‘Umbrella Legislation for Workers in the Unorganised Sector’ is an ideological construct created by the political and economic elites of the nation to hoodwink the millions of workers in India who are construed to be outside the purview of labour legislations and are denied the benefits of social protection.

In India, the ‘unorganised sector’ is an obverse of ‘organised sector’; both offshoots of the national industrial planning that took place immediately after independence. The Industrial Development and Regulation Act of 1951 provided for the establishment of heavy industries as well as Small Scale Industries, the latter as an adjunct of the former to cater to the ancillary and component manufacturing. Moreover, in 1956, the Khadi and Village Industries Commission was set up by an Act of Parliament with the objective of providing employment opportunities to rural artisans from the socially and economically weaker strata of the society, particularly in the context of the agriculture sector losing its ability to generate additional employment opportunities for the fast increasing workforce in the rural areas. These are laudable objectives; but what is relevant to our discussion is that a different set of rules, regulations and administrative practices were made applicable to small, tiny and village industries and the government shielded it in the name of employment generation and viability. As first National Commission on Labour had observed in 1968, ‘Side by side with this desirable aspect of policy (encouraging small industries) which throws up new entrepreneurship, one also finds many small scale employers who have made labour legislation the main target of attack in public and followed it up by non-observance or evasion in practice.’

We, thereby, created ‘sectors’ not by virtue of their differences in economic activity but because they were considered beyond the scope or application of labour law and social protection. Traditionally, construction workers, craftspeople, hawkers and homeworkers fall within this category.

The results of sanctification of a less equal ‘sector’ are there for everyone to see. The ‘organised sector’, where labour laws are applicable and social security protection is in place, has progressively stopped generating employment. In 1987-88, 91.25 per cent workers were unorganised (according to National Sample Survey Organisation).

India’s rapid integration into the global market and its domestic liberalisation policies since 1990s have created new classes of informal employment like outsourced and sub-contracted work along cross-border commodity value chains in informal, part-time, home-based and flexible settings. This includes increasing spatial disintegration of establishments within the country. The decade of globalisation marks a significant increase in the informal economy in India; the share of workers in informal employment, i.e., outside the purview of labour legislations and without benefits of social protection, was 92.92 per cent in 1999-2000, according to the NSSO estimates. What we see in India is the simultaneous existence of the old forms and the new forms of informal or unorganised employments. Worse still, the quality of these employments is so poor that the income from such informal employment cannot lift the workers from the mire of poverty. Non-payment of minimum wages and delayed payment of wages are marked characteristics of informal employment in India.

The Universal Declaration of Human Rights describes a variety of rights, including the rights to life, security of person; to freedom from slavery; to freedom of conscience, opinion, expression, association, and assembly; to freedom from arbitrary arrest; and to education. Constitution of India guarantees these rights to all citizens of the country. India has also its commitment to human rights at work as codified by the International Labour Organisation (ILO) through its Conventions and Recommendations. In 1998, the ILO has brought eight of these Conventions into a Declaration on Fundamental Principles and Rights at Work as reflecting fundamental human rights. These include the right to freedom of association and collective bargaining; to eliminate forced labour; to eliminate child labour; and to eliminate discrimination in respect of employment and occupation.

In India, a number of labour laws codifies the rights of workers concerning wages, employment regulation and social security. These were the fruits of collective struggles of workers as well as the response of a government that stood by the principles of distributive justice. Some laws like the Minimum Wages Act, 1948, Workmen’s Compensation Act, Child Labour (Prohibition and Regulation) Act, 1985 and Bonded Labour System Abolition Act, 1986 do not make a distinction between organised or unorganised employment. Such laws are in practice irrelevant to unorganised workers because laws regulating employment are not applicable in these employment situations. Moreover, identifiable employers, organisations of workers and labour administration are absent in situations of informal employment.

The post-liberalisation era is marked by an aggressive selling of those factors that makes employment informal, by the government and the employers in order to make India Inc. globally competitive and to invoke the ‘animal spirits’ of Indian entrepreneurs. The term ‘animal spirits’ was used by Prime Minister Manmohan Singh on two occasions recently, one while delivering the inaugural speech on the occasion of Golden Jubilee celebration of the Small Industries Development Organisation on 30 August 2004 and second in his address at meeting of the PM’s Council on Trade and Industry in December 2004. In the speeches mentioned above, the Prime Minister also declared his government’s unambiguous intention to end the ‘tyranny of Inspector Raj’, usually the reference to labour administrations’ intervention to ensure the observance of rights of workers as enshrined in the Indian Constitution and labour laws. The government  does not want state machinery to be involved in employment regulation. Even implementation of social security provisions is becoming an anathema to the State. The social security provisions are being more and more privatised.

The National Democratic Alliance (NDA) government, in January 1999, set up the Second National Commission on Labour to suggest rationalisation of the existing laws so as to make them more relevant and appropriate in the changing context of globalisation and opening up of the Indian economy and to suggest an umbrella legislation to ensure a minimum level of protection to the workers in the unorganised sector.

These objectives are mutually exclusive and cannot be suitably carried out at the same time. The NDA government was playing a prank on the working people of India. The government attempted to resolve the conflict by adding the clause – to ensure a ‘minimum level of protection’ to the workers in the unorganised sector. This goes against all natural justice. It not only justifies a distinction between ‘organised’ and ‘unorganised workers’, which neither the Constitution nor the labour laws makes but also argues for lowering of labour rights for Indian workers in the name of competitiveness.

This approach violently negates the principle articulated by the ILO that ‘since the fundamental principles and rights at work and the fundamental Conventions apply to all workers, there should not be a two-tiered system or separate regulatory framework for formal and informal workers …there should not be a lower level of application of core labour standards for informal workers. In regard to fundamental human rights, violation or non-compliance cannot be excused by poverty or informality’.

In a serious dilution of the basic assumptions of equity and justice inherent in our legislative system, repeated drafts of Umbrella Legislation for Workers in the Unorganised Sector diluted the existing rights of workers and proposed lower levels of application of core labour standards for informal workers.

Meanwhile, the United Progressive Alliance government has constituted a National Commission on Enterprises in the Unorganised/Informal Sector as an advisory body and a watchdog for the informal sector. The Commission is expected to recommend measures considered necessary for bringing about improvement in the productivity of these enterprises, generation of large scale employment opportunities on a sustainable basis, particularly in the rural areas, enhancing the competitiveness of the sector in the emerging global environment.  The official resolution does not mention anything about the quality of the employment that is expected to be guranteed or the social security of the workers. To put it in the ILO terminology, the document is silent on how the ‘decent work’ deficits will be addressed. We cannot expect all informal workers to be converted into thriving entrepreneurs. On the contrary, small entrepreneurs in large numbers are becoming subsistence subcontractors at the lower end of commodity value chains.

Employment generation is important; but equally or more important is the quality of employment, which determines the quality of life of the people. The umbrella legislation does not guarantee this to the workers in informal employment.