Singh makes the point that businesses have found all kinds of ways of avoiding labour laws -- including contracting out, casualization, and collusion with labour inspectors, among other techniques. This is consistent with arguments concerning the politics of liberalization which stress that India has witnessed over the past two decades a process of policy change that can best be described as 'reform by stealth'. The ability to evade labour regulations effectively, Singh points out, has been 'assisted to various degrees by ongoing executive and judicial practice'.
Singh's larger point is that SEZs take this logic a step further by blurring the formal-informal distinction in practice:
'Given the overall desire of the SEZ endeavour to push for labour-intensive export oriented consumer goods, the entire enterprise is probably best understood as being located at the border between the formal and informal sectors, drawing the labour force from the informal/agricultural sector. At this location, the very act of employment generates a dilemma because the instant a worker is drawn from the informal/agricultural sector and ‘employed’, she becomes eligible for all the benefits provided by law to formal sector workers. If this were indeed to be allowed, it would raise perceived labour costs which would presumably dampen national and international investment. If disallowed explicitly, the political rhetoric associated with the SEZ enterprise would end up being more widely challenged. Given the frontier location of the labour involved, the solution to this dilemma has been to nudge the practice of law in a manner which minimises the coverage of labour law without actually changing the law—a relatively smoothly accomplished step, given the nature of Indian labour law as well as the structure of the enabling law associated with SEZs.
'Though the Special Economic Zones Act, 2005 overrides certain other laws (particularly granting fiscal benefits to firms located in a SEZ), the Act maintains that in relation to labour, standard labour laws are to continue to operate in the SEZs. While there is no change in the laws, under this regime the implementation of labour law is shifted from the control of the Labour Commissioner to the Development Commissioner of the SEZ, a figure who is given substantial power over all aspects of governance of the SEZ. Furthermore, the ability of workers to organise strikes is curtailed by undertaking a general policy measure that labels economic activity within a SEZ as a ‘public utility service’, which under Indian law makes strikes in units labelled as such entirely illegal. All these factors taken together result in the fact that while the ‘speak’ says that labour laws are supposed to be operational in a SEZ, they are almost entirely absent in practice.'
Singh goes on to discuss a variety of studies of labour practicies within SEZs. The literature on India's SEZs is thin, largely because the SEZ Act is so new, having been passed only in 2005. Still, some of the pre-2005 Export Processing Zones (which had been converted to SEZs following a change to the Export-Import policy of 2002) have been around long enough to have attracted the scrutiny of scholars.
Singh cites, in particular, Padmini Swaminathan (2005) “The Trauma of ‘Wage Employment’ and the ‘Burden of Work’ for Women in India” in Kalpana Kannabiran (ed.) The Violence of Normal Times: Essays on Women’s Lived Realities, New Delhi, Women Unlimited). In terms of the net impact on women's well-being, the study paints a mixed picture. But in terms of the application of labour laws to SEZs, the sense is that enforcement mechanisms are even weaker than in the formal economy as a whole, though (in a de facto sense) clearly have more of an impact than the non-existent regime affecting the informal sector. All of this refers to the pre-2005 SEZ Act dispensation, which may be a different animal altogether.
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