Issues with the Recent Labour Ordinances – A Critical Analysis

As we are aware of fact that Uttar Pradesh Cabinet has approved an ordinance, and Madhya Pradesh has promulgated an ordinance, to relax certain aspects of existing labour laws. Further, Gujarat, Rajasthan, Haryana, Uttarakhand, Himachal Pradesh, Assam, Goa, Uttar Pradesh, and Madhya Pradesh have notified relaxations to labour laws through rules.[i] These ordinances have been passed by states[ii] for granting exemption to industrial establishments from the majority of labour law regulations in order to create employment and attract investment. It is good on the part of the states that they are preparing towards gearing the economy, although some states have taken back the ordinances, the nature and time of ordinance raises certain issues, chiefly among them are:

  1. The constitution provides certain rights to workers and imposes a corresponding duty by way of Directive Principles on State under Article 39[iii], 41[iv] and 43[v]. The ordinance provisions definitely give a blow to both rights and duties.
  2. The subject of Labour falls under the Concurrent List. States by promulgating such ordinances abused the facility given to them even after knowing the fact that the centre is coming with large scale labour reforms by way of codification of all labour legislation.
  3. The time of promulgation of ordinances cast doubt upon the noble intentions of the state. Due to nationwide lockdown, the trade unions are vulnerable and cannot gather forces to support a nationwide or state level struggle against such laws.

The ordinances give a feeling that the State considers Labour Laws too restrictive and rigid for manufacturing units. But the actual problem manufacturing units have to face is not compliance with Labour Law regulations rather it is the availability of skilled and co-operative workforce. States by passing such ordinances usurped upon the rights of the labourers knowing very well that India is a labour surplus country and our labour workforce falls on the lower end of spectrum leading to low bargaining power in their hands and requiring protective legislations to safeguard their interests.

The claim of the states that such ordinances will create jobs does not hold ground. The well-known things that act as creators of jobs include the overall health of the economy, the level of demand in the economy, people’s purchasing power, rising wages, the stability of the business climate, state trusted by small and large businesses, delivering on its promises, favourable export conditions consistent policy of the government, sending out the correct and consistent signals on what it wants to promote and what it doesn’t want to promote. All these macro policies, industrial policies, trade policies govern the climate of job creation, in addition to the overall health of the economy. Merely by amending labour laws will bring no good rather it will worsen the situation.

One of the chief duties of the states is to protect the strength and health of workers and to ensure that because of economic necessity they are not forced to enter avocations unsuited to their age and strength. Along with this States have to make effective provision for work and assistance in cases of unemployment. By way of suitable legislation, states have to provide a living wage to workers and such conditions of work to ensure a decent standard of life. But what States did by passing these ordinances: they increased the working hours, deprived the workers of their basic rights, not provided them with wages necessary for their survival and the situation today because of economic necessity is such that workers have no option to choose rather they have to work in the establishments even though they are not suited to their health and strength and does not provide the conditions necessary to ensure a decent standard of life.

The second claim that it will attract investment to some extent hold good under traditional labour market theory where the race is to the bottom but in the era of globalisation more than cheap workforce and laxity in labour laws companies prefer overall business climate, the reliability of the state and its policies, the infrastructural situation, electricity supply, logistics and transport, the quality of labour and skill of labour and human capital.

The best possible way to come up with changes in labour laws is to first enter into a social dialogue with trade unions and ask them of their suggestions. Second, in post lockdown era private investment may not kick immediately so the government need to bring out fiscal stimulus to tight the labour market by putting some money in the pockets.

Policy Recommendations

The nature of labour migration in India is linked, on the one hand, to the pattern of (uneven) development accentuated by several dimensions of policy, and, on the other, to a pattern of capitalist growth, which has implied continued and growing informalisation of the rural and urban economy. The pattern of development, apart from being inimical to the poor regions, is consistent with a ‘low road’ to capitalist development, constraining the possibility of more rapid growth and technical change.

In the light of this, as was rightly observed by the National Commission on Rural Labour (1991), migration policy has to be concerned not only with supporting migrants but also with the mutual links between migration and development. Some of the major issues in this context are summarised below:

Pro-poor development in backward areas: One major set of policy initiatives has to address a more vigorous pro-poor development strategy in backward areas. This could take the form of land and water management through the watershed approach and public investment in the source area. These strategies need to be accompanied by changes that improve the poor’s access to land, to common property resources, social and physical infrastructure, and to governance institutions. The latter set of changes will require strong organisational intervention by, and on behalf of, the poor. In rain-fed areas, the scope for an Employment Guarantee type of scheme, which dovetails with the need for the building of physical and social infrastructure, should be explored.

Food and Credit-based interventions: Development in poor regions may ameliorate some of the highly negative features of labour migration. Further steps can be taken to strengthen the position of the poor who resort to survival migration. This involves helping the poor overcome two major constraints that they face; food and credit. Access to food can be improved through a more effective public distribution system, through grain bank schemes, or through ‘food for work’ schemes. Organising the poor into self-help or savings groups, specifically tailored to the requirements of migrants, could help increase access to credit.

Ensuring basic entitlements in other schemes: A major policy focus has to be on ensuring that migrant households are able to access the benefits of public programmes meant for poor households. A special focus has to be ensuring access of migrant labourers’ children to schooling (and that they are not pushed into labour). There is scope for learning from the experiences of community-based interventions (MV Foundation, GVT) as well as government programmes (Lok Jumbish, DPEP).

Improving the information base and bargaining strength of migrant workers: As described earlier, poor migrant workers lack bargaining strength. Further, their sense of vulnerability and social isolation is exacerbated by their ignorance, illiteracy and the alien environment in which they have to work. NGOs and governmental authorities have taken various routes to improve the information base and bargaining strength of migrant workers. Some of the NGO strategies have been discussed in the preceding section. In Bolangir (Orissa), district authorities have formed more than 125 labour societies which take up the execution of public works, issue identity cards to workers and negotiate with contractors.

Role of panchayats: Panchayats should emerge as the focus of the resource pool for migrant workers residing in their area. They should maintain a register of migrant workers and issue identity cards and passbooks to them. Further, it should be mandatory for recruiters to deposit with the panchayats a list of the labourers recruited by them along with other employment details. With growing IT-based communication, it may become possible for panchayats or NGOs to maintain a record of potential employers and employees.

Enforcement of labour laws: At the workplace, stricter enforcement of labour laws is essential. It must be mandatory on employers to maintain the record of payments and advances in workers’ passbooks and to provide them with the basic facilities laid down by law. This may, however, also call for scrutiny and simplification of some of these laws. The subjection of contractors and employers to the rule of law requires commitment on the part of the government. In Bolangir (Orissa), authorities use criminal law in conjunction with the existing labour laws to ensure better compliance with the latter by contractors and middle-men. The Inter-State Migrant Workmen Act is one of the important pieces of legislation affecting inter-state migrant workers, who are often employed under very poor conditions. The Act requires both modifications and more rigorous implementation. In particular, the filing of complaints by third parties and trade unions and the constitution of an inter-state coordination mechanism should be taken up as proposed by the Tenth Plan Working Group on Migrant Labour.

Enlarge the scope of Unorganised Workers Social Security Act, 2008 to cover issues pertinent to migrant workers: The act for unorganised workers includes many provisions that are beneficial to migrant workers. The debate on the Amendment to the Act should be vigorously extended in order to ensure that it meets the requirements of migrant workers as fully as possible. The provision of social security numbers, identity cards and passbooks for all unorganised sector workers should be made mandatory, instead of keeping it optional. These cards could be used by migrant workers to access other services, for example, health. The issue of strengthening existing entitlements could be delinked from new social security provisions which may be handicapped due to budgetary constraints.

The thrust of our suggestions is that both governmental and non-governmental intervention should support migrant labourers and pro-poor development as vigorously as possible. This would not only influence the condition of migrants and the pattern of migration, but also the pattern of development that sustains these patterns of migration.







Harshit Sharma


Harshit Sharma is a B.A., LL.B. (Criminal Law Hons.) graduate from National Law University, Jodhpur and an LLM (Criminal Law) from Mahatma Jyoti Rao Phoole University, Jaipur. He has qualified NTA NET (December 2019) and can be reached at

Rishav Dixit


Rishav Dixit is a B.A., LL.B (Business Law Hons.) graduate from National Law University, Jodhpur (Batch of 2019). Presently he is working as an Associate for Cyril Amarchand and Mangaldas.

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