BACKGROUNDER
INDIAN LABOUR CONFERENCE
TO DISCUSS SOCIAL SECURITY, EMPLOYMENTAND DISINVESTMENT
The Prime Minister Shri Atal Bihari Vajpayee
will inaugurate the Thirty Eighth Session of the Indian Labour
Conference at 11.00 am on 28th September, 2002 at Vigyan
Bhawan in New Delhi. The two-day Conference will discuss the impact
of globalisation on the Indian economy particularly on employment
and how to meet the challenge. The other agenda items include
social safety net, disinvestment policy of government and problems
and challenges being faced by small scale industries and their
remedies. The ILC will also discuss the Report of the Second National
Commission on Labour in its Plenary on the second day of the Conference.
The Report was presented to the Prime Minister on 29th
June, 2002 and was made public on September 9, 2002. The Labour
Minister Dr. Sahib Singh has already initiated a Consultation
process with the social partners on the recommendations of the
Report.
IMPACT OF GLOBALISATION ON
THE INDIAN ECONOMY PARTICULARLY ON EMPLOYMENT
Globalisation is now a reality has come to be
reckoned by all sections of the society. The Government has introduced
a series of far-reaching economic reforms in trade and industry
as well as in external, financial and public sectors. These reforms
have had a salutary effect on the economy resulting in higher
GDP growth, reduction in poverty, lowering of inflation, increase
in foreign direct investment etc. There is, however, deceleration
in the growth of employment from 2.23% per annum in pre-reform
era (1987-88 to 1993-94) to less than 1% in post-reform period
(1993-94 to 1999-2000). The major areas of concern are the informalisation
of jobs as well as stagnancy of employment in the organized sector.
The Labour Force Surveys conducted by the National
Sample Survey Organisation (NSSO) point to deceleration in the
growth of employment from 2.23 per cent per annum in pre-reform
era (1987-88 to 1993-94) to less than one per cent in post-reform
period (1993-94 to 1999-2000). While the organised sector has
witnessed stagnancy of employment at 2.8 crore, a large number
of jobs have been informalised which has raised the concern of
many. Although there is no empirical evidence to suggest specific
causes for it, there is a general impression that globalisation-necessitating
adoption of capital intensive technologies could be one of the
major reasons for these unusual phenomena. It is also often expressed
that outdated labour laws are also partly responsible for the
tardy growth in employment. Whatever growth has been there, it
has been entirely in the unorganised sector where employment has
gone up from 34.6 crore to 36.9 crore.
Further, the results of the NSSO surveys show
that around 30% workers are living below the poverty line. This
indicates that the productivity as well as income level of the
workers working in various industries are very poor and require
a substantial step up. This possibly is due to the new entrants
being pushed into the labour market in the unorganised sector,
which at present is not able to absorb them. Excess supply of
labour is resulting in low productivity, low wages and poor social
security. Keeping this in view, the concept of decent work aiming
at high quality employment by raising productivity and income
level is being advocated in various fora including the International
Labour Organisation.
Plan Strategies :
The growth strategy of 10th Plan lays
emphasis on rapid growth of those sectors which are likely to
create high quality employment opportunities and deal with the
policy constraints which discourage growth of employment. Particular
attention would be paid to the policy environment influencing
a wide range of economic activities, which have a large employment
potential. Two Expert Committees, viz., Task Force and Special
Group, were set up by the Planning Commission to suggest strategies
for employment generation for achieving the target of providing
employment opportunities to 10 crore people over the next ten
years (one crore per year).
Task Force
The Task Force under the Chairmanship of Dr.
M.S. Ahluwalia, the then Member, Planning commission, set up in
January 1999, concentrated primarily on the macro-economic policy
changes that would be needed to increase the employment growth
rate. It assumed the GDP growth as a key to employment and said
that it should be accelerated to 9% per annum. It called for creation
of high quality employment opportunities to meet the expectations
of increasing the better-educated youth.
Special Group
The Special Group subsequently set up under the
Chairmanship of Dr. S.P. Gupta, Member, Planning Commission, focused
on micro aspects of the economy. It recommended that future employment
strategy to meet the Plan employment goals should encourage the
use of labour intensive and capital saving technology in general
and to rejuvenate the growth of the unorganised sector in particular.
The globalisation has further brought to the
fore that henceforth the demand would be mostly for labour with
skills and multi-skills. As only 5% of our labour force in the
age group 20-24 have skills acquired through formal training,
there is need to have higher investment in skill development &
training and modernization of training system. A proper testing
and certification system for skills acquired through informal
means would also be desirable.
The scheme for counselling, retraining and redeployment
of rationalized workers of the CPSUs needs to be further strengthened
by bringing under its ambit the employees of State PSUs and the
corporate sector. The Ashraya Bima Yojana launched last year may
be modified/ revamped in the light of experience hitherto gained.
ISSUES FOR DELIBERATIONS/DISCUSSION
1. Adequacy of the Plan strategies for employment
generation and suggestions thereto.
2. Suggestions for skill upgradation &
training to meet the demand of a competitive globalised market.
- Suggestions regarding counselling, retraining and redeployment
and appropriate safety net
for rationalized workers.
SOCIAL SAFETY NET
Globalisation and rapid technological changes
are transforming the world of work. Social Security is increasingly
seen as an integral part of the development process. Social Security
is the means to achieve increase in productivity and competitiveness
as also the means to improve the workers’ health, safety, conditions
of work and incomes.
The existing arrangement for social security
cover only 35 million workers out of the total workforce of around
397 million. The prime concern is the challenge of closing the
existing coverage gap, which affects about 92% of the workforce
in the unorganised sector.
The principal social security schemes, mainly
in the organised sector, are provided by Workmen’s Compensation
Act, 1923, Maternity Benefit Act,1961, Payment of Gratuity Act,1972,
Employees’ State Insurance Act, 1948 and Employees’ Provident
Fund & Miscellaneous Provision Act, 1952.
The EPFO has embarked upon an ambitious programme
entitled ‘Reinventing EPFO’ enabling ‘any-time any-where’ service
across all EPFO offices in the country for settlement of a claim
within 2-3 days of the receipt. It also seeks to provide unique
Social Security Number to every subscriber member to identify
each member uniquely regardless of the employer. Schemes are also
being worked out by the EPFO for providing Unemployment Insurance
and de-linking the pension schemes from provident fund so that
pension benefits can be provided to workers in the unorganised
sector.
ESIC is in the process of forming area-wise and
occupation-wise schemes to extend coverage to the unorganised
sector. It is setting up a Model Hospital in each State to provide
complete Secondary Care Treatment and setting up a revolving fund
in each State for speedy transfer of funds for Super Speciality
Treatment.
In the unorganised sector, despite several social
security arrangements by Central/State Govts., there is a huge
gap in coverage and lack of institutional framework and resources
to implement the social security programmes. Further, majority
of workers in the unorganised sector being poor are unable to
participate in social security schemes/programmes run on contributory
basis.
Convergence of all Central and State Govt. programmes
for optimum utilisation of resources as also the active involvement
of NGOs/Self Help Groups/Social Partners, Local bodies and Panchayati
Raj institution is a pre-requisite, for effective implementation.
ISSUES FOR DELIBERATION
- To provide self-sustained and self-financed social security
system with minimal government involvement.
2. Segmental approach on the lines of Welfare
Funds already in operation.
3. Cooperation from State Governments/UTs and
others to implement the existing legislations like Building and
other Construction Workers Act, 1996 without further delay.
4. Extension of existing social security net
such as Employees Provident Fund, Insurance, Health Care arrangements
under ESI Scheme to identifiable groups of workers in the unorganised
sector in a phased manner.
DISINVESTMENT
POLICY OF THE GOVERNMENT
The main elements of the present disinvestment
policy can be summarized as restructuring and reviving potentially
viable Public Sector Undertakings (PSUs), closure of PSUs that
cannot be revived, bringing down the Government’s equity in all
non-strategic PSUs to 26% or below if necessary and to protect
the interests of the workers.
Since 1991, 48 PSUs have been taken up for disinvestment
and Rs.30738 crores have been realized. Of these 48 PSUs, where
disinvestments have been carried out, 12 companies have been sold
through strategic sale. These include Lagan Jute Machinery Co.
Ltd., Modern Food Industries Ltd., Bharat Aluminium Co. Ltd.,
IBP Ltd., VSNL and Hindustan Zinc Ltd.
The protection of interests of the employees/workers
is an integral part of the disinvestment policy. Prior to disinvestment
in a public sector undertaking, the concerns and apprehensions
of the employees of these PSUs are heard and an attempt is made
to create an atmosphere conducive to disinvestment. Besides, suitable
provisions are included in the shareholders’ agreement with a
view to safeguard the workers’ interests including those belonging
to the socially disadvantaged category.
Recent privatizations have revealed that not
even a single person has been retrenched from these privatized
companies. In fact, some of the privatized companies have gone
in for additional recruitment and have also increased the wages
of their employees. It is possible that in the near future some
of these companies may restructure and may also accept some voluntary
retirement applications. However, the voluntary retirement schemes
offered by such companies would normally be higher or equal to
the VRS given by the Government to the Central Public Sector Employees.
ISSUES FOR DISCUSSION
- Rationale for disinvestment.
- Addressing Employees' concerns at the time of disinvestment
PROBLEMS
AND CHALLENGES FACED BY SMALL SCALE INDUSTRIES AND THEIR REMEDIES
The Small Scale Sector (SSI) which has 34 lakh
units provides employment to 193 lakh persons and exports goods
worth Rs.60,000 crore. It has a pivotal role to play in the industrial
development of the country. The SSIs are administered by a number
of State and Central Authorities under various Acts, which may
entail visit of more than 60 inspectors and filing of 165 returns.
As average employment in a SSI is about 6 persons, it is a herculean
task for these enterprises to attend to such large numbers of
inspectors and maintain various registers and returns.
The Labour Laws (exemption from furnishing Returns
& Maintaining Registers by Certain Establishments) Act, 1988
prescribes combined returns under 9 Acts. Though the registers
and returns prescribed for SSIs were minimised, the Act did not
touch upon some of major laws impacting SSI sector such as the
Employees State Insurance Act, 1958, Employees Provident Fund
and Miscellaneous Provisions Act, 1952, Workmen’s Compensation
Act, 1923, Standards of Weights & Measures Act, 1976 and Maternity
Benefit Act, 1961. Moreover, the three registers & one return
prescribed, required the same information as sought earlier. Also,
the Act extended the formalities of filing the returns to establishments
employing less than 10 workers.
To tackle the problem of Labour Laws for SSIs,
the Ministry of Small Scale Industries is of the view that tiny
units should be exempted from labour laws except the Minimum Wages
Act. For SSIs employing less than 100 workers, there should be
a separate but simple legislation on labour matters. The proposed
law could lay down basic requirement of compliance with registration,
safety and health, working hours and welfare etc. While minimum
wages could be payable as prescribed, this law could substitute
a plethora of laws such as Payment of wages, Payment of Bonus,
Payment of Gratuity, Maternity benefits, ESI, EPF Acts etc. The
Act could provide for bonus and social security allowances as
well as cases of removal/separation from services. A bare minimum
of registers/records could be specified and a procedure of self-certification
be put in place in lieu of submission of returns. Inspections
could be on written, verifiable and signed complaints from stakeholders
only, which could include employees, trade unions and neighbours.
Most of the SSIs employ less than 10 workers
and are not protected by social security measures. There is a
need to provide some welfare and social security benefits for
them such as the insurance coverage against death, disease and
disability. Similarly a mandatory terminal benefit of 3 months
wages in case of retrenchment, removal, etc would go a long way
in eliminating hardship to such workers in unorganized sector.
