Law Making for the Unorganized Sector Workers

T. S. Sankaran

In his letter to the Prime Minister of India, Justice V.R. Krishna Iyer who is the Chairman of the National Campaign Committee for Unorganized Sector Workers said, "The temptation to rush through Parliament a half-baked law providing for a modicum of welfare and social security may be great, but I am sure that it will be a gross betrayal of the expectations and genuine needs of the 37 crore workers and their dependents. I am confident that you will not let this happen"

Earlier, on 5 th May 2005, over 16000 workers, men and women, from every part of the country had assembled in New Delhi, marched through its streets and presented a petition, signed by lakhs of workers from different parts of the country and engaged in a wide variety of occupations and employments in the Unorganized Sector, to the Speaker of Lok Sabha for consideration by the Petitions Committee of the Lok Sabha.

These workers have watched with a lot of concern the half hearted attempts that the Government of India, in the Ministry of Labour, had been making during the last five years to put on the statute book a law for this sector of workers, who account for nearly 93% of the work force, who with their dependents account for almost the entire population in need of help and who contribute over 60% of the gross domestic product and considerably to export earnings. Right from the time the Second National Commission on Labour had submitted its report years ago and recommended, in pursuance of its second term of reference, an Umbrella legislation, the attempt of the powers that be, seems to evade this as long as it could and ultimately when pushed to the corner, come up with a pale imitation of a Bill that satisfies no sector of this vast work force. One recalls with disappointment in retrospect, that the Ministry of Labour had organized in Nov 2002 a National Conference which split itself into three groups of which one was on the legislative aspects of proposals for unorganized sector workers, in the light of the recommendations of the Second National Commission on Labour. The author happened to be the part of this sub group; No part of the unanimous worth while recommendations of the sub group which was endorsed later by the whole conference, finds place in the draft Bills that have been circulated so far, despite these having undergone several drafts. It is only in the light of the disappointing developments that the workers decided that a National Campaign Committee needed to be formed.

In coming to the conclusion, the workers and their representatives were influenced by the experience of the National Campaign Committee for a Central Law for Construction Workers and its successful struggle in getting a Central Law in 1996 for Construction workers, however inadequate that law is.

One can, in retrospect, see the same thing happening in the attempts to legislate on employment guarantee for rural workers. The Rozgar Adhikar Yatra and Jan Manch and the recommendations of the Standing Committee of Parliament, which examines the draft Bill-these are indicators of what public pressure can and should do in such matters.

What should, then be the strategy that these millions upon millions of workers in the unorganized sector must adopt to ensure that they get a law that will meet their needs, not merely in terms of 'benefits' but also and in fact more importantly in terms of participating in the formulation of schemes and programs and in implementing them? In carrying out this exercises, we should not lose sight of the ground reality that over half of the workers in the unorganized sector are 'self employed'; also, a very large number predominantly women are 'home based workers'.

In a 'Note on Unorganized Sector Worker's Social Security Bill', by the National Advisory Council, it is said, "This Bill will address part of the problem explained above- it will build a social security system for unorganized workers. The issue of income security and employment security will have to be addressed by other means, perhaps through another Bill" . It is precisely this kind of diagnosis and treatment that these workers are agitating against. For these workers, economic and social security are not separate entities but an integrated one. In the case of self-employed persons who are more than half of the workers, economic security is not mere loss of regular earnings but also involves protection against loss of income generating assets. The loss could be due to national disasters or man made ones. A Tsunami may not merely destroy the fishing nets and lines but also the very boats in which the fishermen go into the sea; A flood may not merely destroy the opportunities for employment to the power loom workers but also the very powerlooms as had happened in Bhiwandi in the Mumbai floods; a flood may, like wise wash away the huts, and along with it the simple tools that the humble artisan earns his livelihood with or the goat and sheep on which he/she and his/her family depends for their livelihood; a man made development project may deprive a humble farmer of his meager land and with that his livelihood; and so on. In all these cases it is important to notice that economic and social security are not separable entities. No wonder the National Commission on Rural Labour, years ago, while setting up study groups set one up on 'Economic and Social Security', and the present author was privileged to head the study group.

Employment, wages and social security form an integrated aspect of the lives of unorganized sector workers. It is not without significance that in dealing with minimum wages, the Supreme Court of India in the Raptakos Brett Case, included social security also as one of the elements that go to constitute a minimum wage, a welcome improvement of the concept of Need Based Minimum Wage of the 15 th Indian Labour Conference, almost half a century ago.

Likewise, with the steps being taken now to enact a law on employment guarantee for rural workers, it is equally clear that employment is an inseparable part of the worker's life, for whom employment (and wages) are the sine qua non for a reasonable and dignified existence and it is only in the context of satisfaction of the needs for employment and wages that considerations of social security will be relevant.

Without laboring theses points further, it would be adequate to say that the proposal to legislate piecemeal for social security, income security and employment, presumably in that order, is to put the cart before the horse. We have no doubt had sorry 'experience' of the Govt. in the last three or four decades trying to enact a comprehensive industrial relations law; two National Commissions on Labour, a Sanat Mehta Committee, a Ramanujam Committee et al. have all come and gone but the integrated law is not even on the horizon. However, the demand for an integrated law for the workers in the unorganized sector is not a matter that can be trifled with. The recent mass rally of the workers on the 5 th May should serve as a notice to the Govt that the workers' patience is not endless. They can't be fobbed off with some half-baked law. It is in that view that one finds the draft bill prepared by the National Advisory Council to be wholly inadequate. There has been so far, in the last three or four years, several drafts of law for those workers of the unorganized sector. All of them, barring the drafts prepared by the National Centre for Labour and the National Campaign Committee for Unorganised Sector Workers, have very conveniently left out any provision regarding employment and its regulation as well as the basic rights of workers, also, in the matter of implementation of the law, these drafts have placed great reliance on 'Workers Facilitation Centres', and the NAC draft contemplates also an intermediate agency in the shape of 'facilitating agencies'. All these are symptomatic of an attitude of 'benevolence' towards these workers, treating them as 'beneficiaries'. This is precisely what the millions upon millions of unorganized sector workers have been protesting against, as exemplified in what they said in their Petition to Parliament, submitted to the Lok Sabha Speaker on 5-5-05 after a memorable rally in New Delhi . They said: "We reiterate that we are producers of wealth for the country and do not want to be considered mere beneficiaries of State's munificence and treated as such. We want to be partners and participants in the process of formulating the law and schemes there under; we also want to be participants in the implementation of schemes through tripartite boards at various levels in which we are represented in adequate strength.'

The above considerations do not find place in the Bill recently circulated by the National Advisory Council. Apart from the principal defect of its being confined to welfare and social security, ignoring the demands for an integrated law encompassing regulation of employment, wages, rights of workers and so on, the Bill is deficient in the material particulars even in the matter of social security and its implementation. Let us look at them in some detail.

According to the National Common Minimum Programme (NCMP), "The UPA government is firmly committed to ensure the welfare and well being of all workers, particularly those in the unorganized sector who constitute 93% of the work force''. The statement of objects and reasons of the Bill claims "this Bill has given statutory shape to National Common Minimum Programmer's Commitments''. Has it? What does the term 'welfare and well being of all workers' appearing in NCMP connote? Does it start and end with some limited provisions relating to social security? As stated earlier in this paper, can social security be separated from economic security for workers in this sector? Thus the entire Bill has begun on the wrong foot.

The note accompanying the Bill states "it binds the central government to providing a minimum amount of benefits and funds''. Let us look at the Bill to find out what this 'minimum amount of benefits and funds' is. Clause 17 of the Bill lists out a large number of schemes, which the Authority may notify , subject to sustainability of the fund ( emphasis added). Clause 18(a) states that 'there shall be a floor level scheme to be financed by the Union Government directly or through cess or through contribution or through any other means'. What started as a brave assurance, namely 'be financed by the Union Government.' became diluted by indicating other sources of funds. What the workers will like to see in the law is the definite assurance of funds from the Government. That is the reason why workers had been demanding that a certain percentage of GDP (of the Union and the States) or a percentage of the revenue budgets of the Central and State Governments earmarked for social security for these workers and that this percentage be raised annually by half or one percent until a satisfactory level of social protection is reached. Not for nothing does the Constitution of the India in Article 41 talks of 'public assistance in cases of unemployment, old age security and disablement and other cases of undeserved want'. Isn't half a century and more, not adequately long time to redeem that pledge? Are we still wanting to cling to the escape clause 'within the limits of its economic capacity and development?' Will the NCMP promise of "welfare and well being of all workers'' be stifled by 'sustainability of the fund'? A look at clause 19 (a) of the Bill, which lists out the sources of funds, makes one uncomfortable and angry. What we want to see in the Bill is a bold statement of legislative policy that binds the Government to promote the sort of financial commitment that is needed and not vague statements hemmed in by phrases like 'as may be specified' or 'as may be prescribed'. ' By suitable legislation or economic organization in any other way' as envisaged in Article 43 of the Constitution, the State shall have to provide the wherewithal to honor the NCMP promise of 'welfare and well being of all workers'. Nothing less will do or be acceptable .

What are the minimum levels of social security that these workers should be provided? Way back, more than half a century ago, International Labour Organization adopted Convention No 102 on Minimum Standards of Social Security. The Convention provided some safeguards and reservations as far as 'developing' countries were concerned. But all these were done fifty years ago and there can be no justification for not adhering to those minimum standards atleast now. The law must state firmly that these minimum standards will be achieved in a matter of say 10 years from the commencement of the Act, with the assurance that right from the beginning atleast the following measures of social security will be provided to all the workers and their dependents from day one. The term 'dependents' must be liberally defined in the Act itself keeping in mind the social and economic realities of the lives of these workers. As a minimum the following is suggested:

•  Maternity benefits for all women workers with atleast 12 weeks of maternity leave with full wages, combined with arrangements for child care for all children of age group 0-6 years in child care centers.

•  Medical benefits including hospitalization benefits for the worker and his/her dependents.

•  Sickness benefit to the worker who is unable to work because of illness / injury and who therefore suffers from loss of earnings also;

•  Disability benefits

•  Old age pension at Rs 300 / month (with indexation) to all workers as reaching the age of 60 years, with a lower age being fixed for women workers, particularly in those employments where women find it difficult find employment after say, 50 yrs of age.


No mention is made of unemployment relief here, for the reason that it is expected the law will incorporate provisions regarding regulation of employment, minimum guarantee of employment, rights of workers, levels of wages keeping in view, the judgement of Supreme Court of India in the Raptakos Brett Case and so on.


If the contents of the Bill in terms of social security are, found inadequate, 'the architecture through which the Bill will be executed' is structurally defective. The Bill envisages a National Security Authority for the Unorganized Sector''. So far, so good. But this authority is in two parts a supervisory board and an executive office . The executive office will consist of a managing director and two executive directors, both to be appointed by the Union Government. It is these directors who will appoint 'facilitating agencies' to conduct the activities of the authority in the specifically designated geographical area or particular industry in a particular area and these facilitation agencies will in turn set up, administer and supervise workers facilitation centers which will provide direct service to the worker members of the facilitation center; the core functions of the facilitation centers are indicated in Clause 10.

One wonders, where in all these, do the State Governments and State Departments of Labour come in. Of course, as a concession it is stated in clause 3 (d) that the Authority shall formulate policies etc. in coordination (not even consultation, much less

concurrence) with various State Governments, Welfare Boards and other agencies. The Panchayat Raj institutions who are supposed to be a third tier of governance have also been given short shrift and can be best hoped to be 'facilitating agencies' . I think the framers of the Bill has pointed themselves into a corner, as the 'architecture' is wholly unworkable, and one may not be surprised if the efforts of the facilitating agencies and centers are thwarted. The facilitating agencies, it is stated, are appointed to conduct the activities of Authority in the specifically designated geographical area or a particular industry in a particular region. There is no indication of the basis or criteria for selecting 'designated geographical industry in a particular region ' . Will not the Authority or the supervisory Board be consulted in this delimitation? It looks as though there may be , in a State or in a region of the State a large number of facilitating agencies, say one for agriculture, another for construction, a third for handloom and so on. If so, will each of these, appoint its own facilitation centers? And what is the guarantee that all workers in the unorganized sector will be covered in such a system of agencies and centers?

It has been the general complaint that India has fine laws but ineffective implementation. This is particularly loudly stated in respect of labour laws. It is ironic that this should be so when various demands are heard that the labour laws need to be "reformed'' i.e liberalized, in favour of the employers. By and large, labour laws impose obligation on employers vis a vis the workers and when the criticism is that labour laws are not being implemented, it means that the employers are not carrying out their part of the legal obligation. No wonder they do not want an enforcing agency in the shape of an inspector raj to ensure the implementation by the employers. Hence the fashionable cry of doing away with 'inspectorate'. In this scenario, what are the chances of the facilitating agencies and facilitating centers being able to deliver even the meager goods , may be in an atmosphere of hostility from existing departments and other agencies, not to mention the likely resentment from the State Governments that they have been kept out of it all.

Yet, even if all goes well, there is no gainsaying that the entire approach is one of benevolence, treating workers as 'beneficiaries'. This is a situation that the workers resent, They being been actual producers of wealth and what is more being the ultimate payers of substantial portion of the indirect taxes, be it excise or sale tax or VAT. There fore it is that the National Campaign Committee looks at the issue wholly differently, in that they want the workers to be partners and participants in the whole process of formulating the law, schemes and their implementation through tripartite boards and their agencies at the state, district, taluk and lower levels. These boards and agencies will all be tripartite at every level, representing workers, employers and governments; as the representatives will be close to the ground, they will know who the defaulters are and will be in a position to apply correctives. In fact, a part of the functions of these bodies will be to resolve disputes that may arise between the parties. This arrangement also avoids the evils attributed to inspector raj and will also ensure effective implementation of the law and the schemes for the benefit of the workers. Above all this will genuinely empower workers and strengthen democracy at the gross root and upwards.

That is the grand design which all of us will have to aim at and attain. Let us not be detracted or deviated from this objective. If in this process of grand endeavor, mistakes are made, then those are the mistakes made by the concerned parties at their local levels; this will facilitate easy identification of mistakes and their early correction.

Law making for unorganized sector workers is neither a difficult nor a complicated process, provided we are clear about our ends and means. Part IV of the Constitution of India prescribes the ends and Article 43 A also indicates the means. Let us not stultify ourselves into interpreting Article 43 A as being applicable only to the organized sector of economic activity. The approach of the National Campaign Committee for Unorganized Sector Workers has been premised on the democratic principles. And it is only basis in which further progress can and should be made.