Prime Minister Narendra Modi, in his recent speech at the Shramev Jayate programme in Delhi, outlined his government’s >approach to labour reforms . He began by appearing to take a pro-worker stand, urging those who mattered that workers be treated with respect and dignity. He then rightly made a strong plea for recognising that vocational and technical training has a pivotal contribution to make to industrial development, if not national development itself. While he was careful to recognise the contribution of workers to nation-building, the focus of his speech was on the various ills of the much-maligned inspector raj and the initiatives that his government plans to take to eliminate it.
Among others, he proposed the introduction and implementation of a >self-certification scheme in a full-fledged manner. Self-certification has been around for a while in several States, though offered or implemented in different forms. To understand it in its proposed form, it may be useful to go back to Mr. Modi’s speech, where he gave an analogy of maintenance of a personal car versus that of a factory boiler.
He asked, “When we purchase a new car, do we require a government inspector to check if the brakes, the accelerator and the gears function as they should? No, we don’t. We very well know that to maintain our car, its brakes and gear box is in our own interest — it is a question of our own life and death.”
Mr. Modi then went on to suggest that the same applied to the maintenance of a boiler in a factory. A factory owner knows it is a matter of life and death. Hence, we need to have confidence in him and trust that he is capable and will act responsibly. Therefore, he went on to say, the factory owner should be allowed to self-certify that his boiler functions properly and that the factory is compliant with respect to all standards.
Flaws in the argument To begin with, there is a basic flaw in this argument. A personal car is not comparable to a factory and definitely not to a boiler in a factory. In the case of a personal car, there is clearly an inherent incentive for the owner to maintain it, while the same is not true for a boiler. Let me explain.
A personal car is used — and often driven — by its owner. Therefore, the risk of accidents or mishaps due to mechanical failures arising out of its poor maintenance is borne directly by the owner and his/her family.
In the case of a factory and, specifically, a boiler, it is the concerned workers who operate it. Therefore, any risk, life-threatening or otherwise, arising out of poor maintenance of the boiler is borne by workers. Only in very exceptional and rare cases, where the owner himself operates the boiler or positions his office near it,he shares this risk with the workers.
Even when it comes to benefits, it can be argued that in the case of a car it goes entirely to its owner. However, in the case of a factory boiler, while the main benefits go to the factory owner, the operator’s benefits are limited to his wages — a fraction of the total. On the other hand, the risk of accidents arising out of faulty maintenance is borne, disproportionately, by the worker. By equating a personal car with a factory boiler, the Prime Minister seems to have missed these rather elementary points of difference.
It is important to highlight another, more subtle, difference. It has to do with the safety standards. What could be considered safe for domestic operations need not be safe at the level of an industry. While, on average, a personal car is used only for a few hours a day, an average factory boiler is expected to work all 24 hours a day, 365 days a year. In that sense, a personal car and a factory boiler are not comparable. While it is possible that Mr. Modi did not have this difference in mind while making the analogy, it is important and needs to be pointed out.
The context in which a case is being made for self-certification system also needs to be understood. India has a dubious record when it comes to road safety and industrial safety. While in the case of many road accidents, the victims are the owners themselves, in the case of industrial accidents, it is mainly the workers. Further, at times, the victims also include unrelated third parties — like in the case of the Bhopal gas tragedy where most of them were neither owners nor workers but poor slum dwellers living in the vicinity of the factory. Thus, situations relating to industrial safety standards typically suffer from what economists call the problem of ‘moral hazard’.
At present, self-certification schemes — with similar features — are in operation in at least 10 States, including Andhra Pradesh, Gujarat, Maharashtra, Punjab, Rajasthan and Uttar Pradesh. They are voluntary — establishments who do not opt for them continue to operate under the existing labour regulatory standards. As a result, self-certification schemes have few takers.
Under-reporting of accidents Mr. Modi’s announcement perhaps suggests taking self-certification to the next level in two distinct ways. First, the proposed scheme will be offered nationwide — across States and across industries. Second, it will water down the existing compliance requirements — norms that have made the existing self-certification schemes less attractive to factory owners.
These proposals are being made at a time when there is clear evidence to show that inspection standards relating to labour and industrial regulations have declined drastically in the last two decades.
Data on industrial safety and accidents suffer from serious under reporting. Non-fatal industrial accidents go unrecorded and unreported and only those involving deaths in registered enterprises and those that cannot be concealed at all are reported.
Despite this, data from National Crime Records Bureau show that in 2013, boiler explosion-related accidents alone led to 359 deaths in the country. Another 955 persons died in factory/machine-related accidents. Data also show an upward trend in both industrial mishaps and fatal accidents involving workers. Therefore, what a self-certification scheme is expected to achieve on this count is not clear.
It is understandable that an owner of a factory asks for less stringent regulations or even a lax system of self-certification. However, for a government looking for ways to take the country’s industrial growth and production standards to a higher level, the proposal to introduce a system of self-certification clearly displays lack of imagination. How the introduction of a self-certification scheme will succeed in increasing industrial production, productivity and occupational safety is questionable. If widely applied with less stringent compliance norms, it will only exacerbate the already precarious industrial safety situation in the country.
( Jesim Pais is Assistant Professor at the Institute for Studies in Industrial Development, New Delhi. )
