Prime Minister Narendra Modi’s speech at Deendayal Upadhyay Shrameva Jayate Karyakram takes a leaf out of Ronald Reagan’s economic script. It is full of empathy for the ordinary work person — the peon, the construction worker, the unrecognised skilled worker, the farmer who grows cotton, the weaver and the tailor who gives finishing touches to the shirt which is worn by a white-collar worker and praised by his colleagues. Modi emphasised the need to recognise, respect and cherish the worker. This is a quintessential right-wing approach to the working class. But like any right-wing politician, Modi believes in taking the yoke off the entrepreneurs as well. He believes that more trust is to be placed in the employers. And that the consumer-manufacturer trust should be the norm. There is no need for an inspector to check the elevators in a building because now there are too many of them and the inspectors too few. Self-regulation is Modi’s mantra. It would seem that Modi is echoing unwittingly the naïve faith of John Ruskin in amicable class relations. And in a way, Modi is also pointing out to Thomas Carlyle’s idea of ‘the worker as hero’. It is not surprising that a Modi-enchanted media hailed the Prime Minister’s announcements as labour reforms.
Modi has not dispensed with the inspector raj. He has tweaked it ever so lightly that it remains a cosmetic measure. He has reduced the 16 forms to a single one, and instead of establishment-to-establishment checks by the inspectors of the labour department, he has provided for the manufacturing units to e-comply and allowed for randomised checking. This is indeed rationalisation, which is most useful. But it remains an administrative measure. There is no policy involved.
The raw nerve or the jugular of labour reforms is the prickly issue of hire-and-fire. Indian as well as international manufacturers and business houses had been waiting for many years now because India’s socialist-era labour laws are inimical to the potential economic growth story. One of the criteria for ease-of-doing business is the facility to wind up an inviable operation. It is indeed a rational demand, accepting at face value the good faith of the owner of the business. It does not even matter whether a business is being closed for good or bad reasons. Businesses should have the freedom to start and close economic units just as workers should have the choice of choosing their employers. Market economy supporters have also been arguing that the hire-and-fire policy would be beneficial to the workers themselves because their options would expand, and that there will be scope for as many new businesses to open even as the old ones shut down. It has been described and prescribed as labour mobility. It is a debatable issue, and the more radical critics would see this as soft-pedalling the capitalist class despite the pro-worker rhetoric and sentiment.
Apart from the ideological perspective, there is the question of hard reality. The rationale of the hire-and-fire policy is to give the manufacturer/business class freedom to create more jobs. An expanding economy is one that provides jobs to all, or at least to nearly-all. If capital is not put to productive use, and this should imply more jobs, then labour reforms do not make much sense. Modi is a votary of high growth as well as high employment. This may not work out smoothly in the real world because there have been instances of jobless growth during some of the UPA-I & II years. The Prime Minister would then have to find a way of helping people without jobs to keep their heads above water. Social security in one form or the other is the solution. Perhaps shorter working hours per week or per month is a solution which will allow everyone to have a shot at work as was tried out in France in the late 1990s. Advanced market economies need innovative and sophisticated solutions.