At a conference bringing together NGOs and economists in India on 26 January, India’s Planning Commission deputy chairman Montek Singh Ahluwalia said:
Certainly India could do much more to improve infrastructure and promote manufacturing. Of course India is famous for its dynamic IT sector, and yet this sector only employs a few million people, whereas large-scale manufacturing could employ tens or even hundreds of millions. Writers like Nandan Nilekani have pointed out that India currently has a “demographic dividend” in which there are a lot of people of working age relative to children and the retired – a situation that contrasts sharply with China, Japan, Europe, and the US. Manufacturing is necessary to give the large groups of people well paying jobs in the formal sector, as opposed to the informal sector, in which most Indians work today. Reforming labour laws to make it easier to hire and fire workers in large-scale industries, it seems to me, shouldn’t be out of the question.
With that said, the comment that Indian unions need to “learn from China on labour law flexibility” is puzzling since it fails to comprehend some of the basics in China’s current situation. First, China’s labour laws are not really “flexible”. They are relatively “pro-labour”, especially for a developing nation. When an employer fails to comply with China’s labour laws, workers can often take their case to labour dispute arbitration committees (LDAC’s) and the court system, and workers, on average, are victorious in about half of the cases they bring forward. In many routine cases in which workers have all the necessary documentation, workers tend to fare even better (for more, see our backgrounder China’s labour dispute resolution system). Indeed, CLB has seen – through our labour rights litigation project, in which we provide workers who cannot afford legal and court fees, and who have a legitimate grievance, with a determined and effective representation throughout the dispute resolution process – that workers can win in the majority of cases. To be sure, there are many flaws in the system: LDAC’s are overworked, "successful" mediation increasingly comes at the expense of workers, and victims of pneumoconiosis, and other occupational illnesses, have to wade through a bureaucratic labyrinth in which local officials, labour arbitrators, judges are often more concerned with sticking to the letter of the law, and following idealized and unrealistic legal procedures, than they are in seeing justice done. Nonetheless, it seems to me that “flexible” would not be an apt way to describe China’s labour laws.
What might classify as “flexible”, however, is the spotty enforcement of China’s labour laws and the way in which many employers fail to adhere to the letter or the spirit of those laws. Because labour departments have so few labour inspectors in relation to the size of the task at hand (for example, Guangzhou has only 130 specialized labour supervisors for over 160,000 companies), and since China’s sole trade union does not engage in collective bargaining, Chinese workers have little choice but to work in factories where laws are routinely violated and they have no collective power. When combined with a widening wealth gap and significant inflation, it’s no wonder that labour protests and strikes have been continuously on the rise in the past decade.
Over the past 30 years, China has done many things well that other developing countries could consider emulating: improving infrastructure, facilitating the ease of inter-province commerce, promoting trade, attracting investment, and providing good strategic planning. China’s manufacturing sector has been able to employ hundreds of millions, but the economic model that was chosen – one that curtails workers’ collective power and largely shuts workers out from city-provided social benefits – has created a huge set of social problems that are arguably at the root many “sensitive” issues and the tense political atmosphere.
Since India’s “reform and opening”, so to speak, started in 1991, as compared with China’s start in 1978, India could still learn from both China’s successes and failure. One option might be to reform labour laws to encourage manufacturing, while also ensuring that independent (non-party affiliated, worker-centred) trade unions are able to organize in the private sector in order to ensure more equal economic development. This could, dare I say, help provide for a more harmonious society.
India will not have manufacturing growth like China because of exports. Infrastructure isn't good enough. Labour laws don't allow for large scale employment in sectors that are labour intensive. The government is convinced that greater flexibility is required in labour laws but is concerned about big labour unions. Labour unions listen to us, what is required is better enforcement of labour rights, health standards. Indian trade unions need to learn from China on labour law flexibility.
Certainly India could do much more to improve infrastructure and promote manufacturing. Of course India is famous for its dynamic IT sector, and yet this sector only employs a few million people, whereas large-scale manufacturing could employ tens or even hundreds of millions. Writers like Nandan Nilekani have pointed out that India currently has a “demographic dividend” in which there are a lot of people of working age relative to children and the retired – a situation that contrasts sharply with China, Japan, Europe, and the US. Manufacturing is necessary to give the large groups of people well paying jobs in the formal sector, as opposed to the informal sector, in which most Indians work today. Reforming labour laws to make it easier to hire and fire workers in large-scale industries, it seems to me, shouldn’t be out of the question.
With that said, the comment that Indian unions need to “learn from China on labour law flexibility” is puzzling since it fails to comprehend some of the basics in China’s current situation. First, China’s labour laws are not really “flexible”. They are relatively “pro-labour”, especially for a developing nation. When an employer fails to comply with China’s labour laws, workers can often take their case to labour dispute arbitration committees (LDAC’s) and the court system, and workers, on average, are victorious in about half of the cases they bring forward. In many routine cases in which workers have all the necessary documentation, workers tend to fare even better (for more, see our backgrounder China’s labour dispute resolution system). Indeed, CLB has seen – through our labour rights litigation project, in which we provide workers who cannot afford legal and court fees, and who have a legitimate grievance, with a determined and effective representation throughout the dispute resolution process – that workers can win in the majority of cases. To be sure, there are many flaws in the system: LDAC’s are overworked, "successful" mediation increasingly comes at the expense of workers, and victims of pneumoconiosis, and other occupational illnesses, have to wade through a bureaucratic labyrinth in which local officials, labour arbitrators, judges are often more concerned with sticking to the letter of the law, and following idealized and unrealistic legal procedures, than they are in seeing justice done. Nonetheless, it seems to me that “flexible” would not be an apt way to describe China’s labour laws.
What might classify as “flexible”, however, is the spotty enforcement of China’s labour laws and the way in which many employers fail to adhere to the letter or the spirit of those laws. Because labour departments have so few labour inspectors in relation to the size of the task at hand (for example, Guangzhou has only 130 specialized labour supervisors for over 160,000 companies), and since China’s sole trade union does not engage in collective bargaining, Chinese workers have little choice but to work in factories where laws are routinely violated and they have no collective power. When combined with a widening wealth gap and significant inflation, it’s no wonder that labour protests and strikes have been continuously on the rise in the past decade.
Over the past 30 years, China has done many things well that other developing countries could consider emulating: improving infrastructure, facilitating the ease of inter-province commerce, promoting trade, attracting investment, and providing good strategic planning. China’s manufacturing sector has been able to employ hundreds of millions, but the economic model that was chosen – one that curtails workers’ collective power and largely shuts workers out from city-provided social benefits – has created a huge set of social problems that are arguably at the root many “sensitive” issues and the tense political atmosphere.
Since India’s “reform and opening”, so to speak, started in 1991, as compared with China’s start in 1978, India could still learn from both China’s successes and failure. One option might be to reform labour laws to encourage manufacturing, while also ensuring that independent (non-party affiliated, worker-centred) trade unions are able to organize in the private sector in order to ensure more equal economic development. This could, dare I say, help provide for a more harmonious society.