Introduction
SEZs are defined zones inside a country that are subject to different economic rules and laws than the rest of the country. These zones are often established to encourage foreign investment and economic progress. SEZs have played a vital part in sustaining and increasing India’s GDP and economy, which is witnessing exponential expansion. It has been identified as a tool for the creation of infrastructure, trade and investment, job creation, and so on.
The strategy for using SEZs to boost economic growth has been adopted and amended, so that growth may be supplemented by large fiscal packages and the construction of more infrastructure.
However, the implementation of SEZs has been criticized for its impact on labor rights and working conditions. This blog critically analyzes the relationship between SEZs and labor law in India.
Interrelationship between Labor rights, Labor Law, and Special Economic Zone
To examine labor rights, one must first read and investigate SEZs and labor legislation in SEZs. To begin with, SEZs have one trait that impacts their institution and legal regimes to attract investment, whether international or domestic. These may overlap, however, they are not geographical characteristics of that specific place, such as the availability of certain natural resources.
This is to draw attention to the fact that various SEZ jurisdictions have varied legal regimes; yet, in terms of labor, SEZ in different jurisdictions have a distinct impact on the laws of that jurisdiction. Amita Punj has highlighted three major techniques in this regard:- ‘inclusionary’ models, in which regular labor law applies completely in SEZs; ‘exclusionary’ models, in which a distinct legal regime rules worker relations in SEZs; and special/altered’ regimes, in which national labor law applies with changes. However, rather than specific legal restrictions, these models are permeable.
However, these models are porous rather than explicit legal provisions.
With respect, India doesn’t have any explicit legal provisions. Even Section 49 of the SEZ Act, which allows individual states to modify the SEZ Act, reads thus: “Provided that nothing contained in this section shall apply to any modifications of any Central Act or any rules or regulations made there under any notification or order issued or direction given or scheme made there under so far as such modification, rule, regulation, notification, order or direction or scheme relates to the matters relating to trade unions, industrial and labor disputes, the welfare of labor including conditions of work, provident funds, employers liability, workmen’s compensation, invalidity and old age pension and maternity benefits applicable in any Special Economic Zones.”
In actuality, while employment laws cannot be changed, state governments can make changes through notifications and other administrative ways. According to the SEZ Act of 2005, the development commissioner has the ultimate power to ensure that labor rules are followed. The DC has the authority of the labor commissioner (Section 12, Subsection 3) as well as additional tasks.The SEZ Act has permitted a trend of privatization of worker rights monitoring. Units in SEZs are authorized to get reports from recognized agencies notified by the state government for inspections required in units outside SEZs under the Factories Act (1948) for worker health and safety, the Workmen’s Compensation Act, and the ESI Act.
Certain labor rights are guaranteed by the Indian Constitution, including the right to work, the right to a livable wage, and the freedom to create and join trade unions. Various labor regulations, such as the Minimum Wage Act, the Industrial Disputes Act, and the Factories Act, further safeguard these rights. The effectiveness of these regulations in SEZs, however, is frequently hindered by the regulatory vacuum produced by SEZ policies. SEZs have been chastised for having a negative influence on labor rights and working conditions. SEZs, according to critics, create a regulatory vacuum in which labor regulations are not adequately enforced. Companies in SEZs are granted a wide range of labor law exemptions, including those relating to minimum salaries, working hours, and social security. As a result, employees in SEZs are frequently exploited and exposed to substandard working conditions. Compliance with labor rights could also be weakened through international investment treaties, which safeguard the investors’ profit over public interests and human rights, including labor rights. There have been at least 20 arbitrations to dispute various parts of SEZ regimes, with many challenges stemming from states withdrawing or amending tax incentives, and others relating to the removal of SEZ concessions. Strengthening labor rights may have a comparable impact on investor rights or returns and trigger claims.
The influence of SEZs on labor legislation is increased further by the fact that SEZs are generally located in regions with lax labor standards. This makes it simpler for businesses to break labor laws without fear of repercussions. Furthermore, employees in SEZs are frequently engaged in insecure and informal employment situations, making it harder for them to claim their rights.
The COVID-19 pandemic problem has exacerbated pre-existing disparities, with women workers bearing the brunt of the damage. The triple (health-social-economic) dimensions crisis has resulted in precarious and deplorable working conditions for women in supply-chain-based manufacturing sectors as well as the tourism sector, while the lack of a strong, universal social protection system jeopardizes their right to life and dignity.
Women in the tourist business are more likely to be self-employed and receive lower wages, making them more exposed to the shock of losing their job with no way to diversify their income, particularly in locations where tourism is the primary source of income/livelihood.
Conclusion
Finally, SEZs have had a considerable impact on Indian labor law. While SEZs have been effective in attracting foreign investment and supporting economic growth, the impact on labor rights and working conditions cannot be overlooked. Companies have been able to violate labor rules with impunity due to the regulatory vacuum created by SEZ policy. To protect employees’ rights, the Indian government must take steps to ensure that labor laws are effectively enforced in SEZs.
References
1. REVISED SEZ POLICY, Smt. Rachna Sharma, Additional Director (23034591), and Smt. Rashmi Kapoor, Joint Director of Lok Sabha Secretariat under the supervision of Smt. Kalpana Sharma, Joint Secretary and Smt. Anita Khanna, Director.
2. https://kpmg.com/in/en/blogs/home/posts/2022/03/special-economic-zone-mantra-incentive.html.
3. https://academic.oup.com/jiel/article/24/2/341/6219919.
4. Amita Punj, ‘Special Economic Zones: Operational Adjustment of Labour Law’, 5 (1) Journal of National Law University Delhi 78 (2018), at 79.
5. The Cost of Global Competitiveness: Assessing the Impacts of Special Economic Zone Policy on the Working Class in Bangalore, Jessica George May 2015,file:///C:/Users/Shreya%20Kumari/Downloads/GeorgeJessica_GSAPPUP_2015_Thesis.pdf.
6. Feminist Participatory Action Research on Labour Rights 2020-2022:“Women’s labor rights in the Special Economic Zones”.
7. UNCTAD. COVID-19 and Tourism Assessing the Economic Consequences
8. https://unctad.org/en/PublicationsLibrary/ditcinf2020d3_en.pdf.
9. The Cost of Global Competitiveness: Assessing the Impacts of Special Economic Zone Policy on the Working Class in Bangalore, Jessica George May.
10. Trade Unions and Special Economic Zones in India, Pallavi Mansingh, Suneetha Eluri and Sreejesh N P Centre for Education and Communication (CEC), New Delhi for the ILO Bureau for Workers’ Activities (ACTRAV), March 2012
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