India Unions' Protest on March 14
Volume 19 - Issue 05, Mar. 02 - 15,2002
India's National Magazine
from the publishers of THE HINDU
A looming threat
Trade unions react strongly to the move to amend the IDA in order to
make layoffs and retrenchment easier than at present.
THE contentious issue of amending sections of the Industrial Disputes
Act (IDA), 1947, facilitating lay-offs as part of the ongoing process of
labor reforms was cleared by the Union Cabinet on February 22, the day
after polling concluded in the Uttar Pradesh Assembly elections. This
was no mere coincidence. Immediately after the announcement of the
Cabinet decision, all Central trade unions, including the Bharatiya
Mazdoor Sangh (BMS), voiced their protest against the move.
Thus, once again, without waiting for the report of the Second National
Commission on Labor (NCL), the tripartite body involving trade unions,
the government took a decision that would impact on the lives of the
working class. The next day, the Prime Minister, addressing a seminar
marking the golden jubilee of the Employees State Insurance Scheme,
emphasized that "social security cannot, in the post-liberalization
environment, continue to mean exclusively state-funded and
state-administered security schemes".
As expected, the Cabinet decision invited strong responses. While Labor
Minister Sharad Yadav reportedly opposed the Bill in its amended form,
the Shiv Sena, an important constituent of the ruling National
Democratic Alliance government, threatened to walk out of the alliance
unless the decision was reconsidered. The Shiv Sena supremo Bal
Thackeray declared that the party may join hands with the Left parties
and call for a nationwide strike. The BMS, at its 13th national
conference in Thiruvananthapuram, took a similar position. Its founder
Dattopant Thengadi, addressing the conference, said that the Central
government had sacrificed the interests of the working class in its
pursuit of globalization. The amendments, he said, would make it easier
for company managements to lay off workers and close down industrial
units on the pretext that they were economically unviable.
The implications of the amendments are manifold. Chapter V-B of the IDA
placed certain procedural restraints on employers in the matter of
lay-offs, retrenchment and closure. The abolition of this chapter would
ensure that units employing up to 1,000 workers can be shut down without
the need to seek clearance from the government. At present, such
permission is not required in the case of units employing less than 100
workers. The Cabinet decision only echoes what has been recommended by
the Group of Ministers headed by Planning Commission Deputy chairperson
K.C. Pant. While the move to effect labor reforms was indicated by
Finance Minister Yashwant Sinha in his Budget speech last year,
sustained protests by trade unions, including the BMS, had stalled any
Later in the year, the Task Force on Employment Opportunities headed by
former Finance Secretary Montek Singh Ahluwalia, came up with the
argument that rigid labor laws were hurdles in the way of employment
The Cabinet decision is but a culmination of several interventions over
the past one year to introduce changes in labor laws. Amendments to the
Contract Labor (Abolition and Regulation) Act, 1970, and the Trade
Unions Act, 1926, are also expected to be made. Trade unions argue that
the majority of the units in the organized sector would be affected as
there were very few companies that had an employee strength of more than
1,000 workers. The Centre of Indian Trade Unions (CITU), the All India
Trade Union Congress (AITUC), the Indian National Trade Union Congress
(INTUC), the Hind Mazdoor Sabha (HMS), the United Trade Union Congress
(UTUC), the UTUC-Lenin Sarini, the All India Central Council Trade
Unions (AICCTU) and the Trade Union Coordination Council (TUCC) have
decided to observe a national protest day on March 14. On March 4, all
trade unions, including the BMS, will meet to chart out a strategy.
D.L. Sachdeva, AITUC secretary, told Frontline that only 5 to 10 per
cent of the industries would be left out if the limit to exempt
industries from the I.D. Act was raised to 1,000 workers. He criticized
the government for not waiting for the NCL's report, which was due on
February 28 (it is learnt now that the Commission had sought an
extension). "The NCL's work is now infructuous with the government going
ahead and announcing these amendments," he said.
Referring to the proposed amendments to the IDA, Tapan Sen and W.R.
Varadarajan, national secretaries of the CITU, said that initially
employers had wanted the provisions of the Act made applicable to units
employing 300 or more workers, as was the position in 1976. The
government had gone even beyond that, raising it to 1,000. The
Maharashtra government, incidentally, had amended its Industrial
Tribunal Act to raise the ceiling from 100 to 300 workers. R.A. Mittal,
national secretary of the HMS, said that with the amendment there would
be a greater sense of insecurity.
Even the INTUC, whose support to the rest of the trade unions has not
always been unconditional, given its flexible views on liberalization,
has now joined issue with the government regarding the amendments. G.
Sanjiva Reddy, president of the INTUC, told Frontline that he had met
the Prime Minister and suggested that the government wait for the NCL's
report. The INTUC had asked for the compensation package for
retrenchment to be raised from 45 days' wages for each year of service
to 90 days. The INTUC has always seen liberalization as an inevitable
and finds little merit in protesting against it.
The amendments to the Act may well be the tip of the iceberg. Trade
unions also want the Group of Ministers' observations on the Contract
Labor Act. The notice period for strikes or lockouts in public utility
services has been enhanced to 45 days, making flash strikes illegal.
Section 22 of the I.D. Act deals with strikes and lockouts and the
proposed amendment recommends a mandatory notice for strike in all cases
and also the introduction of a system of strike ballot whereby a strike
can be called only if it is supported by a qualifying majority of the
workers. Tapan Sen said that all these measures were aimed at finishing
off the trade union movement.
While trade unions are apprehensive that the Bill will be passed in the
Lok Sabha, they are banking on the Congress(I) to defeat it in the Rajya
Sabha. Unions feel that even if the Maharashtra pattern is pushed
through and the amended Act allows for retrenchment and closure of units
employing up to 300 workers instead of 1,000, it will not be acceptable
to them. After all, that would mean neutralizing the gains of their
struggles over the past several decades.