The UPA-II government introduces with BJP support two anti-labour Bills, the Pension Bill and the Labour Laws Amendment Bill.
ON March 24, the United Progressive Alliance (UPA) government managed to do what it had not been able to do in its first term – it reintroduced the Pension Fund Regulatory and Development Authority (PFRDA) Bill in Parliament with the support of the Bharatiya Janata Party. The objective of the Bill is to undertake promotional, developmental and regulatory functions with respect to pension funds.
The Congress hurriedly mustered the support of the BJP as many Congress members were not present at the time of the Bill's introduction. The UPA, hence, narrowly escaped a loss of face when Left party members demanded a division of votes. The division showed that of the 159 members present in the Lok Sabha, 115 backed the proposed legislation, 43 opposed it, and one abstained.
While the UPA government held that the Left-led opposition had raised objections at the wrong time, the chief whip of the Communist Party of India (Marxist), Ramchandra Dome, said that they had every right to press for a division and that the Bill had been circulated only the night before its reintroduction, giving members little time to study it.
Owing to the opposition of the Left, the UPA-I government failed to secure parliamentary approval for the Bill's introduction. The surprise element this time was the support of the BJP, coming as it did in the wake of the WikiLeaks expose. The parties opposed to the Bill included the Samajwadi Party, the Janata Dal (United), the Biju Janata Dal and the Telugu Desam Party.
It was almost eight years ago, in 2003, that the National Democratic Alliance government constituted an interim pension sector regulator through a resolution. The PFRDA Bill was introduced in the Lok Sabha in 2005, which was then referred to a Standing Committee. In 2009, the UPA-I regime proposed amendments, but they could not be moved; and the 2005 legislation lapsed after the dissolution of the 14th Lok Sabha. Now the same Bill has been reintroduced with some minor changes.
The changes pertain to the foreign investment policy for the pension sector. According to the statement of objects and reasons of the Bill, this policy will now be determined and notified outside the proposed legislation under the Foreign Exchange Management Act (FEMA).
The revised Pension Bill is viewed as giving an opening to private players; it will also help cut government expenditure on pension contributions. The Bill envisages making pension a contribution-based arrangement from being a defined benefit, which it is now. Under the new legislation, all government employees – except those in the armed forces – who joined service on or after January 2004 will be covered under the proposed National Pension Scheme (NPS). Strangely, while it has been made mandatory for government employees, private sector employees have the option of joining it or not. Pension would be disbursed to employees at a rate of return determined by the market, with no implicit or explicit assurance of a guaranteed return.
The NPS was introduced under the PFRDA in 2004 under an executive order by the NDA government. It allows private companies to manage Central and State government pension funds and invest part of them in stocks and corporate bonds. The PFRDA Bill is essentially a step to regulate the pension sector, which has been opened up. It will also provide statutory backing for implementing the NPS.
“The government will contribute as an employer, not as the government. Earlier, employees knew how much pension they would be drawing; now it is going to be determined by the market. Even the contribution is not strictly contributory, it will be market-driven. Even in the United States, in case of vagaries, the government guarantees 75 per cent share of the pension and only 25 per cent is lost by the employee; in this case, there is no government guarantee of any kind,” said Tapan Sen, general secretary, Centre of Indian Trade Unions (CITU) and CPI(M) member in the Rajya Sabha.
The PFRDA Bill allows part investment of the corpus in the stock market, though at the moment it does not have a foreign investment policy for the pension sector. The ceiling of foreign equity envisaged in the earlier version has been removed though it may be made effective through an executive order. It may be recalled that foreign direct investment in the pension sector was opposed by the Left parties. The Bill empowers the PFRDA to oversee multiple pension funds, which means that all kinds of social security, including provident fund, can come under its ambit.
The government has appointed six fund houses – Infrastructure Development Finance Corporation (IDFC), State Bank of India, ICICI Prudential Life Insurance, Kotak Mahindra Bank, Reliance Capital and the state-run Life Insurance Corporation of India – to manage pensions. The contributions of both employees and employers will be given to these fund houses and at the time of annuity or retirement, the corpus accumulated will be forwarded to an insurance company so that the pensioner can buy annuity or pension from them and also a lumpsum from the corpus. Instead of a predefined assured sum, pensioners will now have to keep track of the funds with the fund managers and evaluate different fund managers on the basis of their performance and other issues. The fund-selection technique has to be right so as to get substantial returns. Even supporters of the scheme say this is not possible in the present schemes of government pension as employees are not allowed to invest in the market.
Interestingly, the BJP's trade union wing, the Bharatiya Mazdoor Sangh (BMS), has strongly opposed what it calls the “anti-worker” pension fund Bill. Its national president, C.K. Saji Narayanan, said that the “government has fallen into the hands of the big industrial lobby and is trying to cater to the interests of private investors and the speculative market instead of protecting the interests of millions of employees”. He said that the Bill facilitated the back-door entry of foreign investors and that “the Government of India had not learned lessons from what had happened to lakhs of pensioners in the U.S. and in European countries whose pension funds were invested in private funds and in the stock market. It had ended in social calamity from which their societies have not recovered so far.”
The government, he said, was “trying to snatch away the existing privileges of employees and converting the benefit scheme into a contributory insurance scheme at the expense of the employees, thereby exonerating the liability of employers, including the government. Pension will be virtually converted into a return from private investment. It is fundamentally wrong on the part of the Finance Ministry to trespass into workers' issues; it is for the Ministry of Labour to take care of such matters on the basis of well-established principles and norms.”
The All India Central Government Employees Federation, the All India State Government Employees Federation and the Confederation of Central Government Employees have opposed the introduction of the Bill and planned campaigns.
A day before the introduction of the Pension Bill, on March 23, another contentious Bill titled the Labour Laws (Exemptions from Furnishing Returns and Maintaining Registers for Certain Establishments) Amendment Bill, 2011, was introduced in the Rajya Sabha. This Bill exempts employers of establishments employing up to 40 persons from the obligations of almost all the basic labour laws governing matters such as minimum wages, payment of wages, working hours, contract work, and payment of bonus. The exemption initially was for a larger number of employees but was reduced to 40 following protests from the Left parties, which argued that no unit employing people should be exempt from labour laws. Even with the ceiling coming down to 40, they feel that nearly 78 per cent of the workforce in the manufacturing sector will be out of the purview of the basic labour laws.
Tapan Sen told Frontline that he and his party colleagues in Parliament had opposed the Bill in its earlier avatar too. As a result, the Bill could not be introduced in the Rajya Sabha. He said that even the ceiling of 40 had been apparently calculated on the basis of those factories that submitted regular returns to the government, and that as per the government's own estimates, not more than 30 per cent of factories submitted regular returns. He said private sector employers and even contractors who supplied labour and materials to public sector companies did not maintain proper registers of the workers employed with them.
Tapan Sen said the Bill had been examined by the Parliamentary Standing Committee on Labour, which submitted its unanimous report in December 2005. The committee expressed dismay that the government had not consulted employees' groups or employers' representatives before presenting the Bill in Parliament.
The Bill originally sought to give exemption to employers employing up to 500 persons; the number was brought down to 40. In his speech in the Rajya Sabha last year, Tapan Sen pointed out that hundreds of workers toiled for around 12 hours a day in many industrial areas in Delhi without the benefit of overtime. The names of only a handful of workers were listed in the employment registers while 80 per cent of them continued to be invisible, he said.
Unlike in 2005, the Left parties are not in a position now to defeat anti-labour Bills in Parliament. This makes it easier for the government to push pieces of legislation that were kept on hold owing to pressure from the Left. There is tacit support from the BJP for many of them that pertain to the financial sector. The question of public interest is only secondary.
( T.K. RAJALAKSHMI - Frontline )