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CHAPTER 4

LABOUR WELFARE
SCHEMES IN INDIA AND
LABOUR POLICY OF THE
GOVERNMENT

4.1 LABOUR WELFARE, POLICIES AND PRACTICES IN INDIA

4.2 PROVISIONS REGARDING SOCIAL SECURITY IN EXISTING
LABOUR LAWS AND EIGHTH AND NINETH PLAN
4.3 IMPORTANT LABOUR WELFARE THEORIES
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4.1 LABOUR WELFARE, POLICIES AND PRACTICES IN INDIA

INTRODUCTION

If we read the history of the industrialization we find that a constant struggle

has been going on between labour and capital. Capital has been exploiting the
labour to their own maximum benefit for they have better economic footing and
power and further stand in better position to dictate their terms.

It is generally expected that solving labour problems is the major responsibility

of the Government of any country and the Government is vested with powers to
enact and implement labour laws for solving problems not only of labours but also
of managements. The experience however has been made that labour laws
themselves cannot solve labour problems.

After the independence, the cost of living has considerably increased. The
increase in the cost of living and countrywide political up surge found its way in
economic discontent among the masses, particularly in the industries. The
industrial unrest and economic discontent led to number of strikes and labour
trouble.

Workers were generally illiterate and poor and unaware about their rights.
Workers are weak in negotiating with the employer for employment and wages.
The employer dictated their own terms and conditions regarding wages and the
employment. The workers being in weaker position have no choice but to accept
such terms for employment because employment was the only means to earn
their livelihood and feed their family.

O n the other hand, without considering the paying capacity of the

management there is a constant demand from labourers, for revision oi wages
and allowances, even though concern may not be in a position to fulfill workers
reasonable expectations about the wages, working conditions and welfare
facilities.
 ... 11

Labour welfare is one of the major aspects of the national programmes

towards bettering the majority of labour and cheating a life hit and work
environment of direct comfort for the class of population.

The term "welfare" is very flexible as well as comprehensive. It includes welfare

of labour as well as his family members. The Government has made various rules,
regulations and acts for the betterment of labours life.

The Government has made following Acts for the betterment of labours life :

1. The Factories Act 1948

2. The Payment of Wages Act 1936

3. The Industrial Employment Act (Standing Orders) 1946

4. The Workmens Compensation Act 1923

5. The Trade Union Act 1926

6. The Minimum Wages Act 1948

7. The Employees State Insurance Act 1948

8. The Employees Provident Funds Family Pension Fund and Deposit-linked

Insurance Fund Act, 1952.

Though the Government has made these Acts for the betterment of workers.
The implementation of Labour Welfare and security schemes is not satisfactory.
Many provisions and the Sections of the Act are contradictory and do not provide
clear meaning of the Act.
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The aims of all these Act is to provide reasonable wages and work condition to
the worker at work place and facilities like education, recreation, medical etc.
However, the implementation of this all Acts become very difficult, some of the
workers are ignorant about their rights, risk about hazardous job. In many Acts
workers rights to be away from hazardous operation remains overlooked or
unnoticed.

Employers expenditure on the repairs and maintenance of the machinery,

modernization, automation and computerization goes on increasing at the cost
of health and security of the workers. The workers do not get effective medicines
and proper medicare from the doctors because of improper implementation of
Employees State Insurance Scheme. (ESIS).

It is also found that the system of determination of minimum wages is not

scientific and minimum wages determined by such Act is not able to provide
reasonable and adequate wages to the workers or the wages provided by
M i n i m u m Wages Act 1948 is inadequate to serve the basic need of the
employee.

Wages paid to the labour in small scale industries and labour in unorganized
sector is very low. Their wages are not sufficient to provide them food, cloths and
shelter, i.e. Roti, Kapda Aur Makan.

It is very essential to revise and reformulate minimum wages legislation after

every five years. However, only committees were appointed to review the
minimum wages. These Committees took long time to review and find out
changed conditions. The Committees have right to make recommendations
regarding wages, and these recommendations are not f o l l o w e d by the
appropriate Government. Same time there may not be major changes in the
recommendation made by the committee and so that ultimate object or
purpose is not achieved.
 ... 79
Some time the recommendations are opposed by 'big' managements and
there is a retreat on the part of Government to management. Strategies for
revision of allowances rather than basic wages. When Government appoints pay
commission for deciding the minimum and maximum levels of wages, different
issues are considered and it creates controversial points regarding the minimum
and maximum wages. Wages should be determined in the light of per capita
national income and the wages should be increased according to the cost of living
of the workers or rate of inflation.

It has been observed that instead of formulating a long term wage policy on
national basis, state or region wage policy was formulated and adhoc measures
like increases in dearness allowances, house rent allowances, increase in
management contributions are used for.

In recent years, agreement between employer and employees are being

made.

4.2 PROVISIONS REGARDING SOCIAL SECURITY IN EXISTING LABOUR

LAWS AND EIGHT AND NINTH PLAN

The Government of India has adopted the policy of Welfare State after the
Independence under the leadership of Pandit Jawaharlal Nehru. So that upto
1991 providing social security i.e. employment, welfare of people, Basic needs
were considered as the important responsibility of the Nation.

The following are the important characteristics of the Indian Population :

1. More than 30% people are living below the poverty line.

2. An unorganized worker working in private organization are not getting

adequate wages which will provide them an acceptable minimum level of
living.

3. Only 3% of labour force gets secured employment.

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Considering the above points the Government has decided that the attempts
at providing social security are targeted at the poor through special employment
generation programmes on the one hand and provision at free or heavily
subsidized basic needs like health, nutration, housing, education on the other
hand. Though 2 0 % of the plan and non-plan expenditure at the State and
Central Government is directed towards the creation and maintenance of social
infrastructure the gap between what is needed and what can be made available
within the available resources at Government is too large.

* Ninth Five Year Plan :

Some Important features of Ninth Five Year Plan is as follows :

1 . Administrative and legal infrastructure :

The Government has made efforts to provide guarantee of social security

through a set of laws and regulations regarding employment but such legal
measures can tackle only the economic and social situation and that too to the
extend the measures are enforceable but this protection gets only organised
workers and its also depends upon the proper implementation and
administration of legislation.

The administrative and legal infrastructure cannot secure for all those in the
organised work force what the laws seek to provide for them.

2. Reward To The Workers :

Where the provision of social security encounters fiscal constraints and

administrative limits to the enforcement of laws, the only feasible approach to
reach social security to the population is by creating conditions. Wherein the
"Economically active" segment of population get a reward for its labour, which
efforts a reasonable level of basic needs.
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3. Poverty Alleviation Scheme :

The Government has introduced poverty alleviation schenne for the

unorganized workers where the working conditions of labour is below poverty

line and where agricultural productivity per capita income level and minimum

wage is low and not satisfactory to provide the basic needs of the workers.

The working conditions of labour in those parts of the country where

productivity is high and where the per capita income levels in general are high

are by and large satisfactory. In this part, the market wage is well above the

statutory minimum wage. At some oi the locations it is difficult to find the

beneficiaries eligible to get benefit under poverty alleviation scheme because

there were few house holders identifiable as below poverty line. The policies that

enable high growth in output to reduce the burden on the direct planning

process of providing social security.

4. The Employees State Insurance Scheme for Medical Care :

The Scheme is applicable in only power using factories employing more than

20 persons. The scheme is framed under the employees State Insurance Act

1948 provides for medical care and treatment, cash benefits during sickness,

maternity, employment injury and pension for dependents on the death of the

insured worker due to employment injury.

The Scheme also provides for the expenditure on the funeral of an insured

person. But the Scheme is not applicable where power is not used for production

and where the number of employed persons are below than 20 persons.
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5. Proper Health Care Arrangement For Poor:

In case of unorganized workers he cannot sustain himself, unless the work is

available and he is fit for work his earning gets directly affected. So health aspect is
very important for an average worker who is poor. In this situation proper health
care arrangement for the worker should be made.

6. Risk at the Work Place :

The health, hygiene and industrial safety set up, which has so far remained
confined mainly to manufacturing sector and should allocate a substantial part of
each resources to providing services to agricultural sector, which constitute
majority of work force.

The agricultural labour is exposed to mainly potential risk at the work location.
The hospital gets a large number of cases of accident at work in the field. But in
agriculture sector there is no provision for the health and safety for labourers.
Provisions are made to provide social security to agricultural labour in ninth plan.

7. Active Involvement of Employer :

Any welfare scheme which is beneficial for the working population in the
unorganized sector has to be employed properly. The implementation of such
scheme largely depends upon the active involvement and economic support of
the employer. Because identification of beneficiary is possible, when employer
supports the scheme. So the stress has to be given on the active involvement of
•iUe employer.

8. Insurance Scheme for Landless Agriculture Labourers :

The Government of Kerala, Karnataka, Gujarat and Madhya Pradesh have

insurance scheme for the landless agricultural labourers. This need to be

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extended for the whole country. The welfare boards of Beedi and Cigar workers,

mine workers are financed by the cess levied on these commodities. In the Ninth

Plan, a strong research and development effort will be mounted to facilitate the

extension of social protection to all sections of the working classes.

9. Welfare Scheme for Worker In the Unorganized Sector :

The existing welfare schemes of the unorganized sector which are widely

scattered and fragmented w i l l be integrated properly. This scheme of social

security for the unorganized rural labour would be designed to provide for

protection during the stoppage or diminution of income. Some institutions are

engaged in providing group insurance to the rural poor people

10. Country Wide-Scheme at Social Security :

The benefit of uniform countrywide scheme can not reach effectively in all

the locations. The requirements of the working population and resources that can

be pooled from the workers the employers and the state or national level

institutions differ from place to place. As far as possible, new scheme are

introduced considering the regional needs.

11. Old Age Pension Scheme :

A few states namely, Karnataka, Kerala and Tamil Nadu demonstrated the

viability and potential of old age Pension Scheme. These states have provided

some form of social assistance to the workers in the organised sector. However,

the social security are not given to the informal worker, migrated worker, child
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and women workers. There are multiple social assistance scheme introduced by

the state. But these schemes are not effective, so there is considerable scope for

improvement in most of the promotional and protective social securities

programme in efficient utilization of funds through better administration.

12. Social Security For Urban Informal Worker :

Urban informal sector is a sector where mostly migrant workers are found.

They are landless poor workers who came to the cities and find themselves in a

difficult situation. Staying in most unhygienic conditions. They do not have

support of the trade unions. There is need to provide adequate social security to

such workers.

13. Provision in Eighth Plan :

An effort of providing social security to the poor was initiated in the eighth

plan period in the form of a National Social Assistance Programme.

The Programme comprises :

1. Old Age Pension

2. Maternity Benefits

3. Family Benefits for the Girl Childs

This has been implemented mainly as a programme for the poor under the

broad head poverty alleviation in rural areas.

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4.3 IMPORTANT LABOUR WELFARE THEORIES

THEORIES OF LABOUR WELFARE

It is found that the approach towards the labour was changed according to the
time and industrial development, from a long time 'labour' is considered as one
of the factors of production process. But now the 'labour' has got importance in
the organizational and industrial sector. It is very interesting to study the theories
of 'labour welfare' from the ancient period. These different theories of welfare
provides us with the ideas about, how to improve labour welfare.

The Policy
The
7. The 8. 1. Theory
Development
Functional OR
Theory Compulsion
People Theory Theory

\-

The THEORIES The

6. Public OF 2.
Relation Religious
LABOUR
Theory Theory
WELFARE

The The The

5. Placating 4. Trustship 3. Philanthropic
Theory Theory Theory
 ... 86

1 . The Policy Theory or Compulsion Theory :

This theory believes that without compulsion and periodical supervision and
fear of punishment employer will not provide even the minimum welfare facilities
to the workers. Man is selfish and always tries to achieve his objectives, even at the
cost of welfare of other or exploitation of others, those are under him. So to
improve welfare, the state should take steps to prevent exploitation of the worker
and offer a minimum standard of welfare. This theory emphasises on fear and not
on the spirit of welfare which should be guiding factor. So this theory of
compulsion leads to :

1. Making provision of laws regarding minimum welfare for workers.

2. Supervision and implementation of law through proper authority.

3. Punishment to employers, who disobeys the laws.

In the countries where, minimum provision of safety and work conditions are
not provided adequately and where the workers are illiterate, in that case some
extent amount of compulsion through laws becomes essential.

But in developing countries, where employers can easily do so, compulsion is

not essential.

2. The Religious Theory :

This theory believes that an employer has to take up welfare activities in the
expectation of future benefit either in this life or in some future life. Thus,
according to this theory any good work is considered 'an investment' both the
benefactor and the beneficiaries are reward, some people take up welfare
activities in a spirit of atonement for their sins. In short, the benevolent acts of
welfare are treated either as an investment or an atonment.
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Human being is primarily concerned with his o w n welfare and only
secondarily, with the welfare of others when man offers wealth or goods to other
people to attain 'Kalyan' or 'Mukti' or 'Moksha' is the motive behind such act.
We come across many trusts and charitable persons in India which function on
the basis of this belief.

The religion basis of welfare can not be rational, fundamentally it is based on

charity and so is not good for the beneficiary in the long run. However, these
services and facilities are voluntary and it depends upon the views of employer.

3. The Philanthropic Theory :

'Philanthropic' means 'loving mankind', Man is believed to have an instinctive

urge by which he strives to remove the suffering of others and promote their well
being. This drive may be a rather powerful one and may impel him to perform
noble sacrifices.

In fact, the labour welfare movement began in the early years of the Industrial
Revolution with the support of such philanthropists as Robert O w n . Employer is
the important factor of organization. He is responsible for the well-being of his
workmen.

4. The Trustship Theory :

According to this theory, the industrialist or employer holds the total industrial
estate and profit accruing from them in trust. He uses all properties and estate for
himself, for the benefit of worker and also for the society. Workers in the
organization is like a minors, they are ignorant because of lack of education and
are not able to look after their own interest. Employer therefore, have the moral
responsibility to look after the interest of their wards, who are the workers.

To provide facilities to the worker is a moral obligation and no legal binding.

So employer take interest in providing facilities to his worker. He uses the funds
under his control for the well-being of the workers.

This theory believes worker as perpetual minors and industrialists as eternal

guardians.

/ ^ y

'.\ "M
 ... 88
5. The Placating Theory :

The placating theory is based on nnilitant approach of the labour. This theory
believes that labour groups are more conscious of their rights and privilege their
demands for higher wages and better standards cannot be ignored. Timely and
periodical review of labour welfare measure can create healthy atmosphere in
the organization. This approach w i l l increase cooperation of the worker for
achieve the objectives of the organization. This theory is unsound, though it has
often been acted upon to secure the workers cooperation.

6. The Public Relation Theory :

The Public Relation theory is based on the assumption that the labour welfare
movement may be utilized to improve relations between the management and
labour. Good relations between the labour and the management helps to raise in
the efficiency of labour and productivity of organization. So labour welfare
programme under this theory works as a sort of an advertisement and help an
industnalist to build up good and healthy public relations.

An advertisement or exhibition and labour welfare programme may help an

industrialist to project to the public good image of the company. His sales,
production as well as industrial relation may improve as a result a two fold benefit
to the company. But one thing is here that, welfare may tend to become a
publicity stunt.

7. The Functional Theory :

Under the Functional Theory welfare measures is used as a means to secure,

preserve and develop the efficiency and productivity of labour. It is obvious that if
an employer takes good care of his workers, they w i l l tend to become more
efficient and w i l l thereby step up production. But all this depends upon the
healthy cooperation between management and union and their approach about
the growth and development of industry.
 ... 89
This theory believes that higher production is of benefit for both the
management and the labour. The labour will get better wages and perhaps a
share in the profits. This is functional approach of welfare having efficiency as its
object, which increases productivity.

This theory believes that both the parties have an identical aim in mind that is
higher production through better welfare, and this w i l l encourage labour's
participation in welfare programmes.

8. The Development of People Theory :

According to Lawrence /\pp/ey development of people is the ultimate object

of any business organization, so that the management should help to develop the
people i.e. workers those who are working in the organization.

By providing the better wages and adequate facilities to the worker,

management can help the workers for their social and economical development
and developed people i.e. worker will help to produce more in the organization.

This theory believes that the management should help to the workers for their
socio-economic development through labour welfare measure and labour should
help to the management for higher production through high efficiency and hard
work.

Theory of development of people is important one in modern culture of

industrialization. Both the labour and the management should help each other
for their own development, it will definitely lead to development of nation. This
theory may be described as Labour Management Co-operation Theory.

• • •