December 9, 2005
New Delhi

PM addresses 40th Indian Labour Conference

"I am happy to be here in your midst to inaugurate the 40th Session of the Indian Labour Conference. This is truly a historic forum that first met under the chairmanship of Shri Ramaswami Mudaliar in 1940. Dr B R Ambedkar chaired four sessions during the pre-Independence period. After Independence, some of our seniormost national leaders, like Babu Jagjivan Ram, Shri V V Giri and Shri Gulzarilal Nanda chaired several sessions of the Indian Labour Conference.

The importance attached by our national leadership to this forum was due to the fact that our national movement recognized, from the very inception, the central role of the working class in national development. The working class is like the blood that flows through our veins. Our economy, our society, our nation functions because of the toil and energy of the working people of our country. Let there be no doubt about our commitment to the critical role of our working classes in carrying forward the process of social and economic change.

Our national movement recognized from the very beginning that if India has to regain its true place in the comity of nations, if we have to become an economic powerhouse, if we have to once again stand tall on our own feet, then we must ensure that all social groups come together and build this new India of our dreams. The Indian Labour Conference has contributed enormously to the process of nation building by providing a platform on which representatives of government, of industry and of workers can come together and reinforce this unity in the larger national interest.

I am happy to be here today because this is the first Labour conference being held after the UPA Government came to power and I do agree with you that this Conference should meet regularly; that all senior members of the Government should also attend the Conferences so that they can get acquainted with the feeling of the working classes.

The United Progressive Alliance was forged on the platform of a new unity between different sections of our society and based on the principles of equality, welfare and social justice. The National Common Minimum Programme declares emphatically that the UPA Government is firmly committed to ensure the welfare and well-being of all workers, particularly those in the unorganized sector who, as the previous speakers pointed out, constitute 93% of our workforce. Our Government remains committed to giving a new deal to the working people to ensure that they receive their due share from the fruits of social and economic development.

I am also happy to report that our Government has already brought forward several legislations aimed at addressing issues dear to the working sections of our population, both men and women, in cities and in villages, in industry and in agriculture. However, I do recognize the fact that we have some distance to travel in addressing all the concerns of our working people. I would like to reiterate here once again our sincere commitment to do so.

This Conference is discussing issues pertaining to social security for unorganized sector workers. Our Government has taken a very important step in this direction by enacting the National Rural Employment Guarantee Act. It is the single most important social security benefit being extended to the rural labour since Independence. Our Government has also launched the National Rural Health Mission that seeks to provide health security for our rural areas. We have taken major initiatives in the field of education to eliminate illiteracy and provide basic education. Taken together, all these initiatives of our Government will, I believe, enhance the income security and welfare of the poor, particularly those in the rural areas.

Our Government is presently examining alternative approaches to the welfare of workers in the unorganized sector and is considering different drafts of a possible Bill for Unorganized Sector Workers' Social Security. I am grateful to all those who have contributed to the wide-ranging discussion on the proposed legislation. There should be a meaningful discussion on all aspects of this bill, including its administrative feasibility and financial viability. This we are committed to promote.

While such legislative protection is necessary and desirable, the ultimate security for all working people lies in the assurance of sustained economic growth and development. A country like ours has enormous potential for the growth of employment opportunities. Given the low level of per capita consumption, the demand for goods and services can only increase in years to come. It should be possible for us to sustain growth rates of close to 8-10% for several years, generating adequate employment for all. However, there are several impediments to new investment that must be removed, so that we can accelerate the growth process and generate more employment. I do agree with previous speakers that we cannot live with a jobless growth. We need growth, which will be employment friendly, we need growth which will create a lot more jobs in the process of social and economic change.

I urge therefore, both industry and labour to work together in removing the hurdles in the way of faster economic growth and faster growth of employment. The physical barriers to growth and employment creation, like infrastructure bottlenecks, are easier to deal with. The barriers that are more difficult to remove are the policies that have outlived their original purpose. Many of these are the legacies of the past that have no longer much relevance today. Indeed, some of them have become counter-productive and may well be hurting the very people they were meant to benefit.

Consider, for example, many of our labour laws. Several expert groups have studied them and come to the conclusion that some of these laws have in fact hurt working class interests by discouraging investment in labour-intensive industries. They have encouraged expensive automation and capital-intensive technologies in a country where our real comparative advantage lies in skilled, yet affordable labour.

After Independence, even though we had a comparative advantage in the textiles industry, we missed the bus as global demand grew because of our rigid domestic laws. We were over-taken in the global market by other textile exporting economies of Asia. If I look back in 1948, this side of Suez, India was the largest exporter of textiles. And where are we today? We lost many opportunities, but there is still possibility of a new renewal with the withering away of the Multi-fiber agreement, the world market for textiles are once again open. We have a chance to retrieve the lost ground, but we need sensible policies if we are to succeed in doing that.

Today, once again, the textile sector is opening up and the Indian textiles industry can regain its lost glory in the global market. The jobs that were driven out of the organized industrial sector into the unorganized sector can be regained. New employment can be created in this potentially labour-intensive industry. It will, however, require some reform in our labour laws and in our urban land utilization laws. We must think ahead and think creatively, so that thousands of new blue-collar jobs are created in this major segment of our domestic industry.

There is also the burden of multiple and parallel legislation that has created a vast paraphernalia of regulation. There is, I believe, confusion even with respect to basic definitions in some of our labour laws. Many common items like workman, wages, employee and factory are defined differently in different Acts pertaining to the same sector. Provisions under the Factories Act, do not match with provisions under the Minimum Wages Act. Provisions under the Beedi Act are at variance with those under the Contract Labour Abolition Act.

Many Acts go into unnecessary details. For example, Section 11 of the Factories Act actually specifies the necessity of "daily sweeping" of a premises! Section 18 of this Act specifies the minimum distance in a factory between the source of drinking water supply and a possible source of contamination! Some of our legislation dealing with the organized industrial sector is replete with such examples of misplaced concreteness. I understand that many such laws came into being under certain circumstances, particularly in plantation and manufacturing industries with a poor record of safety and hygiene. We need new laws for new times. Laws which provide safety standards, which cater to the basic needs of workers, which take care of their welfare, which are flexible enough to create rather than destroy jobs, which increase the overall well-being of our people and particularly, the working people.

In fact, some analysts suggest that excessive regulatory legislation has contributed to the relative lack of growth of the organized industrial sector, and the greater growth of the unorganized sector. While the protection of workers' interests is necessary and you must honour all provisions which seek to protect workers' interest, over-protection through such administrative interference only contributes, in some cases at least, to corruption.

I have been told that in most industries in China, a factory establishment is visited by a handful of inspectors, often not more than five. In India, it has been estimated, a large-scale factory is visited by over 30 inspectors under various laws and rules and regulations. This tyranny of the Inspector Raj must end and it must end, if Indian manufacturing is to prosper.

I sincerely believe that if we make the business of doing business in India less intimidating, less cumbersome, less bureaucratic, there will in fact be more investment and more employment, more investment in labour-using technologies and industries. A more flexible and transparent regime of laws, including labour laws, will in fact contribute to increased employment.Appropriate and relevant labour legislation are, therefore, in the interests of labour and in the interests of the nation as a whole. I urge our labour leaders and those committed to the welfare of the working class to recognize the reality.

India cannot become a major economic power, let alone a developed economy unless it has a much larger manufacturing base.Manufacturing as a sector of our economy today accounts for less than 25 per cent of our GDP. In China and South East Asia, countries which have made a mark in development, the share of manufacturing in total Gross National Product is between 35 to 45 per cent. And India cannot become a developed country, India cannot provide all the jobs that our young men and women need outside agriculture, if manufacturing in our country does not grow and grows fast enough.

The share of the industrial sector in our national income cannot continue to therefore, remain as low as it presently is. We need a much bigger manufacturing sector to absorb the new generation of youth being added to our labour force. If our manufacturing base has to grow, if employment opportunities have to be created, we must make our labour laws less rigid. Our policies with respect to the industrial sector must be in line with global best practices, especially in countries competing with us in the industrial sector - like China.

Therefore, the time has come for us to take stock of our labour laws and see how best we can in fact serve the interests of our working people, especially the vast mass of low-skilled, unemployed youth who are looking for jobs in the manufacturing sector. I am convinced that we can create and we must create, new employment opportunities without compromising on basic labour rights and welfare. I think Shri Gurudas Dasgupta referred to labour rights. It is the duty and the obligation of the Indian State to protect the rights of the working classes. Therefore, there cannot be any dilution in that commitment. I am sure the Arjun Sengupta Commission on Enterprises in the Unorganized and Informal Sector will address the relevant issues in the unorganised sector.

Greater social security for the working people must go hand in hand with a more flexible labour policy so that workers can deal with the ups and downs of a well-functioning market economy. No Government can ignore, or neglect the welfare of the working class, least of all UPA Government. We are obliged to protect the interests of those who have nothing more than their labour power to feed their families, educate their children and find a shelter for themselves. Equally, a Government must ensure that its policies serve the greatest good of the largest number by encouraging enterprises to create employment opportunities on a wide enough scale. This is the challenge at hand.

In conclusion, let me say that I do regard the Indian Labour Conference as an important tripartite platform, because Government has to work with both industry and labour to take the economy forward. I do believe that the trade union movement has played a very important role in our national development. Trade unions are an integral part of the functioning of our social democracy. I seek their cooperation in taking our nation forward. I do urge our trade union leadership to recognize that in a world where demand and technology are undergoing rapid change and firms must adjust or perish, we need reasonable flexibility in markets and in public policy and our public policy must respond to such needs with speed. I do sincerely believe that such an approach will be in the best interests of promoting the growth of employment opportunities.

I also urge industry to be mindful of the need to create employment opportunities. In the past some of our policies induced a bias in favour of capital-intensive technologies. I do believe that our economic policies have recently sought to correct this imbalance to an extent and there is greater incentive today for our economy to derive the benefits of adequate labour supply. Our Government is committed to employment generation and to strengthening the manufacturing base in our country. Industry and labour must work together and ensure a climate of industrial peace and good industrial relations.

Leaders of the trade unions have referred to several issues. I don't have the time to respond to each one of them. But I have taken note of the views that have been expressed with regard to the interest rate on the Employees' Provident Fund and I do recognize that a falling interest rate does reduce the returns to individuals and can cause hardship to the people at the lower rung of social and economic ladder. But, all I can say at this moment is that I will have to discuss this matter with the Labour Minister, with all the concerned officials, to examine to see what can be done on this matter within the resources of Employees Provident Fund organization. As regards regular exchange of views with the trade unions, I do recognize that there has been some omission on the part of the Government. We will, I think, seek to correct that. I do regard the Trade Unions as an integral part of our functioning, social democracy and therefore, consultations with the representatives of the workers must be given the prominence it deserves. I think we will try to make up for past deficiency.

With these words, I wish your Conference all success. I hope the 40th session of the Indian Labour Conference will contribute to the task of nation building".