The Chicken and Egg Story of Labor

What’s holding back the tiger? As per popular wisdom, globally, serious problems lie with India’s labor aristocracy and our archaic labor laws. If we were to relax our labor laws, people say, it would be India’s third independence, the second one being the 1991 reforms. As a professional working with the unorganized sector labour, I’ve always wondered if I’ve got my diagnosis wrong.

We work with the migrant worker community, which constitutes the largest chunk of the informal sector workforce. Our struggle is to get them legal protection, basic social security such as insurance, pension and ensure portability of entitlements as they move to fulfill the ever-growing needs of a growing economy. Wherever required, we try and collectivize them, bringing them together so that their voices get heard. For in several cases, our country fails to count them (NSS and Census underestimate seasonal mobility of labor by a gross margin). Worse, we are unable to decide which sector they fall in and which legislation applies to them (millions working in the brick kiln live in such a limbo). Our hypothesis (rather conviction) is that in the entire growth story of India, labor is the most compromised, does not get its due and it is high time that it did.

Popular wisdom, unfortunately, has a different take on the problem. As per them, India has long been a victim of labor union militancy and the society has been held at ransom by labor, rather too often. Their rhetoric is – Employers are forced to choose contract labor because the regulations are so stifling. If India’s labor laws weren’t that retrogressive, so many of our workers would not have been forced to work in the informal sector and would have enjoyed secure, well paid jobs in factories. I am exaggerating, I know. The point is that they would have definitely been better off than what they are now. Intellectuals coming from this line of thought also take a leap to suggest that NGOs such as us should show sensitivity to the problems of employers and help them in gaining access to labor – skilled and disciplined.

This is perplexing. Is Indian economy largely informal because of stringent labour laws? Are we saying that workers in India are in a bad shape because of the laws that we have? If we enable better legal protection for the left-outs, will we aggravate India’s growth problems? Or, are workers vulnerable because they lack legal protection and because our legal system is not equipped to address the plethora of issues the labor market faces on an everyday basis?

Putting it in the chicken-egg story dilemma – what came first – workers plight or labor laws?

I am not an expert in labor laws. If anything, I’d like to know more about the laws which are said to be so stifling. However, what I’ve seen so far does not correspond to popular wisdom. In a survey of 300 migrant workers from southern Rajasthan, majority of our respondents hadn’t even heard of the basic labor laws. While stringent labour laws are considered to be a roadblock in India’s growth, what we have found is that it is its absence that plagues majority of its labour market’s functioning. After all 93 per cent of the economy is manned by unorganized workers.

World Bank in 2007 argued that India could have added 2.8 m jobs (through 2007) only if labor laws were less restrictive. Recently, Business week Bloomsberg in early Jan 2011 reiterated the argument saying that laws in India deter enterprises from growing beyond 100 workers, as firing staff requires permission from authorities. Prime Minister Manmohan Singh in a meeting with trade unions recently, said – “Is it possible that our best intentions for labor are not actually met by laws that sound progressive on paper but end up hurting the very workers they are meant to protect?”

One doesn’t know the answer.

Nevertheless, what is bothersome is that the country is talking of labour reforms yet again. And this discussion is fuelled by popular wisdom. I am afraid if the dominant discourse, as always, is purposive and serving the powerful….yet guised well with stylized facts to command intellectual supremacy? We definitely need more deliberation and research on this topic.

– Amrita Sharma, Aajeevika Bureau

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