COVID-19 and the State of Labour: Current Practices Must Be Rectified In Order to Prepare for the Economic Aftermath

As per the April World Economic Outlook, global growth in 2020 has been projected to fall to -3%, a downgrade of 6.3 percentage points from the earlier projections in January 2020. Gita Gopinath, writing for the International Monetary Fund, has stated that “This makes the Great Lockdown the worst recession since the Great Depression, and far worse than the Global Financial Crisis.” Moreover, she adds that emerging markets and developing economies will face the additional challenges of reversals in capital flows as global risk appetites plummet and currency pressures increase. This will be exacerbated by weak health systems and high debt levels.

While most of that which has made the news with regard to the economic repercussions of COVID-19 has to do with stock markets crashing or oil markets deep diving into the negatives, perhaps the scariest will be its impact on labour. However, as Indira Hirway and Neha Shah have noted in their article in EPW, labour scarcely makes it to the neo-liberal agenda. 

Neo-liberal policies do not directly address labour and employment in the sense that these factors are not at their core. Instead, their benefits were expected to trickle down to labour through the functioning of the labour market.

Thus, it is also true that the adverse effects of the neo-liberal regime on labour are slow in receiving adequate and proactive attention. However, this becomes pertinent if we are to prepare for the aftermath of COVID-19-induced lockdowns, as the system’s current inadequacies will only be exacerbated through the course of the economic stagnation we are currently in. 

In this reading list, then, we explore the EPW archives and highlight the implications of the 2008–09 economic crisis on Indian labour, the currently abysmal Wage Code, 2019, which dilutes the systemic protection and enforcement of labour wages in India, as well as the new iterations of labour that have emerged in today’s era of globalisation and capitalism.

The Plight of Labour Under Global Crises

S Mohanakumar and Surjit Singh find that the economic crisis of 2008–09 had far-reaching implications for labour in India, especially the unorganised sector. The authors carried out a primary survey of the gem polishing and construction industries in Rajasthan, and found that the depletion of incomes and its effects on consumptions was gradual. Though the direct aftermath of the crisis saw a reduction in social spending by workers, it was the succeeding phases that exacerbated their already precarious economic and social positions. For instance, the social composition of the construction industry itself was constitutive of 28.70% Dalits and 23.70% Adivasis. Moreover, as the economic crisis persisted, most families from both the industries were left with little alternative but to cut down expenditures on essential goods, such as food, shelter and clothing. The economic distress was further exacerbated by rising domestic conflict, violence and depression, the burden for which was disproportionately felt by women and children. Mohankumar and Singh note that the only policy solution to deter such long-lasting and dire effects, particularly on the unorganised labour, is to garner the political will of the state to increase budgetary allocations for social services and relief packages. 

During the crisis, workers in general tried to adjust to the wage loss and consequent income fall by spending less on their physical as well as social life. In the initial phase, workers trimmed spending on their social life, followed by a reduction in expenditure on health and education. When the crisis persisted, the workers were left with little alternative other than to cut back expenditure on even the absolute necessities (food, shelter, clothing, etc). As the crisis continued, they were compelled to reduce even the quantity of food intake. On top of all this there was the economic distress-driven domestic conflict, violence and depression, the brunt of which fell mostly on women and children. This study found that expenditure reduction on food, education and health and sale of assets was mostly done by workers in the lower income strata in both industries.

Investigating the labour conditions existent in Tiruppur, Tamil Nadu, M Vijayabaskar observes the importance of trade unions in ensuring basic labour rights. Following the crisis, Vijayabaskar notes that there was a need to produce a “cheap” workforce that could compete for global markets. This displaced the question of worker rights and welfare from the workplace to the household/neighbourhood. For instance, the condition of work in Tiruppur became such that labourers migrated to the area only in an attempt to earn fast by working overtime, so as to be able to pay off debt. However, even though the work cycle itself was transitory and impermanent, there were few workers who protested it as it enabled debt repayment. With Tamil Nadu being at the forefront of executing social welfare measures directed towards poorer households, any setback faced by the individual labourer was compensated for by falling back on their respective entitlements as citizens. This meant that despite the presence of precarious and casual work for nearly two decades, trade unions had barely been able to make any headway in terms of worker mobilisation, which could further transition into better labour conditions and working rights. This ability of the state government to inhibit the growth of trade unions, post the economic crisis of 2008–09, benefited its neo-liberal agenda.

Though the emerging social regime in TN appears to go against the tenets of neo-liberal reforms that mandate cut-backs in public provisioning of social services, the state has been able to shift the question of labour welfare away from the workplace to the lived spaces, from the domain of capital to the domain of government of dispossessed populations. This shift partly ensures that capital accumulation can now proceed unencumbered by the burden of protecting workers’ livelihoods. It is therefore a hybrid regime that simultaneously subverts strictures against the expansion of spaces of public welfare and pursues an accumulation strategy entirely premised on flexibility of labour markets.

The Dismal State of the Current Labour Wages in India

Nivedita Jayaram notes that the Labour Code on Wages Act (or the Wage Code) enacted in August 2019, though hailed as a landmark act codifying India’s four wage-related laws into one piece of legislation, remains a paper tiger on closer examination. In fact, the new version of the Wage Code has further omitted or diluted critical provisions of previous legislations. What deems the Wage Code most problematic is that its ability to protect wages of labourers was questionable even within the context of the preceding wage crisis that had marked India’s failing economy. That is, as per the Economic Survey 2018–19,  one in three wage workers are not protected by the minimum wage laws due to faulty enforcement mechanisms. Of these waged workers, two-thirds are casual workers and represent the poorest and most vulnerable sections of the country. In such a scenario, the Wage Code has made definitions unclear by leaving much of it to the discretion of government authorities or the interpretation of judicial bodies. For example, the methodology for setting minimum wages has neither been defined nor outlined. This also means that there is no clarity as to which authority is responsible for setting the minimum wage. 

The Wage Code merely states that a floor minimum wage may be set by the central government either at the national level or regional levels, and that state governments may set minimum wages at the state level. The danger of using ambiguous language for establishing minimum wages was revealed in the government’s recent announcement, which set the national floor for the minimum wage under the Wage Code, at a mere Rs 178. The amount has been referred to as the “starvation wage,” and it is only Rs 2 higher than the previous national minimum wage, which was set two years ago. While it is not clear whether this would indeed become the national minimum wage, this instance highlights how lack of procedural clarity could lead to minimum wage estimates that are less than ideal.

Impact of Technology on Wages and the Way Forward for Labour Activism

Studying the Cotton Textile Mills in Madurai District, P Prince Dhanaraj observes that with the advent of technology, the tussle is now between workers and machines. The point of content as mills acquire sophistication, and perhaps vulnerability, is the permanency of the worker. Dhanaraj notes that, in the case of the textile mills, the industry’s sophistication has come at the expense of its workers. This means that increments in wages for labour must follow trends that can accommodate such qualitative aspects of the equation. 

The policy of increasing wages in India should provide for noninflationary methods of wage payments. In practice, trade unions are very sensitive to the wage rate. On the other side, productivity improvement requires not only expenditure on machines but also on the wage trends and their relationships with trade unionism, level of employment and the technology enforced with the methods of production.

Furthermore, an essential byproduct of globalisation has been the different iterations of labour that it has produced. Kalyan Sanyal and Rajesh Bhattacharyya observe that globalisation and economic growth have historically been premised on the assumption that modern (or capitalist) economies would expand by breaking up traditional (or pre-capitalist) economies by transferring both economic resources and labourers from the traditional to modern spaces. However, reality has been different. In most developing economies, the transfer has merely been of economic resources, leaving behind the labour of the region. This phenomenon has led to the creation of surplus labour consisting of dispossessed producers whose traditional livelihoods were destroyed and were also not absorbed by the modern industry. This led to the formation of a labour force that was predominantly self-employed, assisted by mostly family labour, making the household as the major site of production and giving impetus to community or kinship networks involving trust and reciprocity in place of impersonal exchange relations. This byproduct of globalisation has therefore exacerbated the vulnerabilities of an informal economy and resulted in a type of exclusion from the usual labour economy.

As the home and the workshop converge, the production of commodities is synchronised with reproduction of life. The inseparability of the life process and the labour process within the household is thus an emerging feature of the informal economy. This is a radical reversal of the general 20th century notion of labour where the worker works for eight hours within the factory gates, after which (s)he reproduces her life within the family. The blurring of the distinction between the home and the workshop implies that labour activism must face up to the new conditions of labour that home-based production brings to the fore and a potentially new subjectivity of labour shaped by such conditions.

Read More: 

Cotton Mill Workers in Bombay, 1875 to 1918-Conditions of Work and Life | Shashi Bhushan Upadhyay, 1990

Evolution of Unionism and Labour Market Structure-Case of Bombay Textile Mills, 1947-1985 | Debashish Bhattacherjee, 1989

Extending the Coverage of Minimum Wages in India: Simulations from Household Data | Patrick Belser and Uma Rani, 2011

Reviewing the Labour Code on Industrial Relations Bill, 2015 | Babu Mathew and Chirayu Jain, 2018

What Happens When Domestic Workers Ask for A Bonus Instead of a Baksheesh? | EPW Engage 

Different Workplaces, Similar Exclusions: Women’s Work in India | EPW Engage

India’s Social Justice Agenda is Unfulfilled as the Labour Market Remains Gendered, Classist and Casteist | EPW Engage

Where are the Laws to Protect the Rights of Domestic Workers in India? | EPW Engage