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IMPACT OF GLOBAL ECONOMIC COMPETITIVENESS ON INDIAN
LABOUR LAWS
Abstract
The highly important blow that the concept of globalisation appears to have made on the existence and jobs of workers arises to be the structural corrosion of the lawful safeguard present to the workers to immune them from the peculiarity of their gain-enhancement bosses. As multinational corporations and transnational supply chains become increasingly prevalent, the imperative to attract foreign investment and maintain competitiveness has, in some instances, taken precedence over safeguarding the rights and welfare of workers. In 2022, 1,000 tech companies laid off 161,000 employees in India. In 2023, almost 23% more layoffs happened in the first five months. In February 2023, the Karnataka and Tamil Nadu state government passed anti-worker legislation that extended the daily working hours from nine to twelve. The article investigates the central research question: How has the surge in global economic competitiveness affected the landscape of Indian labour laws? Through comprehensive analysis, this research article uncovers the labour issues prevailing in contemporary India, shedding light on the imperative need for recalibrating regulatory frameworks to ensure equitable safeguards for the workforce.
Introduction
As globalisation is particularly considered as a procedure of better economic collaboration for several nations of the globe, the primary and leading objective of globalisation procedure appears to be the disassembling of the broad national structure of legitimate safeguard offered for the protection, certainty and well-being of labourers through a susceptible approach or measures carried out by the capitalists or the industrialists in several nations. Hence, by hitting at the foundation of the whole structure of labour legislations, the procedure of globalisation minimises the labourers as a miserable group left on the pity of the industrialists
to employ or dismiss them, with undesirable conditions of agreement being imposed on them.^1 Constitutional safeguards and evolving history of labour laws in India: The Indian Constitution forecasts an exhaustive structure where the concerns related to workers have been managed at both common and distinct positions. Moreover, the nuances of the leading approach embodied in the Preamble of the Constitution are properly explained in several clauses developed in the Constitution’s Part III that put down the pure basic rights of the individuals. But the sincerest representation of the peoples’ rights is present in Article 19,^2 comprising six rights or liberties amongst which three lays down the foundation of the complete structure on which the latest democratic labour laws have been developed. These three rights involve- Article 19(i) (“right to freedom of speech and expression”),^3 Article 19(ii) (“right to assemble peacefully”)^4 and Article 19(iii) (“right to form associations and unions”).^5 While the several liberties provided under Article 19 appear to be the bedrock of the labour laws in the nation, the functional mobilities of these legislations have been put down under the clauses of the basic rights against maltreatment (Article 23^6 and Article 24^7 ). In addition, the Directive Principles of State Policy (laid down in Part IV) specifies the particular dimensions of the labour legislations through Article 38 (to maintain a social arrangement for encouraging the well-being of the citizens)^8 and Article 39 (objectives significant in safeguarding and advancement of the cause of workers)^9 of the Constitution. Therefore, the sole assistance of these constitutional clauses related to worker concerns has been that the regimes have not only been cautioned several times to introduce and integrate the actions targeted at guaranteeing a satisfactory life for the workers but also are considered to be the (^1) Rajendra Prasad Pandey, Globalization and Legal Protection of Labour in India, 71 The Indian Journal of Political Science 133, 133-136 (2010). (^2) INDIA CONST. art. 19. (^3) INDIA CONST. art. 19, cl. 1. (^4) INDIA CONST. art. 19, cl. 2. (^5) INDIA CONST. art. 19, cl. 3. (^6) INDIA CONST. art. 23. (^7) INDIA CONST. art. 24. (^8) INDIA CONST. art. 38. (^9) INDIA CONST. art. 39.
instability all around the world. The “undermining of state” has been at the foundation of effort getting less satisfactory.”^14 Therefore, the idea of “decent work” has probably been progressively undermined with the enhancement of the procedures of globalisation. Moreover, the labour legislations of India have two specific significant impacts. Firstly, they compel entities to stay narrow and in the unorganised section. Compulsory conditions for well-being, pension fund, financial security or certain other material facilities such as washrooms, supported cafeterias, etc. are relaxed for entities under 50 workers. Small firms also receive benefit of excise adjustments, special rights to manufacture some products and much lesser filing necessities if they stay narrow in capacity. For instance, the Industrial Disputes Act (IDA) of 1947 (Chapter VB)^15 mandated firms with over 100 employees to obtain government permission for employee retrenchment. Conversely, firms with less than 100 employees were exempt from this requirement. The associated compliance costs led a substantial majority of firms to deliberately maintain a workforce below the 100-employee threshold. Similarly, firms sought to evade the provisions of the Factories Act^16 by limiting their workforce to below 20 (10 without power). This phenomenon, as highlighted in the Economic Survey of 2018-19, has resulted in the prevalence of "dwarf" firms - those that are both small and over a decade old. These entities dominate the Indian economic landscape, yet their contribution to employment and net value added remains disproportionately low. Secondly, the State is the main stakeholder to the execution of labour legislations. These structural shortcomings in the legal safeguards of workers have the huge possibility of getting misused by the foreign entities who are starting their functioning in the Indian territory, hence putting the labourers in an extremely indefensible place as much as the objective of guaranteeing “decent work” for them is considered.
Concerns arising in the functioning of Labour today
In the early stages of globalization, labour appears to be the most affected. Concerns arise, particularly in developed nations, regarding job displacement due to outsourcing and relocation to lower-cost countries. This is especially worrisome given already high unemployment rates in these regions. There's also unease about 'social dumping,' where (^14) Reddy, D. Narasimha, Challenges of Decent Work in the Globalising World, The Indian Journal of Labour Economics 48, 3-17 (2005). (^15) Industrial Disputes Act, 1947, No. 14, Acts of Parliament, 1947 (India). (^16) The Factories Act, 1948, No. 63, Acts of Parliament, 1948 (India).
subpar labour conditions from developing countries seep into developed ones. The fear of a 'race to the bottom' further exacerbates this. Globalization amplifies competition from imported goods, potentially leading to job cuts and closures of less competitive businesses. This makes it challenging for workers to adapt. Additionally, increased foreign investment may suppress wages and optimal labour utilization, reducing job security and overall employment quality. Globalization is seen as eroding labour protections systematically.^17
Comparative Analysis of Labour Standards in India and China
Global job redistribution prompts scrutiny of Indian and Chinese labour standards. Critics advocate for fair conditions to level the international trade field. Developing economies seek to compete for foreign investment. Questions persist about India's competitiveness compared to China due to perceived labour law inflexibility. Existing studies often overlook labour market regulations. A comparative study on labour standards in India and China provides a systematic overview of standards governing working conditions in a wide variety of economic contexts within both India and China. While minor differences exist, there are numerous similarities in how legislated norms dictate the treatment of employees. While India and China exhibit minor disparities in specific standards, they share numerous commonalities in how legislated norms dictate the treatment of employees in their respective jurisdictions. The study's conclusion includes an examination of the legal frameworks: China's standards represent a recent, unified approach to employment contracts, whereas India's laws, rooted in the post-independence era, employ a more fragmented approach, covering various industries and sectors through different legislations. This fragmented approach contributes to regulatory gaps, particularly affecting a substantial portion of Indian laborers based on factors like establishment size and employment jurisdiction. These distinctions are further complicated by the governance systems in each country. China's unitary system enforces a consistent set of regulations nationwide, with provinces having limited authority to make alterations. In contrast, India's joint constitutional jurisdiction over labour leads to diverse interpretations of norms, impacting transparency in the legal landscape. This complexity makes it more challenging to determine which laws apply in specific instances compared to China. (^17) Papola, T.S., Globalisation, Employment and Social Protection: Emerging Perspectives for the Indian Workers, The Indian Journal of Labour Economics 47, 541-550 (2004).
The recent legislative reforms in India's labour laws represent a crucial step towards aligning regulatory structures with the contemporary economic landscape. By addressing the inherent flaws in the earlier regime, particularly with respect to firm size-based incentives and the formal-informal labour market divide, these reforms hold the potential to foster a more dynamic and inclusive workforce. Despite progress, there are persistent hurdles to guaranteeing fair treatment of workers. A notable issue is the inadequate enforcement of laws, enabling employer exploitation. Furthermore, adjustments to existing laws are necessary to confront evolving labour market issues like job instability and workplace mistreatment. Collaboration among the government, employers, and workers is crucial to surmount these challenges and ensure that labour laws effectively safeguard the rights and well-being of workers. These measures collectively signify a positive stride towards a more balanced and responsive labour regulatory framework in India.
