5 yrs on, schools fail to deposit labour cess

The Tribune | Karam Prakash | July 05, 2021

Mandatory to pay 1% building cost to govt

Though the Education Department has developed many smart schools in the state, but none of these has deposited labour cess, which is mandatory under the Building and Other Construction Workers’ (BOCW) Cess Act. Consequently, cess worth crores has not been deposited at the labour department, which is used for the welfare of construction workers.

As per the BOCW Cess Act, 1996, 1 per cent of the total cost of any construction facility has to be deposited with the labour department as labour cess. The Education Department, in 2016, had already issued orders to the District Education Officers, stating every school had to deposit 1 per cent cess for any construction work at the school. However, none of the schools, despite the instructions, paid the labour cess.

VK Janjua, Principal Secretary, said, “We will again write to the Education Secretary to issue fresh directions to schools to deposit the labour cess.”

Meanwhile, school heads and principals, who get the construction work done, told The Tribune that they were neither informed by any government agency nor had they received any additional amount for labour cess. Amarjeet Singh, District Education Officer, Patiala said, “It is not my responsibility to deposit the money. School heads have to deposit the amount as they look after the construction in schools.”

Construction cess not payable on contracts not having any construction component

Lexology | May 24, 2021

The Supreme Court, in its recent judgment, has finally settled a long pending issue by holding that contracts which cover works other than civil works and do not involve any construction, do not attract cess under the Building and Other Construction Workers’ Welfare Cess Act, 1996. The Apex Court in the decision in the case of UP Power Transmission Corporation Limited v. CG Power and Industrial Solutions Limited [Judgement dated 12 May 2021] clarified that mere installation and/or erection of pipelines, equipment for generation, transmission, or distribution of power, electric wires, transmission towers, etc., which do not involve construction work, are not amenable to levy of such cess.

Facts and issues:

  • The Appellant/ Employer – UP Power Transmission Corporation Limited entered into a framework agreement with the Respondent (Contractor), for the construction of a 765/400kV power substation, which was split into four separate contracts, for (i) Supply and delivery of equipment, (ii) Handling, erection, testing and commissioning works, (iii) Civil works and (iv) Operation & maintenance.
  • The Comptroller and Auditor General (CAG), in its audit, pointed out the lapse on the part of Employer in not deducting cess, as leviable under the Cess Act, from the bills of the Contractor.
  • Based on the CAG’s observations, the Employer sought to recover the cess on the total value of work provided under all four contracts, including supply, erection, testing, and commissioning. Admittedly, there were no proceedings that were passed with reference to the assessment or levy of cess under the Cess Act. The Employer, as a consequence, refused to discharge the Performance Bank Guarantee submitted by the Contractor, to secure recovery of an amount of INR 2.6 crore towards cess payable on works under all contracts including the supply part.
  • The Employer sought to recover the cess for the supply part from the pending bills and by encashment of the Performance Bank Guarantee. The contracts in the present case did not provide for the Employer to withhold any amount from the bills raised by the Contractor on the Employer towards any taxes, cess, or any other statutory dues of the Contractor.
  • Aggrieved by the actions of the Employer, the Contractor approached the Allahabad High Court. The High Court held that, in the absence of any order for levy and assessment under the Cess Act, recovery could not be made solely pursuant to an audit objection raised by the CAG.
  • The order of the High Court was assailed before the Supreme Court by way of an appeal.

Findings of the Supreme Court:

  • The Supreme Court held that the first and second contracts, which do not cover civil works, do not involve any construction and accordingly are outside the purview of levy under the Cess Act.
  • The Contractor was held as not a ‘contractor’, within the meaning as defined under the BOCW Act, nor an ‘employer’ within the meaning provided under the said Act, for the first, second, and fourth contracts. It was observed that the statutory scheme of the BOCW Act excludes a supply contract from within its ambit.
  • The Court clarified that mere installation and/or erection of pipelines, equipments for generation, transmission, or distribution of power, electric wires, transmission towers, etc., which do not involve construction work, are not amenable to levy of cess under the Cess Act.
  • It was held that when there is no assessment or levy of cess under the Cess Act, the Contractor cannot withhold amounts towards such cess payments. Even otherwise, the recovery can be done only in the mode and manner of recovery of outstanding cess under the Cess Act.
  • Further, it was considered that in the absence of contractual provisions, the Employer cannot withhold payments or realize cess by revocation of a Performance Guarantee.
  • Lastly, the availability of an alternative remedy (in this case ‘arbitration’) was held not to prohibit the High Court from entertaining a writ petition in an appropriate case.

COVID-19 first wave pushed 23 crore Indians into poverty: Azim Premji University

Business Today | May 06, 2021

The report, titled ‘State of Working India Report 2021’ stated that rural India witnessed a 15% increase in poverty and a 20% rise was registered in urban areas after one year of the coronavirus pandemic

The first wave of the COVID-19 pandemic shoved a staggering 230 million (23 crore) Indians below the poverty line, estimated a study by the Azim Premji University.

The report, titled ‘State of Working India Report 2021’ stated that rural India witnessed a 15% increase in poverty and a 20% rise was registered in urban areas after one year of the coronavirus pandemic.

“Coming on a low-income base, this shock meant that the number of individuals who lie below the national minimum wage threshold (Rs 375 per day as recommended by the Anoop Satpathy committee) increased by 230 million during the pandemic,” according to the report.

“This amounts to an increase in the poverty rate by 15 percentage points in rural and nearly 20 percentage points in urban areas. Had the pandemic not occurred, poverty would have declined by 5 percentage points in rural areas and 1.5 percentage points in urban areas between 2019 and 2020, and 50 million would have been lifted above this line,” it added.

The report further highlighted how women lost more employment than men during the COVID-19 pandemic last year, how around half of formal salaried workforce moved into informal work, and how poorer households underwent considerably higher income losses during the lockdown period.

Mobility curbs resulted in income losses because of decreased economic activity, the report noted. “A 10% decline in mobility was associated with a 7.5% decline in income,” it stated, suggesting the situation could get worse if more lockdowns are imposed in the future.

The report proposed that the Centre will need to roll out a relief package worth Rs 8 lakh crore to contain hardships being faced by lower-income groups due to the economic impact of COVID-19.

The report is based on inputs from Consumer Pyramids Household Survey, Azim Premji Foundation, and many other civil society organisations.

The study found that nearly half of formal salaried workers moved into informal work, either as self-employed (30 per cent), casual wage (10 per cent) or informal salaried (9 per cent) workers, between late 2019 and late 2020 and there was a decline in their income level as well.

In April and May, the poorest 20 per cent of households lost their entire income and the richer households suffered losses of less than a quarter of their pre-pandemic incomes, the report said.

To bring relief for the people suffering hardships of COVID-19 impact, the Azim Premji University report, released on Wednesday, recommended measures that would cost the government an additional expenditure of around Rs 8 lakh crore.

“The measures that we have proposed will bring the spending by the government of India to 4.5 per cent of overall GDP between this year and last or about Rs 8 lakh crore. We think that is not even internationally comparable to what other countries have done, but really what India needs to do,” Azim Premji University associate professor of economics Amit Basole said while releasing the report.

According to the report, the public distribution system has a wider reach than Jan Dhan Yojana, and free rations under the PDS should be extended beyond June, at least till the end of 2021.

In Karnataka and Rajasthan, out of those with women-owned Jan Dhan accounts, 60 per cent received one or more transfers, around 30 per cent did not receive any transfers and 10 per cent did not know about the fund status in their account, it added.

The university report recommended a cash transfer of Rs 5,000 for three months to as many vulnerable households as can be reached with the existing digital infrastructure, including but not limited to Jan Dhan accounts.

It has suggested expanding the MGNREGA entitlement to 150 days and revising programme wages upwards to state minimum wages.

This needs to expand the programme budget to at least Rs 1.75 lakh crore, according to the report.

It has also recommended launching a pilot urban employment programme in the worst-hit districts with a focus on women workers, increasing the central contribution in old-age pensions to at least Rs 500, a COVID hardship allowance to 25 lakh Anganwadi and ASHA workers of Rs 30,000 and automatically enrolling all MGNREGA workers who do construction work as registered workers under the building and other construction workers (BoCW) Act.

Covid-hit India needs Rs 8 lakh crore package to support lower income groups: Report

India Today | May 06, 2021

A report has suggested that the government needs to roll out a relief package of Rs 8 lakh crore to contain hardships faced by lower-income groups due to the economic devastation caused by the Covid-19 pandemic.

The government will need to roll out a relief package worth Rs 8 lakh crore to contain hardships being faced by lower-income groups due to the economic impact of COVID-19, a report by Azim Premji University said on Wednesday.

The report is based on inputs from Consumer Pyramids Household Survey, Azim Premji Foundation, and many other civil society organisations.

As per the calculations based on CMIE-CPHS data, the report said, around 23 crore people are estimated to have fallen below the national minimum wage poverty line due to the impact of COVID-19 on the economy and around 1.5 crore workers remain jobless by the end of 2020, the report titled State of the Work 2021 said.

The study found that nearly half of formal salaried workers moved into informal work, either as self-employed (30 per cent), casual wage (10 per cent) or informal salaried (9 per cent) workers, between late 2019 and late 2020 and there was a decline in their income level as well.

In April and May, the poorest 20 per cent of households lost their entire income and the richer households suffered losses of less than a quarter of their pre-pandemic incomes, the report said.

To bring relief for the people suffering hardships of COVID-19 impact, the Azim Premji University report on Wednesday recommended measures that would cost the government an additional expenditure of around Rs 8 lakh crore.

“The measures that we have proposed will bring the spending by the government of India to 4.5 per cent of overall GDP between this year and last or about Rs 8 lakh crore. We think that is not even internationally comparable to what other countries have done, but really what India needs to do,” Azim Premji University associate professor of economics Amit Basole said while releasing the report.

According to the report, around 30 per cent of people in some states did not get ration as per Pradhan Mantri Gareeb Kalyan Yojana, which needs to be investigated.

“Something like 30 per cent of PDS priority ration cardholder, unfortunately, did not receive the extra grains, at least in these two states (Karnataka and Rajasthan) and this number of 30 per cent we find broadly similar also in few other states that we have done as part of our other COVID livelihood survey,” Basole said.

According to the report, the public distribution system has a wider reach than Jan Dhan Yojana, and free rations under the PDS should be extended beyond June, at least till the end of 2021. In Karnataka and Rajasthan, out of those having women-owned Jan Dhan accounts, 60 per cent received one or more transfers, around 30 per cent did not receive any transfers and 10 per cent did not know about the fund status in their account, it added.

The university report has recommended a cash transfer of Rs 5,000 for three months to as many vulnerable households as can be reached with the existing digital infrastructure, including but not limited to Jan Dhan accounts.

It has suggested expansion of MGNREGA entitlement to 150 days and revising programme wages upwards to state minimum wages.

This needs to expand the programme budget to at least Rs 1.75 lakh crore, according to the report.

It has also recommended launching a pilot urban employment programme in the worst-hit districts with a focus on women workers, increasing the central contribution in old-age pensions to at least Rs 500, a COVID hardship allowance to 25 lakh Anganwadi and ASHA workers of Rs 30,000 and automatically enrolling all MGNREGA workers who do construction work as registered workers under the building and other construction workers (BoCW) Act.

“The survey has been supported crucially by various organisations including Azim Premji Foundation and Azim Premji Philanthropic initiatives, Initiative for What Works to Advance Women and Girls in the Economy, as well as many civil society organisations, have contributed in bringing the information that we have been able to collect,” Basole said.

May Day 2021: What Has (Not) Changed Since the Pandemic Ravaged Livelihoods of Workers

The Wire | K.R. Shyam Sundar | May 01, 2021
Despite the government passing several laws, hurting the hard-earned labour rights over centuries, workers are staring at an uncertain phase during which neither old labour laws nor the new codes are effectively relevant.

This is the second May Day during COVID-19 and hence as dark as it was in 2020, if not darker. For several reason, it is darker in many senses for the working class. Let us briefly review what happened post-May Day 2020.

The COVID-19 2020 period witnessed several legislations both at the state and at the central levels hurting the hard-earned labour rights over centuries. Capitalising on the extraordinary situation created by the pandemic, several state governments hurriedly, and even unwisely, passed government orders extending the maximum hours of work in a day from eight to 12, and in a week from 48 to 60 hours. In Uttar Pradesh and Gujarat, the judiciary struck them down due to their illegality. On the other hand, some states dared to enter where angels feared to tread by making sweeping changes in all or some major labour laws like Factories Act, 1948, the Industrial Disputes Act, 1947, among others.

At the same time, the central government enacted three Codes – Industrial Relations Code (IRC), Occupational Safety and Health and Working Conditions Code (OSHWCC) and Social Security Code (SSC). The Codes afforded considerable flexibility to employers and contractors by exempting more establishments from regulations concerning standing orders, retrenchment and closure, safety and health, contract labour welfare, etc. The Codes provided some benefits to the working-class like universal minimum wage, trade union recognition, social security for gig and platform workers, wider definition of migrant workers, etc.

Seen holistically, the corpus of legislation provides some benefits which due to lack of effective implementation machinery and of will to implement on the part of the government mean little or even nothing; on the other hand, the employer-friendly clauses are easy to implement as they significantly reduce the role of the government in the labour market owing to increased non-coverage of establishments and workers. This is the irony of the labour laws which is often missed out by commentators. Laws deregulate and thereby cause state retrenchment.

This brings us to the issue of governance of labour market. Labour market governance majorly comprises two aspects: administration of labour laws and collection of labour statistics.

The first year of COVID-19 has so vividly and so woefully brought to life the complete absence of labour market governance. Virtually there was no record of inter-state migrant workers and what happened to them during this period of the pandemic. Even the Supreme Court wondered in 2017 that the Comptroller and Auditor General (CAG) did not know where Rs 20,000 crore collected under the Building and Other Construction Workers’ Cess Act, 1996, meant for spending on construction workers’ welfare had gone! Earlier in 2015, the apex court expressed displeasure over the non-utilisation of the cess fund of Rs 26,000 crore.

The unorganised workers did not receive the mandated smart registration card under the Unorganised Workers’ Social Security Act, 2008 (UNSSA). Even as the labour minister unjustifiably claimed that the OSHWCC provides better occupational safety and health protection to workers, the lack of valid and reliable statistics on industrial accidents is striking. In the meanwhile, industrial accidents have been occurring at frequent intervals in various parts of India, especially New Delhi.

What has [not] Changed?

Legislative vacuum

The four labour codes have been hurriedly passed but not notified till now. I have provided a comprehensive critique of these Codes in my book, Impact of COVID-19, Reforms and Poor Governance on Labour Rights in India (Synergy Books India, 2021).

The central government has hastily used the escape clause in the Wage Code and notified the provisions related to the constitution of the Minimum Wages Advisory Board in December 2020; however, nothing has happened yet. The industry bodies have been reportedly lobbying with the government for changes in the definition of ‘wages’ since the new definition will likely see an increased outgo in social security. Economic slowdown and COVID-19’s virulent spread has impacted businesses and trade considerably and hence the non-implementation of the new Codes, especially the Wage Code, benefits the industry.

The central government fixed April 1, 2021 as the date for the implementation of the four Codes at a stretch. However, as on April 1, 2021, many state governments have not framed the rules under the Codes, leading to a delay in their implementation. Now this has created a “legal void” which in many ways affect both industry and workers adversely. Minimum wage rates are yet to be revised based on new criteria. Social security for the gig and platform economy workers cannot be implemented. The inclusive definition of migrant workers including voluntary migrant workers along with contracted migrant workers cannot be implemented. The list is long.

The “implementing authorities” are justifiably confused as to how to make the rules under the new Codes. Neither the Centre has helped their cause nor the state governments have sought the International Labour Organization (ILO)’s technical assistance in this regard –reflective of the government’s neo-unilateralism. Given the multiple and competing commitments that the governments face during the second wave of COVID-19, one does not see the implementation of the new Codes in the near future.

The employers and workers are staring at an uncertain interregnum during which neither old labour laws nor the new Codes are effectively relevant. This is perhaps the first of its kind in the legislative history of India that the social partners and even the administering agencies are confused and uncertain.

Labour market governance deficits

During the current COVID-19 period (2021), we are witnessing the second wave of reverse migration of workers who once bitten are twice shy. Despite some state governments like Maharashtra and New Delhi having appealed to the migrant workers to stay back, thousands of them have gone back to their villages.

The first period of COVID-19 exposed the utter collapse of the labour administrative system. I have dealt with the labour market governance deficits in detail in my book mentioned above.

Here are a few points on this issue that are also mentioned with evidence in the book:

The existing unemployment insurance scheme is extremely inadequate, and during 2007-17, just about 10,000 workers claimed unemployment allowance under the ESI (Employees’ State Insurance) scheme
Several state governments did not even disburse a single rupee from the Building and Other Construction Workers (BOCW) cess fund even as the migrant-cum-construction workers were facing terrible hardships;
The state governments were poor performers in implementing the BOCW Act, 1996 despite admonitions by the Supreme Court;
The state governments, the employers and even the trade unions have been guilty of non-provision of correct, timely and reliable statistics; the labour statistical system has collapsed beyond repair and there does not exist a comprehensive and reliable labour statistical system;
The industrial disputes settlement machinery was grossly inadequate to deal with the magnitude of industrial conflicts and the dispute settlement processes suffer from inordinate delays;
The labour enforcement machinery has been considerably diluted which reflected in poor implementation of laws as evidenced by steeply declining number of inspections, prosecutions, etc.
Given the cruel and entirely unforgivable failure on the part of the government in implementing the laws concerning migrant, construction and unorganised workers, one would have thought that the governments would have sprung to rectify the huge deficits. Did they? The delay and in a significant sense the complete failure to do so is appalling.

The central government has proposed five pan-India surveys on migrant workers, domestic workers, employment generated by professionals, employment generated in transport sector and quarterly establishment-based employment survey in February 2021 – nearly a year after the first exodus of migrant workers in 2020. The government is expected to release the data on migrant workers by November 2021.

Given the magnitude of migrant workers and the dynamic nature of their work, it is doubtful whether the government would accomplish what it promises. Without a credible database, it would be difficult even for an unusually benevolent and sensitive government to reach the benefits to the targeted workers.

Even in the new dispensation, there is no plan to collect data on the service sector on a comprehensive basis and that on gig and platform economy workers. The question here is: is there a national registry of these workers? The answer is a BIG NO. The government is playing with “guesstimates” and how credible are their promises for social security cover for these workers in the absence of a credible database?

We do not have credible statistics on the newly registered construction workers in India by states. Several state governments including Delhi have announced registration drives for construction workers, but we still do not know the actual live registrations of more than 55 million construction workers who accounted for 12.14% of total employment in India during 2018-19.

While the SSC does not provide for the provision of registration cards, which went largely unnoticed, since the old law, the Unorganised Workers’ Social Security Act, 2008, is prevalent, one does not know whether any constructive move has been launched for registering these workers. The silver lining in this data mess is the officially claimed significant coverage – 86% of the beneficiaries (69 crore) under the National Food Security Act in 32 states and Union Territories – under the One Nation and One Ration Card (ONOR).

The Union Budget 2021 did not provide much comfort to the millions of informal workers. It merely reiterated the ill-formed provisions in the labour codes. The high-frequency unemployment rates produced by Centre for Monitoring Indian Economy (CMIE) has been higher than 6.5% and throughout April 2021. The absence of macro-level unemployment assistance/insurance scheme, especially during high unemployment-prone COVID-19 times is hugely disturbing. The government has persisted with the tough conditions-laced unemployment insurance scheme offered to workers registered under the ESI scheme.

The SSC does not provide for unemployment assistance/insurance scheme even though it included them in the definition of social security. The MNREGS often acts as a proxied unemployment assistance programme, and hence, generally when unemployment rates spike there is corresponding spikes in the demand for jobs under this scheme, as is the case in April 2021 when the demand for jobs under the scheme increased by 89%.

Given this grim reality, the fact that the budgetary allocation for this scheme for the current fiscal is 34% less than the revised allocation for it for 2020-21 is disturbing.

Absence of any form of dialogue

Enough has been said and written on the absence of and contempt for social dialogue in India even though the government has ratified the ILO Convention, C.144, Tripartite Consultation (International Labour Standards) Convention, 1976. The governments have to realise that concrete and useful relief measures cannot be framed and delivered without the aid of trade unions and other workers’ organisations. Hence, there is an urgent need for the government to activate consultation with trade unions not only for amending the defective labour codes, but also frame policies and relief measures to tackle the increasingly menacing COVID-19 this year. Trade unions and workers’ organisations can help in registration of informal workers of various kinds which by itself will be a humungous achievement for workers in India.

There is also a need for a federal dialogue, and a revival of the historically established body, the Labour Ministers’ Conference. This is essential to frame coordinated and non-duplicating measures and also enable the state governments to frame the rules under the labour codes.

If the monolithic government in China could consult the ILO while framing and reforming its labour laws, what prevents the democratic government in India from consulting the ILO is difficult to fathom. ILO has expertise which if accessed would only contribute to better lawmaking and more efficient labour market governance. Not doing so must be attributed to its unholy marriage with “neo-unilaterlism”.

Need for contemporaneous May Day charter, 2021

Thus, the working class has to be prepared to brace another “bad year” or even years in near future as it fights two adversities – COVID-19 and the neo-liberal flexible labour policy regime. Then, May Day 2021 should strengthen its resolve to fight both. It should shelve its 12-points charter of demands and make ‘Lives and livelihoods matter’ as its slogan. The specific contemporary and urgent demands include:

Amendment of labour codes to retain and improve on the existing labour rights
Immediate implementation of the labour laws relating to unorganised sector workers, including migrant, domestic, construction and new economy workers
issue smart ID cards to all these workers, involving trade unions and other workers’ organisations, and initiate a registration campaign for them
Establish a comprehensive labour statistics system in consonance with international labour statisticians’ recommendations
Declare minimum wages and occupational safety and health as fundamental rights
Declare COVID-19 as a national emergency
Ensure adequate labour administrative and judicial bodies for speedy delivery of industrial justice
Universalise social protection

Significantly, the International Trade Union Confederation (ITUC) has demanded occupational safety and health to be included as a fundamental human right by the ILO at the global level and this should resonate in India as well. Trade unions must leverage international organisations like ILO and ITUC to strengthen its campaign to usher in decent work and also more crucially to tackle the COVID-19-induced crisis. The four-pillar approach advocated by ILO must be at the centre of policy lobbying by trade unions. Industry could join as it stands to benefit from these campaigns as in these tough times, the interests of both converge.

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