Public Policy
april 2010global policy brief no.12april 2010indiaPublic PolicyRucha BhateThis policy brief discusses labor and employment related laws in India, which relatesto the dimensions of the quality of employment. Rather than discussing all labor andemployment related public policies, this policy brief will highlight the most significantlegislation in order to provide a general introduction to current public policies pertinentto quality of employment in BurmaThis brief includes four sections: An in-country policy context introducingthe reader to the policy background ofIndia.Sri Lanka A discussion of dimensions of qualityTABLE OF CONTENTSIn-Country Policy Context2Policy Overview—Dimensions ofQuality of Employment4Contextual Focus—Child Labor in India11Implications for13Quality of EmploymentOpportunitiesfor Development,Learning &AdvancementFair, Attractiveand CompetitiveCompensation &BenefitsWellness,Health &SafetyProtectionsOpportunities forMeaningful WorkQuality ofProvisions forEmployment SecurityEmployment& Predictabilitiesemployment, providing a policy overviewof the major public policies affectingPromotion ofeach dimension. The following matrixConstructiveWorkplaceRelationships atFlexibilitythe Workplacerepresents factors that impact the qualityCulture ofRespect,of employment. Both employers andInclusion& Equityemployees have a role in determiningwhether these factors are fulfilled, butgovernment policies strongly influencehow this is accomplished. Discussion for each dimension of quality of employmentconsists of several forms of public policies, including mandate laws, administrativemeasures, or programs which moderate the Indian labor market. Many employmentlaws are multi-faceted and therefore apply to a number of qualities of employmentindicators, while others laws and policies neatly fall within one or another factor. Thispolicy brief discusses six components in this matrix. Opportunities for MeaningfulWork and Workplace Flexibility are omitted because currently they do not constitutethe core of labor market legislation in India. A contextual focus on Child Labor in India and major policy challenges that the Indiangovernment is facing today and will continuously be coping with in the future. A brief conclusion on the implications of policy for quality of employment in the India.This brief uses the quality of employment framework to discuss the effect of publicpolicies in the India.agework@bc.edu1
global policy brief no.12in-country policy contextBefore discussing the key dimensions of public policies inIndia, it is fitting to provide a brief background relating to thecountry context, including the history of labor related publicpolicies that directly affect quality of employment in India.History of labor related public policies in IndiaThe basis of India’s labor policy can be found partly inthe ideas and declarations of important national leadersduring the freedom struggle, in several debates that tookplace in the constituent assembly, in the constitutionalprovisions and partly in various international conventions andrecommendations arising therein. It has also been significantlyinfluenced by the deliberations and proceedings of the IndianLabour Conference and the recommendations of successiveNational Committees and Commissions, namely, the RoyalCommission on Labour, the National Commission on Labour of1969, and the National Commission on Rural Labour of 1991.Key Practice 1). At the Centre, the Ministry of Labour, andin the States, Labour Departments are at the helm of laborrelated matters. Interestingly, labor market legislation andenforcement machinery have disproportionately favored andtargeted the formal sector despite the fact that it accounts foronly about 7% of the total labor force in India.4Five broad types of legislations span the spectrum of laborlaws in India: industrial relations laws, welfare and safety laws,social security laws, wage laws and special laws designed forparticular sectors or labor categories.Structural reforms in India intensified after a wave ofliberalization in 1991 put the economy on a secularly increasinggrowth trajectory. Total labour force in the country is growingsteadily but has not resulted in a concomitant rise in organised(formal) sector employment. The twin phenomena of highgrowth momentum coupled with lackluster employmentgeneration in India are believed to be a by-product of archaicand rigid labor market policies. The vast majority of reformoriented analysts claim that economic reforms have penetratedthe trade and industrial sectors in India; however, the labormarkets have not received due policy focus.1 Thus, India’slabour market reforms have constituted an eclectic policy areain recent decades.India has ratified a total of 39 Conventions at multiple sessionsof the International Labour Organization.2 These includeconventions on hours of work, unemployment, night work,minimum wages, weekly rest, workers’ compensation, forcedlabour, labour inspection, child labour, underground work, andequal remuneration for men and women for work of a similarnature.India’s constitution has granted legislative powers concerninglabor policy issues to both the Centre and the States,making labor policy the subject of concurrent lists.3 Laboradministration in India is mostly rooted in labor laws (see2http://www.bc.edu/agingandwork
april 2010Key Practice 1: Central Industrial Relations Machinery (CIRM)5The Chief Labor Commissioner ’s (central) organization, known as the CIRM, is an attached office of the Ministry of Labour.It is entrusted with the tasks of maintaining industrial relations, enforcing of labor laws in the central sphere and verifyingtrade union membership by record checking and sampling.Maintaining Industrial RelationsThe CIRM ensures harmonious industrial relations through:ππ Intervention, mediation and conciliation in industrial disputes;ππ Intervention in situations of threatened strikes and lockouts;ππ Implementation of settlements and awards; andππ Enforcement of other provisions in industrial Dispute Act relating to Works Committee, recovery of dues, retrenchment,layoff, and unfair labor practices.Enforcement of Labor LawsThe machinery enforces most of the Labor Laws and their associated rules. These laws include: Payment of Wages Act,Minimum Wages Act, Equal Remuneration Act, Contract Labor (Regulation and Abolition) Act, Interstate Migrant WorkmenAct, Child Labor (Prohibition and Regulation) Act, Payment of Gratuity Act, Payment of Bonus Act, Industrial Employment(Standing Orders) Act, and Maternity Benefit Act.Miscellaneous Functionsππ Conducting periodic meetings of the Minimum Wage Advisory Boardππ Defending the Ministry of Labor (MoL) in writ petitions filed in different high courtsππ Assisting the MoL in preparation of various reports required to be submitted to ILOππ Advising the MoL in conflict situations such as strikes of an all-India natureππ Maintaining liaison with state government labor departments for information collections as directed by the ministryagework@bc.edu3
global policy brief no.12policy overviewdimensions of quality of employmentOpportunitiesfor Development,Learning &AdvancementFair, Attractiveand CompetitiveCompensation &BenefitsPromotion ofConstructiveRelationships atthe Workplacesubsidized supply of essential commodities. Moreover, this actalso includes determination of number of hours constitutinga normal working day with intervals, provisions for a day ofrest for every seven days worked, and overtime pay.7 Personsemployed in shops, restaurants, and theaters are granted a restday under the Weekly Holidays Act of 1942.Wellness,Health &SafetyProtectionsOpportunities forMeaningful WorkQuality ofEmploymentProvisions forEmployment Security& PredictabilitiesWorkplaceFlexibilityCulture ofRespect,Inclusion& EquityÂÂIndicators of Fair, Attractive, and CompetitiveCompensation & BenefitsEmployees’ basic economic needs are secured and fair andequitable distribution of compensation and benefits amongemployees is promoted.Interestingly, India does not yet have a uniform nationwideminimum wage. This possibility has been a bone of contentionin numerous discussion forums. However, widely varyingsocioeconomic, geographical, and agro-climatic factors havethwarted consensus formation among states and unionterritories. In 1991, based on the recommendations of theNational Commission of Labour, the central governmentadopted the concept of a national floor level minimum wageof Rs. 35/day (USD 0.70) increasing it to 92 rupees per day in1999 in accordance with inflation.Social SecurityOverviewMinimum WageSocial Security benefits in India are primarily need-based.Social Security in India adopts a comprehensive approachdesigned to prevent deprivation, assure the individual of abasic minimum income for himself and his dependents and toprotect the individual from any contingencies or uncertainties.The State bears the primary responsibility for developingappropriate system for providing protection and assistanceto its workforce.8 There is a wide spectrum of social securitylaws enacted in India encompassing important employmentdimensions such as provident fund, gratuity, maternity benefit,and employee state insurance. Some of these legal provisionsare described below.A sound wage policy is an essential prerequisite for thesocioeconomic justice of the working population. With thisin mind, the Indian government enacted the MinimumWages Act of 1948, focusing on fixation and periodic revisionof minimum wages across a wide array of employmentcategories. The appropriate government (centre or state)may fix minimum wages for time and piece rates and revisethem at intervals not exceeding five years. Minimum wagediffers according to employment class, age (adolescent,adult), location, and time period (hour, day, month or longerduration). The minimum wage so specified consists of acombination of basic rate and a special allowance linked tothe consumer price index (variable dearness allowance) orProvident Fund: The Employees Provident Fund Act (1952)specifies the amount and manner of employer and employeecontributions to provident funds. This scheme addresses basicemployee needs such as retirement, medical care, housing,family obligation, childrens’ education, and financing ofinsurance policies. As per the latest amendment in this act,both employees and employer contribute to the fund at therate of 12% of basic wages, dearness allowance and retainingallowance, if any, per month. A member of the providentfund can withdraw full amount at the credit in the fund onretirement from service after reaching the age of 55 years orunder specific circumstances (disablement, termination ofservice, or migration).9In order to assure fair remuneration to several classes of labor,the Indian government has enacted a series of measuresclassified broadly into Minimum Wage Laws and SocialSecurity legislations. The minimum wage in India was set inthe Post-World War II era when the Indian Labor Conferenceevaluated a draft bill in 1945.6 Laws explicitly dealing withmajor aspects of social security such as provident fund,gratuity, pension, and maternity benefits are in force today tosafeguard the long term security of workers and their families.4http://www.bc.edu/agingandwork
april 2010Pension: The Employee Pension Scheme under the EmployeesProvident Fund Act (1995) provides for monthly pension toemployees on their superannuation and for pension to widowsand children of employees. It was originally conceived as abenefit-defined Social Insurance Scheme based on actuarialprinciples for ensuring long term financial sustenance. Noseparate contribution is payable by the member for the PensionScheme benefits. The new Pension Scheme, similar to the oldEmployees’ Family Pension Scheme of 1971, derives its financialresources by partially diverting funds away from the ProvidentFund contribution.10Maternity Benefit: India is one of the first countries toenact laws for maternity protection. Under Article 42 of theConstitution of India, states are required to make provisions,inter alia, for maternity relief. The Maternity Benefit Act (1961)in India seeks to regulate the employment of women forperiods before and after childbirth and governs the provisionof various maternity benefits such as maternity leave, wages,medical bonus, and nursing breaks.11 A National MaternityBenefit Scheme (1995) has also been initiated under theNational Social Assistance Program (NSAP) to offer financialassistance to mothers below the poverty line.Gratuity: Payment of Gratuity Act (1972) sets the rule andenforces the payment of gratuity: a reward for long service as astatutory retirement benefit for employees who earn up to USD70 per month and have rendered a continuous service for 5 ormore years excluding central and state government employeeswho are beneficiaries of an alternative gratuity scheme. Themaximum gratuity payable is around USD 7000.12Opportunitiesfor Development,Learning &AdvancementFair, Attractiveand CompetitiveCompensation &BenefitsPromotion ofConstructiveRelationships atthe WorkplaceWellness,Health &SafetyProtectionsOpportunities forMeaningful WorkQuality ofEmploymentProvisions forEmployment Security& PredictabilitiesWorkplaceFlexibilityCulture ofRespect,Inclusion& EquityÂÂIndicators of Opportunities for Development,Learning, & AdvancementJob skill development and advancement are promoted foremployees of as many industrial sectors, employment statues,and life/career stages as possible.OverviewThe demand for skilled labor force is continuously risingin this era of globalization. Technological diffusion, neworganizational designs, sophistication in production processesand heightened competitiveness have contributed to fastereconomic growth and concomitant employment expansion.To leverage these opportunities, a pool of high-quality humancapital with appropriate skill-sets is critical in every nation.Moreover, technological changes and cross-border economicintegration entail considerable social costs that can becontained only when accompanied by gradual up-gradation oflabor force capabilities and skill training. Therefore, providingincentives for training programs to adapt to changingindustrial dynamics is imperative.At present, the capacity of skill development in India isaround 3.1 million persons per year. India has set a target ofimparting skills to 500 million people by 2022. Developmentand articulation of a national policy on skill development toreap the benefits of India’s demographics and to harnessinclusiveness is of utmost importance.13ApprenticeshipSkill enhancement is a vital component of human resourcedevelopment. However, formal training imparted in specializedtechnical institutions alone is not sufficient and needs to beduly supplemented by on-the-job training. Under this backdrop,agework@bc.edu5
global policy brief no.12the Apprentice Act (1961)14 was enacted to regulate theframework laid down for apprentice training and to utilize thefacilities available in the industry so as to enable the provisionof practical training in order to fulfill the demand for skilledmanpower. This act directs the employers to hire apprenticesin certain designated trades as specified by the government.The act has since been amended several times to make it moreinclusive and flexible in character. It also lays down the specificsof apprentice training program, including stipend payment,minimum age and basic qualification of the trainee, trainingperiod and content.Opportunitiesfor Development,Learning &AdvancementFair, Attractiveand CompetitiveCompensation &BenefitsPromotion ofConstructiveRelationships atthe WorkplaceWellness,Health &SafetyProtectionsOpportunities forMeaningful WorkQuality ofEmploymentProvisions forEmployment Security& PredictabilitiesWorkplaceFlexibilityCulture ofRespect,Inclusion& EquityÂÂIndicators of Wellness, Health & Safety ProtectionsWorkers’ EducationHuman resource development is also the primary objectiveof workers’ education in many developing countries. Workers’education deals with providing workers and their representativeswith the necessary training to play an effective role in theeconomic and social life of their respective societies. The rationalefor workers’ education in India stems from the belief that strongand enlightened trade unions can be a great asset to the countryin the wake of rapid industrialization. The Central Board forWorkers’ Education (CBWE) under the auspices of the Ministryof Labor and Employment was established by the governmentof India in 1958 as a semi-autonomous agency to implementworkers education schemes at national, regional, unit and villagelevels.15 Workers’ Education was introduced in India’s secondfive year plan (1956-61) with the understanding that harmoniousrelations between labor and management were critical forsuccessful plan implementation. The subsequent plans madebudgetary provisions for various workers’ education schemesadministered by the CBWE. CBWE is a tripartite body consistingof representatives from central organizations of both workersand employers, central and state governments, and educationalinstitutions. The Board organizes different types of trainingprograms for workers in the unorganized, organized, rural andinformal sectors at various levels in the organizational hierarchy.The idea is to enhance self-confidence, inculcate scientific attitudeamong the workers, and generate critical awareness of problems,privileges, and obligations as workers and citizens.In 1974, the Government of India established an autonomousbody under the aegis of the Ministry of Labor called the V.V. GiriNational Labor Institute as a premier organization for actionoriented research, grass root level training and education in thearea of labor. Initiating research projects focusing on labor-relatedissues and problems takes center-stage in the institute’s activities.Moreover, the memorandum of association clearly mandates theinstitute to undertake and assist in organizing training, educationprograms, seminars and workshops as well as foster collaborationwith other national and international agencies.6Protection of employees’ safety and health at their worksite ismandated, and their physical and mental well-being is promoted.In case of job-related injury or illness compensation or other formsof social protection are offered in an accessible manner.OverviewSafety in industrial and agricultural operations is a criticalrequirement not only for the worker and the firm, but alsofor the society at large. Occupational and health hazardsand accidents affect all sections of the society. This impliesthat working conditions in any industrial enterprise must beconducive to the protection of human life and limb. In India,laws on safety of industrial workforce precede the Constitution.Under the Indian Factories Act of 1881, the District Magistratewas designated as the safety-enforcing agent. Factory Inspectorswere appointed as early as 1911 even though the currentFactories Act came into action only in 1948. Today, there exists awhole spectrum of legislative provisions ensuring the safety ofpersons working in industrial and commercial organizations.The improvement of labor welfare and increasing productivitywith an adequate social security net are two pivotal goalsconcerning social and economic policy of Indian government.Resources have been directed through the Plan programstowards skill formation and development, monitoring andregulating working conditions, creation of industrial harmonythrough appropriate health infrastructure and insurance againstdisease, accidents, and unemployment for workers and families.Occupational SafetyThe Indian Constitution contains specific provisions foroccupational safety and health of workers. Article 39 (e&f)directs the state to ensure that the health and strength ofworkers, both men and women,
National Commission of Labour, the central government adopted the concept of a national floor level minimum wage of Rs. 35/day (USD 0.70) increasing it to 92 rupees per day in 1999 in accordance with inflation. Social Security Social Security benefits in India are primarily need-based. Social Security in India adopts a comprehensive approach
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