Why the Factories Act revision is bad

Factories Act India

The changes merrily barter away workers’ rights, tilting the labour landscape in favour of companies

On August 10, Narendra Modi government introduced a piece of legislation that could jeopardise lives of nearly 10 crore factory workers in the country. That day, the Union Cabinet approved ex-post facto (with retrospective effect) amendments to Section 64 , 65 and 115 of the Factories Act, 1948, and introduced the Factories (Amendment) Bill, 2016, in Parliament. The government claims these amendments will help power up manufacturing and enhance “ease of doing business”, making jobs better-paying. But given the regressive nature of the amendments, that’s a tall order.

The law, to start with, aims to increase workers’ overtime hours from 50 hours per quarter to 100 hours (Section 64) and 75 hours per quarter to 125 hours (Section 65). On the face of it, this appears pro-workers, and the government explains that when there is high “demand from industries” factories can carry out the work on “urgent basis” now. That means, more work and more pay for employees.

But not many seem to buy this logic. Opposition parties including the Congress, left parties, TMC, JD-U and IUML vehemently oppose the Bill. Members of these parties even walked out of Lok Sabha when the Bill came up for discussion.

So, what’s wrong with this slice of labour legislation? To start with, the Bill gives the Centre and State governments powers to exempt rules on overtime working hours. As things stand now, only States can do this. The Centre now can frame rules under the Act on, say, terms and conditions of workers in a factory and make separate Rules on fixed working hours, period of rest, etc., for people doing overtime, urgent work.

Labour minister Bandaru Dattatreya says the changes will make labourers work more and earn more. And he seems to be sure that the Bill will cover workers’ interests, by fixing the number of work hours in a day at 10 and the total hours of work in a week after including overtime at 60. The minister says the amendments do not go against norms of the International Labor Organisation (ILO). Dattatrey feels such a Bill is the “need of the hour”. Because initiatives such as Make in India, Skill India and Digital India  would need a large populace of workers.

Disagrees CPIM parliamentarian from Tripura, Sankar Prasad Datta, who has sought changes to the Bill. He says its provisions look similar to the one introduced in 2014, which was also suitably controversial and anti-worker. Datta’s amendment was, however, defeated in voting. Adhir Ranjan Chowdhury of the Congress, reportedly, feels the Bill is anti-labour and favours employers. RSP’s NK Premachandran goes a step further and says the Bill intrudes upon rights of States and will compromise India’s federal structure. Critics say that by increasing the overtime clause, the government is giving companies the right to burden their existing employees. They say the government is joining hands with the corporate sector. But the labour ministry thinks these concerns are baseless.

Dattatreya says the Act gives States executive powers and they must ensure the safety and health of workers. But industry watchers say that trying to standardise labour norms, the new law gives the Centre the power to exempt certain types of workers from fixed working hours and periods of rest. Which is unwelcome and uncalled for, to say the least. The unions say the new Bill is a watered down edition of the Factories (Amendment) Bill, 2014 in which a parliamentary standing committee didn’t find merit.

In sum, letting the Centre fiddle with the rights of workers do not augur well for the economy in general and workers’ welfare in particular. If one juxtaposes this fact with the report that the government is also planning to enact a ‘Small Factories Act’ for units employing below 40 workers, exempting them from ESI and PF requirements, the scenario appears alarming. Because by default the new Act will apply to units employing above 40 workers without power, as against 20 at present.

Further, the Model Shops and Establishments Bill, which is making its rounds in the policy circuit now, which is eerily silent on minimum wages, ESI, PF and terms of service, is making matter much worse for workers in other sectors as well. In this context, the changes to the Factories Act will only end up making workers poorer and the astonishing absence of social security cover in India will rub salt on their wounds. Less wages and more work for workers do not mean business. It will drive down purchasing power of the people, and end up hurting the economy.

Leave a comment

Leave a Reply

Your email address will not be published. Required fields are marked *