- For the uninitiated, the Indian labour scenario prevalent on the ground must come as a surprise knowing how unorganized the majority of the sector remains despite the country making tremendous progress over the decades. It is befuddling to note that 90% of the workforce continues to be categorized as unorganized to this day. No wonder, a mere 5 to 7% of the total population in the country diligently file income tax returns. Yes, again the majority of the tax payees’ are salaried employees whose liabilities are deducted at the source itself leaving a huge population out of the bracket.
PC: Devarshi Singh
- Of course, efforts are perpetually underway to extend the tax net to cover more and more individuals. Also, under scrutiny is the much-needed labor reforms to ensure level-playing fields are accorded to employees looking for state support through legislation. As you are aware, any reforms envisaged in the country are usually met with resistance as our political masters are known to uphold parochial considerations rather than worry about extending well-intended welfare measures to common citizens. Did someone say change is the only constant? Of course, it is but do our lawmakers succeed in enacting all-encompassing labour laws that pass the muster of the Constitutionally mandated strictures?
- The question is open to extensive interpretations and subsequent debates. Let’s look at how the recently organized two-day National Labour Conference to facilitate the rollout of the four central labour codes began. Remember, labour laws are an extremely crucial component of the country’s progression plans. The four codes covering wages, social security, industrial relations, and working conditions were cleared by Parliament between 2019 and 2020. They compressed multiple central laws on the subject into four categories that aimed to make things simpler and also decriminalize minor offenses.
- The subordinate legislation to actualize the new codes is not yet in place as it needs coordination between Union and State governments, as labour is in the Constitution’s concurrent list. To forge ahead, GOI pre-published drafts of the subordinate legislation. As many as 31 states have done the same for the Code on Wages, the first of the four to be cleared by Parliament in 2019. However, the ground realities are entirely different from the parent legislation. For instance, the proposed definition of wages goes a step further than the erstwhile legislation. Specifically, it says basic income must be at least 50% of the total wage/salary for any employee – one of the arguments being that this will increase social security contribution.
- But while this will increase the social security component of pay, it will be at the expense of the take-home component. It not only limits the flexibility employers currently have but it may also hurt employees’ interest as private firms fix salaries based on cost-to-company. As such, a minimum contribution for social security is enough leaving the salary structures to contractual negotiations between stakeholders. In the meanwhile, the government authorities should strive to legislate pragmatic laws that cater to every veritable challenge holistically.