Expert Talk

Why Workplace Safety Should be a Fundamental Right

K. R. Shyam Sundar

The institutional framework governing industrial safety issues in India needs to be strengthened

Yesterday was World Day for Safety and Health at Work (according to the ILO), and simultaneously Inter-national Commemoration Day for Dead and Injured Workers (according to the International Trades Union Confederation). And April 23 marked the fifth anniversary of the Rana Plaza industrial accident in Bangladesh — yet another opportunity for the world to think about and under-take policy actions to enhance workers’ safety.

Occupational safety and health (OSH) is a key concern in India. We have an institutional framework in place, com-prising labour laws (such as the Factories Act, 1948, and the Building and Other Construction Workers Act, 1996); regulatory institutions (directorates of factories and boilers), advisory bodies (Directorate General, Factory Advice Service and Labour Institutes); and research institutes (National Institute of Occupational Health. However, India has not ratified any of the three major general conventions relating to OSH (C155, C161, C185), and it has ratified only two (C115 and 0174) of the nine conventions that ensure protection against specific risks.

The media regularly report major industrial accidents (such boiler explosions, industrial robotic accidents, fire accidents and so on) occurring in both public and private sec-tor establishments. Dilip Kumar Patel and Kumar Neeraj Jha’s research shows that the construction industry in India annually contributes 24.2 per cent of occupation fatalities, the highest in the country. The labour ministry’s data on fatal injuries reported per 100,000 man-days worked in the years 1991-2013 showed no sign of a dip, while that on non-fatal injuries showed a steep decline. However, owing to the high incidence of non-reporting and underestimation, official data on injuries and accidents are neither valid nor reliable.

While industrial accidents have been occurring at regular intervals, snuffing out human lives or damaging the environment beyond repair, there is not much public debate on this either in the media or in academic circles. Further, the policy orientation towards safety is far more worrying than the disasters themselves. The neo-classical economic proposition is that profit-maximising employers would pay attention to workers’ safety due to the investment made in workers, and to prevent potential production disruption and damage to the firm’s reputation. Using this logic Prime Minister Narendra Modi likened boiler maintenance to the maintenance of a private car! In reality, employers often pursue a low-cost business strategy. The global supply chain has further intensified the adoption of competitive low-cost practices, which has often led to unregulated contracting and sub-contracting that is evident in industries like garments.

As a result of these paradigm shifts, the institutional framework governing industrial safety suffers from five serious ailments. One, the institutional coverage is narrow in that it does not cover the huge unorganised sector and the emerging service sectors with their own occupational hazards, like e-waste. While there are no reliable estimates of the working population covered by the institutional framework, the British Safety Council puts it at 20 per cent.

Two, even those covered are not adequately monitored, thanks to inadequate public sector enforcement resources. According to Occupational Health and Safety Profile, 2017, in 2014, 743 factory inspectors were mandated to inspect 307,459 working factories, which mean that an inspector is expected to cover 414 factories in a year. According to one newspaper report, 10 safety officials inspect 3,000 boilers in Karnataka!

Three, information, databases, mapping and research on safety and occupational diseases need serious policy attention from the government.

Four, the economic and labour policies followed in the post-reform period have led to the emergence of precarious employment (where workers are subject to unstable employment, lower wages and more dangerous working conditions); these workers are more unlikely to receive legal protection, OSH training, and union coverage and hence are more vulnerable. Tsyoshi Kawakami, an ILO official, has said that precarious workers are more likely to bear the brunt of poor OSH policies and lax governance.

Five, it is well known that workers and trade unions are important stakeholders and players in ensuring safe work-places. Neo-liberal policies have weakened both governance and the place and role of trade unions. It is not as if industrial safety was high during the heyday of planning. What is worrying is the policy orientation and economic thinking that places greater emphasis on economic outcomes rather than processes and institutions.

It is another story that the trade union movement in India has not given due importance to OSH. While OSH need not displace its major concerns, it needs to be given high importance. It is also ironical that OSH has not figured high on the agenda of ILO, as it does not figure as one of the Fundamental Principles and Rights at Work. ILO has been careful in not including labour rights that could have monetary implications — say, minimum wages – and hence adverse implications for poor and developing countries. But safety is a larger issue in that it is not only about the human body and life but also the environment’ Hence it is imperative that ILO’s centenary agenda should include safe work and living, and elevate it to the status of a fundamental right.

The writer is Professor, XLRI, Jamshedpur.

The Article was first published in Business Standard 


Haunted by the same old problems

K. R. Shyam Sundar

As the issues labour faces today have a resonance with the past, it’s important to learn from history April 27, 1918, was a historic day in the annals of the labour movement in India as the first trade union as is commonly understood was formed. After months of meetings, both private and public, the Madras Labour Union (MLU) was formed on that day. What is interesting and a little disturbing is that despite the passage of the Trade Unions Act, 1926 and a string of labour laws in the post-Independence period, workers and trade unions today are facing challenges similar to that of the colonial era. While the labour movement and the larger society should celebrate the historic occasion of the formation of the MLU, this should also serve as a moment for introspection for all those who believe in and cherish the values of democracy, pluralism, constitutional rights, and decent society. The making of MLU

Veeraraghavan, in his book The Making of the Madras Working Class (Leftword, 2013), describes the terrible conditions of workers employed in the Buckingham and Carnatic Mills (which was closed in 1996).

A worker who was denied permission to answer an urgent call of nature defecated at the work spot itself. Lunch breaks were “few minutes for food” and scenes of workers swallowing a few morsels and running back to the shops lest the huge mill gates were shut were normal.

This was tough because workers worked from 6 a.m. to 6 p.m. Tensions prevailed between workers and their European masters at the mill and in November 1918 some European officials were assaulted by workers in MLU. Ill-treatment of workers by management was very much the norm. European management used threats, suspensions, vindictive lockouts, police interventions to dissuade workers from joining unions and it also used the good offices of the Governor of Madras to moderate and even snuff out the union and its activities. The colonial response

The State used every ploy to weaken the union movement seeing it more as a “law and order” issue rather than genuine aspirations of the working class. Emergency laws and regulations like the Defence of India Act were used to quell strikes and agitations.

Workers sought out the help of “public figures” so that their movement would gain significance. Humanitarians, political parties including Congress and the Justice party competed among themselves to organise workers.

The print media, with a few exceptions, did not take kindly to the workers’ movement.

Innovative methods of reaching out to workers through Sabhas (where religious and mythological discourses were made) were also used.

Hostility at the workplace led to these strategies which have huge relevance to modern day dilemmas of organising workers. Much of the energies of the working class were spent on “preserving” trade unions.

Conflicts between labour and capital those days were not mere shop floor scuffles, they had a larger political salience – as they were embedded in imperialism, class consciousness, and larger political goals. Labour historians such as Sukomal Sen, Veeraraghavan and leading advocates like Sanjay Singhvi have noted the influence of global forces in the formation of trade unions especially MLU — the Russian Revolution, British Labour Party’s influence, the establishment of International Labour Organisation (ILO), the Communist conclaves happening since mid-19th Century, etc.

As Sanjay Singhvi notes in his recent article, “Changes in Labour Laws: Lessons from History!”, the industrial dispute in B & C Mills in 1921, which lasted for six months, led to a civil suit in the Madras High Court against the leaders of MLU.

The Court in the absence of an industrial law protecting trade union rights and heeding the charges by the management of criminal conspiracy against the Mills awarded damages to the tune of ₹7 lakhs (which was not a small sum those days) or imprisonment of union leaders in lieu of it!

This shocked India and even the colonial Britain. The changing scenario

Eventually, the Trade Unions Act was passed in 1926 which among others legalised trade unions and provided immunity to trade union leaders and members from civil and criminal conspiracy in pursuit of legitimate trade union activities.

Post-Independence India has built an impressive array of labour rights via labour regulatory institutions as befitting a democratic and pluralistic society.

But globalisation has thrown up new challenges for the labour movement today, which have a resonance in history.

Under the ‘neo-liberal’ policies adopted by successive governments since 1991, which focus on attracting industrial investments both domestic and foreign, workers’ rights and trade unions have come under increasing pressure. Companies investing in India prefer a pliant workforce and often take a dim view of trade unions. The challenges today

There have been reports of companies adopting vindictive HR policies affecting workers’ rights.

There are also reports of tough work conditions including scant time for lunch and stringent control of washroom time, 9-10 hours of total shop-floor time, which have provoked strikes and on occasions even violence from the workers.

What these accounts firmly convey is that a labour regulation regime that seeks to placate capital often at the expense of labour rights will invite tremendous labour unrest which will not benefit any stakeholder, least of all the ruling classes.

It is a pity that potential HR managers in the B-Schools neither read nor are they taught history as lessons from history is vital for harmonious worker-management relations.

The writer is Professor, XLRI, Jamshedpur.

The Article was first published in Business Line


Forget toxic shortcuts

01.09.17_Business Standard (Hindi)_Pg 05The Ministry of Labour is clearly more ignorant than the young boy at a job fair in Gwalior who told us: “Give me a monthly salary of Rs 4,000 in Gwalior, Rs 6,000 in Gurugram, Rs 9,000 in Delhi, and Rs 18,000 in Mumbai; my bags are packed, so tell me where you want me to go.” The proposal for national minimum wages of Rs 18,000 is like the Mahatma Gandhi National Rural Employment Guarantee Scheme – a rigged benchmark – and will murder formal sector job creation by mandating wages not linked to cost of living.

This article is on the national minimum wage which will murder formal job creation the youth needs and corrode competitive federalism. And this is an authored article by Manish Sabharwal Co-Founder and Executive Chairman and  Sonal Arora Vice President, TeamLease Services Limited.


Minimum wage code bill 2017: Base pay will differ for states and geographical areas

The new Wage Code Bill which, if passed by the Parliament, will seek to set minimum wages for different states and geographical areas. This will ensure that no State Government fixes the minimum wage below the National Minimum Wages for that particular area as notified by the Central Government.

Rituparna Chakraborty, Co-Founder and Senior Vice President, TeamLease says that instead of the centre it is the state governments that are in the best position to decide the minimum wages because they have a better view of is required locally and have a better understanding of the economics of their
land.

The code on Wages Bill 2017 states that the Central Government, before fixing the national minimum wage, may obtain the advice of the Central Advisory Board which will have representatives from employers and employees. Therefore the Code will provide for a consultative mechanism before determining the national minimum wage, said the statement from Press Information Bureau.


Protecting Employee Interest: Why trade unions must embrace labour law reforms

Article Written by Sonal Arora, Vice President TeamLease. Formation of trade unions alone will not solve employee problems; we need an overhaul of labour laws, and trade unions must work with the government, employers and employees towards reforming labour laws. This will boost job creation in the formal sector.

Last month saw the first trade union from the Indian information technology (IT) industry getting registered in Tamil Nadu. This got many worried, lest it opens the floodgates with more trade unions coming up, leading to a possibility of unionism or collective bargaining or industrial unrest in an industry that was so far away from such contentious phenomenon. While there is nothing wrong with trade unions as such, most employers and industry bodies view them with suspicion because, unfortunately, trade unions in India have always made ‘job protection’ as their primary agenda. It is important to recognise that, unlike some developed economies, India does not have a ‘jobs problem’—our unemployment rate is 5%—but a ‘wages problem.’ Almost everyone in India who wants a job can get one, just not at the salary they want. It is also important to recognise that higher wages or value that people demand can only be provided by formal sector jobs. Our ‘wages’ problem arises because most of our enterprises are dwarfs (small companies that will stay small), rather than babies (small companies that will grow big). This massive informalisation of our enterprises is an important source of poverty for the average Indian worker because enterprises can only pay the wage premium if they are productive. The real agenda for trade unions in India should, therefore, not be a protection of jobs, but enabling job creation in the formal sector.


Empowering women through job creation

Article Written by Sonal Arora, Vice President TeamLease. According to the World Economic Forum’s “Global Gender Gap Report 2017”, India’s ranking has fallen by 21 places from last year. Not only are we currently far below the global average but also behind our neighbours China and Bangladesh. One of the areas where we have fared poorly is in wages and participation of women in the economy where our rank is an abysmal 139. This is not the first report to highlight the plight of our women. In fact, as per the World Bank report, we have one of the lowest workforce female participation rates, ranking 120th among 131.

Even in terms of contribution to the gross domestic product (GDP), women are currently under-represented. At 17%, India has a lower share of women’s contribution to GDP than the global average of 37%. What is even more alarming is that the participation levels have been dropping in the last few years. The National Sample Survey found that while in 1999-2000, 25.9% of all women worked; by 2011-12 this proportion had dropped to 21.9%.


Expanding formal employment: India’s labour laws need desperate surgery

Manish Sabharwal & Rituparna Chakraborty

The Employee State Insurance Corporation (ESIC) is a monopoly for employer-financed health care. This monopoly gives it a return on equity (ROE) of over 17,000 per cent, which is worrisome since the ROE for great companies with satisfied customers like Naukri.com, TCS, and Hindustan Lever are 105 per cent, 33 per cent, and 67 per cent respectively. The ESIC not only has millions of unsatisfied customers but offers poor value for money — the ESIC pays out less than 50 per cent of contributions as benefits while there is hardly an Indian commercial health insurance plan that has a claims ratio of less than 95 per cent. Its cash surplus of ₹70 billion ever year on total capital employed of ₹1.5 billion has created cumulative reserves of over ₹500 billion. Formal job creation desperately needs labour reform but instead of equating reform with hiring and firing workers — the infamous Chapter 5B of the Industrial Disputes Act — we’d like to make the case that the best place to start labour reform is creating competition and reforming the governance of the ESIC (also EPFO, but we will cover that in a future article). No modern private company in India has a return on equity of 17,000 per cent. Surely no government corporation should.

ESI reform should start with three interventions of fairness, governance and competition. First, like any health insurance scheme in the US, they should be required to return any premiums collected above an 85 per cent claims ratio to payers in the following years. Second, we should fix the governance of ESIC; a smaller board, a retirement age, a term limit of eight years for board members, true employer representation, etc. Third, we should create competition for ESIC by allowing individuals to buy health insurance from other providers. After these three immediate steps, ESIC should be included in a broader debate on how health care will be financed particularly after the budget health care announcement.  We acknowledge that neither the US nor UK models seem to work in meeting the conflicting objectives of quality, quantity and cost because, as health expert Nachiket Mor points out, health markets have three problems — Hyperbolicity (under-estimation of need), Coordination (market failure) and Information Asymmetry (between patient and provider, provider and doctor, and doctor and latest knowledge). The new national health insurance program is an interesting new vehicle; maybe ESIC should hand over its cash balances to the government — it represents unfair overcharging — and include all their members in that scheme.

Mandatory Employer financed healthcare has important implications for labour and healthcare markets. A cap on salaries in the United States during World War 2 had the unintended consequence of exploding employer-financed health care (American companies are now liable for covering healthcare insurance costs for two-thirds of the country’s population. But this could explain the frequently quoted real wage stagnation of the US; health benefits from employers now account for 20 per cent of total worker compensation (up from 7 per cent in the 1950s) and health care costs now approach an unaffordable 20 per cent of US GDP. An interesting recent development is a partnership between Amazon, Berkshire Hathaway and JP Morgan that aims to deliver “simplified, high-quality and transparent health care at a reasonable cost” evolved in response to what Warren Buffet called “a tapeworm eating away at our economic growth and prosperity”. We wish them luck but sense that it may take more than bulk buying to solve America’s health care cost spiral.

Over the last few years the increase in formal employment from 10 per cent of the labour force to 15 per cent (as indicated by EPFO/ESI) to payments) or 25 per cent (as indicated by employers who pay GST) has been an important indicator of the lazy cultural explanations for India’s informality. Improved enforcement and big moves like demonetisation, GST, Rem, FDI-limit rising, Shell company evisceration, etc have led to an increase to GST registered enterprises crossing 10 million. But only 1.3 million enterprises pay EPFO and ESI; with structural reform to these organisations, this number could easily triple.

But the current acceleration in formal employment will surely slow without deep and broad changes to our labour laws. We have too many of them, too many of them contradict each other, most need too much paper, and most confuse regulation with supervision. Dropping the draft Bill that exempted small organisations from many laws was the right thing to do; it would have created an arbitrage opportunity at best, and at worst, an apartheid. The lowest hanging fruit is a single labour code (we really don’t need three or five), a Universal Enterprise Number (another important announcement of the budget that was missed by the commentariat; clearly many of them have not actually run businesses and dealt with pain and corruption of the more than 27 numbers that every company has right now). The UEN should enable all labour laws to go paperless, presence less and cashless from April 1, 2019. It’s sad that the Income-tax department beat the labour ministry in adopting e-assessment; the least they can do now is copy it.

India’s formal jobs problem — the wage premium — is often confused with a jobs problem. India’s labour laws need desperate surgery. The best place to start massively expanding formal employment is not breaking the back of formal employers but catching the neck of ESI.

The writers are with TeamLease Services


Data on Jobs: Be Careful what you wish for

Manish Sabharwal and Ashok Reddy

Some of us have long felt that India’s poverty industry and poor people lived on different planets. But the poverty industry’s reaction to new data from Employees’ Provident Fund Organisation (EPFO)/Employees’ State Insurance (ESI)/ National Pension System (NPS) confirms they don’t live on different planets but a different gamma quadrant. Job seekers —mostly young and poor —know that a formal job is better than an informal job (higher wages) and an informal job is better than no job (wages higher than zero). Yet, the poverty industry’s predictable and patronizing reaction to the massive increase in formal jobs implies that a new formal job is not a job. I’d like to make the case that jobs are yesterday’s war; India’s tryst with destiny lies in formal jobs.

Voltaire said doctors prescribe medicines of which they know little, to cure diseases of which they know less, in human beings of whom they know nothing. Intellectual humility in diagnosis is key to be an effective writer of prescriptions. The current debate about jobs demonstrates that the poverty industry’s diagnosis for India is jobs, yet most of our youth know they can get “a” job but struggle to find a formal job that pays them the wages they need or want. India’s youth —there were 100 million new voters in the last election and there will be 100 million new ones in 2019 —has raised its aspiration from subsistence wages to living wages. And the way to meet these aspirations is not yesterday’s stale thinking (throw money from helicopters, mandate a three-day workweek, take away their shovels and give them spoons) but raising the productivity of our firms and workers. This needs formalization, financialization, urbanization, industrialization, and human capital.

American politician Daniel Moynihan said, “You can have your own opinions but not your own facts”. The notion that the new EPFO/ESI/NPS data is not true, important or positive is delusional. The data is truer than survey data; it represents actual cash being deposited into an individual account linked to Aadhaar. The data is important because it gives researchers, policymakers and employers new data across time, ages and regions. And the data is positive because any increase in formalization whatever the source (GST, demonetization, better enforcement, amnesty, rediscovered morality, etc.) improves a lot of Indian workers and puts our economy on a trajectory of higher productivity.

India must have diverse opinions about manufacturing vs service jobs, the impact of automation on employment elasticity of growth, the diminishing role of capital in job creation, the only way to help farmers is to have less of them, etc. But we must unpack opinion and fact. There are four sources of employment data: household surveys, enterprise surveys, administrative data, and data from government schemes. Both survey and administrative data are needed to keep each other honest but the notion that survey data is superior is unfair (29% of Indians in our household survey say they work for an enterprise with more than 9 employees but only 1.5% of enterprises say they have more than 9 employees in our enterprise survey).

The original sin in labour market data and strategy comes from the National Commission for Enterprises in the Unorganized Sector (Arjun Sengupta report) that not only created confusion between informal enterprises and informal employment data but surrendered by treating informality as undefeatable. To reuse a wonderful metaphor of Avinash Dixit of Princeton, informality is not like cancer but obesity. We must not think of informality as cancer, insisting that every malignant cell must be removed or will not come back. Instead, informality should be compared to being overweight or obese. The fight against obesity is hard and slow; victories are partial, sometimes you regress. But keeping up the fight by all methods and at all times can mitigate obesity. Eventually, the diet and exercise will become a way of life and a healthier body will yield tangible benefits.

Informal employment is the slavery of the 21st century and arises from our sense of humour about the rule of law. This sense of humour shows up in transmission losses between how labour laws are written, interpreted, practised and enforced. Why do only 1.2 million of our 63 million enterprises pay EPFO or ESI? But it is becoming tougher for enterprises to hide; the 50% increase in GST registered enterprises to 11.5 million means that EPFO payers should be closer to that number than a tenth of it. By holding our bad employers accountable, we stop handicapping our good employers. The task of formalization is far from over; we need to amend all labour laws to adopt the IndiaStack (paperless, presence less, cashless), replace our 25+ numbers with a unique enterprise number, and move forward on a single labour code (instead of the proposed 3 or 5). Our current labour laws need overhauling because they choose the old over our young.

India’s poverty industry draws inspiration from Karl Marx but clearly doesn’t take his advice, “You can describe the world in thousands of ways. The point, however, is to change it”. India’s labour market has new data and many new formal jobs. Now, that is the change we haven’t seen in a long time.

The writers are with TeamLease Services