Examining the State's failure to provide income support during the lockdown

In an earlier post, we had discussed that the State has a constitutional obligation under Article 21 to ensure that workers and laborers get access to basic sustenance income - during a lockdown where they have lost their means of livelihood. No such concrete measures have been undertaken by the Central or State Governments ever since the lockdown began on 25^th March. Even the economic stimulus package announced by Finance Minister Nirmala Sitharaman did not provide for any such basic sustenance income.

The only form of income support that the Finance Minister assured was for rural employment undertaken under the MGNREGA scheme. Apart from the failure to provide any income support through the economic stimulus package, there is another issue that merits discussion. This is the failure of the Central Government to enforce its own executive order - which mandated that employers pay full wages to their workers during the lockdown period. We shall, in this post, discuss the Central Government’s failure to give effect to its own order mandating payment of wages.  We shall also discuss alternative measures through which income support could have been secured, in furtherance of the State’s positive obligation under Article 21.

Employers’ obligation to pay wages during the lockdown – The chronology of events

At this juncture, it is pertinent to recall that on 29th March, the Ministry of Home Affairs (‘MHA’) had issued an executive order (‘the 29^th March Order’) under the National Disaster Management Act, 2005 which stated that - all employers in (i) industrial undertakings; (ii) commercial establishments; and (iii) shops shall ensure that wages are paid to their workers without any deduction, for the period during which their enterprises were under closure during the lockdown. Effective implementation of this order would have ensured that daily-wage laborers, migrant workers, and other segments of the workforce had some financial resources to sustain themselves during the first three phases of the lockdown.

The lack of implementation of this order is evident from multiple first-hand accounts given by migrant workers, many of whom were left with no option but to walk back to their native places by foot. One aspect that is common in multiple first-hand accounts of migrant workers is that they were denied wages by their employers, and not provided with any resources for sustenance. Now, under the new guidelines for Lockdown 4.0, which were notified on 17^th May, the 29^th March order of the MHA has been superseded. The implication of this is that employers are now under no legal mandate to pay wages for the months of April (when the lockdown was in full force) and May.

Meanwhile, before the new guidelines were issued, enterprise associations such as the Hand Tools Manufacturers Association and the Indian Jute Mills Association filed petitions in the Supreme Court, contending that the 29^th March Order was in violation of the freedom of trade and business guaranteed by Article 19(1)(g) of the Constitution, and was unreasonable and arbitrary. The Supreme Court issued an interim order in some of these petitions - directing that no coercive action should be taken against the petitioners (the employers) for not paying wages when their enterprise was under closure due to the lockdown.

In light of the new lockdown 4.0 guidelines, and as the 29^th March Order has been superseded, such interim orders have also become redundant, as the employers now do not have any legal mandate to pay wages for the lockdown period. We shall now discuss how this failure to ensure payment of wages and provide income support during the lockdown is in clear derogation of the State’s obligation under Article 21.

Failure to ensure payment of wages – yet another violation of Article 21

As I argued in an earlier post, during a lockdown, the State has a constitutional obligation under Article 21 to ensure that daily-wage laborers, migrant laborers, casual wage earners etc have access to some basic sustenance income. We derive this from the State’s ‘minimum core obligation’ under the right to livelihood and social security, which are facets of Article 21. Under this minimum core obligation, based on the prevailing circumstances, the State must ensure that the basic essential levels of a right are realized, that would enable the poor to live with dignity. In a lockdown, where the workers have lost their means of livelihood, the ‘minimum core’ obligation would mandate the State to ensure access to a basic level of sustenance income for the workers.

Examining different measures through which income support could have been achieved

The ‘minimum core’ obligation under Article 21 is only the constitutional benchmark, and does not mandate the method through which the State should secure this obligation. That is a policy prerogative for the State to frame. Now, in such a situation where workers may lose access to their livelihood and income, the State has multiple policy options which it can examine and implement. The first option is for the State to directly provide the workers with some form of basic income through cash transfers. The other option available is to impose a mandate on the employers to not deduct wages for the period during which their enterprise was under closure – which was attempted through the 29^th March notification.  Fulfilling this mandate may however be difficult for many enterprises especially in the MSME sector, who may be staring at losses.

In this scenario, the State could have fulfilled its constitutional obligation by implementing a wage/income protection scheme, through which the State provides eligible enterprises with the financial resources to pay their workers. This would have enabled the enterprises to keep the workers on their payroll, instead of terminating their employment. For other large-scale industrial undertakings, the Central and the State Governments could have ensured that the 29^th March Order of the MHA is complied with in letter and spirit. This would have to a certain extent ameliorated the plight of migrant laborers and daily-wage earners, who have suffered the most under the lockdown.

Let us at this juncture examine the worker-protection measures adopted in the United Kingdom and in USA, which serve as useful templates for India. In UK, Rishi Sunak (Britain’s Chancellor of the Exchequer) announced policy measures through which the UK Government would cover up to 80% of the wages of workers, which would enable companies to keep them on their payroll. In the USA, the Federal Government is implementing a Paycheck Protection Program for small businesses. Under this program, small businesses can avail of loans that are designed to be a direct incentive for them to keep their employees on their payroll. The loans granted shall be forgiven if the employees are kept on the payroll for eight weeks, and the money generated through the loan is used for wage payments, rent etc.

The Central and State Governments could have collaborated to executed similar income support measures, to ensure that enterprises did not lay-off migrant workers and daily-wage earners. Providing small enterprises with the money to pay their workers would have helped both the employers and the wage-earners, and would have ensured  compliance with the 29^th March notification. Without a doubt, such policy measures involve substantial fiscal resources. But, we must note that fiscal resources are in this scenario expended by the State to fulfill its constitutional obligations under Article 21. Another aspect that we must remember is that during a lockdown, where movement and gatherings are restricted, the workers and the trade unions significantly lose their bargaining power with the employers. This dilution in bargaining power can only be rectified when the State steps in to fulfill its constitutional obligation of providing basic levels of income support.

This failure to ensure income support is one of the reasons as to why migrant laborers have no option but to leave for their native places, as they have been left in the dark by their employers and contractors, and have also not received any assurance from the State. In this entire process, ensuring the dignity of the workers has culminated as the biggest casualty of the lockdown.