33. Labour Policy in Five-Year Plans – Industrial Relations, Trade Unions, and Labour Legislation, 2nd Edition

Chapter 33

Labour Policy in Five-year Plans

Chapter Objectives

This chapter will enable students to:

  1. Understand the factors and forces influencing the labour policy under India’s five-year plans
  2. Describe the policy under five-year plans in regard to workers in the organized sector
  3. Describe the policy under five-year plans relating to labour in the unorganized sector
  4. Explain the nature of India’s five-year plans in regard to trade unions and industrial relations
  5. Explain the policy relating to social security and labour welfare under India’s five-year plan
  6. Describe the policy under five-year plans of the country relating to productivity, skill-development and training
  7. Understand the changes in the labour policy under five-year plans after the adoption of the economic and industrial policy of 1991

The Five-Year Programme for Labour, 1946

A Five-year Labour Programme was drawn up in the country in 1946, when the interim national government came to power at the centre. This could be taken as a precursor to the labour policy envisaged in the five-year plans of the country, the first of which came to be launched in 1951. The main policies envisaged in the programme are as follows:

  1. Wages

    1. Statutory prescription of minimum wages in sweated industries and occupations
    2. Promotion of fair wage agreements
    3. Steps to secure living wage to workers in mines and plantations
    4. Study of wage and dearness allowance structure with a view to standardizing occupational terms and wages, and the determination of differentials in wage-rates as between various occupations in an industry.
  2. Working Conditions

    1. Reduction in the hours of work in mines—to bring these in line with the hours of work in factories
    2. Legislation to regulate hours of work, spread-over, weekly rest periods and holidays with pay, for other classes of workers not now subject to regulation
    3. Overhaul of the Factories Act with a view to the prescription and enforcement of right standard in regard to lighting, ventilation, safety, health and welfare of workers
    4. Revision of the Mines Act to bring about similar improvements.
  3. Training

    Organization of industrial training and apprenticeship scheme on a large scale, with a view to improving the productive and earning capacity of workers and enabling them to qualify for promotions to higher grades.

     

  4. Housing

    1. Provision of adequate housing for workers to the extent of resources, both of manpower and materials
    2. Steps to secure for workers in plantations, mining and other categories, and provision of housing.
  5. Social Security

    1. Organization of the Health Insurance Scheme applicable to factory workers to start with, for the provision of medical treatment and monetary relief during sickness, maternity benefit on an extended scale, medical treatment in the case of disablement and the substitution of pensions during periods of disablement and to dependants, in case of death, in place of the present lump sum payments
    2. Revision of Workmen’s Compensation Act with a view to extending to other classes of workers the benefit provided for under the Health Insurance Scheme in respect of disablement and dependant’s benefits
    3. A central law for maternity benefits to secure for other than factory workers the extended scale of benefits provided under the Health Insurance Scheme.
  6. Welfare

    1. Provision of crèches and canteens
    2. Welfare of coal mining and mica mining labour.
  7. Inspection and Administration

    1. Strengthening of the inspection staff and the inspectorate of mines
    2. Expansion of the factory inspection services
    3. Organization of an inspectorate for enforcing legislation relating to the regulation of conditions of workers in shops and commercial establishments, transport services, plantations, and so on
    4. Setting up of an administrative organization for prescribing and enforcing minimum wages in sweated industries
    5. Provision of conciliation and adjudication machinery
    6. Organization of Workmen’s State Insurance Corporation
    7. Organization of Chief Adviser, Factories
    8. Constitution of Labour Bureau
    9. Organization and expansion of Employment Exchange Services.1

The years following the adoption of the programme in 1946 till the launching of the first five-year plan in 1951 witnessed the enactment of a series of significant protective, regulative, social security and labour welfare laws, major amendments in the existing ones, initiation of labour welfare measures, appointment of special committees and strengthening of the inspecting and administrative machineries. This can be clarified by referring to the preceding chapters dealing with labour legislation.

Soon after coming into force of India’s Constitution in 1950, the government decided to embark upon planning as an instrument of the economic and social development of the country. The first five-year plan was launched in 1951. Being the first plan adopted soon after coming into force of the Constitution, the planners and those at the helm of affairs of the government were full of enthusiasm in regard to concretizing the mandates concerning labour as enshrined in the Directive Principles of State Policy and Fundamental Rights of the Constitution (for details, see Chapter 15). It may also be mentioned here that the constitutional provisions relating to labour reflected the promises made by the Indian National Congress at its various sessions, particularly those held at Karachi (1931) and Wardha (1946) (see Chapter 4) in which the Congress had committed itself to adopt specific measures to ameliorate the conditions of labour when it came to power after attainment of Independence. Besides, many eminent personalities, who held key positions in the government at the centre and in the states, had been actively associated with the trade union movement of the country. Jawaharlal Nehru, V. V. Giri, Guljari Lal Nanda, Khandu Bhai Desai, to name a few without any prejudice to others, must have their influences in the formulation of labour policy in the initial five-year plans. By the time the first five-year plan was adopted, a lot of deliberations on labour-related matters had taken place at tripartite forums. A particular mention may be made of Five Year Programme for Labour (1946), Industrial Truce Resolution (1947) and the Fair Wages Committee (1948). The Industrial Policy Resolutions of 1948 and 1956 also had a direct relevance to labour matters. It was under this background that the policy and programme in regard to labour were incorporated in the first five-year plan and those immediately following.

LABOUR POLICY IN THE FIRST FIVE-YEAR PLAN (1951–56)
  1. The basic approach of the plan towards labour problems rested on the considerations which were related ‘on the one hand to the requirements of the well-being of the working class and on the other to its vital contribution to the economic stability and progress of the country.’2
  2. The labour policy enunciations of the plan related inter alia to industrial relations, wages, social security, working conditions, employment and training, and productivity. The broad features of the policy in these areas are described below.

Industrial Relations

The policy of the first plan in regard to industrial relations is described in Box 33.1.

Box 33.1

INDUSTRIAL RELATIONS POLICY UNDER FIRST FIVE YEAR PLAN

The policy statements of the plan relating to industrial relations covered wide areas including the right of workers to organize, rights and obligations of trade unions and employers’ organizations, methods and machineries for settling industrial disputes, collective bargaining, preventive measures for maintaining industrial peace, redressal of grievances, labour management cooperation and work stoppages. Some of the more pertinent policy enunciations in these areas are as follows:

  1. The workers’ right to association, organization and collective bargaining was accepted without reservation as the fundamental basis for fostering mutual relationship. The differences between the parties were to be examined and settled in a spirit of reasonable adjustment with an eye on the good of the industry and well-being of the community. In the last resort, differences might be resolved by impartial investigation and arbitration.

  2. Collective bargaining could derive reality only from the organized strength of the workers and a genuine desire on the part of the employer to cooperate with their representatives in exploring every possibility of reaching a settlement. A legal intervention might, however, be necessary to determine appropriate bargaining agency and for the fixation of the responsibility for the enforcement of collective agreements. The plan also provided guidelines for the determination of bargaining agents.

  3. In the event of failure of bargaining and continuation of the dispute, recourse to conciliation through conciliation machinery set up by the government was to be taken in all cases, except where it had been submitted for voluntary arbitration or where a direct approach to tribunal or labour court was permitted under law.

  4. In certain cases, it would be useful to have recourse to an official inquiry for the purpose of avoiding dispute, eliciting information or educating public opinion regarding the merits of a dispute. A court of inquiry or an inquiry Commission could be set up for the purpose.

  5. In the event of failure of conciliation in settling a dispute, provision should be made for compulsory arbitration or adjudication for ensuring impartial decision. The employers and trade unions should be encouraged to submit every industrial dispute to adjudication in the event of failure of negotiation, failing which, the state would refer such a dispute for compulsory arbitration by Labour Court or Tribunal, as the case might be. The plan suggested, ‘The machinery and procedure relating to compulsory arbitration of disputes should be so designed as to secure the essence of a fair settlement based on the principles of natural justice with the minimum expenditure of time and money’.4

  6. Within an enterprise, disputes involving common interests of workers was required to be pursued in a coordinated manner either through a suitable machinery for joint deliberations or by collective bargaining between the representatives of organized labour and of employer or a group of employers, as the case might be. The establishment of joint committees or works committees for the settlement of differences on the spot was considered ‘key’ to the system of industrial relations envisaged in the plan.

  7. Efforts should be made to encourage elected representatives of workers to function as shop stewards and should be fully associated with the redressal of individual and collective grievances. A works committee should ordinarily be the culminating step in the grievance machinery designed to function within a unit and there might be a separate committee for the purpose of collaboration in dealing with other matters specially relating to production.

  8. The plan justified compulsory postponement of stoppages without notice and while collective bargaining or arbitration was in progress. A strike or lockout without due notice during the pendency of any proceedings or in violation of the terms of settlement, agreement, award or order had to be banned and attended by suitable penalties and loss of privileges.

  9. The plan also specified certain special roles of trade unions and employers’ associations.

  10. The all-India organizations should enlighten their affiliates towards their responsibility in regard to achievement of plan targets.

Wages

  1. The plan advocated the policy of wage-restraint in view of the inflationary pressure then existing in the country and for maintaining economic stability which might be disturbed on account of the execution of the plan. The plan, however, made it clear that any step to restrict wage increases should be preceded by similar restrictions on the distribution of profits.
  2. Wage increases could be permitted (a) to remove anomalies or where the existing rates were abnormally low or (b) to restore the pre-war real wage as a first step towards the living wage through increased productivity resulting from rationalization and renewal or modernization of plant.
  3. Tripartite machinery such as the Indian Labour Conference and Standing Labour Committee should evolve norms and standards which would guide wage boards or tribunals in settling questions relating to wages.3
  4. The plan endorsed the recommendations of the Fair Wages Committee regarding reckoning of wage-differentials.5
  5. The plan also suggested merger of a certain percentage of the basic wage in the dearness allowance for employees in lower wage groups.
  6. Full and effective implementation of minimum wage legislation should be secured during the plan period. A beginning should be made with regard to the fixation of minimum wage for agricultural workers.
  7. Although the quantum of bonus to be paid would be determined by the formulae to be laid down, to prevent the diversion of resources into consumption payment in cash should be restricted, the balance to constitute the savings of workers.
  8. Permanent wage boards with a tripartite composition should be set up in each state and at the centre to deal comprehensively with all aspects of the question of wages, to initiate necessary enquiries, collect data, review the situation from time to time and to take decisions regarding wage adjustments suo moto or on reference from parties or from the government.

Social Security

  1. In view of administrative and other difficulties and financial implications of the ESI Scheme, efforts should be directed during the plan period only to the proper implementation of the scheme in its present form and to putting it on a sound and sure basis.
  2. A measure which could provide for the future of the workers was the institution of provident funds. The Employees’ Provident Funds Act, 1952, which applied to six major industries should be extended in gradual stages to all the industries employing 50 or more persons during the period of the plan as soon as experience was gained and the scheme placed on sound footing.

Working Conditions

  1. In order to get the best out of a worker in the matter of production, working conditions were required to be improved to a large extent. The Factories Act, the Mines Act, the Plantation Labour Act and the proposed central legislation for regulating the conditions of work in shops, establishments and motor transport services had this common object and were sufficient for the purpose. The emphasis in the next five years should, therefore, be on the administrative measures needed for the implementation of such legislation.
  2. In regard to the working conditions in factories, the plan laid emphasis on improvement of standards; ensuring strict compliance with the provisions of the Act; application of the principles of industrial safety, health and welfare; appointment of medical inspectors; research, surveys and investigation relating to occupational diseases and health hazards; and promotion of workers’ education.
  3. The Plantation Labour Act, 1951, was considered a far-reaching piece of legislation. Apart from ensuring its proper implementation, attention was to be given to certain other matters for improving working conditions in plantations, such as: promoting coordination among various recruitment agencies, provision of cottage industries with a view to enhancing the earnings of workers, application of Employees’ Provident Funds Act, 1952, in plantations, improvement of housing and provision of welfare measures by employers.

Employment and Training

Some of the main steps suggested by the plan to bring about an improvement in the existing methods of recruitment, employment and training included:

  1. Improvement of the internal recruiting arrangements made by individual concerns
  2. Conduct of enquiry on the working of employment exchanges
  3. Conduct of manpower surveys
  4. Coordination of training arrangements of various agencies involved.

Productivity

The major emphasis of the plan in regard to productivity was on:

  1. Conduct of productivity studies on scientific basis
  2. Promotion of training within industry (TWI)
  3. Training of officers of Ministry of Labour, employers, organizations and trade unions in the methods of productivity, payment by results and TWI
  4. Setting up of an advisory committee on productivity
  5. Holding regular conferences of managers, technicians and trade union officials.
LABOUR POLICY IN THE SECOND FIVE-YEAR PLAN (1956–61)

The second five-year plan started with a vote of enthusiasm about the progress made in the field of labour under the first plan. The plan, however, admitted that much remained yet to be done in the field. A significant development during the period was the adoption of a socialist pattern of society. Another development of the period was expansion of public sector undertakings. The second plan had to be framed in the light of these developments. The Planning Commission entrusted the task of making recommendations to a representative panel on labour. The labour policy under the plan is based mainly on the suggestions of this panel. The more notable policy enunciations in the second plan in regard to labour are mentioned below.

Trade Unions

  1. A distinction should be drawn between outsiders who were whole-time trade union workers and those who worked upon union work only as a part of their other activities.
  2. The right of trade unions to elect dedicated outsiders to their executives, if they so choose, should not be interfered with. Training of workers in trade union philosophy and methods was considered necessary to enable workers to become self-reliant in this area.
  3. A step in building up strong trade unions was to grant them recognition as representative unions under certain conditions. Since recognition had played a notable role in strengthening the movement in some states, it was suggested that statutory provisions for securing recognition of unions should be made by states where such provision did not exist.
  4. For improving finances of trade unions, the plan suggested a minimum membership fee to be prescribed in the rules of a trade union as a condition precedent, if it desired registration as a recognized union. It was considered equally necessary that there should be stricter enforcement of rules regarding payment of arrears by members.

Employers’ Organizations

For industry-wide bargaining, the plan suggested certification of employers’ associations as representatives of industry in an area. Any agreement entered into by such associations would be binding on all members of the associations as well as on non-members.

Industrial Relations

The industrial relations policy of the second plan is described in Box 33.2.

Box 33.2

INDUSTRIAL RELATIONS POLICY UNDER SECOND FIVE-YEAR PLAN

  1. The plan asserted that industrial peace was indispensable for an undertaking or industry. This could best be achieved by the parties themselves. Labour legislation and enforcement machineries could only provide a suitable framework in which the employers and workers would function.

  2. The plan laid stress on preventive measures for achieving industrial peace. Greater emphasis should, therefore, be laid on avoidance of disputes at all levels including the last stage of mutual negotiations, namely conciliation.

  3. The plan held that once a dispute arose, recourse should be had to mutual negotiations and to voluntary arbitration. However, in intractable cases, where these methods failed, recourse to governmental intervention would be unavoidable.

  4. Penalties for inadequate implementation of awards and agreements by management were to be made sufficiently deterrent. A similar approach was suggested for offending workers. The plan also suggested the constitution of an appropriate tribunal to deal with the cases of violations.

  5. The plan held the view that the representative union should have the sole right of taking up with the management matters or disputes in connection with wages, allowances and other terms, and conditions of service or matters which were appropriate for mutual discussions. Questions relating to the technical and human problems of an enterprise and means of achieving the common objectives of the undertaking could be more effectively handled by works committees.

  6. For the successful implementation of the plan, increased association of labour and management was considered necessary. The plan, therefore, recommended the establishment of councils of management, technicians and workers. Matters falling under the purview of collective bargaining should be excluded from the scope of discussion in the joint councils.

  7. Managements of public sector undertakings should normally refrain from seeking exemptions from labour laws or asking for other concessions not available to private sector.

Discipline

The plan considered it necessary that the whole issue of industrial discipline on its various aspects should be examined and in the meantime, in their mutual interest, the parties should see that tendencies to indiscipline were sternly dealt with.

Wages

The plan came forward with a rather bold policy in regard to wages. The plan asserted that a wage policy aiming at a structure with rising real wages required to be evolved. In spite of their best efforts, the industrial tribunals had not been able to evolve a consistent formula.

  1. The more acceptable machinery for settling wage disputes would be one that gave the parties themselves a more reasonable role in reaching decisions. An authority like a tripartite wage board, consisting of equal representatives of employers and workers, and an independent chairman would probably ensure more acceptable decisions. Such wage boards should be instituted for individual industries in different areas.6
  2. For improvement in real wages, the plan stressed the need for augmenting productivity and introduction of payment by results.
  3. The plan also suggested the conduct of a wage census and revision of existing series of cost of living indices at different centres.

Social Security

  1. The plan suggested the extension of Employees’ Provident Funds Scheme so as to cover industries and commercial establishments employing 10,000 or more persons in the country as a whole and enhancement of the rate of contribution from 61/4 per cent to 8 per cent of the wages.
  2. The plan also proposed the extension of medical benefit under the ESI Scheme to the family members of insured employees and extension of its coverage.

Rationalization

In regard to rationalization, the plan laid emphasis on strict adherence to the principles evolved as a result of agreement between the representatives of workers and employers during the first five-year plan period.

Working Conditions

The plan favoured legislation to regulate working conditions in construction industry and transport services, and also in shops and establishments in those states where laws did not exist.

Welfare

The plan suggested institution of welfare funds for the manganese industry and adoption of welfare fund laws in the states. It also emphasized the need for establishing adequate number of welfare centres, and for training of welfare personnel at different levels.

Contract Labour

In regard to contract labour, the measures suggested by the plan included: studies to ascertain the extent of employment of contract labour and the problems facing them; possibility of progressive elimination of contract labour; earmarking responsibility for the payment of wages and their proper conditions of work; setting up schemes for decasualization of contract labour and securing to contract labour the conditions and protection enjoyed by other workers employed by the principal employer.

Agricultural Labour

The plan admitted that assuring a minimum wage to agricultural labour was not an easy task. However, there was an imperative need to intensify the fixation of minimum rates of wages under the Minimum Wages Act, 1948, and vigorous measures for their implementation. Realizing that the low level of living of agricultural labour was due not so much to low wages, as to lack of sufficient employment opportunities, the plan suggested the need for effective measures for providing greater employment opportunities to them.

Women Workers

The policy statements of the plan relating to women workers included: effective implementation of safeguards available to them under labour laws; their protection against injurious work; provision of crèches for their children; special rest intervals for feeding infants; vigorous implementation of the principle of equal pay for equal work and provision of training facilities so that they could compete for higher jobs.

LABOUR POLICY IN THE THIRD FIVE-YEAR PLAN (1961–65)

The third five-year plan took a note of the developments immediately preceding its adoption. Some of these included: emergence of a body of principles and practices in respect of labour matters growing out of deliberations at tripartite forums; increase in litigations and delays in the disposals of industrial disputes; acceptance of Code of Discipline (1958) covering a wide range of industrial relations matters by all the parties involved; increase in inter-union rivalry and inadequate implementation of awards and agreements. The third plan also recognized the importance of giving the workers a sense of belongingness, stimulating their interest in augmenting productivity and workers’ education programme.

Keeping in view the above background, the third plan expressed confidence that the plan period would witness a notable impact of the ideas emerging during the second plan period. However, the plan also aimed at making its own contributions towards the evolution of labour policy and realization of its basic aims. The measures contemplated under the plan were expected to serve adequately both the immediate and long-term ends of planned economic development. The fruits of progress were intended to be shared in an equitable manner. The principal test of the approach of the plan was the good of all those who were engaged in it—the quality and growth of the individual human being and the service and happiness of the entire community.7 The broad labour policy statements of the plan relating to labour are described in brief below.

Industrial Relations

The industrial relations policies of the third plan are mentioned in Box 33.3.

Box 33.3

INDUSTRIAL RELATIONS POLICY UNDER THIRD FIVE-YEAR PLAN

  1. The development of industrial relations during the plan was envisaged to rest on the foundation established by the Code of Discipline (for details see Chapter 12).

  2. The plan stressed the need for increasing the application of the principle of voluntary arbitration in resolving differences between workers and employers.

  3. The plan also aimed at strengthening the works committees and making a demarcation of the functions of works committees as distinct from those of trade unions.

  4. The plan stressed the need for progressive extension of the scheme of Joint Management Councils. These councils were expected to bridge the ‘gulf between labour and management, create better mutual understanding and facilitate the adoption, on both sides, of an objective approach towards the problems of industry and the workers’8 (see also Chapter 14).

Trade Unions

  1. The plan realized that there was a need for considerable readaptation in the outlook, functions and practices of trade unions to suit the needs of the changed conditions.
  2. The plan endorsed the view that union leadership had to grow progressively out of the ranks of the workers and emphasized the need for spreading the scheme of workers’ education further.
  3. The basis for recognition of unions would be according to the criteria laid down under the Code of Discipline.

Workers’ Education

The plan visualized a large-scale expansion of the scheme of Workers’ Education initiated in 1958. The plan also intended to diversify the programme to secure fuller association of workers’ representatives and their organizations in the scheme.

Industrial Relations Machinery

The plan emphasized the need for giving greater attention in respect of selection and training of personnel of the industrial relations machinery. It was considered necessary to ensure that the quality and equipment of conciliators and tribunals were adequate for the complex tasks before them.

Wages and Bonus

  1. The plan laid emphasis on the need for strengthening the inspection machinery for an effective enforcement of the Minimum Wages Act, 1948.
  2. The plan also envisaged further extension of wage boards introduced in the second plan period to some other organized industries.
  3. As regards principles for wage-fixation, the plan suggested adherence to the relevant recommendations of the Fair Wages Committee and the norm of ‘need-based’ as adopted by the 15th session of the Indian Labour Conference held in 1957. Besides, the plan also suggested giving due weight to incentives for the acquisition and development of skills and improvement in output and quality.
  4. The plan also proposed the appointment of a tripartite Commission to study the problems connected with claims for bonus and to evolve guiding principles and norms for its payment.

Social Security

  1. The plan suggested further extension of the Employees’ Provident Funds Scheme, reduction of employment limit from 50 to 20 and enhancing the rate of contribution from 61/4 per cent to 8 per cent of the wages.
  2. It was also considered desirable to provide some social assistance to the physically handicapped, old persons unable to work and women.

Working Conditions and Welfare

  1. A major stress of the plan was on the need for making efforts to keep abreast of modern developments in regard to working conditions, safety and welfare.
  2. The plan proposed to set up a standing advisory committee to promote measures for bringing down the incidence of accidents in factories and the appointment of a National Mines Safety Council.
  3. The plan was also in favour of a separate safety legislation for building and construction workers.
  4. It also proposed creation of statutory welfare funds for manganese and iron ore mines.

Workers’ Cooperatives

The plan suggested undertaking campaigns for setting up cooperative credit societies and consumer stores for the benefit of workers.

Industrial Housing

The plan considered existing approach to the problem of industrial housing as ‘wholly inadequate’ and suggested devising new ways on an urgent basis so that the workers could be assured of minimum standards in respect of living conditions within a reasonable period.

Contract Labour

It was considered desirable to select occupations in which contract labour would not be permitted, and in respect of occupations where abolition of contract labour was not possible, steps should be taken to safeguard their interests in an effective manner.

Employment and Training

  1. The plan suggested establishment of increasing number of training institutes to meet the demand for craftsmen. It also asserted the need for in-plant training facilities in industrial establishments.
  2. Apprenticeship training scheme was proposed to be placed on a compulsory footing under a central legislation.
  3. The plan also envisaged the expansion of employment exchanges and strengthening of the organization of state employment directorate.

Closure

The steps suggested by the plan in regard to workers displaced as a result of closures included: establishment of a scheme on a contributory basis to provide relief and assistance, help to units facing financial difficulties, temporarily taking over the management of sick units and financing cooperative ventures.

Productivity

The measures contemplated under the plan in regard to productivity included: rationalization of effort in every direction; promotion of group incentive plans; promotion of piece-rate payments; requisite training of workers and adoption of a Code of Efficiency and Welfare.

The situation created by the Indo-Pakistan conflict in 1965, successive years of drought, general rise in prices and erosion of resources delayed the finalization of the fourth plan. Instead, between 1966 and 1969, three annual plans were formulated within the framework of the fourth plan.

LABOUR POLICY IN THE FOURTH FIVE-YEAR PLAN (1969–74)

The labour policy adopted during earlier plans continued to be retained in the fourth plan. However, the thrust of the plan was expansion of employment opportunities. Some major developments during the third plan period had been: enactment Payment of Bonus Act, 1965, which was intended to minimize growing industrial disputes on the question of bonus; enactment of Shops and Establishments, and Labour Welfare Funds Acts in states; and appointment of the National Commission on Labour in 1966. The main features of the labour policy adopted in the fourth plan are described below.

Industrial Relations

The industrial relations policy of the fourth plan is mentioned in Box 33.4.

Box 33.4

INDUSTRIAL RELATIONS POLICY UNDER THE FOURTH FIVE-YEAR PLAN

Labour relations continued to be regulated by regulative and protective legislation initiated during earlier plans. Changes in policy in regard to industrial relations were expected to be considered after the National Commission on Labour submitted its recommendations.

Social Security

The activities under the ESI Scheme were proposed to be expanded in order to provide medical facilities to the families of insured employees, and to bring under the coverage of the scheme shops and commercial establishments in selected centres, non-power factories employing 10 or more persons, running staff of road transport undertakings and all centres having a concentration of 500 or more insurable employees.

Welfare

Programmes for welfare centres, holiday homes and recreational centres were envisaged in the state plans.

Industrial Safety

The plan proposed the strengthening of the ‘Safety, Health and Hygiene’ divisions of the Central and Regional Labour Institutes. The plan also laid emphasis on intensifying the activities of the National Safety Council. Stress was also laid on promoting safety in mines.

Labour Administration

The plan laid stress on strengthening labour administration for better enforcement of labour laws, research and studies on matters relating to labour relations and labour laws, and expansion of training programmes for labour officers. The plan also envisaged introduction of training in industrial relations for managerial personnel and university teachers associated with labour subject and improvement of labour statistics.

Training

The main emphasis of the plan in the field of training had been on: expansion of industrial training institutes and promotion of apprenticeship training.

Employment Exchanges

The employment service was proposed to be expanded through strengthening of employment exchange machinery, university employment information and guidance bureaux, vocational guidance and counselling centres and employment market information programme for collection of employment data.

Employment Generation

As stated earlier, the major thrust of the fourth plan was on employment generation and expansion. The first step in this direction was on the study and the assessment of the unemployment situation in the country. At the same time, it focused attention on the adoption of labour-intensive schemes in various areas of economic activities. The main areas emphasized included: road construction, minor irrigation, housing small-scale industries, development of agriculture, rural infrastructure including rural transport and communication, urban development, and general and technical education.

LABOUR POLICY IN THE FIFTH FIVE-YEAR PLAN (1974–79)

The fifth five-year plan was drafted in late 1973. At that time, the country was facing unprecedented financial crisis resulting from rapidly rising prices of crude oil and mounting inflationary pressure. These forced a series of revisions of the original plan. The plan was subsequently approved in late 1976, but was rejected in 1978 by the coalition government led by Morarji Desai as prime minister. The new government wanted incorporation of its own priorities and programme in the plan. For all practical purposes, the fifth plan remained operative only for about 1 year. The major emphasis of the plan was on fighting inflationary pressure, adoption of measures for achieving self-reliance and improving the living standard of people below poverty line.

As regards labour policy, the earlier policies continued to operate, but with less vigour. Some of the notable policy statements of the plan relating to labour are as follows:

  1. The plan laid emphasis on greater mobility of labour, removing geographical barriers and promoting interstate migration.
  2. The employment services were sought to be expanded with comprehensive packages.
  3. The plan aimed at expanding the coverage of the ESI scheme and the Family Pension Scheme under the Employees’ Provident Funds Act, 1952.
  4. The plan suggested improving labour welfare amenities by integrating the existing schemes into a comprehensive one.
  5. The plan also asserted the need for adopting legislative measures for ensuring equal pay for equal work, abolition of bonded labour system, promotion of interstate migration and compulsory recognition of representative unions.

Although the labour policy under the fifth plan lacked the enthusiasm of labour reforms contemplated under the initial plans, some notable programmes relating to labour were incorporated in the 20-point programme of 1975. These included:

  1. Declaring bonded labour as illegal
  2. Review of laws on minimum agricultural wages
  3. Promotion of schemes of workers’ association in industry
  4. Adoption of new apprenticeship schemes with a view to enlarging employment and training, especially of weaker sections. Vigorous efforts were made to implement the programme in the initial period of its adoption, but the seriousness started diminishing in the course of time. These programmes with modifications are still in operation in the country.
LABOUR POLICY IN THE SIXTH FIVE-YEAR PLAN (1980–85)

When compared to the fifth plan, the sixth five-year plan gave a little more serious attention to the problems of labour. In regard to labour and labour welfare, the plan stated, ‘the aim is to promote cooperation between workers and employers in order to improve production and working conditions and to promote the interests of the community at large’.9 The plan accepted that the measures in the earlier plans gave more attention to the problems of industrial labour in comparison to those in the unorganized sector. The plan took a note of the diversification of labour policy which was manifested in the adoption of various pieces of labour laws enacted during the preceding period. The policy adopted under the plan in some specific areas concerning labour is presented in a summary form below.

Industrial Relations

The policy of the plan in regard to industrial relations is described in Box 33.5.

Box 33.5

INDUSTRIAL RELATIONS POLICY UNDER THE SIXTH FIVE-YEAR PLAN

The plan considered workers’ participation in management at the level of enterprise as an integral part of the industrial relations system of the country. It was expected to be an effective instrument of modern management and was intended to be made a vehicle of transforming the attitude of both employers and workers for establishing a cooperative culture in industry. Based on the recommendations of a committee consisting of representatives of employers, trade unions, government and academicians, the plan asserted the need for enacting legislation providing for three-tier participative forums at shop floor, plant and corporate/board levels. The plan realized that ‘there is a very wide area of relationship in an enterprise outside the domain of collective bargaining where employers and workers can work jointly for the benefit of different interest groups and for the common interest of the enterprise as a whole’.10 Most of the recommendations of the committee were subsequently incorporated in the Participation of Workers in Management Bill, 1990 (see Chapter 14).

The plan also considered it necessary to strengthen tripartite machineries so that they might contribute to evolve the broad framework of labour policies and programmes after full consideration and discussion among all interests concerned. At the industry level, standing tripartite committees could serve a useful purpose in identifying the bottlenecks and deficiencies and suggesting corrective measures.

Trade Unions

The plan emphasized the need for overcoming multiplicity of unions, union rivalries and ills of outside leadership. The plan also stressed the need for adopting serious efforts by trade unions to promote a spirit of greater involvement of workers in the enterprise to fulfil the norms of greater efficiency and to achieve excellence in overall performance of the enterprise.

Social Security and Labour Welfare

  1. The plan suggested extension of the coverage of both the Employees’ Provident Funds and Employees’ State Insurance Schemes.
  2. Recognizing the utility of the welfare fund laws, the plan suggested undertaking welfare programmes by the state governments for the benefit of workers and artisans in the rural sector.
  3. The plan also recommended integration of welfare and social security services relating to medical care and income security during sickness so that overlapping could be avoided.

Safety and Working Conditions

The plan laid stress on strengthening institutional arrangements and promotional measures in regard to safety in factories and mines. Besides, the plan suggested adoption of effective measures for promoting safety-consciousness at all levels, overall improvement of safety education and provision of safety arrangements in industrial enterprises.

Apprenticeship Training

The plan suggested that along with the extension of apprenticeship schemes, efforts should be made to improve the quality of training, provision of hostel for outstation apprentices, increase in stipend, effective supervision and better liaison with industry.

Organization of Rural Workers

The plan considered it necessary for the state machinery to facilitate the process of unionization of rural workers in the initial stages. The government should enact suitable legislation for conferring specific rights to the rural workers in matters relating to the formation and registration of their unions and giving their registered unions certain immunities.

Agricultural Wages

The plan emphasized effective enforcement of the Minimum Wages Act, 1948, in agriculture, simplification of the procedure for coverage and revision, linking of minimum wages to consumer price index numbers and associating workers’ representatives in the implementation of the provisions of the Act.

Specific Categories of Labour

The plan also made certain recommendations in regard to rehabilitation of bonded labour, abolition and regulation of the conditions of child labour, and welfare of women labour.

LABOUR POLICY IN THE SEVENTH FIVE-YEAR PLAN (1985–90)

The major thrust of the seventh five-year plan was on fighting unemployment and poverty, especially in the rural areas. Apart from giving due emphasis on general industrial development, the plan strongly suggested development of agriculture, horticulture, fisheries, irrigation, housing, transport and adoption and continuance of special beneficiary-oriented programmes for specific target groups such as IRDP, TRYSEM, EGS and so on. In addition, the plan also laid emphasis on effective manpower planning.

As regards labour policy, the thrust of the plan was on capacity utilization, and promptness of efficiency and productivity. The plan asserted that the success of labour policy had to be adjudged on the basis of the productivity standard that it helped the economy to produce. It, however, conceded that while technical factors and state of technology were crucial in determining productivity levels, there was no gainsaying the fact that discipline and motivation of workers, their skill, the state of industrial relations, the extent of effectiveness of participation of workers, the working climate and safety practices were also of great importance.11 Some specific policy statements of the plan in certain labour fields are mentioned in the following sections.

Industrial Relations

Industrial relations policy of the plan is described in Box 33.6.

Box 33.6

INDUSTRIAL RELATIONS POLICY UNDER THE SEVENTH FIVE-YEAR PLAN

The plan conceded that there was considerable scope for improvement in industrial relations which would obviate the needs for strikes and the justification for lockouts. For proper management of industrial relations, it was considered necessary to identify the responsibilities of the unions and employers and to avoid inter-union rivalry and intra-union divisions.

Training

The plan suggested that training should suit the requirements of industry and should be of best quality. This would help in ensuring quality output of industrial goods and raise their competitiveness both in domestic and foreign markets. The plan also suggested modernization ITIs.

Industrial Safety

Recognizing that technological changes were taking place at fast pace and production processes increasingly got diversified, the plan suggested adoption of promotional services in the field such as survey, research, training and other supportive services. Factory inspection was suggested to be made more effective and foolproof.

Wage Policy

The basic approach of the plan was a rise in the levels of real incomes in consonance with increases in productivity, promotion of productive employment, improvement in skills and reduction in disparities.

Unorganized Labour

As regards unorganized labour in the rural areas, the plan emphasized to continuance of the special target group programmes for employment creation and income generation with more vigour. The plan also suggested making efforts not only to train and upgrade the skills of the workers but also to educate them and make them aware of the programmatic and legislative provisions available to them. Genuine and effective voluntary organizations were proposed to be involved in the process of organizing the poor and in actual implementation of the schemes. In regard to unorganized labour in urban areas, the plan stressed the need for implementation of the relevant laws concerning them.

Bonded Labour, Child Labour and Women Labour

  1. The plan considered it an important social obligation to see that the law relating to bonded labour was enforced and the freed bonded labourers were rehabilitated.
  2. In regard to child labour, the plan conceded that it was not feasible to eradicate the problem at the existing stage of economic development. The plan, however, suggested that attention should be focused on making the working conditions of child labour better and more acceptable socially.
  3. As regards women labour, the plan suggested giving them special recognition and providing them requisite facilities for bringing them into the main stream of the economic growth.

The period from 1989 to 1991 was a period of political instability in the country. As such the five-year plan could not be implemented. Between 1990 and 1992, there were only annual plans. In 1991, India faced a major crisis in foreign exchange reserves. India was forced to reform the existing economy under pressure. In 1991, the government had to adopt an altogether new economic and industrial policy based on globalization, liberalization and privatization (for details, see Chapter 5). This development profoundly affected the labour policy under the next and subsequent five-year plans.

LABOUR POLICY IN THE EIGHTH FIVE-YEAR PLAN (1992–97)

The main objectives and thrust of the labour and labour welfare programmes under the eighth five-year plan laid emphasis on ‘skill-formation and development, strengthening and modernization of employment service, promotion of industrial and mines safety, workers’ education, promotion of self-employment, rehabilitation of bonded labour, enforcement of labour laws, especially those relating to unorganized and women and child labour, promotion of a healthy industrial relations situation and encouragement of workers’ participation in management’.12 The specific policy statements in particular areas are mentioned below.

Vocational Training

The plan was of the view that while expansion and diversification of vocational training including craftsmen and apprenticeship training was necessary, upgradation of training, curricula and equipments, tools and other infrastructure were equally important. The plan also aimed at enlarging the size and scope of the centrally sponsored vocational training project initiated in the seventh plan under the assistance of the World Bank. The coverage of the project was sought to be enlarged, which included modernization of equipment and high-tech courses, establishment of new ITIs and wings for women, introduction of new trades for women and upgradation of vocational rehabilitation centres for the physically handicapped.

Employment Service

In regard to employment service, the plan laid stress on computerization of employment exchanges, assessment by employment exchanges of the magnitude of labour adjustment resulting from the restructuring of trade and industry, liberalization, deregulation of industry and redeployment of labour in self-employment.

Labour Welfare

The plan aimed at strengthening and expanding the institutional mechanisms in the organized sector intended to ensure adequate levels of earnings of workers, safe and human conditions of work and access to some minimum social security benefits. The plan emphasized the need for adopting steps on larger scale to improve the quality of working life of the unorganized workers.

Industrial and Mines Safety

The plan suggested that greater attention should be paid to the assessment and control of hazards to workers and the general population and to the development of safety devices, protective gears, appropriate design of the machines and tools, plant layout, and work and workplace layout. The plan also envisaged programmes relating to application of ergonomics for improvement of working conditions in factories and docks, establishment of a system of chemical safety, strengthening of the system of monitoring improvement of the occupational health status and certification of personal protective equipments. In the field of mines safety, the plan suggested augmenting of support capabilities of the Directorate General of Mines Safety so that problems relating to humidity, mine fires, ground control and stability of illumination might be dealt with effectively. The plan also proposed to develop computer programmes for monitoring the health of the miners.

Industrial Relations

The industrial relations policy of the plan is mentioned in Box 33.7.

Box 33.7

INDUSTRIAL RELATIONS POLICY UNDER THE EIGHTH FIVE-YEAR PLAN

The plan asserted the need for enacting a suitable legislation for ensuring effective implementation of the schemes of workers’ participation in management. Besides legislation, the plan suggested proper education and training of workers and developing cooperation from both employers and workers so that the problems emanating from multiplicity of trade unions and inter-union rivalries could be effectively tackled.

Rehabilitation of Bonded Labour

The responsibility for identification, release and rehabilitation of bonded labour has been rested with the state governments. The centrally sponsored scheme of financial assistance on a matching grant basis was introduced in the seventh plan. The eighth plan proposed the continuation of the scheme on a larger scale. The plan also suggested greater involvement of voluntary agencies in governmental efforts to identify and rehabilitate the bonded labour for which they were to be given financial assistance.

Unorganized Workers

The plan considered it desirable to associate workers’ organizations, non-governmental voluntary organizations and organized trade unions in ensuring implementation of statutorily fixed minimum wages, instead of solely relying on the official enforcement machinery. The plan also suggested the development of suitable organizational arrangements in order to provide a minimum measure of social security for unorganized workers. In regard to child labour in the unorganized sector, the plan sought to expand the National Child Labour Project with a view to ensuring suitable rehabilitation of children withdrawn from employment. Programmes for women labour in the plan included: financial assistance to voluntary organizations for taking up action-oriented projects, studies relating to women labour, organization of child care centres, welfare projects for women workers in construction industry and strengthening of the enforcement of the Equal Remuneration Act, 1976. The plan also aimed at the expansion of the rural workers education programmes undertaken by the Central Board for Workers’ Education.

LABOUR POLICY IN THE NINTH FIVE-YEAR PLAN (1997–2002)

The ninth five-year plan was framed when a series of measures of economic reforms based on the economic and industrial policy of 1991 were in operation. Some of these measures comprised delicensing, deregulation and liberalization of mechanism governing import and export and foreign exchange regulations. Efforts were in progress making Indian economy more competitive and to integrate the national economy with the global economy. The ninth plan asserted ‘the social, economic and political conditions that existed in the initial years of planning in the country have changed. The trends in demographic, social and economic developments, that have taken place, are not always the same as expected and the government policies have to be adjusted to the changing situation’.13 These changes have their potent impact on labour policy and programme envisaged under the ninth plan. Some notable features of the labour policy contemplated under the plan in particular areas are described below.

Labour and Labour Welfare

  1. In public sector undertakings, in which trade unions had been negotiating directly with the managements, the role of the government as an arbitrator in industrial disputes was suggested to be reduced drastically. Both employers and employees should select a mutually agreed arbitrator, independent of the government, to resolve such disputes.
  2. The plan suggested that the resources of the labour administration infrastructure should become available increasingly for studying the working conditions in the unorganized sector.
  3. The plan suggested that the trade unions should contribute to promoting changes in the work culture. The contribution from trade unions was also required for creating an environment that encouraged linking of rewards to labour with productivity improvement in a more flexible structure of the firms that delivered such services.

Labour Laws

  1. The plan stated, ‘Benefits from existing labour laws reach a minor part of the work-force because of administrative difficulty in implementation. Ninth plan will aim at reducing the number of laws which determine relations between workers and employers, with the objective that a much smaller number of laws can reach the entire work-force’.14 Action contemplated in the plan in this regard included:
    1. Identification of laws which were no longer needed and to repeal them
    2. Identification of laws which were in harmony with the climate of economic liberalization and hence needed no change
    3. Amendment of laws which required changes
    4. Revision of rules, regulations, orders and notifications.
  2. In order to alleviate the sufferings of the unorganized rural and urban labour, the plan stressed the need for proper enforcement of the Minimum Wages Act, 1948. The plan also suggested periodic revision of minimum wages in all the states, which would ensure a level of income above the poverty line. The state governments were also requested to take measures to reduce interstate disparity in minimum wages. The plan was of the view that, if properly enforced, minimum wages could offer greater potential for income transfers than special employment generation schemes.15

Social Security

  1. In regard to the broader aspect of social security, the plan observed, ‘given the situation where the provision of social security encounters fiscal constraints and administrative limits to the enforcement of laws, the only feasible approach to reach social security to the population is by creating conditions wherein the “economically active” segment of population gets a reward for its labour, which affords a reasonable level of basic needs’.16
  2. The plan stated that efforts would be made to extend the application of the ESI scheme to all factories employing five or more persons.
  3. A scheme of social security for the unorganized rural labour would be designed to provide protection during the stoppage or diminution of income.
  4. The design of the efforts for providing social security to the unorganized labour was intended to be on location-specific basis.

Unorganized Workers

  1. The health, hygiene and industrial safety set-up, which had so far remained confined mainly to manufacturing sector, should allocate a substantial part of its resources to providing services to the agricultural sector.
  2. The existing welfare schemes for the unorganized sector, which were widely scattered and fragmented, would be properly integrated.
  3. The social security schemes would have to be operated and managed jointly by the employers, employees and the representatives of the local authority. The support from the government would be in the initial stage.
  4. The plan suggested that steps should be taken to improve the lot of migrant labour with social security measures.
  5. An effort was intended to be made to extend the coverage of the National Social Assistance Programme to the casual and self-employed workers in informal sector, both in the rural and urban areas.

Employment Service

  1. The plan stressed the need for reorientation of employment service in the context of emerging markets.
  2. The plan suggested that employment exchanges should be organized under a local society which could raise resources from the beneficiaries the employees and the employer in return for the information provided.
  3. The ability of the existing employment service set-up to identify the job-seekers could be utilized for determining those eligible to get benefits related to unemployment.
  4. The employment service should pay greater attention to compilation and dissemination of comprehensive labour market information, employment promotion and vocational guidance, and give up excessive reliance on traditional registration and placement activities.

Vocational Training

In regard to vocational training, the plan suggested that the existing instructional packages in different trades should be updated and made more attractive. The plan laid particular emphasis on women training and suggested close liaison with different departments concerned with women’s development. It also sought to strengthen accreditation facilities for the training institutes. It also suggested proper linkage between vocational training and vocational education, both at the central and state levels.

Child Labour

The plan suggested modification of the National Child Labour Project and strengthening and enlargement of the activities under the project.

Employment and Manpower Research

The plan aimed at strengthening the activities of the Institute of Applied Manpower Research, especially in regard to research in employment and unemployment.

LABOUR POLICY IN THE TENTH FIVE-YEAR PLAN (2002–07)

Conceding that labour policy of the earlier plans had hitherto been generally focused on the organized sector, the tenth plan stressed on taking initiatives for those workers who were engaged in the unorganized sector. The plan held that availability of gainful employment was basic to improving the lot of workers. The labour policy would have to interact closely with the economic policy that concerned with labour-intensive sector. In order to promote employment to the labour force, the plan aimed at restructuring of many of the institutions, laws and programmes, particularly those relating to vocational training system, occupational health and safety, labour regulations and social security.

The basic features of the more notable elements of labour policy of the tenth plan in certain specific areas relating to labour are described below.

Review of Labour Laws

  1. The plan asserted the need for legislations intended to protect the rights of labour in such areas as ‘to form unions for the purpose of collective bargaining, laying down minimum obligations which employers must meet with regard to social benefits, health and safety of workers, provision of special facilities for women workers, establishing grievance redressal mechanisms….’17
  2. The plan suggested that restructuring of the labour laws must bear in mind that small establishments employing less than 20 per cent accounted for more than 60 per cent of employment and, asserted the need for drafting a single labour legislation applicable to all such establishments, which should provide for safety and social security to the workers employed in them.
  3. The plan suggested changes in the Industrial Disputes Act, 1947, to provide ‘more flexibility in hiring and firing of workers in order to increase productivity, efficiency and allow a more flexible adjustment process in the changing demand market’.18
  4. The plan suggested repeal of the Contract Labour Act in order to ensure more flexibility in recruiting labour without putting a long-term financial commitment on the employer.
  5. Other suggestions of the plan in regard to labour law reforms included provision of the payment of unemployment benefits by the principal employer and payment of pension to contract labour through placement agencies; exempting small-scale industrial units from the rigours of various labour laws and authorizing the state governments to amend labour laws as per their requirements.

Social Security

  1. The plan stressed the need for a long-term perspective in regards to social security. The plan conceded that a budget-funded social security system similar to that available in developed countries was not possible in India and suggested exploration of new resources to cover additional categories of workers.
  2. The plan stressed the need for creating a legislative and administrative framework for significant coverage of the unorganized workers under social security.
  3. For extending the coverage of social security measures for workers in the unorganized sector, the plan suggested giving encouragement inter alia to establishment of cooperative, self-help groups, mutual benefit associations managed and financed by occupational groups and workers, and voluntary health insurance and pension schemes.
  4. The plan proposed formulation of a policy on social security framework at the national level for different groups of workers and employees.
  5. The plan also proposed improvement of the Employees’ Provident Funds and ESI schemes through the help of information technology, and their extension to the unorganized sector through innovative approaches.

Labour Welfare

The plan envisaged making efforts to constitute statutory welfare funds for additional employments such as fish-processing and salt-making, and enhancing the coverage of the National Social Assistance Programme.

Wages

The plan proposed the strengthening of the enforcement machinery under the Minimum Wages Act, 1948, and enhancement of penalties for violations of its provisions.

Vulnerable Groups of Workers

In regard to child labour, the plan suggested undertaking regular surveys to assess the number of child workers and placing them in schools. It also emphasized the need for imparting vocational skills to children under 14 in schools set up under the National Child Labour Project.

As regards bonded labour, the plan favoured continuance of the centrally sponsored scheme relating to their release and rehabilitation. It also suggested induction in the vigilance committees representatives of trade unions and NGOs as co-opted members.

In regard to migrant workers, the plan suggested key actions both at the destination and at the point of origin of migration so that their vulnerability might be reduced and their capacities enhanced.

Vocational Training

  1. The plan aimed at bringing major reforms in the existing vocational training system, and contemplated initiatives for increasing the demand for training and increase in the capacity for training.
  2. The plan suggested giving priority to the need of local small employers, and modification of the apprenticeship scheme keeping small employers in view.
  3. The strategies contemplated in the plan in regard to skill-development included: enunciation of policy by the government; increasing literacy standards and production skills in the informal sector; conduct of surveys for determining training needs; motivating associations engaged in skill development in the informal sector; opening training-cum-production centres; restructuring of training institutions as autonomous bodies and promoting coordination among the training institutions at the district level.
LABOUR POLICY IN THE ELEVENTH FIVE-YEAR PLAN (2007–12)

The eleventh plan formulated its labour policy keeping in view the needs of economy in the global and domestic perspective. The major thrust of the plan in regard to labour is on improving the conditions of workers in the unorganized sector commensurate with the requirements of the policy of employment generation, skill-development and productivity. Realizing that earlier plans could not provide adequate protection to workers in this sector, the eleventh plan envisages legal and other measures for providing minimum social security benefits to them and to regulate the conditions of their employment.

Unlike the initial plans under which the focus had been on the workers in the organized sector, the eleventh plan does not say much about improvement of their condition. The plan has, however, laid stress on promoting health and safety, skill development and productivity of labour in this sector. The insufficient treatment to workers in the organized sector may presumably be due to the assumption that their organizations would be able to protect and promote their interests by organized action, which has been the usual feature of most of the economies with dominance of the private sector. Keeping in view the competition faced by the Indian industries in the global as well as domestic market, the plan has gone to the extent of considering Chapter V-B of the Industrial Disputes Act, 1947, containing special provisions relating to lay-off, retrenchment and closure of undertakings, and the Contract Labour (Regulation and Abolition) Act, 1970, as ‘exit barriers’ in the investment climate in industry and hindering ‘flexibility’ causing inhibition to employment.

The broad policy enunciations of the plan in regard to labour are described below.

Social Security

  1. The eleventh five-year plan clearly stated that in the plan ‘social security will be treated as an inclusive concept that also covers housing, safe drinking water, sanitation, health, educational, and cultural facilities for the society at large.’19
  2. The major thrust of the plan has been focused on providing social security to workers in the unorganized sector. The plan emphasized the need for a statutory package of national minimum social security to which all unorganized workers, agricultural and non-agricultural, would be entitled.
  3. A protective social security mechanism, taking care of the adversity aspects of ill health, accidents, death and old age for workers in the unorganized sector would be established at the core. Other vulnerability aspects would be taken up on the availability of resources.
  4. Efforts would be made to widen the coverage of the ESI and EPF schemes and to strengthen them. The government would strive to streamline the delivery system to reduce harassment and corruption under these schemes.
  5. The two schemes would be extended to all citizens in the country, so that the most vulnerable people, who needed it most, could use it.
  6. The plan also proposed to launch a scheme for providing employment to persons with disabilities. Under the scheme, the government would be reimbursing the employers’ contribution in the organized sector in the EPF and ESI schemes for the initial 3 years with the aim of creating jobs for physically challenged persons.

Labour Laws

  1. The eleventh plan has conceded that the most important exit barrier relates to Chapter V-B of the Industrial Disputes Act, 1947, under which units with more than 100 employees cannot exit an unprofitable enterprise without the consent of the concerned state government. This consent is often difficult and time consuming to obtain.20
  2. The plan also conceded that lack of flexibility of some labour laws such as Chapter V-B of the Industrial Disputes Act, 1947, and Contract Labour (Regulation and Abolition) Act, 1970, which focus on job protection, inhibits employment.21
  3. The plan, however, holds that the amendments in the labour laws need to be based on a consensus, taking into account the interests of the stakeholders. This applies to any suggested amendments in respect of the Industrial Disputes Act, 1947, and the Contract Labour (Regulation and Abolition) Act, 1970, as well.
  4. The plan recommended expediting the consideration of the Participation of Workers in Management Bill, 1990, and amendment to the Payment of Bonus Act, 1965, and the Minimum Wages Act, 1948, which has been pending for a long time.
  5. The plan suggested the expansion of the scope of Employees’ State Insurance Act, 1948, and the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, so as to cover certain segments of workers in the unorganized sector also.
  6. Where sector-specific relaxation in labour laws is sought, the administrative ministries/departments should first formulate them, hold discussions with all stakeholders including central trade unions and refer them for the consideration of Ministry of Labour & Employment only after a consensus is reached.
  7. While formulating amendment proposals of various labour laws, the recommendations of the second National Commission on Labour, ILO the Conventions, tripartite forums like Indian Labour Conference and Industrial Committees, and bipartite bodies should be taken into account.

Wages

  1. The plan has asserted that a national policy for fixing minimum wage would be crystallized and made effective.
  2. Discrimination in wages based on gender and age would be abolished and penalized.
  3. The recovery of minimum wages would be simplified and equated with the recovery of land revenue.

Child Labour

  1. With a view to improving the effectiveness of ongoing programme relating to child labour, the plan has suggested such steps as conduct of child labour surveys, tracking and monitoring the child labour withdrawn from work, economic rehabilitation of the families of withdrawn child labour, improvement and standardization of curriculum of basic education, training of teachers, provision of vocational training and strengthening of health facilities for child workers.
  2. The focus of efforts to eradicate child labour has been suggested to be on location-specific, confined to those pockets where employers are prone to be exploitative in accessing the cheapest cost labour.
  3. The plan also suggested convergence of child labour eradication programmes with other sectoral programmes of poverty alleviation and employment generation of different ministries.
  4. The plan envisaged that during the plan the expansion of the child labour project would be a centrally sponsored scheme.

Women

In regard to women including women workers, the plan proposed a fivefold agenda including (i) ensuring economic empowerment, (ii) engineering social empowerment, (iii) enabling political empowerment, (iv) effective implementation of women-related legislations, and (v) creating institutional mechanisms for gender mainstreaming and strengthening delivery mechanisms. The plan also intends to work towards a social security policy that will mitigate the negative impact of globalization on women.

Occupational Safety and Health

Some of the more notable of the proposal of the eleventh plan in regard to occupational health and safety are as follows:

  1. Formulation and declaration of a national policy on occupational safety, health and environment, and establishment of an implementation mechanism.
  2. Review of the safety policy for mines in view of the new policy of privatization.
  3. Establishment of Council for Mines Safety and Health to cater to the needs of small-scale and unorganized mining ventures.
  4. Comprehensive review of legal mechanism, including reporting of accidents in all factories, mines, ports and docks, analysis of the causes, improvement measures based on the analysis, prosecution of offenders and judicial machinery.
  5. Upgradation of Directorate General of Mines Safety and Directorate General of Factory Advice Service and Labour Institutes as nodal agencies with database and expertise.
  6. Building up adequate research and development capacities in the country in the field of occupational safety and health.

Skill Development and Training

  1. The thrust of the plan is on creating a pool of skilled personnel in appropriate numbers in line with the requirements of the ultimate users such as industry, trade and service sectors. This has been considered necessary to support employment expansion envisaged as a result of inclusive growth, including in particular the shift of surplus labour from agriculture to non-agriculture.
  2. The plan envisages launching of a major skill development mission with the aim of creating a pool of skilled personnel in appropriate numbers with adequate skills in line with the employment requirements across the entire economy. The emphasis will be on the 20 high-growth, high-employment sectors.
  3. Public-private partnership is proposed to be the major vehicle for absorbing public expenditure in skill development in the plan. The plan suggested creation of an enabling environment for private investment in skill training along with financial contribution from the government.
  4. The plan also suggested transforming of employment exchanges as career counselling centres and upgrading and strengthening of state councils of vocational training.
SUMMARY
  1. The main factors influencing the labour policy under five-year plans of the country have been constitutional mandates, contents of tripartite conclusions, industrial policy resolutions adopted from time to time and recommendations of the committees and commission appointed at intervals to deal with labour matters.
  2. The First Five Year Plan (1951–55): Stress of the labour policy adopted in the first five-year plan in different areas was on:

    Industrial relations: (i) Regulation of the workers’ right to form association and to bargain collectively; (ii) in the event of failure of negotiations, recourse to conciliation and voluntary arbitration, and in the last resort, to adjudication; (iii) encouragement to the formation of works committees and joint committees at the plant level; and (iv) restrictions on strikes and lockouts in specified situations.

    Wages and bonus: (i) General policy of wage-restraint; (ii) reckoning of wage-differentials based on the recommendations of the Fair Wages Committee; (iii) effective implementation of minimum rates of wages fixed under the Minimum Wages Act, 1948; (iv) appointment of wage boards both at the centre and in the states to deal comprehensively with the question of wages; and (v) need for evolving formula for the determination of quantum of bonus.

    Social security: Effective implementation of the ESI Act, 1948, and gradual extension of the EPF Act, 1952.

    Working conditions: Effective implementation of laws dealing with working conditions in factories, mines and other establishments, and improvement of standards relating to safety and health.

    Employment and training: (i) Improvement of internal training programme and coordination of training arrangements of various agencies; and (ii) study of the working of employment exchanges.

    Productivity: (i) Conduct of productivity studies; (ii) promotion of TWI; and (iii) training of officials of government, employers and trade unions in productivity.

  3. The Second Five Year Plan (1956–61): The major developments influencing the labour policy under the second plan had been: adoption of socialistic pattern of society and expansion of public sector undertakings. The labour policy adopted in the plan is based primarily on the recommendations of a representative panel on labour. Some more notable labour policy enunciations emphasized under the plan were:

    Industrial relations: (i) Emphasis on statutory recognition of representative union and prescription of a minimum membership fee; (ii) stress on certification of region-cum-industry level employers’ organizations for promoting industry-wide bargaining; (iii) stress on preventive measure for promoting industrial peace and strengthening the institution of works committees; (iv) emphasis on mutual negotiations for resolving industrial disputes and recourse to governmental intervention in the last resort; (v) promoting establishment of Joint Councils of Management; and (vi) enhancement of penalties for non-implementation of awards and agreements.

    Wages: (i) Need for establishing tripartite wage boards for individual industries in different areas for working out wage-structure; and (ii) conduct of wage census and revision of cost of living indices.

    Social security: (i) Extension of the EPF Scheme and enhancement of the rate of contribution; and (ii) extension of medical benefit under the ESI Scheme to the family members of the insured employees.

    Others: (i) Need for enacting legislation for regulating working conditions in construction industry and transport services; (ii) Need for enacting welfare fund laws for certain mines and in the states; (iii) adoption of measures for improving the conditions of contract labour; (iv) effective implementation of Minimum Wages Act, 1948, in agriculture; and (v) adoption of measures for providing additional protection and facilities to women workers and implementation of the principle of equal pay for equal work.

  4. The Third Five Year Plan (1961–65): The third plan framed its labour policy in the light of the developments in the field of labour immediately preceding its adoption. The notable among these included: principles emerging out of tripartite deliberations, increase in industrial disputes, acceptance of the Code of Discipline by all the concerned parties and increase in union rivalries. The more notable of the labour policy enunciations emphasized under the plan are briefly described below.

    Industrial relations: (i) Need for developing inside union leadership; (ii) Code of Discipline to serve as the basis for promoting industrial peace and for recognition of union; (iii) Stress on voluntary arbitration for settling industrial disputes; and (iv) strengthening of Works Committees and expansion of the scheme of Joint Management Councils.

    Social security: Further extension of the EPF Scheme, reduction of employment limit and enhancement of the rate of contribution.

    Working conditions: (i) Stress on efforts to keep abreast of modern development in regard to working conditions, safety and welfare; and (ii) Need for enacting separate safety legislation for building and construction workers.

    Wages and bonus: (i) Effective enforcement of the Minimum Wages Act, 1948; (ii) adherence to the recommendations of the Fair Wages Committee and need-based minimum wage norm of the Indian Labour Conference in matters of wage-fixation; and (iii) need for appointing a tripartite Commission to go into all aspects of bonus.

    Others: (i) Large-scale expansion of Workers’ Education Scheme; (ii) promoting workers’ cooperatives; (iii) abolition of contract labour in certain occupations; (iv) establishment of increasing number of training institutes and promotion of apprenticeship scheme; (v) adoption of measures for augmenting productivity; and (vi) measures for rehabilitation of workers displaced as a result of closures.

    The third plan period witnessed the enactment of the Payment of Bonus Act, 1965, enactment of Shops and Establishments, and Welfare Funds Acts in states, and the appointment of National Commission on Labour under annual plan in 1967.

  5. The Fourth Five Year Plan (1969–74): The major thrust of the fourth plan was on generation of employment. However, the plan also contained some statements in certain areas concerning labour, brief descriptions of which are given below. (i) in regard to major changes in labour policy, the plan preferred to wait for the recommendations of the National Commission on Labour. (ii) extension of medical benefit to the family members of the insured employees under the ESI Scheme and to expand its coverage to shops and establishments in selected centres and non-seasonal factories employing 10 or more persons and in centres having concentration of 500 or more workers; (iii) strengthening of the machineries associated with labour administration, safety and health; (iv) expansion of industrial training institutes; (v) expansion and strengthening of employment exchange; and (vi) adoption of labour-intensive schemes for employment generation.
  6. The Fifth Five Year Plan (1974–79): The fifth plan was drafted late in 1973. At that time, the country was facing unprecedented financial crisis resulting from enormous rise in prices of crude oil and mounting inflationary pressure. These conditions led to a series of revisions of the plan, which was ultimately adopted in 1976, but was eventually rejected by the new government at the centre. The new government inserted its own modifications in the plan. For all practical purposes, the plan remained operative only for about 1 year.

    As regards labour policy, the earlier policies continued to operate but with less vigour. Some of the notable policy statements of the plan included: (i) Promoting greater mobility of labour; (ii) expansion of employment services; (iii) expanding the coverage of the ESI Scheme, and the Family Pension Scheme under the EPF Act, 1952; (iv) need for improving welfare amenities for workers and their integration; and (v) need for enacting law for ensuring equal pay for equal work, abolition of bonded labour system and compulsory recognition of representative union.

  7. The Sixth Five Year Plan (1980–85): The major emphasis of the sixth plan was on ameliorating the conditions of labour in the unorganized sector. However, it also came forward with certain specific policies in regard to organized workers. Some of the notable labour policy statements of the plan were:

    Industrial relations: (i) Need for enacting legislation providing for three-tier participative forums at the shop floor, plant and corporate/board levels; (ii) strengthening tripartite machineries for evolving broad framework of labour policy; (iii) necessity of overcoming multiplicity of unions, union rivalries and ills of outside leadership; and (iv) facilitating the process of unionization of rural workers.

    Social security: Extension of the coverage of the EPF and ESI Schemes.

    Labour welfare: Emphasis on the enactment of welfare fund laws.

    Others: (i) Rehabilitation of bonded labour; (ii) abolition and regulation of conditions of child labour; (iii) strengthening of institutional arrangement and promotional measures in regard to safety; (iv) improvement of quality of training; and (v) effective implementation of the Minimum Wages Act, 1948, in agriculture and associating workers’ representatives in the implementation of its provisions.

  8. The Seventh Five Year Plan (1985–90): The major thrust of the seventh plan was on fighting unemployment and poverty, especially in rural areas. As regards labour policy, emphasis of the plan was on capacity utilization and promotion of efficiency and productivity. Some specific labour policy enunciations of the plan were: (i) Need for identifying the responsibilities of unions and employers for maintenance of peaceful industrial relations; (ii) avoiding inter-union rivalry and intra-union divisions; (iii) provision of training in keeping with the requirements of industry; (iv) need for promotional services in the field of safety; (v) stress on raising the levels of real incomes, linking wages to productivity, and reduction in wage-disparities; (vi) up gradation of skill of workers in the unorganized sector; (vii) release and rehabilitation of bonded labour; and (viii) improvement of the working conditions of child labour.
  9. The Eighth Five Year Plan (1992–97): In 1991, the government adopted a new economic and industrial policy based on globalization, liberalization and privatization. This necessitated the adoption of an altogether new approach towards labour policy in the eighth and subsequent plans. The major thrust of labour policy of the plan was on: (i) Need for enacting a suitable legislation for ensuring an effective implementation of the schemes of workers’ participation in management; (ii) provision of a minimum measure of social security for workers in the unorganized sector and improvement of their working life; (iii) expansion and diversification of vocational training, upgradation of all areas of training and modernization of ITIs; (iv) improvement and reorientation of employment services; (v) strengthening and expanding institutional mechanisms in regard to labour welfare in the organized sector; (vi) need for associating workers’ organizations, non-governmental voluntary organizations and trade unions in the implementation of the Minimum Wages Act, 1948; (vii) greater attention to the assessment and control of industrial hazards and development of safety devices; and (viii) continuance of the programme for the rehabilitation of bonded labour and expansion of the National Child Labour Project.
  10. The Ninth Five Year Plan (1997–2002): The ninth five-year plan was framed when a series of measures of economic reforms in pursuance of the economic and industrial policy of 1991 were in progress. By that time, the social, economic and political conditions that existed during the initial period of planning had materially changed. This necessitated a positive change of approach in regard to labour policy. The emphasis of labour policy contemplated in the plan was on: (i) Resources of the labour administration infrastructure to become increasingly available for studying the working conditions in the unorganized sector; (ii) trade unions were expected to contribute to promoting changes in the work culture for creating environment for linking remuneration to productivity; (iii) reduction in the number of laws relating to industrial and employment relations with the objective that smaller number of laws could reach the entire workforce; (iv) proper enforcement of the Minimum Wages Act, 1948, and removal of disparities in the minimum rates of wages; (v) extension of ESI Scheme to all factories employing five or more persons; (vi) need for a scheme of social security for the unorganized rural labour to provide protection during stoppage or diminution of income; (vii) integration of welfare schemes in the unorganized sector; (viii) coverage of migrant workers under the social security scheme for the unorganized sector; (ix) need for reorientation of employment service in the context of emerging markets; and (x) updating the infrastructural packages in vocational training.
  11. The Tenth Five Year Plan (2002–07): The major thrust of the tenth plan was focused on initiatives for workers in the unorganized sector. The plan held that availability of gainful employment was basic for improving the lot of workers. The plan stressed: (i) The need for legislations intended to protect the right of labour in the unorganized sector to form trade unions for the purpose of collective bargaining, and laying down minimum obligations of employers in regard to social benefits, health and safety of workers; (ii) need for drafting a single legislation relating to safety and social security for workers in small establishments; (iii) necessity for change in the Industrial Disputes Act, 1947, providing for more flexibility in hiring and firing of workers with a view to augmenting productivity; (iv) repeal of the Contract Labour (Regulation and Abolition) Act, 1970; (v) creation of legislative and administrative framework for significant coverage of unorganized workers under social security; (vi) improvement in the EPF and ESI Schemes and their extension to the unorganized sector; (vii) efforts at establishing statutory welfare funds for additional employments and enhancing the coverage of the National Social Assistance Programme; (viii) strengthening of the enforcement machinery under the Minimum Wages Act,1948, and enhancement of penalties for violation of its provisions; (ix) efforts to place child labour in schools; (x) continuance of centrally sponsored scheme for the rehabilitation of bonded labour; (xi) priority to the needs of local small employers in vocational training; and (xii) effective measures for skill-development.
  12. The Eleventh Five Year Plan (2007–12): The major thrust of the eleventh plan in regard to labour is on improving the lot of workers in the unorganized sector, keeping in view the requirements of the policy on employment generation, skill-development and increase in productivity. In view of the competition faced by Indian industries in the global as well as domestic market, the plan has considered Chapter V-B of the Industrial Disputes Act, 1947, containing special provisions relating to lay-off, retrenchment and closure, and the Contract Labour (Regulation and Abolition) Act, 1970, as ‘exit-barriers’ in the investment climate and hindering ‘flexibility’ resulting in inhibition of employment. The notable policy enunciations and stress of the plan in certain specific areas concerning labour are described below.

    Social Security: (i) Social security has been considered as an inclusive concept that also covers housing, safe drinking water, sanitation, health, educational and cultural facilities for society at large; (ii) emphasis on provision of social security to workers in the unorganized sector and the need for a statutory package of ‘national minimum social security’ for them; and (iii) widening of the coverage of the ESI and EPF Schemes.

    Labour Laws: (i) Chapter V-B of the Industrial Disputes Act, 1947, and the Contract Labour (Regulation and Abolition) Act, 1970, considered ‘exit-barriers’ and hindrance to flexibility; (ii) need for enacting legislation relating to workers’ participation in management; and (iii) necessity for adequate consideration of the recommendations of the second NCL, tripartite conclusions and Conventions of the ILO while formulating amendments of labour laws.

    Wages: (i) Adoption of a national policy relating to fixation of minimum wages; and (ii) prompt recovery of minimum wages statutorily fixed.

    Child Labour: (i) Diversified measures for the elimination of child labour; and (ii) convergence of child labour eradication programme with other sectoral programmes.

    Women Workers: Diversified measures for providing facilities to women workers.

    Occupational Safety and Health: (i) Formulation of a national policy on occupational safety, health and environment, and establishment of an implementation mechanism; and (ii) comprehensive review of legal provisions.

    Skill-development and Training: (i) Creation of a pool of skilled personnel in appropriate numbers in line with the requirements of ultimate users; (ii) launching of a major skill development mission for creating a pool of skilled personnel; (iii) developing public-private partnership; and (iv) transformation of employment exchanges as career counselling centres.

QUESTIONS FOR REVIEW
  1. Explain the factors and forces that have influenced the labour policy under India’s five-year plans.
  2. Highlight the main features of labour policy envisaged under the initial three five-year plans.
  3. Briefly describe the policy under five-year plans in regard to trade unions and industrial relations.
  4. Briefly describe the policy under India’s five-year plans relating to social security and labour welfare.
  5. Highlight the main features of the policy under India’s five-year plans in regard to productivity, skill development and training.
  6. Identify the changes that have taken place in the labour policy under the plans after the adoption of the economic and industrial policy of 1991.
  7. Describe the policy envisaged under five-year plans in regard to workers in the unorganized sector.
KEY TERMS

 

Industrial Truce Resolution

Wage boards

Training within industry

Rationalization

Code of Discipline

Joint management councils

Need-based minimum wage

Code of Efficiency and Welfare

Vocational training

Bonded labour

Exit-barriers

Vulnerable group of workers

Case Study 1

What policies on industrial relations have been envisaged under India’s five-year plans?

The initial three five-year plans of the country envisaged a number of initiatives in the field of industrial relations. These included: assertion of the workers’ right to form association and collective bargaining, methods and machineries for settling industrial disputes with emphasis on mutual negotiation and voluntary arbitration, strengthening of the institution of Works Committees and establishment of Joint Council of Management, statutory recognition of trade unions, encouragement to tripartite deliberations on labour matters, appointment wage boards in organized industries and control of strikes and lockouts. The fourth plan preferred to wait for the recommendations of the National Commission on Labour appointed in 1967 for initiating change. The fifth plan did not say much about industrial relations. The sixth plan stressed the need for enacting legislation providing for three-tier forums for workers’ participation in management, which were later embodied in the Participation of Workers in Management Bill, 1990. The eighth plan also stressed the need for enacting suitable legislation for ensuring effective implementation of the schemes of workers’ participation in management. The plan also emphasized the need for tackling the problems of inter-union rivalry and intra-union factionalism. The ninth plan advocated the need for reduction in labour laws determining the relationship between workers and employers. The tenth plan suggested changes in the Industrial Disputes Act, 1947, to provide more flexibility in hiring and firing of workers with a view to ensuring increased productivity, efficiency and flexibility in adjustment process with changing demand market. The eleventh plan has considered Chapter V-B of the Industrial Disputes Act, 1947, containing special provisions relating to lay-off, retrenchment and closure as ‘exit-barrier’ and hindering flexibility. The plan also suggested expeditious consideration of Participation of Workers in Management Bill, 1990.

Questions

What could be the reasons behind adoption of a comprehensive labour policy in the initial three five-year plans?

Did the five-year plans frame their industrial relations policy based on the recommendations of the first National Commission on Labour ?

What, according to you, could be the reason for all the five-year plans recommending promotion of workers’ participation in management?

Do you find any change in industrial relations policy after the adoption of the economic and industrial policy of 1991?

What could be the reasons for considering Chapter V-B of the Industrial Disputes Act, 1947, as ‘exit-barrier’ and causing inflexibility in adjustment of workforce?