A New Labor Regime

Since coming to power in 2014, India’s right-wing government led by Prime Minister Narendra Modi has introduced sweeping reforms aimed at strengthening the union government at the expense of the states, and catering to large corporations over smaller establishments and workers. 

The 2017 Goods and Services Tax (GST) and the 2020 Farm Laws represent distinct ways with which these reforms have been dealt by local governments. The former, which centralized India’s indirect tax regime, was initially met with stiff opposition from the states. Over time, however, this opposition ebbed due to the difficulty of unifying against the government-controlled GST council. By contrast, farmer-led opposition to the agrarian reforms, which would have likely weakened farmers’ bargaining power and left them at the mercy of corporations, was so vociferous that even the proud Modi government was forced to repeal the laws. 

Which of these paths will characterize the fate of the recently passed labor reforms is yet to be determined. Like the tax and agrarian legislation, the four new Labour Codes—the Labour Code on Wages of 2019, the Labour Code on Industrial Relations of 2020, Labour Code on Social Security of 2020 and Occupational Safety, Health and Working Conditions Code of 2020—strip workers of bargaining power through over-centralization. Their passage, which consolidates 44 different pieces of labor legislation, came without any meaningful debate or discussion.

Together, the reforms illustrate the Modi government’s attempt to weaken existing structures of formal employment and loosen regulations, with the ultimate effect of shifting power to large employers. Despite their enormous significance, opposition to the reforms has thus far remained lukewarm. In what follows, I take the construction industry as one avenue for studying the context and consequences of the Labour Codes. Reflecting on the experience of class among India’s building workers, I then consider the likelihood of successful resistance.

Background

After agriculture and domestic work, the construction industry employs the largest proportion of India’s workforce: 10 percent of all registrations in the union government’s social scheme portal declared their occupation as construction in March of this year.¹ Of those workers, 75 percent are male, approximately 90 percent earn less than Rs. 10,000 (roughly $132 USD) per month, and nearly 77  percent come from lower-caste or tribal backgrounds. These features have characterized India’s construction industry for decades.

Labor laws governing the industry to date have been forced to adapt to effective labor organizing. Over the course of decades, building workers’ unions agitated tirelessly against the Contract Labour (Regulation and Abolition) Act of  1970 and the Inter-State Migrant Workers Act of 1979, arguing that the measures failed to provide an adequate social security net, ensure safe working conditions, and regulate wages and hours. These efforts came to fruition in 1996, with the passage of the Building and Other Construction Workers Act (BOCW).

The BOCW Act had two key aims: firstly, to regulate the employment conditions of building workers, and secondly, to construct a system of social security benefits specific to their needs. This system was to be  administered by the states-run Building and Other Construction Workers Boards (BOCW Boards). While its practical implementation was far from perfect, the BOCW Act has nevertheless empowered vulnerable workers to make demands on their employer, and equipped them with  pension schemes, maternity grants, marriage grants, education scholarships, and other essential benefits. 

The Act does this by implementing a 1 percent fee on total-project costs from all construction sites, making one of the rare labor-welfare laws with a built-in financing mechanism. While the new codes retain this mechanism,  they modify nearly everything else—welfare benefits, employer obligations, working conditions, and the very definition of a building worker itself. 

Centralizing the welfare regime

Echoing the Modi administration’s reforms in other arenas, the new codes increase the role of the central government in the administration of welfare schemes. Hitherto, local BOCW Boards designed welfare schemes alongside state governments, ensuring that schemes reflected the needs of particular jurisdictions. For instance, while the southern union territory of Puducherry passed a scheme for minimum basic pay due to loss of work during the monsoon season, the Delhi government passed a commensurate legislation for loss of work due to poor air quality. The states are also able to adjust benefits to local economies—while Delhi’s pension scheme amounts to Rs. 36,300 per year, Bihar’s is just 12,000 annually. 

Now, under the Code on Social Security 2020 (SS Code), the welfare schemes can only be designed by or with the central government. Beyond the political attack on state governments, the reforms neglect financial disparities between states and the specific needs of local populations. The SS Code also broadens the criteria of eligibility for BOCW benefits to include government employees and also enables diversion of funds to hold all forms of properties. In these ways, it weakens the utility of the BOCW for construction workers.²

The more subtle impacts of the reforms emerge from their emphasis on digitization. Usurping the power of states to register workers with the BOCW boards, the central government has replaced statutory identity cards with digital ones, and digitized the registration process. Under the BOCW Act, statutory cards empowered workers who may have lacked language and technical skills to assert their rights and receive benefits. Additionally, local registration ensured that claims could be made by vulnerable workers. The digital requirement on cards and registration ignores enormous disparities in digital infrastructure between states and digital skills between workers. Construction workers rarely have the means to pay for a phone, and regular access to internet is well out of reach. In Delhi, the digital registration process reportedly took workers more than an hour and a half to fill. 

Uneven and arbitrary categories

The government claimed that consolidating 44 labor laws into four new codes would introduce uniformity and simplicity. But as demonstrated, the codes have obfuscated more than they have clarified. Key to this is the disparity between the definition of a building worker in the  employment regulations and that referenced in the welfare regime. In the former, the category of building worker does not depend on the size of the construction site. But in the latter, only a worker who is employed at a site which employs more than ten workers is eligible for benefits, with the rest considered “unorganized workers.” This definition is especially problematic given the “floating” nature of the construction industry—workers move not just across project sites, but from one contractor to another. 

In the multiple worker categories which the codes outline, each worker type is entitled to a different set of rights and protections. A person who qualifies as an “employee” has the widest variety of rights and protections, a “worker” has fewer, and a “contract laborer” has even fewer. Even these definitions of “employee,” “worker,” and “contract labor” change across the codes. Under the SS Code, a worker employed through a contractor would fall under the definition of “employee” but this same worker would not qualify as an employee under the remaining three codes. 

In fragmenting the legal category of worker, the new codes weaken protections and limit access to welfare benefits. Workers struggle to understand which right, duty, and protection covers them, and are consequently prevented from making demands. At the same time, the codes are rather clear for employers. As a result, we can anticipate a string of  arduous court battles aiming to clarify provisions, categorizations and definitions, each with multiple rounds of litigation, to secure each right and definition of a worker under the new regime. These definitions become even more muddled when considering the nature of subcontracting in the industry.

Contractualization

The problem of categorization is especially acute in the construction industry, where the majority of the work is distributed from the main contractor to subcontractors, who contract to petty-contractors, who contract to pettier-contractors still, and who, finally, contract to the munshis or the head workers. Even munshis occasionally rely on  jamadars to supply unskilled labor. In almost all cases, the munshi and the jamadar belong to the same socio-economically vulnerable background as the laborers. Under the SS Code, the munshi and the team would qualify as “employees” of the main contractor, but for the purposes of the remaining three Codes, the team may equally be employees of the munshi or jamadar only. Who, then, is responsible for worker protections? Though the BOCW Act was equally ambiguous, it assigned co-responsibility to contractors and establishment owners to cater to the needs of workers. By eliminating the responsibility of the latter, the Labour Codes place responsibility on the poorer elements of the hierarchy and relieve the larger players.³  

While the government claims to limit contractualization, the OSH code effectively promotes it—the principal employer only needs to prove that contract labor performs the normal functioning of certain activities. The new codes allow employers to classify even those working continuous, regular hours, as contract labor, stripping them of the rights and protections of permanent workers. The increased reliance on contractualization—largely cheaper and thus advantageous for employers— furthers the divides between permanent and contract laborers, a dynamic that has plagued India’s trade unions over the past three decades.

A receding regulatory and supervisory state

In addition to digitizing registration, blurring worker categorization, and encouraging contractualization, the new codes reduce government capacity for regulation and enforcement. While the old regime was not known for its strict enforcement of regulations at construction sites, its powers to inspect and enforce compliance remained intact. Under the new regime, compliance enforcement can only be undertaken with prior notice given to the employer, and the inspector’s powers to seek attendance and gather evidence regarding non-compliance is severely reduced. Physical inspections will largely be replaced with virtual ones, limited to scrutinizing company-filed documents.⁴

The power of states to prescribe local safety conditions has been exchanged for standards set by the central government, though no record of these standards exist to date. Similarly, labor unions are no longer entitled to report violations—this power is preserved for government-commissioned labor inspectors. 

The new inspection regime serves the interests of  the bigger players in the industry—main contractors and subcontractors. With a digitized enforcement system, even the pettiest contractors will struggle to comply with given technology limitations, and the largest (and richest) employers will be able to get away with blatant violations. As a result, workers will be forced to confront an increasingly unregulated and dangerous industry. 

The future of sectoral demands

The new Labour Codes illustrate the dangers of consolidation: under the guise of integration and inclusion, the reforms bulldoze decades of labor victories and replace them with minimal rights and protections. Why, then, have the codes seen so little resistance?

India’s largest central unions have voiced their total rejection of the reforms and advocated for their complete repeal. In doing so however, they ignore the woeful inadequacy of existing regulations. Some, for example, have commented on the new codes’ improvements for gig workers, who are now recognized by the laws for the first time (though many argue the benefits for gig workers have been greatly misrepresented⁵). Moreover, the divided and varied nature of Indian labor markets makes it difficult to formulate a representative set of demands. While building workers may advocate for the entire hierarchy of employers—from principal employers to petty contractors—to be equally responsible for safe working conditions, gig workers may prefer to be employed by the employer, as is the case at Uber, Zomato, or another web-based application. Sales workers and those who work on a “piece-rate” basis are fighting to expand the definition of wages to include commissions, granting them access to the rights, entitlements, and protections in current legislation. 

In a nation with high rates of fluctuating employment and informal work, making demands specific to each sector and the unique characteristics of its labor-market structure may be the ideal strategy. The BOCW Act of 1996—where building workers organized around the specific floating nature of their industry to gain access to formal benefits and rights—is a case in point. But even in this single industry, the reforms threaten the ability to organize. By fragmenting workers into various categories of “employee,” “worker,” and “contract laborer,” and dividing workers’ rights and protections based on these inconsistent groupings, even those working in a single construction site will now face increased difficulties in building and sustaining power. The challenge for the labor movement, then, is to confront the codes’ distinct impacts on each industry and segment of the labor market. So far, the wider coalition led by central unions—and notably lacking sectoral demands—has been unable to mount a meaningful opposition. But through recognizing and articulating these divisions, a common path can be forged.