How the Code on Wages ‘legalises’ bonded labour

News: The Code on Wages, 2019 gives legal sanction to Debt bondage, by allowing employers to extend limitless credit advances to their workers, and charge an unspecified interest rate on them.

What are the new changes brought in The Code on Wages, 2019?

Even, the weakest safeguards earlier in place under the Minimum Wages Act, 1948 has been removed.

Comparison of earlier code vs new code

Minimum Wages (Central) Rules, 1950 The Code on Wages, 2019
Advancement: It provided that; advances made by employer to employee should not exceed an amount equal to wages for two calendar months of the employed person.Changes made in Advancement criteria: 1) It allows deductions from wages for the recovery of advances of whatever nature, including advances for travelling allowance or conveyance allowance, 2) No Cap on the advance amount provided. 3) It allows the employer to charge interest rate on the advances made to the employee.
Deduction: It provided that the monthly instalment deduction should not exceed 1/4th of the wages earned in that month.Changes in Deduction criteria: The Code increases the permissible monthly deduction towards such recovery, up to one-half of the worker’s monthly wage.
How the new changes in the Code on Wages institutionalises Debt bondage?

First, by removing the cap on the advances made, it allows employers to lend unlimited advances to their workers. This gives the employer more control over the employees.

Second, by adding the clause on interest. Moreover, with no details on what might be charged and increasing the deduction amount from 2 to 4 months will trap the employee in a vicious cycle of mounting debt and dwindling income.

The net impact is an open sanction for the bonded labour system to flourish.

Case studies related to Debt Bondage

Sahariya (a primitive tribal group) of Rajasthan: In 2011-12, a series of Sahariya families boldly came out one after the other and spoke of their experiences of violence and even rape at the hands of Sikh, caste Hindu, and Muslim landlords, for whom they had worked as ‘halis’ for generations.

Large-scale primary survey in a mining cluster of Nagaur district, Rajasthan: It revealed that, one in three workers interviewed had taken advances from their employers ranging from ₹1,000-₹1,50,000 at the time of joining work.

Why debt bondage still exists?

Despite our Constitution, the Labour Codes or various Supreme Court judgments, which have deterred the bonded labour system, it still exists because of the following reasons:

Firstly, Govt has done nothing to ensure the economic security of the labourers.

Secondly, the existence of bonded labour has simply been denied among elected representatives, or grossly understated.

Thirdly, dominant castes don’t want to give away their power. According to Anand Teltumbde, the dominant castes understand that if Dalits came to own the means of survival, they will abandon their low status and the social bondage.

Fourthly, the deepening economic inequality to the advantage of the privileged castes and classes.

What are the negative implications?

Firstly, it denies the employee, their families and future generations, of their most basic rights.

Secondly, the disproportionate effect of this huge regression in the Labour Code will fall on Dalits and the landless. Because, the vast proportion of landless agricultural labourers in India, to date, are Dalits.

Thirdly, according to Ambedkar, economic enslavement was an extreme form of coercion, and it makes political freedom meaningless.

What is the way forward?

BR Ambedkar had suggested for state intervention in the economic structure to prevent such practices. He proposed a complete recast of rural and agrarian land structures, and state ownership of land.

Source: This post is based on the article “How the Code on Wages ‘legalises’ bonded labour” published in The Hindu on 22nd   Dec 2021.

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