Jobs Crisis Brought on By COVID-19 Requires a Healthy Dose of Tripartism

The Wire, September 18, 2020

By Pradeep S. Mehta and Prashant Tak

Workers, employers and the government need to come together to ensure that economic revival is inclusive.

A total of 6.8 million daily-wage earners lost their jobs in India since April, 2020, as per the recent Centre for Monitoring Indian Economy report.

Perhaps the more revealing facet of this report is that around 14.9 million people took to farming during this period, probably due to the absence of better livelihood opportunities. It is thus clear that there is a lack of synergy between industry, workers and government to ensure the welfare of each other. It also reflects the unsustainable character of India’s economic growth which has long kept a substantial working population inadequately resilient from economic and financial shocks.

So, we need to revisit the old but discarded consultative process of tripartism between the three branches of the society to jointly find solutions to the crisis.

Tripartism is economic cooperation based on tripartite contracts between employers’ organisations, trade unions, and the government of a country. Each is to act as a social partner to create economic policy through cooperation, consultation, negotiation, and compromise.

It took a pandemic like COVID-19 to highlight such deep embedded flaws within its current economic system. The reverse migration of informal workers that was prompted by the COVID-19-induced national lockdown further highlighted the flaws. Factors like insufficient wage structure, inadequate social security systems and nearly absent social dialogue among the employees, employers and the government forced the workers to migrate from workplaces to their respective hometowns.

The present situation, being characterised by inequity and inequality, demands inclusive economic progress as the development anchor. And this needs to be pursued on a constant mode. Amongst other measures, this goal can be realised by revamping the way tripartism has worked in India post-1991. The tripartism – i.e. social dialogue between government, employers and workers – became ineffective in the absence of a long-term vision on mutual welfare. Furthermore, the notion of labour entitlements being the obstacle in business reforms process was integrated in the economic discourse leading to the alienation of the collective voice of workers.

The long-term effect of inadequate tripartism is evident from the way the present day work is characterised in India i.e low wages, lack of opportunity for skill enhancement, absence of social security systems & safety. The recent unilateral amendments in labour laws, especially Factories Act to increase the working hours by 12 states is another testimony to it.

There have been efforts to engage with the agenda of tripartism in the form of legislative consultations, such as the consultation process carried out on the one enacted and three proposed Labour Codes. As part of labour reform initiatives, the labour ministry decided to amalgamate 44 labour laws into four codes: on wages, industrial relations, social security and working conditions, and occupational safety and health.

However, the engagement is limited to legislative consultations and the difference on conceptual understanding with regards to the sustainability of the welfare of employees, employer and government still persists. It is essential for these three actors to understand the value they add to the well-being of each other and economy as a whole. Learnings can be taken from the rare but golden instances where these three conflicting stakeholders have worked for mutual benefit; for lighting the way forward. Such instances can be utilised as the initial point of deliberations for enabling a greater role of tripartism in inclusive development.

Government-led initiatives

In a developing economy like India, government acts as both an interventionist as well as a non-interventionist agency. There can be two possible motivations which drive the government either to interfere or exercise restraint in the market economy. One being government’s adherence to principles like laissez faire (economic doctrine in which transactions between private parties are controlled through economic interventionism such as regulation and subsidies) or dirigisme (economic doctrine in which the state plays a strong directive role over a capitalist market economy). Other, being the consideration of the impact of its action on a specific stakeholder i.e. consequentialism.

Indian state strives towards balancing these two principles and when it intervenes, it does either to ease the conditions of business or ease socio-economic conditions of workers. Kerala has taken lead in the latter by introducing lowest minimum wages of Rs 600 to workers and by extending the benefits applicable to local workers towards migrant workers.

These initiatives undertaken by the Kerala government is an outcome of tripartism dialogue and an expression to value the contribution of workers by regarding them integral to the commercial activity. Apart from being in line with the SDG Goal 1.3 of providing decent work to all, it is also an attempt to do away with the structural exploitation of migrant workers.

Workers-led initiative

The voice of workers in realising their own needs is an established modus operandi of tripartism practicing societies like Japan. The justification for the presence of workers voice is twofold. First, the worker is an integral part of any industrial activity, and therefore needs to be consulted in decisions affecting their life. Secondly, it stems from the fact that inclusiveness of workers in decision-making boosts productivity of an enterprise.

A unique initiative led by the Cashew Workers Union and the Cashew Processing Unit Owners in Palasa (Srikakulam district, Andhra Pradesh) is the agreement with respect to the revision of wages every two years. Though there have been strikes to convey disagreement on the percentage of the increment, the compact between the worker and the employer remains intact. This participatory mechanism strengthens the interlinkage between the welfare of workers and employers, with the state implicitly being a facilitator.

Employer-led initiative

The employer-led initiatives are steered by big groups having a trickledown effect on one or more components of the supply chain. There are models pursued or subscribed by employers towards ensuring non-exploitative workplaces for employees at the bottom of the supply chain. The adherence of employers towards initiatives like Good Weave Standards aimed towards ending child labour in the global supply chain is a step towards that direction.

There are also initiatives in the form of positive actions undertaken for the welfare of employees and consumers. The Annual Business Responsibility Report submitted by the top 1,000 listed entities in India is an instance of it. The report is in line with the National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business’ (NVGs) which advocates employers’ responsibility towards diverse stakeholders. However, the impact of these initiatives is highly limited and much more needs to be done to be adequately impactful towards bearing the fruits of tripartism.

It is high time for the Indian economic system to revisit its objectives and agenda to make it more inclusive. It is essential for the leadership of the tripartite stakeholders to learn and engage with each other to effectively respond to future economic and financial shocks. An effective tripartite system will lead to a balance between demand and supply, which will further potentially enhance economic growth, an aspiration pursued by Indian state wholeheartedly.

Pradeep S. Mehta and Prashant Tak work for CUTS International, a global public policy think tank.

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