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Writer's pictureYouth Policy Review
Aug 14, 20206 min read

Analyzing the Suspension of Contract Labour (Regulation & Abolition) Act 1970, Uttar Pradesh

On 8th May 2020, the Uttar Pradesh (UP) government promulgated the Uttar Pradesh Temporary Exemption from Certain Labour Laws Ordinance 2020, for exemption from compliance of most labor laws, for a period of 3 years, on the grounds of incentivizing investment and recovery of economic activity in the state. Applying to both new and old factories, businesses, and other manufacturing establishments, the ordinance suspended 35 of the 38 labor laws of the state. Suspended laws include the Contract Labour (Regulation & Abolition) Act, 1970 which regulates the employment of contract labor, provides for its abolition in certain circumstances and holds the contractor and principal employer responsible for catering to health and safety needs of the workers. This ordinance is yet to receive a nod from the center and it has been under review by the Standing Committee on Labour since August 7, 2020.


The contract labor culture emerged from the early industrialization in colonial times. Since British employers weren’t able to understand workers’ issues of caste, language, and religion, middlemen used to recruit and control them. Contract workers have always been exploited due to their lack of organization. It was only after deliberation by some committees that the definition of ‘workers’ was expanded to include contract laborers. The enactment of the Contract Labour (Regulation & Abolition) Act 1970 was justified and deemed essential since no other legislation catered specifically to the needs of contract workers before this. In the past, Indian labor laws have been criticized for being complicated and intertwined with laborious legal requirements (primarily for hiring and firing). However, the reasons given by the UP government to revoke the ‘inflexible’ labor laws during the pandemic pertain to preventing labor shortages, by promoting migrant employment while maintaining existing levels of employment. The government reasoned that structural bottlenecks have to be removed to give impetus to investment in the state. While they promised to take care of workers’ rights, they deemed this provision of flexibility essential for economic recovery.


This promulgation invited extremely negative reactions from Trade Unions, researchers, and even the International Labour Organisation (ILO). To oppose these draconian measures, ten Central Trade Unions (CTUs), including the RSS-affiliated Bhartiya Mazdoor Sangh, called for nationwide hunger-strikes and demonstrations on May 22, 2020. Their demands included relief for migrant workers, strengthening of social security measures, and universalization of Public Distribution System and cash-transfers to the informal sector workers. They also emailed their concerns to the Prime Minister (PM) and sent a joint representation to the ILO requesting the Chief of the organization to investigate ‘anti-worker’ activities in India. In Noida, 10 Trade Union leaders were arrested prior to the strike and in Prayagraj, the protestors clashed with the police during the march but participation in demonstrations was massive despite repeated state efforts to suppress them. After the Allahabad High Court’s notice, the state had to repeal its order, thus restoring the number of working hours from 12 to 8. The ILO appealed to the PM to send a clear message to state governments to uphold the country's international labor obligations and engage in effective social dialogue. The Labour Ministry, which earlier seemed receptive of the suspensions, later said that suspensions cannot be called ‘reforms’ because some of them are in violation of ILO conventions to which India is a signatory.


This Ordinance indicated a paradigm shift in labor politics. The government revamped its approach from urging industries to pay full wages to safeguard workers’ welfare at the beginning of the Lockdown, to snatching their basic rights and bargaining powers in the Unlockdown. This move is pushing our labor policies to the 19th century, rather than propelling them forward through an environment of exploitation. This move will particularly affect the contract laborers, mostly women, and kids, who don’t enjoy social security benefits like regular workers. Suspension of this act will free the contractors and principal employers from all kinds of responsibilities, like regular payment of wages, ensuring safe working conditions (toilets, canteens, drinking water, etc.), and so on, thus making grounds for humongous exploitation. Even though the government has assured to protect worker rights, it has closed the doors for it by proposing the suspension of inspections. The question of its constitutional validity looms large as it can create conditions of forced labor which is prohibited under Article 23 in Fundamental Rights. Not to forget, this move will also push the organized sector into the unorganized sector. The argument of how this suspension will boost investment is both analytically flawed and empirically invalid since there is no established cause and effect relationship between the two. According to research conducted by V.V Giri National Labour Institute, previous labor reforms for higher labor flexibility in Uttar Pradesh, Rajasthan, Haryana, and Andhra Pradesh haven’t been successful in industrialization and job creation. Even the companies moving out of China are choosing countries like Thailand and Vietnam with higher wage rates and worker protection over India, which has one of the cheapest and most exploited laborers in the world. It’s also important to understand that labor laws aren’t the primary constraints to recovery and investment, but the lack of demand is. Depriving workers of their wages & rights will also deprive them of their purchasing power, leading to a further fall in aggregate demand. Last but not the least, deciding to value economic recovery and profits over human lives and rights is a classic example of the capitalist approach that the government wants to follow in post-pandemic times. The mere fact that the government chose to overhaul these laws in favor of economic perks at the first possible chance possible clearly shows where their loyalties lie.


A very ridiculous pro-suspension argument is that labor laws were already ineffective as they were accessed by only 10% of the workers, so this move doesn’t affect the status quo. This is just like abandoning all the traffic rules because they aren’t followed, and letting all hell break loose. With an acceptance that our labor laws are redundant, complicated, and serve interests of none, we need to introduce simplified and easy-to-follow labor laws instead of completely doing away with them. The 2nd National Commission of Labour had suggested some sweeping recommendations like the 4 Labour Codes to subsume the multiple laws in 2002 but sadly, they have not been implemented yet. The government needs to approve and implement these codes namely- Code on Wages, Occupational Safety, Health and Working Conditions Code, Industrial Relations Code, and Social Security Code on a priority basis. These labor codes have commendable provisions for extending social security to informal sector workers, setting centralized minimum wages & strengthening employer-employee relations. If implemented properly, these can become the labor reforms everyone has always wanted. One of the major reasons why employers despise labor laws is the wide-spread corruption among inspection officers who use these visits to extort money from them. This can be fixed by regulating the number of visits and necessitating proper permissions from administrative officers prior to visits. To perform its welfare functions well, the government should draw inspiration from European countries, Canada, New Zealand, Australia, Thailand, and even Bangladesh for providing wage subsidies to the employers. This way, the workers’ interests will be protected & employer burden will be shared, which will allow them to put their funds to other users. Swift economic recovery can also be secured through networking and collaboration with other establishments. Here, it becomes important to establish that it’s the ‘labor and industry’ and not ‘labor vs industry’ format that augments productivity. Labour friendly practices always lead to higher “Ease of Doing Business” rankings because it makes compliance easy. When labor representatives are allowed to participate in corporate governance, it leads to mutual trust and profitability. Now, emphasis should be on developing other areas influencing investment decisions apart from lenient labor laws like infrastructure, logistics, vibrant domestic market, and transparent official procedures. Finally, before taking such a monumental decision, serious deliberations should be held with all the stakeholders so that intended and unintended consequences can be analyzed properly.

In conclusion, the Standing Committee on Labour should strike down these relentless suspensions on the grounds of being unconstitutional and in gross violation of the ILO conventions. The government needs to gather meaningful alternatives instead of finding opportunities to strip the dignity of the very people who keep the state economy running.



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Akshita is an undergraduate student at Jesus and Mary College, University of Delhi who is very enthusiastic about the policy domain and aspires to be a bureaucrat. (akshita.pareek@gmail.com)


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