Labour Law reforms: Nobody knows who's a 'worker' under Indian laws! Do you?
Prasanna Mohanty July 11, 2019
India not only lacks an accurate estimate of its work force, a substantial part of which is in the informal sector (85% of all workers, as per the Niti Aayog), it is yet to develop an uniform definition for several critical concepts like workers, wages, organised-unorganised or formal-informal sectors, small and medium enterprises etc to enable such estimation. This hampers a realistic assessment of the ground realities and policy and planning to address key constraints while attempting labour reforms.
In 2017, when the country was debating on the state of unemployment, the Niti Aayog's Report of the Task Force on Improving Employment Data commented that this discussion was "taking place in a vacuum" because the available estimates were either outdated or based on surveys with design flaws that rendered them unsuitable for inferring a nationwide employment level or compare one set of data with another.
Nothing much has changed now that the debate has shifted to labour reforms.
Multiple and bewildering array of definitions
The Niti Aayog report pointed out that one of the reasons for lack of relevant and accurate data was different definitions used for workers. For example, India does not have a fixed definition of 'formal' workers and hence, various definitions are applied. A commonly used definition accepts only regular workers in enterprises registered under the Factories Act of 1948 as 'formal'. However, the NSSO which carries out surveys calls them 'organised', instead of 'formal'. Under this definition, all workers in service sectors are classified as 'informal' or 'unorganised' workers.
Further, the Ministry of Labour and Employment used another definition which classifies all workers in enterprises with 10 or more workers and all government workers as 'formal' workers. This definition also uses the term 'organised' workers. Yet another definition classifies workers as 'formal' provided they have a contract regardless of the size of the enterprise in which they work. This definition draws a clear distinction between formal and organised workers but "is extremely constraining for the Indian context".
The report said all these definitions were "highly restrictive and excluded many workers who had decent and steady jobs but either did not work in large enough enterprises or did not have written contracts". After considering various alternatives, the Task Force concluded that it was desirable to adopt a new, more pragmatic definition of formal workers.
New labour codes leave gaps
The problem persists even as the government is trying to streamline and subsume 44 central labour laws into four codes - classifying those into wages, industrial relations, social security and welfare and occupational safety, health and working conditions.
For example, the Industrial Relations Code of 2017 defines 'unorganised' worker to mean a home-based worker, self-employed or a wage worker in the unorganised sector and includes one in the organised sector who is not covered by the six laws listed under the Unorganised Workers' Social Security Act of 2008. But the Social Security Code of 2018 defines 'unorganised' worker as (a) a worker (including home-based worker, own account worker, owner-cum-worker or a wage worker) working in the unorganised sector or (b) a person who gets employed by any entity through an informal contract or in absence of any written contract.
Similar is with the case of 'worker' in the new codes. There are multiple definitions, worded differently in some cases and long winding, expressly leaving out 'apprentice' while seeking to widen the scope and include all 'unorganised' workers.
CK Sajinarayanan, president of the RSS-affiliated trade union Bharatiya Mazdoor Sangh (BMS), says a comparative study is needed to study all different definitions used in the four codes (of worker, wage, organised-unorganised sector/worker and others) to bring about uniformity and simplicity. For him, a worker should simply be defined as anyone who gives labour for someone else. Such is the complexity in definitions that, as he points out, there are 144 definitions in the Social Security Code of 2018 alone.
On the plus side, Sajinarayanan says many "invisible workers" - home-based supply-chain workers engaged in manufacturing activity for multinationals through multiple middlemen, contract workers below a threshold (less than 20 in a company in case which it need not register itself), unregistered migrants and domestic workers etc - have been included in the codes. The real challenge, however, is to bring them into a formal system for legal protection.
The complexity in definitions, former acting chairman of the National Statistical Commission (NSC) PC Mohanan explains, is because India's economy developed differently from European countries and the normal way of defining work was confined to a small segment. He says, most Indians were engaged in self-employment (farming, carpentry, pottery making etc.), something that came to be defined as "family occupation", and the census of 1930s and 1940s captured this. The word 'organised' came first and conveyed statutory cover (and so, registered under a law). 'Formal' came later to represent government and organised sectors and 'informal' included agriculture and services.
Mohanan says even now it is very difficult to define 'work' or 'worker' in the Indian context. The latest approach is to define an "economic activity" as any activity that goes into the GDP calculations and anyone doing so is a worker, as per the International Labour Organisation (ILO).
Scientific and elaborate data for better application
It is not enough to just define different concepts simply and uniformly but collect the required data to ensure that the new labour codes are applied properly and cover all the intended beneficiaries. Sajinarayanan says data collection has to be elaborate and scientific to include the "invisible workers" - who are out of the statistical base now - and not just a sample survey. This would require developing a new mechanism to ensure that the intended benefits reach all workers.
MS Unnikrishnan, chairman of the CII National Committee on Industrial Relations, avers that the existing data base is "highly insufficient" even for the formal sector. As an example, he says it excludes contract workers outside the EPFO coverage and nobody knows their number. For the informal, there is no formal roaster or published data for the informal sector.
Once the data is in, Unnikrishnan says, the next big challenge is proper application of the new labour codes.