LABOUR CODE AND UNORGANIZED SECTOR IN INDIA

The labour codes will only better India’s ‘ease of doing business’ ranking instead of improving conditions of employment

The Union Labour Minister claimed that the four labour codes would generate employment and secure the basic rights of the workers.
The labour codes seek to universalise the right to minimum wage of workers and social security entitlements.These appear to be extremely positive steps from the perspective of all workers.

Universal social security

The codes mandate benefits of Employees’ State Insurance (ESI) and Provident Fund (PF) only for workers belonging to establishments employing 10 workers or more.This leaves out nearly 80% of all Indian workers — the informal sector — from the ambit of these benefits.
These workers have to be satisfied with a promise of some special schemes for them in their as yet undefined future.
They may also be allowed access to underutilised Employees’ State Insurance Corporation hospitals — and even that only on payment of a usage charge.

What does ESI coverage mean for the remaining 20% of the workers?

In 2016, the ESI covered 2.1 crore workers; this increased to 3.6 crore by March 2019.
The ESI employed around six doctors per one lakh beneficiaries in 2016, as against the World Health Organization norm of 100 doctors; the proportion of doctors to beneficiaries would have further fallen with the expanded membership.
The ESI would have needed to urgently increase doctor and paramedical strength, for which it would need more resources.
However, in the interest of ‘ease of doing business’, the employer plus employee contribution to the ESI was reduced from 6.5% to 4% from July 2019.
The decision to reduce the contribution rate at a time when the need for the ESI was to increase expenditure on medical care surely appears counter-intuitive.
With the new codes seeking to cover 20% of all workers, the membership would further increase to around 10 crore workers: a three-time increase over the membership in 2019.
The available capacity of the hospitals and dispensaries would evidently be inadequate.
The hope of ‘underutilised hospitals’ being made available to the informal sector is mere populist kite-flying.
The ESI coverage follows the map of industrial growth in the country. Thus, in industrialised States like Karnataka and Tamil Nadu, the ESI covered around 20% of the population as beneficiaries in 2016; the corresponding figure was just 0.7% for Bihar.
While introducing the new codes, the government also did away with a number of existing cess-based welfare schemes.

Promise of miminum wage

The second claim for universal coverage was of the minimum wage.
According to the Union Labour Minister, at present only around 30% of all workers get covered under the various minimum wage schedules.
The government’s remedy in the codes is to include a floor wage covering all workers. At various instances, the Labour Minister announced a floor wage of ₹178 per day in 2019; and more recently the Finance Minister announced ₹202.
These codes, also include various measures restricting the unions’ right to strike and relax norms for factory closure, serve to improve the ‘ease of doing business’ ranking instead of improving the conditions of employment.
For the unorganised sector workers, the labour codes provide nothing but a mirage.