Qrius.com | March 15, 2018
PM Modi has been after labour reforms ever since coming to power.
The BJP-led government plans to introduce new labour reforms in the ongoing parliament session, in a bid to enhance its voter base before the 2019 polls. The move also serves the aim to improve the low productivity sector and pave the way for legislation on industrial relations.
What are labour laws?
Labour laws refer to the laws pertaining to the labour force that is regulated in India. They explore the relationship between the employers and the employees while aiming to ensure the protection of the rights of all workers. These include provisions for health, safety, proper working hours, equal pay and so on. While labour laws seek to protect the interests of all employees, in reality, they cover only a small fraction of the entire labour force.
Since his election, Prime Minister (PM) Narendra Modi has been criticised for implementing policies that only work in the favour of the business elite. This includes the decisions such as making it easier for factory owners to hire and fire workers, or to buy farmers’ land. He has faced hostility from the opposition, party allies as well as the unions. Over the past four years, the government has attempted to bring changes in some of these laws by amending the rules pertaining to the payment of wages, bonuses and maternity benefits.
Introduction of new reforms
In recent news, PM Modi introduced one of the elements of his proposed labour reforms. Through it, he aims to streamline 44 different labour laws into four codes, as the government attempts to formalise a $2.3 trillion economy. It also seeks better packages for fired employees and longer notice periods by the unions before declaring strikes.
According to the Labour Minister Santosh Kumar Gangwar, the administration has decided against the plan that would have allowed companies with around 300 workers to lay off employees without government permission. It will now keep that limit at 100 workers instead. The administration will also bring up an industrial relations bill in the parliament session by April 6, 2018.
According to Madan Sabnavis, Chief Economist at Care Ratings Ltd, “The government’s move to overhaul labour laws, even in a diluted form, is a step in the right direction. Land and labour are two major reforms which the government has not undertaken because both are very controversial.”
Difficulty in working through complicated legislation is the main factor behind the slow journey to fulfil India’s industrial ambitions. The difficulty arises despite many programs aimed at easing them, such as ‘Make in India’, which is dedicated to encouraging domestic manufacturing. Modi came to power with the promise of creating more jobs for the youth of the country. However, despite being one of the world’s fastest-growing economies, there is no reliable data to indicate how many jobs were actually created under this promise.
Problem with labour laws in India
Restrictive labour regulations have been a big burden which has prevented India from reaching its full potential when it comes to productivity, output and employment. According to a recent study, wage and employment gains appeared in India’s textile industries after the lifting of quota limitations on imports of cloth. The adverse effect of inflexible labour laws on the benefits of international trade does not come as a surprise since the gains are generated only through reallocation of resources which are otherwise distorted.
One of the biggest problem areas, when it comes to the strict labour regulations of the country, is the complete ignorance towards one of its biggest resources: Surplus of labour. Currently, India’s labour ministry is working alongside the NITI Aayog to draft a national employment policy, which will be released in three months’ time.
There is a rather large chunk of the labour force that remains unutilised, which in most cases results in exploitation as people are willing to work in sub-standard conditions for low wages. The labour laws implemented in the country are made in such a way that they allow maximum productivity and profitability at the expense of the workers. It is essential that these policies should be given more importance for the betterment of the employers, employees as well as the entire economy and not just be used as a push before the polls.
