Come Wednesday and 10 of India’s largest trade unions will go on a one-day strike against the Union government’s “anti-labour” policies. How the strike is handled will be a big test for the Narendra Modi government.
The demands put by the unions are a virtual list of undoing labour reforms. One key demand is ending—or at least limiting—wage differentials between regular and contract labour. The Modi government should be firm in resisting this ruinous demand.
The reason contract labour has surged in recent decades is because an entrenched labour aristocracy won’t permit the flexibility needed by industry to cope with the ups and downs of business cycles. If wage differentials are eroded or if contract labour is legally brought on par with regular labour, then one can say goodbye to the Make in India programme. More than that, this will spell a return to labour militancy seen in the dark days of industrial stagnation during the 1970s.