Introduction

 Labor regulations could be perceived in broad terms to include both formal and informal institutions of regulation, such as labor law, trade unions, collective bargaining, conventions and norms. Labor regulation seeks to: (a) rectify the basic power asymmetry inherent in employer-worker relations; (b) prevent opportunistic behavior by employers; (c) correct deviant behavior of workers and ensure industrial discipline and commitment; (d) provide social protection; (e) provide a set of rights to and obligations on workers and their associations and employers; and (f) create “rules” to govern the interaction between the two parties in the labor market (Sundar, 2011). Therefore, labor regulations form an essential aspect of social security and welfare for workers, with respect to macro and micro contexts. The macro refers to the social security at the level of the country (for e.g. adequacy of food grains at the national level) or a region as whole and the micro refers to the security provided at an individual or a household level (for e.g. fulfillment of at least 2 nourishing meals per day).  ‘Centralization’ and ‘decentralization’ are two terms, which are interdependent, and the important aspect of macro (centralization) and the micro (decentralization) elements is how they are defined according to the context of a worker’s livelihood. Such macro and microelements form the basis while articulating labor laws. Definitions of inclusionary and exclusionary terms, amendments made at the State level, implementing tools and committees, procedures for registration of the applicant, etc. provide the basis for such frameworks. The legislative framework of labor conditions, the working conditions, employer-employee relations, mode of wage payments; provide social security and protect the interests of special categories of working class (Pillai, 2012). These issues need to be analyzed with respect to Indian labor laws and regulations because of the highly segmented labor market in India. Segmented labor market theory suggests that the labor market is divided into “good” and “bad” jobs, and that mobility between these segments is limited (Doeringer & Piore, 1975). Jobs in the primary market are characterized by relatively high pay, benefits, good working conditions, and advancement opportunities. Jobs in the secondary market pay poorly, carry no benefits, and involve undesirable working conditions. They often consist of contingent, part-time, on-call, and self-employed work arrangements (Daw & Hardie, 2012).  Discrimination and segmentation are among the persistent features of the Indian labor market. This can be explained at the broadest level by pointing to the high level of segregation in the Indian society by caste, gender, region and religious groups (D, et al., 2009).

Narrative of Labor Regulations in India

 Apart from the ‘fundamental rights’, the Indian Constitution gives a pride of place to the Directive Principles which link political democracy with economic and social democracy. The Directive Principles of the Indian Constitution lay down directions and objectives in the achievement of economic rights, and are unjustifiable. They are, to be used by the government in making laws. Of particular interest in the Directive Principles to us here is ‘Article 41’, which directs the state to ‘within the limits of its economic capacity and development, make effective provision for securing the right to work, to education and to public assistance in cases of unemployment, old age, sickness and disablement, and in other cases of undeserved want.’ The sectors of health, food, and employment become the basis for implementing such directive principles. On the basis of these directive principles, laws are passed by the central government and amended by the state governments, which create variations in the cohesiveness and consistency of the Acts across India. The tools of such laws are the central and state boards or committees and the entitlements provided by them on the basis of registration.  The following is a brief description for some labor laws in India explaining their relevance with implicit and explicit social welfare and security of workers. 

Workmen’s/ Employees’ Compensation Act 1923 (Workmen’s Compensation Act 1923, 2012)

Basis: This aims to provide workmen and their dependents some relief in case of accidents arising out of and in the course of employment and causing either death or disablement of workmen. It is constituted as a central legislation, which makes it, the Employer’s liability for payment of compensation for injuries suffered by a workman in the course of and arising out of his employment according to the nature of injuries suffered and disability incurred. Where death results from the injury, the amount of compensation is payable to the dependents of the workmen. There is mention of the applicability of the terms ‘clerical’ and ‘casual’ employees, with the omission of ‘unorganized workers’ in the Act. The compensation for unorganized workers gets covered in the ‘Unorganized Workers Social Security Act, 2008’.        

Mechanism: The amount of compensation depends on the nature of the injury, the wages and the age of the employee.  The minimum and maximum compensations for death or disability are fixed and get revised from time to time. For example, the minimum compensation limits in the amendment are extended to Rs. 1,20,000 and Rs. 1,40,000 from the earlier Rs. 90,000. It also involves the funeral expenses and medical expenditures incurred from the injuries during the course of employment.

Minimum wages Act 1948 (ILO, 2011)

 Basis: The concept of Minimum Wages was first evolved by the International Labor Organization in 1928 with reference to the remuneration of workers in those industries where the level of wages was substantially low and the labor was vulnerable to exploitation, being not well organized and having less bargaining power.  The minimum wages act relates majorly to the informal sector or the unorganized sector in India.  The advisory committee and sub committee appointed by the government of India formulate the recommendation for the fixation and revision of the minimum wages. The minimum rate of wages consists of basic wage and special allowance relating to the consumer price index.  The allowance is revised twice in a year, once in April and then in October. The Act specifies two categories of workers namely, agricultural and non-agricultural employees. Though the minimum wages get defined at the national level, there are variations in consumer price indexes due to different geographical, social, political and economic differences. Here the states of India get clubbed separately according to regions viz., Northern, Southern, North Eastern regions; and the minimum wages get defined region wise. Once a minimum wage is defined under the scheduled employments of the particular States, the employers are liable to pay the workers accordingly. However the main discrepancy in the listing of these minimum wages is that, not all wages are specified for all the types of occupations in the State. Sometimes the Schedule of employments differs according to the states and hence workers employed in certain occupation not listed in the scheduled employment of the state, are liable for exploitation of minimum wages. 

Mechanism: Both the Central and State Governments can review, revise and fix the minimum wages. The minimum wages get fixed and revised by two ways: Committee Method and Notification method.  In the notification method, the affected people in the scheduled employment can make a notification. The minimum wages are fixed and revised according to the consumer price index numbers and variable dearness allowance, which are related to mitigate the impacts of inflation. The Consumer Price Index Numbers show the price changes in the specified group of goods for each item and are used to assess the price changes associated with the cost of living. The consumer price indexes could be equated to ‘inflationary indicators’. The Chief Labor Commissioner at the Central level aids the enforcement of the Act and the State Enforcement Machinery at the State Level. Apart from the State and Central Spheres, Regional committees are formed to fix uniformity in wages at the regional level. 

Inference: India‘s complicated system of minimum wages has generated substantial criticism and debate. The major criticism points towards the lack of coherence resulting from this complex system of minimum wages; and that it is applicable only to certain employments and does not include all workers (Belser & Rani, 2010). A second area of criticism is linked to the difficulty to enforce such a complex and numerous sets of minimum wage rates. For example, (Ghose, 1997) considers that, ‘there is no justifiable basis for specifying different minimum wages for different types of activities so long as they all employ unskilled casual labor’. In his view, a system that results in a plethora of statutory minimum wages, all arbitrarily set, which vary across jobs within a state and across states in the same job, is simply indefensible. The following table summarizes the variations in minimum wages across India (Labor Bureau, 2009). 

Central government /States / union territories	No of scheduled employments in which minimum wages fixed / revised	Range of minimum wages per day (Rs.)		Range(max-min)
		Minimum	Maximum
C.L.C. (Central)	45	109.09	203.00	93.91
Arunachal Pradesh	30	80.00	80.00	0.00
Bihar	88	99.00	104.00	5.00
Gujarat	53	100.00	161.60	61.60
Haryana	50	151.00	151.00	0.00
Himachal Pradesh	12	100.00	110.00	10.00
Jammu and Kashmir	28	110.00	110.00	0.00
Manipur	15	81.40	81.40	0.00
Meghalaya	27	100.00	100.00	0.00
Mizoram	4	132.00	132.00	0.00
Punjab	60	130.71	136.79	6.08
Rajasthan	62	81.00	112.42	31.42
Uttarakhand	58	84.35	166.43	82.08
A & N Islands	6	156.00	186.04	30.04
Chandigarh	48	157.36	157.36	0.00
Delhi	29	152.00	152.00	0.00
Lakshadweep	9	141.85	141.85	0.00

Contract Labor (regulation and Abolition) Act 1970 (Contract Labor Act 1970, 2012)

            Basis: The contract labor exists when an employer hires a contractor to get a job done and the contractor in turn hires a set of laborers for the particular job. In such a condition, the laborers are not in direct contact and neither in any contract with the principal employer. Such laborers are to be called as ‘Contract Laborers’. In most of the cases, the exploitation and abuse of such labor exists when the laborers are paid less than the minimum wage that the work officially dictates and are subordinated under poor working conditions.  With the contract labor hired in a situation, the Contract Labor Act binds the principal employer, the contractor and the workers, to prevent exploitation of labor in terms of wages paid and working conditions provided for the employees working under contract labor. The Act does not purport to abolish contract labor system in its entirety, but provides the abolition of contract labor in appropriate cases. 

Mechanism: Any establishment, which employs 20 or more workmen on any day of the preceding 12 months, can employ temporary workers upon obtaining a valid certificate of registration. A temporary worker under the Act is a workman employed on a contractual basis by and through a contractor for an establishment. The contractor is required to obtain a license under the Act. The term establishment is defined very broadly in the Act. Temporary workers being the indirect employee of an establishment are under the direct control and supervision of the contractor as opposed to direct employees who are under the direct control and supervision of the establishment. A contractor has to ensure that the temporary workers are provided with basic facilities like canteen, rest rooms etc. The wages of temporary workers should not be less than the minimum wages prescribed under the labor laws (this bit is archaic as the daily wage rates are low). The law also provides that temporary workers, who perform same or similar kind of work as regular workmen, will be entitled to the same wages and other benefits and service conditions as regular workmen. The Act requires certain periodical returns to be filed by the contractor. The law empowers inspectors to conduct regular checks on establishments employing contract labor. The institutions of Central and State Advisory Boards advise the Central and State Governments respectively on the Act. Industrial Courts have no jurisdiction to determine the question as to whether contract labor should be abolished or not. The following state amendments implicitly lead certain occupations (usually in common practice to be hired under a contractor) to be free of the Contract Labor Act, which would directly result in the exploitation of contract laborers.

State amendment for Maharashtra – One has to understand the political rhetoric behind this amendment. Special Economic Zones require incentives for businesses to set up. By excluding certain employments from the contract labor act, which are in common practice hired under a contractor, would result in businesses trying to save on costs by exploiting the minimum wages and living conditions cost of such workers. 

 “(c) Notwithstanding anything contained in clause (b) or any other provisions of this Act, the work performed or carried out in the area of Special Economic Zone (declared as such by the Government of India), which is of ancillary nature such as canteen, gardening, cleaning, security, courier services, transport of raw material and finished products, or loading and unloading of goods within the premises of a factory or establishments which are declared 100 per cent. Export units by Government, required to achieve the objective of a principal establishment in the said area, shall be deemed to be of temporary and intermittent nature irrespective of the period of performance of the work by the workers in such ancillary establishments.”

State amendment for Andhra Pradesh – This is a cleverly disguised amendment, which excludes all categories on workers, which are usually hired under a contractor, from this Act. Basically one can conclude that the contract labor act would be ineffectual in the State of Andhra Pradesh given this amendment.

“Core activity does not include sanitation works, sweeping, cleaning, dusting and collection and disposal of all kinds of waste; watch and ward services including security service; canteen and catering services; loading and unloading operations; running of hospitals, educational and training institutions, guest houses, clubs and the like where they are in the nature of support services of an establishment; courier services which are in nature of support services of an establishment; civil and other constructional works, including maintenance; gardening and maintenance of lawns, etc.; house keeping and laundry services, etc., where they are in nature support services of an establishment; transport services including ambulance services; any activity of intermittent in nature even if that constitutes a core activity of an establishment; and any other activity which is incidental to the core activity: Provided that the above activities by themselves are not the “core activities” of such establishment.”

Interstate Migrant Workers’ Act 1979 (Interstate Migrant Workers’ Act, 2012)

Basis: This Act was constituted to prevent the exploitation of migrant workers. Under this Act, ‘Interstate migrant worker’ means a person recruited by or through a contractor in one State under an agreement or other arrangement for employment in another State, with or without the knowledge of the principal employer. 

Mechanism: The Act requires registration of the establishment employing interstate migrant workers with the Registration Officer appointed by the government. It applies to the organizations employing five or more interstate migrant workmen. The contractors employing the interstate migrant workers are to have separate licenses registered for employing these workers. The contactor is responsible to issue passbooks in Hindi/English or in the language of the workman ascertaining the job title, period of employment, proposed payment of wages and return fares. The wages paid to the migrant workers are not be less than that as specified in the Minimum Wages Act, 1948. All the wages have to be paid only in cash and not any other form. The contractor is responsible to pay the interstate migrant worker a displacement allowance equal to 50% of the monthly wages payable or Rs.75, whichever is higher. In case the contractor is not able to pay or provide facilities for the workers, the principal employer is deemed responsible for the same. The government has the power to ‘exempt special cases’ and Central government has the power to direct the State governments in carrying out the provisions under this Act. The Limitation of prosecutions section under this Act states that, ‘No court shall take cognizance of an offence punishable under this Act unless the complaint thereof is made within three months from the date on which the alleged commission of the offence came to the knowledge of the inspector or authorized person concerned; provided that where the offence consists of disobeying a written order made by an inspector or authorized person, complaint thereof may be made within six months of the date on which the offence is alleged to have been committed.’ 

Inference: There is no definition with regards to migrant workers not employed under any contractor, who don’t have a residence proof in the State apart from their state of origin. There is no provision of social security for such workers. The Act also does not provide a valid argument for stating why it applies to establishments employing more than 5 workers and not less. Also for keeping a check on any irregularities in the practices there is no decentralization of governance or supervision for review of these contractors (considering that migrant workers have become a norm across the country). The term “ appropriate government” responsible for appointing “inspectors” to review licenses under do not get defined at all. With the case of limitation to prosecution there is no definition about a condition when the contractor tries to hide all the evidence for more than six months of time. All such loopholes in this Act have made the constitutional applicability inefficient, thus affecting the social welfare of the volatile migrant workforce. This is just another evidence stating the urgency to revise the archaic nature of such laws.

Building and other construction workers’ Act 1996 (Building and Construction workers’ Act, 2012)

 Basis: Given the temporary nature of work relating to construction workers and the vulnerability of these to accidents and welfare therein, this Act provides a comprehensive Central legislation for regulating the safety, welfare and other conditions of service relating to the construction workers. This Act applies to every establishment, which employs or had employed 10 or more building workers in any building or construction work. Building and construction Welfare funds are established at state levels and national level under this Act, so that funds allocated to labor schemes can directly be transferred for the purposes of this Act. The Central Government accredits the number of hours of work for a building worker, to provide for a day of rest in every period of 7 days and for the payment of remuneration in respect of such days of rest.

Mechanism: The government appoints “Registering officers” for the purposes of this Act and every Employer has to register his establishment with the registering officer. The registration officer at a given point in time can revoke such registration in case of discrepancies stated under this Act. The Central Government is responsible to constitute a Committee called “The Central Building and other Construction Workers’ Advisory Committee “. It consists of representative members of parliament and other members nominated by the Central Government to represent employers, building workers, associations of architects, engineers, accident insurance institutions and any other as would seem appropriate. A similar pattern of representation is used for formulating the State Advisory committee. The Central or appropriate government appoints expert Committees consisting of specially qualified persons in building and other construction work, for advising on rules made by the Government. Every building worker who is between the age of 18 and 60 and who has been engaged in any building or other construction work for not less than ninety days during the last 12 months is eligible for registration as a beneficiary of the Building and Other Construction Workers’ Welfare Fund. For the functioning of this fund the construction welfare boards formulate at the State level issue identity cards to construction workers registered under the board, which include the details of the building and other construction work done by the worker. The registered worker under this welfare fund can apply for assistance relating to accident and ailment benefits, sanctioning of loans for the construction of houses of these workers, pensions, education of the constructions workers’ children, maternity benefit for women workers. A registered beneficiary, until he attains the age of sixty years, has to contribute to the Fund at the rates specified by the State Government. If any beneficiary is unable to pay his contribution due to any financial hardship, the Building and Other Construction Workers’ Welfare Board can waive the payment of contribution for a period not exceeding three months at a time. If any beneficiary fails to pay his contribution for a continuous period of not less than one year, he ceases to be a beneficiary of the Fund, unless for a reasonable condition. The welfare fund also provides loan or subsidy to the local authority or employer for the scheme approved by the State government in relation to the welfare of building workers. The central government is the primary body responsible to sanction grants or loans o these welfare boards and funds. 

Inference: The Act does not state clearly the essential representation of construction workers’ trade unions. There is only a mention of temporary work shelters for construction workers living on site but no detailed building specifications for such temporary shelters. This situation would not lead to the efficient application of this Act, but only dire living and work conditions for construction workers. The number of officials appointed by the government for inspection of this act is not specified and is up to the local authority or the state government to decide upon its number according to the local limits. For efficient application on ground, a specific structure of inspection needs to be designed. Another important aspect is the propagation and awareness amongst the workers for registering themselves under the construction welfare boards to benefit from the welfare fund. The following table lists the large variations in the number of registered members across the states in India (Ministry of Labor and Employment, 2010).

State-wise position of Number of Workers Registered with Welfare Boards under Building & Other Construction Workers Act, 1996  and  Cess Collected under Building & Other Construction Workers  Welfare Cess Act, 1996– as on 31.03.2010*

Sl. No.	Name of the States/UTs.	No. of workers registered with the Board	Amount of cess collected(In Crores)
1.	Andhra Pradesh	7,91,759	358.00
2.	Arunachal Pradesh	95	4.50
3.	Assam	0	16.02
4.	Bihar	5,857	75.03
5.	Chhattisgarh	574	3.11
6.	Goa	0	0.57
7.	Gujarat	36,972	146.62
8.	Haryana	96,642	191.1
9.	Himachal Pradesh	0	24.71
10.	J&K	0	0
11.	Jharkhand	13,981	8.2
12.	Karnataka	1,05,799	420.06
13.	Kerala	15,82,309	377.31
14.	Madhya Pradesh	10,40,000	254.29
15.	Maharashtra	19101	10.53
16.	Manipur	0	0
17.	Meghalaya	0	0
18.	Mizoram	0	0
19.	Nagaland	0	0
20.	Orissa	35,633	24.86
21.	Punjab	6,085	36.14
22.	Rajasthan	9,248	1.05
23.	Sikkim	0	0
24.	Tamilnadu	19,88,882	321.01
25.	Tripura	4,918	15.57
26.	Uttar Pradesh	0	0.04
27.	Uttarakhand	0	2.40
28.	West  Bengal	1,16,783	149.75
29.	Delhi	25,682	389.21
30.	A & N Island	0	2.37
31	Chandigarh	0	0.41
32.	Dadra and Nagar Haveli	0	0.01
33.	Daman and Diu	0	0.0098
34.	Lakshadweep	0	0
35.	Puducherry	25,340	18.63
	Total	59,05,660	2837.4198

Unorganized Workers’ Social Security Act 2008  (ILO, 2012)

            Basis: This act defines “Unorganized sector” as an enterprise owned by individuals or self-employed workers and engaged in the production or sale of goods or providing service of any kind whatsoever, and where the enterprise employs workers, the number of such workers is less than ten. “Unorganized worker” is defined as a home-based worker but not a domestic worker, self-employed worker or a wageworker in the unorganized sector and includes a worker not in the organized sector. 

Mechanism: Central government is responsible to formulate and notify welfare schemes for the unorganized workers relating to, life and disability cover, health and maternity benefits, old age protection and other benefits as seemed suitable. The State government is responsible to frame welfare schemes for provident fund, employment injury benefit, housing, educational schemes for children, skill up gradation of workers, funeral assistance, old age homes for such unorganized workers. The Central government is also responsible for the constitution of the National Social Security Board, which would consist of members representing the unorganized workers, employers of unorganized workers, civil society, women and minorities, Upper and lower houses of the Parliament, central and state governments. The National Social Security Board, which is still in the planning and implementation stages would be responsible for recommending and advising on schemes to the central government, monitoring Social Welfare Schemes for unorganized workers, reviewing and issuing identity cards to the unorganized workers, review of expenditures and record keeping functions of the State governments and funds under various schemes. Apart from the national board there would also be constitution of the State Social Security Board. Worker Facilitation Centers would be set up by the State Government for, disseminating information on social security schemes, processing of application forms, assisting unorganized worker to obtain registration from the District Administration, facilitating enrolment of registered unorganized workers in social Security schemes. The eligibility for registration of unorganized workers is that they have to be 14 years or above.

Inference: India has almost more than 50% of workers employed in the unorganized sector and at times there are more than 10 workers employed in an unorganized or informal business activity. So when the Act states that it is applicable only for those under 10 workers, it omits a large part of the workforce simultaneously. This obviously needs revision. 

Conclusion:

Labor Legislations form the basis of social welfare mechanism in India. As seen from the readings and inferences of above stated Acts, it is clear that there are many loopholes in the applicability of these labor laws and more often they do not actually affect the targeted population mentioned under these Acts. Hence no matter how well the policy or scheme might be designed for social assistance of the workers, the basic mechanism for administration, inclusion and exclusion criteria, flow of funds gets defined by legislation. And therefore tightly and efficiently constructed labor legislation would lead to the resourceful application of the specific scheme or policy. Another aspect of the flaws in these legislations is their scant respect for market response. If ‘X’ seems bad, the presumption usually is that one has to simply enact a law banning ‘X’, which ignores that each law leads entrepreneurs and laborers to respond strategically and often in complicated ways (Basu, 2006). This also has led to the overlaps between various laws, making the application on ground often a complicated set of tasks. 

India’s labor laws have their roots in the British raj and were last fully updated in the Industrial Disputes Act of 1948. They prohibit companies with more than 100 employees from making positions redundant and firing people for any cause other than criminal misconduct. An additional 45 national laws intersect or derive from the 1948 act, and about 200 state laws control the relationships between employees and employers, according to India’s Labor Ministry. Companies must keep 6 attendance logs and 10 separate accounts for overtime wages, and file 5 types of annual returns. There are at least 11 definitions of the word ‘wage’ (Srivastava, 2011). Instances like these only make it cumbersome for efficient response of social welfare from the employer’s side and laws like these that increase employment protection or the cost of labor disputes substantially reduce registered sector employment and output. These laws do not seem to benefit workers either, as they do not increase the share of value added that goes to labor (Ahsan & Pagés, 2008). The rigid retrenchment laws have thus increased the costs of adjusting a firm’s employment level and led firms to consider not only current market conditions, but also future labor needs while making their labor decisions. A firm will therefore be reluctant to hire additional workers during an economic upturn if it anticipates significant costs in reducing its work force during a subsequent downturn (Basu, Fields, & Debgupta, Retrenchment, Labor Laws and Government Policy: An Analysis with Special Reference to India). 

To conclude, the revision of labor laws are the need of the hour and the process has to include a range of stakeholders in the process implementation strategy. 

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