Not labour’s love alone

Business Standard     3rd October 2020     Save    

Context: For close to three decades, wanting economic reform (i.e. greater market-orientation) have called for changes in India’s multiple, archaic, rigid and procedure-bound labour laws.

Benefits of the labour reforms

  • Simplification of laws by merger:  Forty-nine central laws have been crunched into four “codes”(on wages, on working conditions, on social security and on industrial relations).
  • Greater freedom to businesses: Hiring and firing have become easy and lock-outs are more difficult now.
  • Those companies employing fewer than 300 workers don’t even have to issue standing orders, which specify conduct norms for workmen.
    • Provisions to de-criminalise many actions and allow compounding fines to be paid instead.
  • More freedom to government: They can exempt industries from the coverage of the codes, and to define the limits within which they will operate.
  • Expands the scope to fixed-term employees, contract labour, gig workers, migrant labour and “platform” workers 
  • It can enhance large scale factory employment: that turns out wage goods like shoes and clothes, electronic goods, to be followed by backward integration into components, for the domestic and export markets. 
  • Benefits from Chinese exit: It helps to profit when China is exiting some of these activities, or when companies are exiting China for wage-cost and other reasons.

Way Forward: Coterminous changes along with are required

  • To reduce the cost of factory land, transport, and electricity for industrial consumers , 
To stop the arbitrary interpretation of tax and other laws and maintain an appropriate exchange value for the rupee