Authors: Ayush Gattani and Vaibhav Kansara*
The shutdown in China due to Covid-19 has caused major supply shock which has prompted global firms to look for new manufacturing centres for hedging risk of the future. It created a golden opportunity for India to make itself a global manufacturing hub which will also fulfil the ‘Make in India’ initiative. In furtherance of this Cabinet of Uttar Pradesh has approved ‘Uttar Pradesh Temporary Exemption from Certain Labour Laws Ordinance, 2020’ to create a favourable environment for global manufacturing companies. If it is signed by Governor of UP and President of India, it will suspend all labour law for three years except Bonded Labour System (Abolition) Act, 1976; Employee Compensation Act, 1923; Building and Other Construction Workers Act, 1996 and Section 5 of Payment of Wages Act, 1936 and provisions related to women and children and will make the situation worse for the labour which is currently facing the unprecedented situation due to Covid-19. The paper will discuss the pitfalls of labour reforms so introduced.
Challenging the constitutionality
The aforementioned Labour reform is a bane directly hitting the constitutional regime established in India. As the ordinance will suspend laws in the concurrent list i.e. Entries 22, 23, 24, 55, 61 and 65, the assent of president is mandatory under Article 213(3). Such assent would provide a green flag to the ordinance. However, violation of fundamental rights would bring down its constitutionality.
By suspending Trade Unions Act, 1926 vide ordinance, it will directly violate the fundamental ‘right to form association’ established in All India Bank Employees’ Association v. National Industrial Tribunalby virtue of Article 19(1) (c). Though there are reasonable restrictions can be imposed to maintain public order, the present situation is outside the ambit of such restriction, mainly because restriction for a period of 3 years will deteriorate the situation of labourers and atrocities by employers will escalate.
Moreover, renouncing Factories Act, 1948 would put an end to the right to safe and healthy working environment thereby violating Article 21 of the Constitution of India. Unnecessary suspension would only lead to increased malfeasance rather than serving the purpose of increased productivity and investment.
Violation of Human Rights & ILO Standards
COVID-19 has negatively impacted the labour across the globe. The reforms will also contradict the recent recommendations by International Labour Organisation ensuring the protection of labour in this crisis as the regulations are employer centric rather than labour centric, giving excessive power to employer in hiring and firing employees as a result of suspension of Industrial Disputes Act, 1947. Freedom of association and right of collective bargaining has been recognised as basic rights by ILO, which are embedded in the Indian jurisprudence through Trade Unions Act, 1947.
Moreover, the suspension of Factories Act, 1948 will lead to disregarding the health guidelines mandated under Chapter III which are indispensable for protection of workers from the virus. Since, the new guidelines of ILO placed workers’ protection from infection on the top priority, the policy on the same line should have been framed by the government. However, the government drafted ordinance looking into only the economic perspective and reviving the economy by using financial measures, treating labourers as a mere tool to achieve the aforementioned objective without framing any rules regarding protection of labourers from the virus.
The Pandemic makes the workers vulnerable as they are forced to take risky decisions and they could not afford to lose their source of income, leading to a rise of modern slavery. The government added to the plight of such economically disadvantaged workers by coming up with policies of increased working hour with reduced benefits and curtailed labour rights. The tune of affected people worldwide due to such exploitation will be around 40 million people. In addition to it, the pandemic is going to widen the inequalities.
World Economic Forum has raised a concern that political leaders may manipulate human rights to serve confined interest. Also, UNHRC stated that the emergency rule should be strictly temporary along with proper judicial reasoning otherwise the possibility of violating international human rights law will be very high. The 3 year time period of suspension does not seem to be temporary and will in fact have a lasting impact on the Labour community.
According to ILO around 4,00,000 workers die due occupational problems, even in the presence of Factories Act, 1948 because of unsafe and unhealthy working conditions. Most of the workers are protected by the hazards as the employers are bound to follow the aforementioned enactment. However, in its absence, it can be estimated that such number is only going to increase and it is violation of Human right i.e. right to safe and healthy occupational environment. The situation will be aggravated as the demand of labour in UP will be less than supply due to the COVID-19 and migration of labour from other states to UP, this will certainly lead to reduction in the wages and termination of workers more frequently.
Impact on International Trade
WTO is functioning under the standards enacted by ILO for determining minimum labour standards in International trade. It is clear from the aforementioned discussion that there will be violation of fundamental rights of labourers if the ordinance is assented. This violation will have a direct negative impact on the export of goods manufactured by such labour, which directly contradict the object of economic growth of the country. There will also be an indirect impact on trade due to increased awareness of buyer about the conditions under which such goods are produced as they will restrain themselves from purchasing such products.
The decision to relax the labour laws for making a lucrative environment for the potential foreign investors comes at the cost of human rights and constitutional rights of crores of labourers. It might allow the industrialists to have best of their times but the labourers will definitely have to face worst in state of slavery and poor working conditions with meagre wages. Also, it is a mere prediction that new firms will enter Indian economy, if they do not, the whole object of such reforms will collapse with increased cases of labour exploitation. Many states are also coming out with such reforms which, considered wholly, will be detrimental to the labourers/ potential labourers, given the unemployment rate is very high in India. Also, contrary to the belief of government, increased number of working hours would only lead to reduction in productivity. Nevertheless, the government would be required to pay either proportionate or more for the overtime, leading to an overall loss.
As a means to revive the economy, the government should reduce the prices of raw materials and decrease taxes which are the major obstructers, hampering the potential investments in India rather than taking away the basic rights of workers.
Furthermore, flexibility of labour laws does not denote increase in production. However, non-availability of skilled labour is a factor which needs to be analysed and capitalised upon. The government should conduct training programmes to enhance the employability and productivity of worker for their socio-economic integration rather than exploiting them.
Author 1- Mr. Ayush Gattani, 3rd year B.B.A. LL.B. ( Hons.) students at National Law University, Jodhpur.
Author 2- Mr. Vaibhav Kansara, 3rd year B.B.A. LL.B. ( Hons.) students at National Law University, Jodhpur.
Brighter Future Waits Ahead
Our footprints on the sands of time are about to be washed up by the next wave. We need to set out new paths, urgently, after all, the real power of wisdom not hidden in knowing it all; but in not knowing enough. Because whatever we may think of our mastery of our own crafts is in reality achieving ‘mastery’ as an acknowledgment of arriving at a point of not knowing enough therefore continuous hunger and craving to search for bigger answers. Otherwise, just a few experts would have been enough for the world. Observe how after two millennia passed, we still have not figured out achieving grassroots prosperity, diversity, tolerance and equalities.
Only if our new wisdom understood will we advance or else stay lost at the beaches. Our new world of today needs new words, new vocabulary, and new narratives to allow correctly knitting the tapestries of our miseries and equally weaving strong and fit enough sails for the coming stormy winds of tomorrow. Muffled in the old-fashioned terms of the past, the double-sided, agenda-centric language used today, already lost its authenticity. Today’s language mummified in bandages of political correctness, already tombed intellectualism and spoken words into deprivations, while whatever enunciated as rehearsed acts via teleprompters is still undecipherable by the global populace. Realities now demand change to honest words to assemble new narratives, to calm restless citizenry to deliver its truthful meaning in bold progressions.
Loudly enunciated are our acceptances of our victory and defeats or we stay silent to our deceptions. There is a brighter future ahead, indeed, but firstly, if we only accept for a moment that our previous attempts on grassroots prosperity creation were failures of sorts, suddenly pandemic recovery appears meaningful. If we also accept our previous trajectory of economic development spanning the last decade was somewhat hit or miss on targets, suddenly, new horizons appear. If we accept also that all our power-skills and rich-knowledge almost maxed out, suddenly brighter futures start to appear. Because, only when we discover a window, find some empty spaces tumble into voids, and chasms new things start to pour in, new ideas flourish, the processes start as enlightenment for new discoveries to commence. No matter where we stand on this earth, a new world has once again brought us on crossroads to face new transformation for brand new adventures
Our limitations on our performance are true measurements to qualify us to enter the cockpits. Historians will recognize this pandemic recovery as a very special moment; declare this era as a small blip in the course of human endeavor and a glitch that ‘possibly’ corrected the role of government administration to allow far more talented and upskilled citizenry at helm to advance. One: The corporate leaderships of technology companies acquired extraordinary smarts many times more powerful over what their own top national political leadership team displays and thus unable to tackle any technology sides of the economy. Two: Digitized and technologically advanced vertical sectors across 200 nations and 10,000 cities shut out national political leaderships and local institutional administrators as obsolete and unprepared to deal with the required speed of response and execution and therefore losing future control of the national economic drivers of national economy in global jurisdictions. Frequent flyers know a lot about flying city to city but definitely are not certified and qualified pilots to fly jumbos around the world. The power play of the digital economy once enters the ocean of platform economies of the world will become extremely specialized, therefore, unless prepared, nation-by-nation, top political leadership and government agencies will lose grip on all such technology advancement games and become simply spectators. Study crypto-currency deployments, Space travel and satellite transportation, AI and trading games, Jack Ma and China over ruling financial sectors as a start.
Our mobilization of hidden resources and talents are proof of what we just learned coming out of fog. For the first time in 100 years, globally speaking, a new world emerges; The pandemic has already prepared the humankind to rediscover “the meaning of life” the purpose of “co-existence” while to the poor of the world “re-learn to survive” and to the rich “re learn to create common good”. Is pandemic germinating our entrepreneurial intellectualism? Is this the kind of transformation humankind has been waiting for over a century? Why is futurism calling for futuristic literacy?
Our billion hungry every night despite two millennia past, we must show our resolve or our negligence will destroy us. The poor of the world; in neglect, misery and almost buried alive, Millionaires anxiously digging their own graves, now exhausted, Billionaires digging deeper to find their own legacy if any and Trillionaires buying up heavens in the clouds to block other voices. The Towers of Babylon going half empty, displaying signs of ‘vacancy’ fires of hell at the base only provide gentle warmth to the upper celestial floors of luxury living. Where sweetness is missing in the bitter medicine of our times ignored but candies alone will never cure; the message in the bottle found on the bloody beaches tossed but the noise of fakery drowns us all. Imagine, if we compressed the last two millennia in two minutes. We just evaporated at the last second. Universe did not even notice.
Wondering, what was the possible message in that bottle, if any?
Kickstarting the U.S. Economy: A Rebound or Further Inequity?
The global economy has seen its fair share of peculiarity in recent years; much attributed to the developing economies rather than the stable sovereigns of the world. However, the wave of the pandemic has toppled the conventional trend unlike ever before. Whilst the developing economies gain traction, the European economies are crumbling under the whelming pressure of the pandemic.
The US economy, however, is on its track to rebound at nothing but an accelerated pace that is optimistic as it is sinister. Forecasters have been predicting an economic boom post the pandemic for months yet the claims were rebuffed as overly quixotic. The economic boom is on cards that could contract the surging unemployment rates and could even push the economy towards a prolonged growth trajectory.
The economic recovery is evident from the jump in retail sales all over the US: levels anticipated to bloom further amidst speculations of a hefty aid package advocated by president Biden. Moreover, the FED has predicted a growth of 4.5% in the US output; the highest predicted level of GDP growth in over two decades. The optimism is matched by the leading economists, likes of Goldman Sachs putting a word in their perspective: ‘We [US] are very likely to get a very high growth rate’.
The budding confidence in the economy is majorly linked to the rollout of vaccines. Albeit slow-paced, the vaccination drives are striving hard to meet targets set by the authorities. Coupled with the shift in the government, the national focus is primarily etched in the campaigns to ensure timely inoculation before the virus strikes again.
However, the inoculation would grip over the country for most of the year 2021, keeping the natural order of the country at bay. The economy, thus, is bolstered by Federal aid packages; pouring trillions of dollars in rental packages and unemployment benefits. The resulting is a pile of surplus disposable income which awaits an opportunity to be expended. Given the mounding pressure of recession and health crisis cumulated over the yesteryear, the income would be sufficient enough to suffice under the newfound rental and mortgage reliefs purported by the federal government. Combined with free public transportation, the added monetary value could be utilized as soon as the country bounces back from lockdowns.
The surplus income could further expand if congress approves the magnanimous aid package proposed by the democrats under the plan of president Joe Biden. As vaccinations continue to immunize the population and income blooms within common households, approaching summers could prove to be a haven for the US economy to shine bright. Peak demand for hotels and transport is expected in the second and third quarter of 2021; unemployment is predicted to level down to 4.1% due to surging demand for labour in the HoReCa sector whilst simultaneously kickstarting the dormant business of airlines and smattering of other means of transit.
Even the most experienced economists, however, have pitched reservations to the envisioned rebound of the US economy. The prime facet impeding that prospect is the intermittent campaign of vaccination. The inoculation has been slower than expected and the adverse effects of the jabs have instilled a fear that threatens to further stall the efforts to vaccinate the population. With the ensue of new virus variants in California and irregular vaccination drives, the expected recovery could defer to late 2021 and even 2022. This could make the US vulnerable to the 3rd wave of Covid as per the pattern of cases observed last year.
The political standoff is another factor that could push economic prosperity into despair. The simmering tensions post the impeachment trial of Donald Trump have surfaced over the last two months. The demarcation in the senate is as clear as it has ever been over decades and even the split in the republicans has brewed post the acquittal of Trump. Both parties locking horns this early casts a confusion that stood out in the recent energy crisis in Texas; the federal and state governments bumping heads whilst the state drowned in stark darkness and bitter cold. This disparity paints a bleak picture for the United States given Mr. Trump could stir more instability with the prospect of running the election again in 2024.
The escalating oil prices also indicate a tough road for nearly the entirety of the manufacturing sector of the economy along with any lucrative opportunity to the airline industry in the forthcoming months. As the world still reels from the pandemic, the crush in the oil supply from the US has rendered the valuation at high levels; a contrast to the plummeting prices just last year. The Brent index has surged more than 28% since December 2020, pushing the prices up to as high as $66 per barrel. With the forecasts expecting Brent to further climb up the trajectory and the subsequent production crunch from Russia and OPEC members, oil prices could rise up and beyond $70 per barrel. This price surge, as a result, could convert the booming economy into hyperinflation since the US would continue to rely on imported petroleum until it regains the economic traction to be self-sufficient again. Thus, the pilling income could transition into sky-high prices post the pandemic.
Mirroring the recession of 2001, while the economy started to expand within a year, the unemployment rates remained high for the better part of the decade. Drawing parallels from that period, while the growth is projected to touch the 5.8% mark later in the fiscal year of 2021, a congruent projection could not be made on the front of economic recovery. Although high inflation has never been an issue for the US in the past, unlike the developing nations, sluggish recovery in employment, brimming tensions in the political arena, and irregular inoculation rates could widen the gap of wealth in the country. Inequity, thus, is inevitable as an opportunity cost of growth at the expense of an inflating economy. The affluent strata of the society would reap the benefits much more rapidly than the working class. Whether it would be of long-term virtue or despair: time is the deciding factor for the common citizens of America.
EEU: An Irrelevant Anachronism or a Growing Digital Enterprise Dynamo?
A commonwealth of interests
The search for a stable Eurasia depended on the effectiveness of a durable system for the post Soviet space which could easily descend into an arc of instability if was not properly managed. Moscow had to be careful not to view these ex Soviet countries as its natural hinterland to be taken for granted and to upgrade its relations with each of them to preserve a communality of interests that had eluded it in Ukraine. The world of the command economy centred on Moscow would be made over on an entirely new basis that reflected the fast moving 21st century digital economy. Where common standards and freedom of movement of people and capital was meant to create a climate of openness and facilitate cross border business not to seal off Eurasia from the outside world. The fragile nature of post Soviet identities meant that a sense of commonwealth and common citizenship rooted in an overarching Eurasian identity would be more appealing to a growing entrepreneurial class disillusioned with the results of narrow ethno- nationalism as a ruling idea. The danger was that the more the Eurasian Union grew in stature it would have to navigate roadblocks deliberately placed there by powerful nationalist interests who perceived it as threat to their power base. And by stoking tensions with Russia periodically these former Soviet states could remind the outside world that they were not tame satellites of Moscow or artificial constructs but were free to decide their own destinies.
The path to some kind of durable Eurasian concept was obstructed by the reluctance of many Eurasian states to give up on the idea that eventually find a place in the west. The Eurasian union might be a useful stopgap while they waited to the privileged world of the west where they felt they ultimately belonged. Even though the chances were slim that it would ever happen. The Russian view of the Eurasian Union was that it would be a modernizing force which would have the express aim of bringing the region closer to the world and transforming it into a forward thinking technological giant. It would not be a repeat of the “Soviet experiment” which was a parallel universe closed to outsiders with information tightly controlled. And with the official version vastly at variance with the grim reality. Its core vision this time around was to effectively connect the region to the outside world and be at the forefront of new innovation. It would not depart from international standards and go off on its own tangent or conduct its affairs with guarded secrecy. But happily embrace new ideas and fresh thinking. Russia’s objectives were to circumvent parochial state leaderships and local bureaucracies and create a global brand that would capture the imagination of high net worth investors and provide a real alternative to pro western orthodoxy. With first class transport, logistics and a digital economy that would be the envy of the world, it would be first and foremost technocratic and meritocratic and not so much ideological in nature.
The Russian leadership concentrated on achieving maximum consensus in decision making and adopting policy positions where the weaker states would not be unfairly disadvantaged. While Russia would be providing the bulk of the digital infrastructure and at its own expense it would be considered common property of the Eurasian economic union in many ways. Russia’s contribution was based on a more generous model than its Chinese partner which took the form of loans that could result in forfeiture of assets if loan payments were not met in time.
Thus Russian prime minister Mihail Mishustin recommended at a meeting of the inter Government commission implementing a “digital project” across the whole Eurasian union. This would provide a “specialist information system” in the sphere of “migrant labour” that would better serve the needs of business and the migrant communities. These measures would seek to gradually phase out and replace the patchwork, confusing system of regulations with a common framework. So for example in future the EEU would receive powers that would promote standardization. The Eurasian commission adopted a new technology based system of labelling products that “would apply in future in relation to new categories of labelled products.” The prime ministers of the EEU states approved a document that would “establish a time limit by which member states would be notified of the intention to introduce labelling on their territory.” And would give them a “period of nine months to outlaw unlabelled products.” The new system should eventually be incorporated fully at the national level so that business could “escape unnecessary burdens” caused by “different systems of control.” and gradually filter out bureaucratic anomalies.
The priority was to create a level playing field so that the EEU was not perceived as just an exclusive club for Government connected state companies. But that it would also create conditions for small and medium enterprises to thrive and expand and ease substantially the costs of doing business. As well as reversing the favouritism traditionally shown to large companies by making the ability of SME’s to operate in an environment that was transparent and equitable more concrete. For example the prime ministers of the EEU states agreed to a “unified ecosystem of digital transport corridors”. The total cost of the scheme would be around 10 billion roubles. The cost divided between the union and the member states. It would provide a “service for the access of electronic route maps, international transport charging rates” as well as electronic protocols that would give updated information on interior ministry regulations etc. This unified system was especially useful to SME sector who were often reliant on “outside platforms” which were often “not connected to each other” and ” the absence of coordination added to their logistical costs.”
Similarly the five member states of the EEU have agreed to form a common financial market by 2025. A key role in this is played by financial technology which will be deployed to make financial services “more accessible, cost favourable and safer”. Private and business customers can expect “financial services of higher quality and greater choice to be available”. And with such a hi tech financial monitoring tool at the authorities disposal “credit and financial institutions will have to reveal the origin of their capital”. An important element was the Application Programming interface which gave the programme the capacity to conduct biometric identification and to connect IT systems together so “they can exchange information between themselves.” Also a pilot project was launched which the AFT system together with 13 Russian banks were undertaking. “The aim of it is to improve automated online credit lending for small and medium businesses.” And create a level playing field. This was another example of how the Eurasian Union was preparing the ground for a greater role for the more dynamic and innovative SME sector in anticipation for a shift from a resource based economic model to a more diverse demand and consumption one.
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