Trade unions in an era of neo-liberalism


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AT a recent meeting held at Vigyan Bhawan, New Delhi, grandiosely called ‘Shramev Jayate’ (victory to workers) and addressed by Prime Minister Narendra Modi, notable trade unions representing shramiks (workers) were not even invited – a clear foreshadowing of what was to unfold in the coming months. The voice of workers and their trade unions arguably have no space in the policy framework of the present government, as is evident from the hasty steps of the Modi government to push through labour reforms both at the Centre and through the state governments.

It is important to note here that the negative impact on the workers and on labour in general was already visible after the introduction of the neo-liberal economic agenda in 1991. The trade unions had demanded that a Second Labour Commission be constituted to look into deteriorating working conditions resulting from the IMF-World Bank driven structural adjustment programmes to advance the agenda of the WTO, but their views were ignored. They had asked for changes in labour laws in order to strengthen provisions for the protection of workers suffering from a growing contractualization and casualization of the labour force and the rapid informalization of the formal sector.


Their demand was not only ignored; rather the government wanted to bring in labour law reforms to meet the demands of employers and investors. With the NDA coming to power with Atal Bihari Vajpayee as prime minister, the Second Labour Commission was constituted on 24 December 1998 with Ravindra Verma as chairperson. The terms of reference clearly signalled that the government wanted a change in the laws to suit the requirement of neo-liberal economic policies – an opening up of the Indian market, a speedier disinvestment of the public sector and an open invitation to FDI-FII. The process was given a major boost with the mobilization of the media by employers’ organizations and the full backing of government.

This model also involved a greater abdication of the state from its responsibilities to provide basic social infrastructure, civic amenities and access to basic needs for the ordinary citizen, such as education, health, water, sanitation, affordable food through rationing, shelter for the poor, transportation, energy and so on, leaving everything to market forces.

Various letters written by the chairperson of the commission to the then prime minister revealed that the Vajpayee government had initiated action with a specific agenda without even waiting for the commission’s report to be finalized. This was time and again contested and opposed by the chairman and the trade unions.

The Second Labour Commission finally submitted its report in 2002. Despite the reservations of the trade unions on some recommendations, the few provisions favouring labour, specially the recommendation for social security legislation for the unorganized sector workforce, did not see the light of day for several years. The agenda of anti-labour reforms begun by the Vajpayee-led NDA was sought to be continued by the UPA led by Manmohan Singh, but there was little forward movement largely owing to opposition and resistance by the trade unions.


Increasingly, government programmes for provision of basic facilities were wound down or dismantled, with the onus now shifted to private/voluntary organizations. These revised schemes denied basic rights to those engaged in working at the grassroots by designating them volunteers and not regular workers and paying an honorarium instead of salaries. There are today almost 20 million such workers. Under the Modi government, the agenda has become even more open and explicit, as all policies and schemes are now to be pursued with the help of international finance capital under the garb of ‘national development’. There is, however, sufficient international experience to show that this economic approach involves a substantial reduction in labour costs by cutting down on workers’ welfare and containment of unions and their activities.

A first set of amendments to labour laws was brought in by the BJP government in the state of Rajasthan in June 2014 – amendments to the Industrial Disputes Act, Contract Act, the Factories Act and the Apprenticeship Act. The amendments received immediate central government approval. Soon thereafter, in the month of July, the Modi government introduced its own amendments to the Minimum Wages Act, Apprentice Act and Labour Law Amendments (exemption from submission of returns and maintaining of registers of certain establishments). The amendments were approved by the Lok Sabha despite concerted opposition by the trade unions attached to parties across the ideological spectrum, including the Bhartiya Mazdoor Sangh (closely associated with the BJP). Note that in the entire process the trade unions were ignored and no consultations on proposed labour law amendments were held despite the then labour minister, Narender Tomar, having so promised in his meeting with Central Trade Unions (CTUs) on 24 June 2014.

The changes made in the laws are detrimental to the interests of a vast majority of the workforce. In Rajasthan, a key change in the Industrial Disputes Act involves raising the ceiling for lay-off, retrenchment and closure of establishment from the earlier 100 to now 300 workers. To be formally recognized, unions will now have to demonstrate a membership of 30% of the workers instead of 15% as earlier. Establishments employing up to 50 contract workers (existing number was 20) will now no longer be covered under the provisions of the Contract Labour (Regulation and Abolition) Act, and nor will the principal employer be held responsible for violations by the contractor. In the Factories Act, the exemption from coverage by labour legislation has been raised from 10 to 20 workers in case of units using power and from 20 to 40 workers in the units not using power.


Now yet another damaging bill is sought to be introduced by the central government. The Small Factories (Regulation of Employment and Conditions of Service) Bill 2014, if approved, will exempt factories with up to 40 workers from registration and applicability of 14 existing labour laws. These include, among others, minimum wages, industrial disputes, provident fund, maternity benefit, employees compensation, equal remuneration, child labour, interstate migrant workman and the existing Factories Act. The definition of workers too has also been kept so vague that it contravenes the provisions of the existing Factories Act. All this, we believe, will only encourage employers to outsource the work to small factories to further reduce labour costs and increase exclusion of workers from labour law protection. Effectively, the proposed changes would exclude more than 70% of small factories from any kind of coverage of labour law.

In his many statements at home and abroad Prime Minister Modi has more or less assured ‘investors’ that they would have access to cheap labour and easily available land, with minimal resistance from trade unions. That is why before he embarked on his foreign tours, he began the process through the Rajasthan government and soon thereafter shepherded the introduction of amendment bills in Parliament. The opposition of trade unions through their united actions such as observing an all-India protest day on 5 December 2014 and the satyagraha action on 26 February 2015 clearly failed to impact the government.


The government is clearly in a hurry to push through ‘anti’ labour reforms. The PMO, through its principal secretary Nripendra Mishra, has already sent an advisory to the chief secretaries of all state governments that they should follow the Rajasthan initiative in bringing about amendments in labour laws. The governments of Madhya Pradesh, Maharashtra, Chhattisgarh, Jharkhand and Haryana are already moving in that direction. The Centre has facilitated the reform process by introducing a provision whereby Presidential consent would no longer be necessary. This move of abandoning labour to the whims of state governments is dangerous given the secular weakening of the national movements of trade unions.

The Gujarat government has gone a step further by passing amendments to labour laws in its state assembly on 24 February 2015 – a ban on strikes and special rights to employers in special economic zones, special manufacturing zones and special investment zones to decide on hire and fire. Worse, it has also declared that the managements are free to decide whether or not compensation needs to be paid to retrenched workers in these zones.


The 2015-2016 budget has openly signalled its direction – advantage corporate houses of Indian and foreign origin as well as other rich and affluent sections of society, while the poor and vulnerable sections face cuts on welfare projects in the social sector by as much as 4.39 lakh crore rupees as compared to the previous budget. The corporate tax rate has been brought down from 30% to 25%; the wealth tax stands abolished; the changes in custom duty on 22 items are to the disadvantage to the cooperative, home based, medium and small sectors. The budget totally ignores the workers charter of demands relating to minimum wages and social security, against disinvestment and FDI-FII in core sectors of national importance, for granting full worker status to scheme workers, control of inflation in essential commodities etc. Rather, it has gone on to slash the existing labour friendly schemes.

The PF, EPF and ESIC schemes are under attack; by making them optional, the poor and vulnerable workers will be left at the mercy of the private insurance companies who will now get lucrative business in the name of health insurance. Meanwhile, the budget on health and education too has been reduced, encouraging a further commercialization of these sectors. The private sector is being lured by providing it huge incentives to capture these social sectors for commercial purposes. Finally, budget allocations for schemes like MGNREGA, ICDS, NRHM, mid-day meal, national literacy mission, tribal sub-plan, scheduled caste sub-plan, drinking water and sanitation, to list a few, are also under pressure.

The government is clearly seeking to dilute the concept of the welfare state – of sharing any benefits with the working masses who provide services and participate in the process of manufacturing and production. More disturbingly, it seems determined to throttle any opposition and dissent to these policies. The trade unions are the biggest mass movements, an expression of the democratic rights of working people; hence the first moves of this government were in the form of ignoring workers and weakening their trade unions through an exclusion of significant sections of the labour force from the protection of labour law. Amendments to the apprentice act are also for the purpose of enabling industrialists to have workers without any commensurate obligations of labour law applications.


The next stage is likely to involve a more direct attack on unions, glimpses of which are visible in the amendments approved by the Government of Gujarat – declaring strikes as illegal and attacking unionists by taking away the jobs of workers in most industrial zones under three designated categories with no legal recourse and even denial of compensation.

The Indian labour movement which has a glorious history of struggle going back over a century, developed under three distinct influences. First, the world labour movement as it unfolded in USA, UK and other European countries for fixation of working hours and proper wages; second, the Indian national movement against British colonial rule; and third, the rising working class movement led by communists in various countries.

The workers responded to the larger social and national calls. That is why we find workers in action in the anti-imperialist struggle for Indian independence even before a national centre of trade unions had emerged in India viz., spontaneously coming out on the streets in 1908 when Bal Gangadhar Tilak was arrested, demanding his release. This was definitely going beyond their own day to day problems. With the passage of time as the freedom movement advanced, the working masses and their mentors linked the workers movements for a resolution of their problems with the larger struggle against an exploitative foreign rule.


In 1919, when the entire nation was gripped in shock and anguish with the ghastly massacre in Jallianwala Bagh in Amritsar, the workers along with farmers, played a significant role in the civil disobedience movement led by Mahatma Gandhi. It is in these turbulent times that the first national centre of workers, the All India Trade Unions Congress (AITUC), was formed on 31 October 1920 in Mumbai by workers from all parts of the country and from almost all sectors. Lala Lajpat Rai was the president of this founding conference. And unfortunately though Bal Gangadhar Tilak had played an important role in deciding the venue and the agenda of the session, he did not live to see the founding of AITUC.

Hardly surprising that a strong bond developed between leaders of the freedom movement and the labour movement with major leaders like Pandit Jawaharlal Nehru, Subhas Chandra Bose, V.V. Giri, to name a few, chairing the AITUC sessions in the later period. As a result there was clear recognition of the role of the working class movement in strengthening the freedom movement on one hand and acceptance by the political leadership of the independence struggle for the genuine demands of workers for institutionalized collective bargaining for improving their working and living conditions.

With this support and backing, the trade unions ensured the passage of several legislation, including the Trade Unions Act 1926 and the Workers Maintenance and Compensation Act 1928, during British rule. Revolutionaries like Bhagat Singh and his comrades also included workers demands in the pamphlets they threw in the assembly.

The debates in the Constituent Assembly for drafting the Constitution for a free India, not only appreciated the role of working people in the independence struggle and extended support to worker’s rights to help move India towards a more egalitarian society. The right of association, equal pay for equal work, living wage, maternity benefits and so on are all enshrined in the Indian Constitution.


The first Prime Minister of India, Jawaharlal Nehru gave serious attention to the concerns of working sections of society and along with some of his important ministers regularly participated in the Indian Labour Conference. Overall, the workers participated in national development while simultaneously struggling to increase their voice in democratic politics as well as their share in the national wealth by seeking better working and living conditions. Unfortunately, the healthy practice of seniors leader in government giving heed to the voice of workers in the tripartite mechanism started diminishing in the seventies and this trend has since accelerated. Several of the recommendations of the Indian Labour Conference, particularly those related to the principles underlying the fixation of minimum wages decided at the 15th Labour Conference, are still to be implemented.

Forget about securing a living wage, enshrined as a goal in the Constitution, even ensuring minimum wages has been a struggle for the workers. Even this the government is attempting to further dilute by allowing employers to go ahead with contractualization and casualization of the workforce with unquestioned right to hire and fire. The outsourcing of work is being practiced by the government departments and public sectors extensively.


The workers and their trade unions will not accept the attempt of the government to crush the voice of working people and snatch away their hard won rights. The coming days are likely to witness an intensification of the struggles of working people, not only to defend their rights, but to further expand them and for social security measures. The recent period witnessed a successful strike of coal workers and gramin dak sevaks. The telecom worker’s two day all-India strike and the transport employees one day all-India strike are scheduled for the last week of April. The central trade unions are to meet once again in a national convention on 26 May 2015 in Delhi to take a fresh view of the situation, including the possibility of launching an all-India general strike action. Their struggle is to defend democracy, economic sovereignty of the nation and to further the process of social inclusion, as well as in sharing the fruits of development.