The battle on labour reforms between some of Narendra Modi government’s more reform minded ministers and the Bharatiya Mazdoor Sangh (BMS) is increasingly reminiscent of the stormy relations on the issue between the two sides witnessed during the Atal Behari Vajpayee-led NDA-1 government. In the current scenario, as was the case from 1999 to 2004, the government has beaten a tactical retreat on the issue.
Finance Minister Arun Jaitley has had to roll back several of his proposed measures under pressure from the unions. Some of these being the rollback on tax on withdrawal from Employees Provident Fund and rollback in the 0.1 per cent cut in Public Provident Fund interest rates to 8.7. The government has also heeded the unions to not increase the pensionable age from 50 to 55. Recently, the PM as well as Jaitley have gone on record to state that amendments to labour laws will be undertaken, if at all, after due consultations.
In last few months, the BMS has effectively stalled the Rajasthan labour reforms by approaching the International Labour Organisation (ILO). It has challenged Rajasthan government’s labour reforms under ILO’s convention 81 that the state assembly passed the labour amendments without mandatory consultations with labour unions. It has also protested amendments to labour laws in Haryana.
According to a BMS leader, the BMS representatives also met senior officers of the Prime Minister’s Office in mid-May to underline how increased automation has led to jobless growth and the need to focus on labour intensive Medium and Small Scale Enterprises (MSME) sector.
In 1999, BMS founder Dattopant Thengadi had publicly criticized Vajpayee as a “petty politician” and opposed reforms. The story is being repeated a decade and a half later with the Modi government at the Centre, as also Bharatiya Janata Party (BJP) governments in states like Rajasthan, are faced with stiff resistance from the BMS, the trade union arm of the Rashtriya Swayamsevak Sangh (RSS).
The BMS leadership had met Finance Minister Arun Jaitley on May 25, the eve of the Modi government’s completion of two years. Its press release after the meeting had a bombshell. It claimed the Finance Minister told the delegation “that the government has realised that labour reforms are not essential for Industrial growth in the country.” According to BMS leaders, there were nine participants in that meeting – four from BMS and four ministers from the inter-ministerial group on labour –Jaitley, Bandaru Dattatreya, Piyush Goyal and Dharmendra Pradhan. Labour Secretary Shankar Aggarwal was also present in the meeting.
According to sources, not all in the government were happy at the BMS press statement. There was a sense that the BMS had taken editorial liberties and could have consulted North Block before releasing it in the media. However, senior BMS leaders told Business Standard that they stood by the statement. “Whoever is skeptical about our press statement need only wait for events to unfold in months to come and judge for themselves whether the government goes ahead with any major amendments,” the leader, in a manner of throwing down an open challenge, said.
A bit over a week before his meeting with the BMS, Jaitley had told Business Standard: “On labour…the emphasis has to be on what is doable and possible. There is also needs to be on job generation. The Indian trade union movement is still to realize that job growth should also be part of the agenda. Saving existing jobs is one challenge but growing is also essential. I still think the union movement is delicately poised on that question.” Some days later, the PM told the Wall Street Journal that labour reform should not just mean “in the interest of industry” but should also be in the interest of the labourer. Modi also said that ‘hire and fire’ was a western phrase.
But the BMS is galvanized on the issue of labour reforms. In his address at the International Labour Organisation (ILO) Conference in Geneva on June 1, former BMS president CK Saji Narayanan flagged the issue of Transnational Corporations (TNCs) operating without respecting uniform labour standards in developing countries and of automation leading to jobless growth. In India, the BMS and RSS want the government to give more focus to the MSME sector to create jobs.