Labour reforms for Digital India

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Labour reforms for Digital India

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• Latest trouble in labour laws: The four new Labour Codes are getting delayed reportedly due to state-level delays in rules formation. The time is right to align them with the needs of digital markets.
• New Labour Codes: In 2020-21, India merged many of the earlier labour laws into just 4 Labour Codes - Industrial relations, occupational safety, wages, and social security. New forms of employment like in "Gig Economy" too are now covered (under Code on Social Security, e.g.). Not even developed countries have thought of it so far. [The UK Supreme Court's verdict on Uber drivers being employees is a factual one, not a holistic policy one, like in India, above. Courts in India cannot intervene like that in UK, due to new Code]
• Legacy thinking, Digital markets: India must cautiously not allow old thinking to harm digital markets' functioning. 

1. The OSHWC Code divides an employer's activities between "core" and "non-core" [OSHWC Code - Occupational Safety, Health and Working Conditions Code]
2. Contract labour cannot be employed in core. But digital businesses cannot operate in this manner, as they evolve daily! [Schumpeter's creative destruction]
3. Core of any digital platform is to build a network of consumers to offer them services. These networks are the online equivalent of economies of scale. Each new node increases the overall utility for all members. 
4. Exceptions are allowed in the OSHWC Code, but state discretion comes in. So, unpredictable interpretation will also come in. 

• A bad precedent: Sadly, states, when they want to liberalise, throw the baby out with the bathwater. Both MP and UP revoked labour laws in 2020, during the pandemic. At the same time, more than 1.5 lakh cases (labour and industrial) are pending in judiciary. Only smart policies will help escape such problems.
• Self-regulation: The PM has always spoken of lower compliance load on businesses, with higher stakeholder responsibility. In 2021, he spoke of "self regulation and self certification as the way forward." He spoke about manufacturing, but it applies to services too. Self-regulation in digital businesses is far more possible than otherwise, as data collection is automatic.
• Comply-or-explain: Normally, in labour laws, the State has followed a "Comply-or-Else" approach. For digital, it can now adopt the "Comply-or-Explain" approach. Let the digital businesses classify core and non-core on their own, and let data and facts justify it.
• The CSR precedence: In 2014, India adopted this approach for the Corporate Social Responsibility (CSR) targets. Large firms found it easier to navigate the CSR regime (both private and public). Instead of getting bogged down in minor issues, they focussed on larger aspects. 
• Light touch: Adopt the same light-touch approach for fast-moving digital businesses. 

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