policies is reflected in the difference between the terms of reference of the First National Commission on labour and the Second National Commission on Labour appointed in 1966 and 1999 respectively (Annexure 1). While the former was asked to recommend measures to improve the conditions of labour, the latter was asked to suggest labour law reforms to align labour policies with the requirements of product market as also recommend an umbrella legislation for unorganized labour. Table 1: Changes in the Scenario, Before and After Economic Liberalization Before Liberalization After Liberalization State-sponsored and mediated development Protected domestic market Competitive market Budgetary and directed institutional resource allocation Competitive capital market-led resource allocation Subsidies and administered price regime Rational pricing, including user charges Welfare state active in labour Labour-neutral and invest-friendly state market policies Systematic jobs de-casualization Fast re-casualization of contractualization of jobs and state- Market led and private dominated enterprise

Crisis of sustainability of social security welfare programmes, and pressure for Largely government-funded social security measures for all security and welfare programmes for a few Crisis of governance and fear of political and economic instability Stable governing structure and policy regime Micro-electronics-led new-generation capital and skill-intensive technologies Stable, though obsolete, labourintensive technologies Threat of deindustrialization and rapid growth of the service sector

Dominant status of manufacturing Source: Adapted from C.P. Thakur (2003). The Indian economy is still characterized by a sharing rural urban divide in terms of its structure and composition of both industries and workforce. LABOUR AND ECONOMIC PLANNING The objectives of labour policy in economic planning in India in the postindependence period can be classified into two categories: the plan era and the transition-to-market era. In the plan era, the first seven Five Year Plans (1951- 91, with some breaks in between) focused on the following objectives vis--vis labour: - improving the conditions of labour and their welfare - prevention and settlement of industrial disputes and maintenance of industrial peace and harmony to avoid disruption of industrial activity which could adversely affect the realization of plan goals - controlling industrial growth to prevent concentration of economic power in the hands of a few income disparities among individuals and regions - workers education - workers participation in management With the transition to a market economy (1991 to date), the need has arisen for aligning industrial relations policies with industrialization strategies. This calls for: - facilitating the growth of enterprise and entrepreneurship and aligning labour policies with economic policies - a policy focus 7 per cent organized labour to 93 per cent unorganized labour (Ninth Five Year Plan, 1997 2002, Working Group Report) - reform of labour laws and labour policies in the wake of globalization (terms of reference of the Second National Commission on Labour appointed in 1999) - a shift in emphasis from job security to income security and social safety measures - concern for skills development, productivity and competitiveness - reforming of pension - a shift in government role from control to facilitation Unemployment and underemployment have been major concerns, but it is mainly in the Tenth Plan (2002-07) document that a strong plea has been made for bringing about a qualitative change in the structure and pattern of employment to promote growth of good quality work opportunities. The growth process alone will not be able to provide adequate work opportunities for the emerging workforce, let alone reduce the backlog of unemployment. Further, the Tenth Plan document recognizes the need for transforming an agrarian economy into a modern, multidimensional economic powerhouse and an egalitarian society.

The Tenth Plan specifically has as its targets 8 per cent annual economic growth, reduction in poverty from 26 per cent in 2002 to 21 per cent by 2007 and a decrease in population growth from 21.3 per cent in the 1990s to 16.27 per cent during the decade 2001 - 2011. It also aims to provide gainful, high quality employment to at least new entrants in the labour force, improve literacy to 75 per cent and reduce unemployment to 5.3 per cent by 2006-07. Further, the Tenth Plan envisaged to reduce gender gaps in literacy and wages by 50 per cent. TERITIARIZATION OF THE ECOONOMY Economic activities are classified into three sectors: primary, secondary and tertiary. To begin with most economies are engaged in primary (agricultural) activities. As industrialization takes place the secondary (manufacturing) sector comes to account for the bulk of employment and GDP. Post-industrialization, the tertiary (service) sector becomes the major provider of jobs and the main source of GDP and its growth. In India, since the mid-1980s, the service sector has been growing fast. Tertiary sector currently accounts for the bulk of employment and GDP. Of Indias one billion population, the workforce is an estimated 400 million. About 58 per cent of the countrys workforce continued to be engaged in agriculture and contributes a mere quarter of GDP. Nearly 18 per cent is engaged in industry and contributes 26 per cent of GDP. The remaining 23 per cent of the workforce is in the tertiary sector its proportion is steadily growing and contributes roughly half of the GDP (Table 2). The tertiarization of the economy requires new skills and new work values and, in some cases, new forms of employment and work organization. Table 2: Sector-wise Share in Employment and GDP, 1983 and 2000 (%) Sector Share in Share in employment GDP 1983 1983 38 26 36 100 Share in employment 2000 60.4 16.8 22.8 100 Share in GDP 2000 25 26 49 100

Primary (Agricultural) 69 Secondary 13.8 (Manufacturing) Tertiary (Service) 17.2 Total 100 Source: Government of India (2001).

Agriculture, which accounts for nearly three-fifths of employment, is expected to grow without any significant increase in employment. During the 1990s it had zero elasticity of employment and over the coming few decades it may have negative elasticity of employment. Without a major shift in employment from

agriculture to other sectors including rural industries, the majority of Indias working class will remain poor. However, improvement in productivity can be expected to increase wage levels in agriculture. If those displaced from agriculture can have gainful employment in the non-farm sector or rural industries, there can be a significant reduction in poverty. Table 3: Employment Elasticities, 2001 Agricultural Manufacturing Construction Wholesale and retail trade Transport, storage and construction Finance, real estate, insurance and business services Source: Government of India (2001). Estimated elasticity 0.00 0.26 1.00 0.55 0.69 0.73

Employment of elasticity in manufacturing is higher than in agriculture but lower than in the service sector (Table 3). Global competition and extensive use of modern technologies have reduced and continue to reduce employment intensity in the manufacturing sector. The stringent provisions in labour law restraining layoff, plant closure and retrenchment of labour introduced during the emergency in 1976 by way of amendments to the Industrial Disputes Act, 1947 has resulted in an increase in capital intensity and decrease in labour intensity. Employment intensity in manufacturing is also declining and there is a virtual stagnation in employment in organized industry. The service sector holds the prospects of a major share in new job creation, but substantial part of it is expected to remain unorganized in the foreseeable future. The quality of employment in the unorganized sector is usually poor. Growing global competition has increased casualization and contractualization of labour. Poverty ratios are declining but quality of employment and quality of the labour force remain major areas of concern. The gradual withdrawal of the welfare state role of the government, policy shifts from labour to investor concerns and the assertion of consumer rights and the pressures of cost-cutting competition portend persistent jobless growth and worsening of labour market conditions. To counter this trend, it is imperative to invest heavily in basic education and skills training . LABOUR FORCE IN INDIA: STRUCTURE AND COMPOSITION The diversity of the Indian industrial workforce makes it difficult to generalize its profile. Only 13 per cent of the labour force is in regular wage employment and

barely 7 per cent is in the organized sector and 4 per cent unionized. The growing tertiarisation of the economy where the service sector dominates in terms of share of employment and GDP is accompanied by casualization. Forty-two per cent of the population is not literate. As a result a substantial proportion of the labour force, even in the organized sector, is illiterate. Ninety-three per cent of Indias labour force is in the unorganized sector; 55 per cent is self-employed; 13 per cent is in regular wage employment. About a third of the labour force is in casual employment (Table 4). Casualization of labour is growing due to economic liberalization, changes in ownership and technology, cost-cutting competitive strategies of employers and the governments investorfriendly disposition towards the organized sector. Over one-fourth of the population of the country is below the poverty line. Unemployment is growing. In the absence of unemployment insurance, open unemployment is relatively less in India. The real problem is of underemployment and disguised unemployment. The really poor cannot remain without jobs. Therefore while the vast majority accept whatever job comes their way and work below subsistence level, the few who can afford to, wait for a better job. Therefore, it is little wonder that the incidence of poverty is higher among the employed than among the unemployed. Table 4: Labour Force Profile, 2001 2001 Population >1 billion Labour force/workforce <400 million Organized sector/Formal sector 7% Unorganized sector/Informal sector 93% Self-employed 55% Regular workforce 13% Casual workforce 32% Employment in government and public >18 million sector Employment in private sector >9 million Unionized workforce/Union density 4% Workforce covered by collective bargaining 2% Self-employment and regular salaried employment declined between 1977 and 2000 in rural areas (Table 5). Consequently there was a significant rise in casual employment in rural areas. In contrast, in urban areas, the situation was relatively stable though there was a 2 per cent increase in casual employment in urban areas during the corresponding period. Though employment in the organized sector grew in absolute numbers between 1977 and 2000, it declined marginally

between 1994 and 2000. Overall, the trend points to a worsening of the quality of employment during the period 1997 2000 (Table 6). Only 5 per cent of the Indian labour force in the age bracket 20-24 years has obtained vocational training Low literacy, vocational bias against technical skills, occupational preference for non-production jobs, mismatch between skills acquired and skills required, dearth of adequately/appropriately trained technical personnel, low competitiveness of labour vis--vis developed nations and employability and retraining of labour are among the major weaknesses that characterize the macro level situation of labour in India There is a need to forecast marketable skills through labour market intelligence system with focus on linking job seekers with job providers. Competencies for different jobs should be assessed systematically both in the organized and the unorganized sectors. Table 5: Distribution of Workers (Usual Status) by Category of Employment (1997 2000) (%)
Year Self-Employment Rural 1977-78 1983 1987-88 1993-94 1999-2000 62.6 61.0 59.4 58.0 56.0 7.7 7.5 7.7 6.4 6.7 Urban 1977-78 1983 1987-88 1993-94 1999-2000 42.4 41.8 42.8 42.3 42.1 41.8 40.0 40.3 39.4 40.1 Rural and Urban combined 1977-78 1983 1987-88 1993-94 1999-2000 58.9 57.4 56.0 54.8 52.9 13.9 13.9 14.4 13.2 13.9 27.2 28.7 29.6 32.0 33.2 15.8 18.2 16.9 18.3 17.8 29.7 31.5 32.9 35.6 37.3 Category of Employment Regular salaried Casual

Source: Government of India (2001)

Table 6: Employment in Organized and Unorganized Sectors, 1973 - 2000

Year 1973 1978 1983 1988 1991 1994 2000

Organized 18.8 21.2 24.0 25.7 26.7 27.4 28.1

Employment Unorganized (Million) 217.5 249.5 278.7 296.3 315.2 344.7 365.1

Total 236.3 270.7 302.7 322.0 341.9 372.1 393.2

Organized as % of total 7.4 7.8 8.0 7.9 7.9 8.0 7.1

Note: The organized sector includes all establishments in the public sector and non-agricultural establishments employing 10 or more persons in the private sector. Source: National Sample Survey Organisation and Directorate General of Employment and Training, Ministry of Labour, Government of India. The government should invest in basic education, skills formation and training. Apart from achieving literacy for all, vocational skills provision should receive urgent attention. This is best done through private public partnerships with due emphasis on vocational skills certification and appropriate funding. Vocational education should be integrated at the school level. Along side, there is need to institute special programmes for protecting the interests of vulnerable groups and to enhance income security for those who are adversely affected by unemployment or job loss. Box 1: Sectors with comparative advantage and Employment Potential in India No country can have competitive advantage in all sectors. There is a need to identify and develop, with state playing a nourishing and nurturant role with fairness, firmness and compassion. Several studies suggest the following ten sectors have the potential to generate jobs. Agriculture and food processing and agro-based industries including organic foods Bioengineering and biotechnology Marine resources (India has long coastline) and inland transportation Pharmaceuticals and chemicals Education, health, housing and social services Physical and public infrastructure: roads, irrigation, and public transportation Communication, information technology and entertainment Banking, insurance and financial services Tourism and hospitality industry Service sector including IT-enabled services

TRADE UNION SITUATION Today there are over a dozen national centres of trade unions in the country with five of hem having a membership of over 500,000 in at least four states and four industries/ sectors. Though the official number of registered unions is around 50,000 the actual number may well exceed 100,000. There is a serious problem with regard to the data base on trade unions, their membership and finances. In the non-farm sector trade union density is very high. While only 4 to 6 per cent of the total labour force in the country may be unionized, in public sector undertakings it could be well over 80 per cent. Trade unions main problem is inter union rivalry due to multiplicity. While there is usually broad cooperation on wider issues concerning wages and working conditions, on specific issues at the work place level such cooperation is rare. Collective bargaining takes place at national, sectoral and enterprise level. In banks, coal, steel and ports and docks there is good coordination among the unions at the national level and centralized bargaining is the rule. In these sectors, at least till recently, government has been the sole or the major employer. In sectors like jute and textiles where private sector is the main employer region-cum-industry wide collective bargaining is common. In other industries collective bargaining is usually at the enterprise level. National legislation in India provides for trade union registration, not recognition. Some state laws provide for recognition through law (Maharashtra for example) or through administrative notifications (Orissa and West Bengal). Workers participation is provided in Factories Act in the form of mandatory works committees, joint management councils, etc. Their formation and working varies across enterprises and the over all situation with regard to representative forms of participation is not encouraging. In several cases, mostly banks and several public sector companies there is worker representation even at the board level. A law on the subject is pending since 1990. Through an amendment to the constitution of India in 1976, the Government of India has included workers participation in management as a directive principle of state policy. The second national labour commission (2002) recommended statutory provision for the purpose. Several professionally managed companies, including some of those which follow Japanese management principles and practices have been resorting to greater use of direct forms of worker participation and involvement thorugh 5S, Kaizen, Quality circles, Suggestion schemes, etc. INCIDENCE OF INDUSTRIAL CONFLICT As seen from Table 7, the incidence of strikes and lock-outs is generally on the decline in the post-liberalisation period (1991-to date) as compared to 1980s in terms of number of disputes, number of workers involved and number of mandays lost. Significantly, in recent years roughly two-thirds of the mandays lost is due to lockouts. Some of the lockouts may have taken place in the

aftermath of a strike and the resultant law and order situation which provokes management to declare lockout in the interest of protecting people, premises and products from possible acts of vandalism, arson and sabotage. Whatever be the truth in it, usually that is the reason that several employers give for declaring lockout. There are several plausible explanations, including the following: 1) Increased used of advanced technologies is making control over work shift from workers to machines and managers thereby blunting the power of strike to disrupt work Evidence of this can be seen in printing, banking and many other industries. 2) Declining membership and union power 3) When most of the allowances, etc., are linked to wages and the courts ruling no work no wage principle, workers are not usually prepared to lose earnings due to strikes. This particularly so because it is usually difficult to go on a legal strike due to restrictions on strikes in the form of notice and prohibition during the pendency of conciliation, adjudication, etc. 4) Growing fear among workers about the futility of strikes and the possibility of job loss in view of growing competition, industrial sickness, governments reluctance to support strikes any longer because of the need to woo investors, etc. 5) A vast majority of the stagnant organized/unionized workers moving from working class to middle class are less prepared to take to streets and support unions during direct action State-wise analysis of strikes and lockouts reveal that five states West Bengal, Kerala, Andhra Pradesh, Tamil Nadu and Maharashtra account for over half the mandays lost in India over the past several years. In most years over 90 per cent of the mandays were lost every year in the past decade due to lockouts and less than 10 per cent due to strikes. It is believed that in India more mandays are lost due to poor work ethic than due to industrial strife. Workers in the organized sector, work usually 5 hours in a shift of 8 hours in most establishments. Thus every day the 28 million strong organized sector workforce account for a loss of one million mandays a day as against about 20 million mandays lost every year on average due to industrial strife during the past 14 years or so. If the indirect loss of mandays due to minor and major industrial accidents is reckoned, perhaps unsafe workplaces and working habits account for more mandays loss than the number of mandays lost due to strikes and lockouts. The above observations should not be construed to undermine the seriousness of the problem of mandays loss due to industrial strife. In fact, in most developed countries, mandays loss is on the decline. A perusal of the ILO Statistics on mandays loss in developed and developing countries seem to point out that industrial harmony and industrial development go in tandem. The importance of

industrial harmony for planned and uninterrupted industrial development and economic and social well being cannot be exaggerated. At the same time, it is not proper to put restrictions on strike or lockout. Absence of conflict could, in some cases, be a measure of the misery of the workforce concerned. During the post liberalization period on average over one lakh workers are affected every year due to closures, lay off and retrenchment. Over 90 per cent of the workers thus affected were due to lay offs. Unlike closures and retrenchment, lay off is a permanent removal of worker from work with 50 per cent pay. Therefore, it can be said that notwithstanding the fears about the adverse affect of liberalization, privatization and globalization the number of workers actually affected by job loss due to closure of business and retrenchment is small. However, this data does not include voluntary retirement and casualisation of jobs. Table 7 : Industrial Disputes, Workers Involved and Mandays Lost in India during 1986-2003 India

Number of Disputes Workers Involved Mandays Lost Strike Lockout Total Strike Lockout Total Strikes Lockout 1986 1,458 434 1,892 1,444,397 200,485 1,644,882 18,823,648 13,294,580 1991 1,278 532 1,810 872,482 469,540 1,342,022 12,428,333 13,999,759 2 1996 763 403 1,166 608,673 330,631 939,304 7,817,869 12,466,934 2 2001 372 302 674 489 199 688 5,563 18,204 2002 295 284 579 900 804 1,704 9,665 16,921 2003 309 293 602 3,169 804 3,973 3,169 26,526 Notes : * Period (1981-91) ; ** Period (1992-03) Source : Compiled and Computed from Government of India, Ministry of India, Industrial Disputes in India (2002) and earlier issues CAUSES AND CONSEQUENCES OF INDUSTRIAL CONFLICT IN INDIA. As seen from Table 14.5, since 1961 to date, three fourths to two third of the work stoppages in India have been due to four reasons in the following order of importance: 1) wages and allowance 2) personnel and retrenchment 3) Indiscipline and violence 4) Bonus 5) Leave and hours of work

II. INTERNATIONAL LABOUR STANDARDS As a founder member and one of the 10 countries of chief industrial importance, India holds a non-elective seat in the governing body of the ILO. India has ratified 39 of the 182 conventions. The ILO has influenced India and India has influenced the ILO. A tripartite committee on ILO conventions oversees the aspects relating to international labour standards, proposals concerning new conventions/ratification of old conventions, compliance of the provisions in the ratified conventions, etc. The Constitution of India and labour legislation uphold all the fundamental principles envisaged in the eight `core international labour standards. India has also ratified three of the eight core conventions that constitute the fundamental principles. It also likely to ratify two more of the remaining five core conventions: Convention No. 105 concerning abolition of forced labour and Convention No. 182 concerning immediate action to end the worst forms of child labour. Indias record in this regard is better than that of US, which has ratified only one of the seven core conventions. Among the Western European countries, France and Germany have ratified all the core conventions. Though some South Asian countries have ratified more core conventions than India, it can be said with certainty that Indian record is no less, if not better, than its neighbouring countries. India is actively considering the ratification of Convention No.105 concerning the abolition of forced labour. India has not ratified Convention Nos. 87 and 98 concerning freedom of association and right to collective bargaining due to `technical difficulties involving trade union rights for civil servants. This, however, is not a major hurdle because the government can always exempt certain services while ratifying the concerned conventions. Indias record in respecting freedom of association and collective bargaining is much better than that of many other countries in the region, which have ratified either one or both conventions. Mere ratification, however, cannot guarantee the achievement of the underlying objectives. It should be backed by a strong political will and legislative framework and effective vigilance by the other social partners such as NGOs, consumer groups. But these considerations cannot be a justification for non-ratification. India ratified Convention No.11 concerning Right of Association (1921) for agricultural workers way back in 1923. The Union Ministry of Labour in association with the National Labour Institute, set up by it in the 1970s, has organised several workshops and rural camps to facilitate the organisation of rural workers. Still, given the huge social inequities both in terms of caste and land distribution, the density of unionisation among rural workers is negligible. In contrast, there are some highly organised and unionised sectors where collectively determined labour standards exceed the national and international labour standards in some aspects. During the 1920s and 1930s, the private sector steel giant Tata Iron and Steel Company, introduced a number of voluntary welfare

measures long before such measures were incorporated either in the national legislation or international labour standards. In the past, some of the legislative initiatives based on ILO conventions have had the opposite effect. For instance, measures to safeguard the interests of women through maternity benefits and restriction of employment of women in night shifts in factories and in underground mining have resulted in many employers hesitating to employ women. This should not lead to discontinuance of maternity benefits. Giving paternity leave would perhaps restore the balance and remove the incentive for employers to employ only males. The ILO Convention on night shift work was revised in the 1990s to enable the employment of women in night shift. The Government of India is pursuing, although rather half-heartedly, changes to some of the labour legislations. The employing ministries have apparently been pressing for some of these changes. They Include changes in the Factories Act to permit employment of women in nightshift, particularly in electronic units and export zones. India is actively pursuing 14 projects to eradicate child labour in hazardous industries by 2002. The All India Organisation of Employers has undertaken a project in Jalandhar (Punjab) to enter into an agreement similar to the one in Sialkot, Pakistan, concerning the abolition of child labour in the manufacture of sports goods. India has advocated the promotion of labour standards within the framework of the ILO Constitution. It has consistently opposed the proposals to link labour standards and trade through social labelling, etc. The non-aligned countries summit organised by the labour minister of India at New Delhi in 1995 adopted a resolution to this effect. India played an active role in Seattle in 1999 to prevent linking trade with labour and environmental issues. All three social partners --the government, employers organizations and national trade union centres belonging to different persuasions --- are all united against the linkage of international standards with trade. Under Article 246 of the Constitution of India, labour is in the concurrent list. Since liberalisation there has been a tendency among some state governments to pursue competitive labour policies with a view to attracting investments and creating jobs. III. THE POLITICS OF LABOUR REFORMS IN INDIA The stark reality about Indias labour policy during the past 50 years is that it covers only a small fraction (less than 8 per cent) of the labour force. It has a long way to go in protecting the vulnerable, maintaining harmony and ensuring productivity. Neither labour policy nor labour law has kept pace with the changes in society and in the economy. For good governance what is required is a

firmness to defend traditional values and promote change with dual focus on both equity and efficiency. SIX MYTHS 1. Are labour reforms politically risky? Bhaduri and Nayyar (1998) stressed the need for sensible politics and feasible economics. Public policy on labour in India has emphasised, for far too long, feasible politics and unfeasible or expedient economics. The World Bank (1995) cited the substantial wage rise the coal miners obtained in 1970s before general elections to ridicule to the link between politics and pay rise. The V Pay Commission recommended pay rise and job cut. The government accepted the recommendation on pay rise but dithered on job cut. The economic burden of that unwise pay rise had a more drastic negative impact than the cumulative effect of economic and other sanctions imposed by some industrialised countries. Three times in the past, when comprehensive labour reforms bill was tabled in Parliament, the latter got dissolved. Labour reforms constitute a deadly political risk. That risk increases disproportionately when political instability is high. The problem, however, is politicians are looking at consequences of changes in labour laws/administration. They are not looking at the consequences of non-change. If we do not move with times, we miss the bus as it happened in early 1970s. Till early 1970s India maintained its leadership in industrial and economic development in Asia Pacific. Later, its insular policies brought down its position to lower than smaller countries like Singapore despite the sheer size and resource-rich characteristics of India. The dawn of the new millennium beckons a second opportunity. Should India miss that too? Politicians being short term oriented, they are afraid of risks. We need statesman to think long term and act boldly. The strength of parliament members from left parties at over 60 is the largest in Indias history. They are supporting the government from outside. They influenced the drafting of the common minimum program (but have not signed) which highlights the need to pursue propoor policies including the introduction of employment guarantee as a statutory obligation of the state, restrain liberalization of foreign investment and cautions against privatization and liberalization of labour laws. The economic consequences of common minimum programme are huge and makes its implementation difficult. Even the left front government seems to be concerned about unabated litigation if the employment guarantee is provided as a fundamental right though an amendment to the Constitution. While trade unions are pressing for the setting up of six central pay commission for revising the pay scales and benefits of government employees, several of the political parties, including some left parties, are wary that their governments in states will find it to bear the economic fallout of further revision of pay scales of government employees at state level. They are therefore hesitating to echo or endorse the demands of the unions affiliated to them. 2. Is there is a political consensus on labour reforms in India? Regardless of the colour and identity of the party, if it is the ruling party or part of the ruling coalition, it is in favour of investor friendly labour market reforms. If it is in

opposition, it is more cautious, if not outright opposed to. This polarization is not necessarily based on either ideology or any other principles. It is usually opposition for the sake of it and endorsement of a particular line because the ruling party feels being driven to the wall and is usually clue less about any other better option. The absence of data and devisive tendencies render effective consensus elusive and perceived political risks made successive governments at the center feel hesitant to disturb the status quo. The dilemma of political parties is illustrated best by Bhattacharjee (2001). The consequent dilemmas between the political party and the trade union affiliated to it were documented well with specific reference to Communist Party of India (Marxist) (CPM) and Centre of Indian Trade Unions (CITU) in West Bengal. The employers and administrative ministries in the government, both central and state call for flexibility and increasing the bar, if it is not possible to completely dispense with prior administrative approvals for layoffs, retrenchment and closures. Unions and labour ministers prefer status quo, it is not possible to further tighten or expand the existing protection afford to organized labour. The study group on labour laws set up by the Second National Commission on Labour virtually endorsed, in 2002, the Draft Labour Bill prepared by National Labour Law Association in 1985 and substantive provisions of the first National Commission on Labour in 1969. The two employer representatives in the study group opposed and submitted a dissent note. The final recommendations of Second National Commission on Labour call for increasing working hours and working days and easing restrictions on workforce reduction. Significantly, the Commission Member representing Bharatiya Mazdoor Union which has close links with the BJP, the leader among the ruling coalition, submitted a dissent note while Indian National Trade Union Congress (INTUC) which is affiliated to the major opposition at Centre, Congress Party, did not. Continuation of pre-liberalisation labour policies is not the solution to the problems of labour as many independent analysts agree that existing labour laws neither benefit workers nor employers. 3. Is it good for a union to have its own party in power? Quite so, during the 1950s through the 1970s when socialist ideals dominated the newly democratising colonial countries as well as in Central Asia and East Europe. Not any longer. That it is ultimately becoming a liability was demonstrated amply in the case of both Poland and Australia. Labour parties in oppositions were like insurgents. Today, when they become incumbents, they are finding it hard to retain the spirit of insurgency (Miliband, 2002). Miliband says, in the UK Labour was reelected in 2001 because its policies were largely in tune with the dominant currents in British society. But it has yet to succeed in shifting the political centre of gravity in its direction and forging a broad coalition for change. It has to become the party of social mobility and economic efficiency. Success hinges on policies being driven by convincing ideas. 4. Does the Indian government believe in decision-making, not decision-taking. Decision-taking is a unilateral exercise which is supposed to be an anathema in a democratic society. Decision-making is a democratic approach to problem

solving. India Government takes decisions, unilaterally, when it wants to. On other occasions when it shies away from taking decision, it pretends to be making a decision and blames it on either or both labour/unions and management/employers for lack of consensus. During the pre-liberalisation era, Indian Government, particularly under Mrs. Indira Gandhi, protected labour in labour market and capital in product market. It appeased and kept both parties guessing. For instance, during the Emergency (1975-77), discipline was enforced with an iron hand even as the Industrial Disputes Act was amended by the Communist in Congress robes, Mr K Raghunadha Reddy, Labour Minister, to make prior permission mandatory for retrenchment, lay off, and closure. 5. Is there social exclusion in social dialogue and social and labour policies in India? In the first five decades of independence labour policy in India has focused rather narrowly on the less than 8 per cent organised sector. There is a growing realisation and firm indications that in future the attention will shift to unorganised sector. The first indication came from Union Labour Minister Mr P A Sangma in late 1990s when he was addressing the conference of the All India Trade Union Congress in Patna. Then the 9 th Plan Working Group Report prepared under the chairmanship of the then Union Labour Secretary Dr L D Mishra. Though much of the concern for the unorganised sector has been thus far limited to mere lip sympathy and a few crocodile tears, the Second National Commission on Labour was asked to, and indeed it did, recommend a comprehensive legislation for the unorganised sector. 6. Do labour law reforms really matter? Not necessarily so, if they are merely aimed at merely tinkering a few clauses here and there in the Trade Union Act and Industrial Disputes Act. The need is for a drastic overhaul with heavy emphasis on rationalization and simplification. The need is for changing mindsets. Customs override laws, particularly when we have too many laws and too blissfully ignorant about their compliance/enforcement. For instance, minimum wage laws do not matter for the organized labour because any way they get much more. In the unorganized labour they usually get much less. Given the vast and growing unemployment, for every person who will assert his/her right for at least a minimum wage, there are hundreds who will agree to work for half that minimum. In a market economy with vast unemployment and underemployment, there is little that unions can do if the government is neutral and indifferent. This does not mean that there should not be any minimum wage legislation. It certainly sets the pace and direction and the moderates among employers who would like to be constitution bound will like to pay minimum wages as ordained in the law regardless their individual preferences and cost calculations. Also, contexts matter, not laws themselves. In Malaysia, Industrial Relations Act recognizes right to hire, assign work, adjust workforce, reward, transfer and promote as managerial prerogatives. None of these are employer prerogatives in India. Still, a study of Mumbai and Kualalumpur reveals that Mumbai labour market is nearly as flexible as Kualalumpur. Why? Even though the government gave the employers in Malaysia the freedom to hire and fire they

did not exercise because labour is scarce. If they fire a skilled, experienced person where will they get another equally skilled and experienced person? In India because labour is surplus employers, particularly in the private sector, find, through their somehow management- ingenuous ways of exercising prerogatives that did not exist under the laws of the land. KEY CONCERNS The manifestoes of the major political parties in the 1998 general elections had consensus in the thrust, though not the tone, of their concerns about labour. Broadly, these can be listed as under: Job protection and employment creation Extending legal protection to the unorganized sector Some promised improvement in living standards while others talked about linking wages to productivity Vocational training and skills development Trade union recognition through secret ballot Workers participation in management at all levels, while some mentioned workers takeover of sick units through cooperatives and worker ownership Industrial sickness and attendant problems Social security benefits, including pension

The agenda of the government should therefore cover, as a basic minimum, the concerns of the pre-poll political consensus. It should also include some other issues, which are not necessarily populist. These are: Paradigm shift in the labour policy environment Align labour policy with economic policy Labour law reform Competitive labour policies at the state level Reviewing the link between parliament, the judiciary and the bureaucracy

PARADIGM SHIFT IN POLICY ENVIRONMENT The processes of liberalization, privatization and globalization mean that the governments role in social and labour matters has to change, not diminish. Paradigm shifts in governments role and attitude to labour should reflect the following: 1. The content and the purpose of labour policy and labour law should focus on facilitation rather than regulation, pro-action, reaction and on the creation of harmonious relations conducive to social and economic development rather than dispute resolution. A decline in the role of the state in economic activity need not necessarily lead to a decline in its regulatory/supervisory role in labour and industrial relations matters. In fact, when the private sector becomes the engine

of growth, the state may need to play a much stronger role in ensuring a balance between the rights of both labour and management. 2. Labour policy should focus more broadly on the entire labour force. It should be developmental, not regulatory. There should be a decisive shift towards proactive labour market intervention, with the major thrust on development of skills and attitudes conducive to building a cohesive and productive work culture. Labour policy must be more closely aligned to changes in industrial and other policies. It should provide stimulus to rather than shun job creation. 3. Globalization is leading to decentralized industrial relations. There is a need to create and strengthen institutions/mechanisms for information sharing, consultation, communication and consensus development at the enterprise/firm level. 4. The labour market is characterized by dualism: an illiterate, unskilled, unorganized, unprotected and mute majority of the workforce and a literate, skilled, organized, protected and vocal minority of the workforce existing side by side. Political unions acting in unison with the state may force it to pursue labour market policies based on political considerations rather than considerations of labour and product market characteristics. The resultant distortions are contrary to the declared goals of equity and efficiency and may even precipitate state and market failures. The state should therefore broad base the scope of labour policy and labour legislation to cover the unorganized sector in a more substantive manner than is currently being done. 5. The state should give up the negative function and assume positive one of promotion of sound labour-management relations. Statistics on strikes and lockouts do not always reflect the actual state of industrial relations either at the firm, industry, state or national level. Here the state can provide mediation and arbitration services. It can also acknowledge the semi-public status of the labour market parties, but in democratic tripartite structures. 6. Hitherto public sector enterprises have stressed the need for them to be model employers. Now, with growing competition on the context of globalisation, there is a need for them to be model performers as well. 7. Sustaining growth and fostering competitive labour markets are critical to ensuring job and income security. The demand for jobs does not depend on the supply of labour. There is a need for a fundamental change in employment and income security measures. The concept of bankruptcy is not accepted in India where jobs are treated as property with attendant hereditary rights in some employment contexts. Employment flexibility, recruitment, transfer, promotion, work assignment, workforce adjustment, etc., need to be considered dispassionately with due regard both to employment and social stability as well as business imperatives, if any. Job security at any cost, regardless of the

viability of the enterprise, which provides the jobs in the first instance, can lead to a counterproductive work culture. The state should consider it its obligation to eradicate poverty and end unemployment through creation of productive jobs, which do not sacrifice the basics of quality of life. Here labour-intensive industrialization strategies are appropriate and the options should be different in existing businesses vis--vis new businesses. During the transition period, foreign investment may lead to jobless growth. Therefore, parallel domestic/public investments should target areas where job potential is high. 8. The state should therefore ensure wider social dialogue for broad-based social consensus and social cohesion. Tripartism cannot survive without state patronage. Despite the long tradition of tripartite consultation, in the past quarter century it was atrophied due to the weak and unrepresentative character of the three social partners. Traditionally, tripartism is restricted to consultations among government and organizations of workers and employers in the organized sector. There is a need to extend the scope to other sections of society including the unemployed, unorganized and even consumers. In South Africa, the establishment of the National Economic Development Labour Advisory Council merits attention for possible lessons. Academicians should be associated with tripartite bodies. While the government has already taken initiatives to rationalise and restructure tripartite committees, there is a further need to reform the way in which tripartite meetings are conducted. They focus on the draft proposals concerning the agenda and follow the double-discussion procedure in considering ILO conventions. Ministries other than the labour ministry also need to take an active interest in such consultations. 9. There is a growing concern that globalization benefits few and but affects many in negative ways. Commitment to rural labour, women labour, child labour, bonded labour, and labour in the unorganized sector so far has been largely rhetorical. 10. The state also has an obligation to make social justice an integral part of developmental planning. Exhortations like `sacrifice today for a better tomorrow will not hold much water in societies where the rich continue to get richer and the poor poorer. As Reich (1995) cautioned, `Persistent unemployment/underemployment, declining wages and living standards undermine the moral fabric of capital democracy.... In a democracy, people will vote for economic dynamism only if they have a fair chance of benefiting from it. ALIGN LABOUR POLICY WITH INDSUTRIAL POLICY Fifty years ago, in the newly independent and industrializing India, the state avowed its commitment to the welfare of workers. The politically controlled economic system required politically oriented economic action by workers. An

influential section of the union movement tacitly endorsed the states preference for adjudication rather than articulate the need to promote collective bargaining. In todays world the policies of protection, self-reliance and import subsistence are giving way to policies of competition with a view to integrating the national with the global economy and to boost foreign investment and exports. To catch up with the other industrialized countries, India needs to attract capital, cut costs and enhance competitiveness. In the sphere of labour, this means a new alignment between industrialization policies and industrial relations policies. Towards this end, labour policy should stress on: (i) the observance of a minimal number of core/basic labour standards; (ii) free trade unions and collective bargaining; (iii) workplace institutions capable of internalizing enforcement of labour standards/government regulations and effecting changes at the micro level smoothly; (iv) investment in education and training; (v) bringing the entire labour force under the purview of minimal, but effective --- rational and rationalized --- regulatory/administrative norms; (vi) proactive labour market policies that provide building skills/competencies, reduce/eliminate the existing mismatch between acquired and required skills, facilitate information and counselling facilities for employment; and, (vii) a culture of non-interference by one party in the affairs of the other. Labour market flexibility is a factor, not the factor that influences the flow of foreign direct investment. The minimum that foreign investors expect is: (a) a clear enunciation of the rights and responsibilities of employers and workers/unions; (b) an unambiguous and easily understandable legal and institutional framework; (c) predictable arrangements concerning union recognition, collective bargaining, skills development, flexibility and workforce adjustment; (d) well-defined, clear-cut and time-bound procedures for grievance redressal; and, (e) an administrative and judicial system that can be trusted for its transparency, integrity, expediency, efficiency and accountability. COMPETITIVE LABOUR POLICIES AT THE STATE LEVEL Labour is in the concurrent list under Article 246 of the Constitution of India. Given the trend towards accentuation of regional disparities, state governments may consider the pros and cons of competitive labour policies with a view to inducing investment and encouraging job creation. Presently, states can and do make a difference in areas like trade union registration, recognition, minimum wage laws, defining or redefining limits or granting exemptions concerning the applicability of certain legislations, etc. The labour bureaucracy also can make a difference in matters ranging from inspections and penalties to adjudication and even the use of force (deployment of police, for instance). Since 1991 to date, several state governments have made far-reaching changes in their policies. For instance, Uttar Pradesh, requires the labour inspector to obtain prior permission of the labour commissioner or labour minister; and

Rajasthan granted exemption to several firms and both Rajasthan and Andhra Pradesh simplified several forms with regard to labour inspection. Orissa and West Bengal introduced secret ballot. While Maharashtra proposed a new legislation, in the mid-1990s, the Maharashtra Industrial Relations Act to replace the existing Bombay Industrial Relations Act and Prevention of Unfair Labour Practices Act; and Kerala announced radical moves in labour policies as part of its 1994 industrial policy. The desirability, possibility and feasibility of competitive labour policies merits serious consideration. The industrial relations implications of centre-state relations, particularly on public sector undertakings, also needs careful review. LABOUR LAW REFORM In a global economy labour law as an autonomous subject stands at a crossroads. Some judges feel compelled to interpret law not on the basis of the text of the clauses, but in the light of the preamble to that particular piece of legislation and more importantly the Indian Constitution itself. Therefore, they might sometimes question the new economic policies as inconsistent with the Indian Constitution. Elsewhere in the world, there is another view gaining ground: The social vision of labour law, which went with the old-established institutions and practices has come under challenge to change or risk irrelevance. The current scenario requires striking a balance between these two extreme viewpoints. There is a perception that the existing laws give virtual veto power to unions in the organized sector to block changes like improvement in plant and machinery, rationalization of manpower, and growth of productivity. Further, there is a perception that labour legislation has paved the way for multiplicity of unions, growth of intra- and inter-union rivalry, exacerbation of industrial strife and excessive intervention by the state in industrial relations. There are as many as 165 legislations --- both central and state --- that address aspects relating to labour. But more laws mean less when implementation is thinly spread out. Even minimum wage laws have meant little when the wages fixed are too low and implementation too lax. Study groups of the National Commission on Labour and the National Labour Law Association (NLLA) prepared draft labour codes in 1969 and 1994 respectively. The Commission on Labour Standards appointed by the Government of India, in its report submitted in 1995, almost entirely endorsed the NLLAs Draft Labour Code. It suggested a few changes: initiate a national debate or wider consultation on the Draft Labour Code through Project LARGE and simplify the law without further delay. Labour law reform is not easy. The Korean experience confirms this. When the economy was doing well organized labour organized bitter struggles against the new Korean law which was enacted to make, among other things, workforce adjustment easy. In the wake of the Korean economic crisis, however, a tripartite

agreement provided for the very changes that were opposed just a year before. Several economies in transition (notably China and Vietnam) and those undertaking structural adjustment (many in Africa and Latin America) have been able to rewrite labour law without much friction. The Government of India has appointed the Second National Commission on Labour (1999) to address the issue of aligning labour policy and labour laws with the contemporary concerns of product markets. The contrast between the terms of reference of the first and the second national commissions on labour (Annexure 1) points to the stark shift in emphasis from labour market (First National Commission on Labour) to product market (Second National Commission on Labour) and a palpable concern for a separate simplified approach (one umbrella legislation) for the unorganized sector. The major thrust of changes in labour laws should be along the following lines: Have fewer laws but ensure better enforcement. It would be still more expedient and equitable to have one labour code instead of numerous legislations, as China and Vietnam did in the mid-1990s. The nature and extent of protection for labour has little to do with the number of laws. Multiple definitions should be eliminated across different legislations. Wages, for instance, are defined in a dozen ways in as many legislations, or the legal distinction between worker, workman and other worker is exclusionary. Unless otherwise defined perpetrates and perpetuates discriminatory practices and confusion dictionary meanings should be considered adequate. The Labour Code can cover all working people rather than have variations in limitation of numbers employed, amount of wages/salaries drawn, etc. There should be have one national minimum wage act for all occupations rather than separate ones for select notified industries/occupations. It should be made easy to understand, be simple to administer and effective in enforcement. Several amendments to the Trade Union Act suggested earlier bipartite committees and subsequently incorporated in the bill prepared by the Ministry of Labour do not serve any useful purpose; they do, however, perpetrate distrust among unions and create strife. Japan and Denmark do not have trade union acts. In Japan, the union movement is consolidated and multiplicity reduced without legal intervention. Denmark is one of the countries with the highest rate of unionization. Almost all political parties and many unions favour secret ballot. But it would be prudent to review the experiences of Andhra Pradesh, Orissa and West Bengal before taking any action, since the experience so far suggests that the present conditions are not conducive to secret ballot. They have led to antiestablishment vote and destabilising recognised unions, causing strife in industrial relations and resultant litigation. The provisions of the Industrial Disputes Act should be reviewed while preparing the Labour Code. Legislations in some Southeast Asian countries

as well as China and Vietnam offer valuable insights. In the wake of structural changes and liberalization, more than 100 developing countries and transitional economies have reformed their labour law. The three most important changes in legislation which are necessary in the Indian context also well are as follows: (a) Employment can be secure only so long as the enterprise where they are employed is secure and viable. According to ILO Convention No.168, termination of employment at the initiative of employer can be valid if structural, technical, economic and other changes so require. Workforce adjustment as per business needs is imperative. Notice, consultation, and compensation provisions can be and should be tightened. The requirement of prior permission of the government should be dispensed with in matters concerning lay-off, retrenchment and closure; (b) Section 9-A, concerning notice of change, should be amended. Notice is required, consultation is to be encouraged, but the employer should have the responsibility, if not the right, to make changes necessary to maintain and improve competitiveness; (c) As in Malaysian legislation, which forbids bargaining in respect of recruitment, transfer, promotion, work assignment and workforce adjustment, in India also collective bargaining should be encouraged on aspects other than the above. Industrial relations machinery should be made independent as recommended by the National Commission on Labour. Some studies point out that job protection laws impede job creation. Increase in the price of labour and its relative inflexibility have also been found responsible for the stagnation of job opportunities. These studies have also found that job loss was less with adjustment than without it. It is necessary to investigate the technological determinedness of employment decisions, employment effects of adjustment vis-a-vis non-adjustment and consequences of job creation on further job creation and the claims of the unemployed and fresh entrants to the job market. The cost of job protection and its effects on job creation require careful analysis. The ILO-South Asian Multidisciplinary Teams study drew attention to the need to shift the focus from job protection to income protection. Set up a skills development fund and a tripartite national wages council.

LINK BETWEEN PARLIAMENT, JUDICIARY AND THE EXECUTIVE The process of integration of the Indian economy with the global economy started seven years ago. Some say it started much before that. Political manifestoes, however, do not realise the need for a linkage between industrialization strategy and industrial relations strategy. The apparent contradiction with the preamble to the Indian Constitution --- which still retains the magic phrase, socialist democracy --- leaves the field wide open for a variety of interpretations by the judiciary. There is a need to reassess the roles of parliament, the judiciary and the bureaucracy. Since Justice Krishna Iyer gave his interpretation of the definition of industry in the Bangalore Sewerage Company case, there have been couple of other

landmark judgments on the subject which have reversed and re-reversed the Bengal Sewerage judgment. When the Supreme Court declared P&T as not an industry, but a sovereign activity under the state, P&T officials refused to appear before the conciliation machinery of the central government with regard to the disposal of certain grievances of P&T employees. Some judgments of the Supreme Court have the effect of prescribing legislation. For instance, in the case of the Food Corporation of India concerning representative union, the Supreme Court ordered that the matter be settled through secret ballot and even prescribed the procedure for conducting it. Similarly, in many cases relating to child labour, environment and sexual harassment the judgments prescribed dos and donts. There have been judgments in recent years that have upset organized labour while those concerning unorganized labour including contract labour have generally gladdened the hearts of the workers. Our labour bureaucracy is caught between these two extremes. `Labour policy in future would be market friendly, a high-ranking official of the labour ministry assured the audience at a conference on globalisation. The labour leader present on the podium demurred, `If labour policy is not labour friendly what kind of a labour policy is it. `I am the labour commissioner, not the management commissioner, was the stern reply of a labour commissioner to an industrialist who was pleading his case about the rigidities in the labour market of the country. The labour bureaucracy has, however, enormous powers. It can stall the will of Parliament through delays or notification in the gazette. For instance, the amendment to Section 9c of the Industrial Disputes Act in 1982 has not been notified to date. In another case, though electronics is not notified for the purposes of the Minimum Wages Act in one state, a labour inspector who found a lathe machine in a unit chose to classify the unit as an engineering industry and applied Minimum Wages Act to it also. It is important that all these three wings --- Parliament, the judiciary and the bureaucracy --- should function in harmony and unison without compromising on the rationale of their respective roles. IV. CONCLUSION In India about seven per cent of the labour force is in the organized sector and the rest in the unorganized sector. Union density is low if agricultural labour is included and high in the organized sector. Globalization and technology have reduced labour intensity. To promote employment, it should stress on improving thee quality and expanding the base for basic education and skills training. Agro

industrialization, service sector and self employment will be the main providers of employment. India should focus on few sectors where there is competitive advantage. India has ratified four of the eight core labour standards and 39 out of 184 international labour standards. Though convention No.s 87 and 98 were not ratified, freedom of association is guaranteed under Consitution and Indias record of freedom of association and right to collective bargaining has been far better than that in countries which ratified these convention. There is a series effort to bring unified legislation defining and banning child labour. Labour being being in the concurrent list of Constituioin of India the government needs to consult with and make the state governments to work in tandem. All the three major partners government, employers and workers organizations are generally one in their opposition to linking international labour standards with international trade. Unlike in the past, the current thinking of Government of India is that labour policy should concern itself with the entire labour force. Till not too long ago the labour policy in India has addressed itself mostly to the eight per cent labour force in the organized sector. Even salaried workers constitute only a fraction (about 15 per cent) of the total labour force in the country. It is time it paid greater attention to the issues confronting the workforce in the unorganized sector. A credible mechanism for providing literacy and vocational skills training to all aspirants in the labour market together with a support mechanism for basic health and social security are imperative. Further, workplace industrial relations systems should be put in place that facilitate change, promote flexibility and prepare the workforce to be able, adaptive and atuned to respond to the challenges of the changes. REFERENCES Bhaduri, A and D. Nayyar (1998). An Intelligent Persons Guide to Liberalization, New Delhi: Penguin. Bhattacharjee, D. (2001). The New Left, Globalisation and trade Unions in West bEngal: What is to be Done? Indian Journal of Labour Ecoomics, 44(3) JulySeptember. 447-474. Debroy, B (1997). `Labour Market Reform . Policy Paper No. 22 prepared for Project LARGE (Legal Adjustments and Reforms for Globalising the Economy). New Delhi: Allied Publishers. Kuruvilla, S. and C.S. Venkata Ratnam (1996). Economic Development and Industrial Relations: The case of South Asia and Southeast Asia. Industrial Relations Journal 27 (1), pp. 9-23.

ILO-SAAT (1996). India: Economic Reforms and Labour Policies. New Delhi: ILO-SAAT and UNDP. Japan Institute of Labour (1996). `Industrial Relations and Labour Law in Changing Asian Economies. Proceedings of the 1996 Asian Regional Conference on Industrial Relations. Tokyo: Japan. Miliband (2002). New Labour: A View from Inside, International Politics and Society, IPG 3/2002, pp.15-25. Reich, R. (1995). Address to the delegates of the 10th World Congress of International Industrial Relations Association. Washington, D.C. IRRA. May 31June 4. Venkata Ratnam, C.S. (1997). `Competitive Labour Policies in Indian States . Working Paper prepared for Project LARGE. New Delhi: Allied Publishers. Venkata Ratnam, C.S. (1997). `The Role of the State in Industrial Relations in the Era of Globalisation. Paper presented at the subregional tripartite meeting on Globalisation and Transformation of Industrial Relations in South Asia at New Delhi during 15-17, 1997. New Delhi: ILO-South Asia Multidisciplinary Advisory Team (Mimeo).

Table 1: Terms of Reference of the First and the Second NCL Terms of Reference of the First Terms of Reference of the Second National Commission on Labour National Commission on (1966) Labour1(1999) 1. To review the changes in conditions (a) To suggest rationalisation of of labour since Independence and existing laws relating to labour in to report on existing conditions of the organised sector. labour. 2. To review the existing legislative (b) To suggest an `umbrella legislation and other provisions intended to for ensuring a minimum level of protect the interests of labour, to protection to the workers in the unassess their working and to advise organised sector. how far these provisions serve to implement the Directive Principles While drafting the framework for the of State Policy in the Constitution above, the Commission may take into on Labour matters and the national account the following: objective of establishing a socialist society and achieving planned (i) Follow up implications of the economic development. recommendations made by the 3. To study and report in particular on: Commission set up in May, 1998 for (i) The levels of workers earnings, review of various administrative the provisions relating to wages, laws governing the industry. the need for fixation of minimum wages including a national (ii) The emerging economic minimum wage, the means of environment involving rapid increasing productivity, including technological changes, requiring the provision of incentives to response in terms of change in workers. methods, timings and conditions of (ii) The standard of living and the work in industry, trade and services, health, efficiency, safety, globalisation of economy, welfare, housing, training and liberalisation of trade and industry education of workers and the and emphasis on international existing arrangements for competitiveness and the need for administration of labour welfare, bringing the existing laws in tune both at the Centre and in the with the future labour market needs States. and demands. (iii) The existing arrangements for social security. (iii) The minimum level of labour (iv) The state of relations between protection and welfare measures employers and workers and the and the basic institutional role of trade unions and framework for ensuring the same, in employers organisations in the manner which is conducive to a promoting healthy industrial flexible labour market and relations and the interest of the adjustments necessary for nation. furthering technological change and

(v) The labour laws and voluntary economic growth. arrangements like the Code of Discipline, joint management (iv) Improving the effectiveness of Councils, voluntary arbitration measures relating to social security, and Wage Boards and the occupational health and safety, machinery at the centre and in minimum wages and linkages of the states for their enforcement. wages with productivity and in (vi) Measures for improving particular the safeguards and conditions of rural labour and facilities required for women and other categories of unorganised handicapped persons in labour. employment. (vii) Existing arrangements for labour intelligence and research; and to make recommendations on the above matters.