The indignity of labour laws

Context: Suspending the entire labour law as some states have tried is not sustainable.

Labour laws and Migrants’ woes:

• Single sided view of Labour Laws: The issue of labour laws must no longer be viewed in the context of attracting investment and ease of doing business, as it often is. India’s labour laws need to change for the sake of labour. 
• Informal Sector: Reason for 80 % of workforce being informal is that higher-paying formal sector with superior working conditions shies away from hiring labour because of stringent laws. 
• Hire and Fire: Inability of the firms to hire and fire operating in a market which is cyclical restricts their flexibility and profitability. By forbidding hire and fire, the current labour laws protect a small labour elite, not more than 10 per cent of the workforce. 

Recommendations: 

• Grandfather existing labour laws : The new laws will be applied to new entrants who have joined after cut off date. The amended laws can be applied for the same category of industries which has been provided tax concession to attract firms relocation form China.
• Built in social security: In the form of cash transfers after retrenchment or until a worker does not gets alternative employment. This can be conditional on the worker entering a re-skilling programme. 
• Urban Housing construction :This can provide necessary stimulus to get the economy back on a high growth trajectory post Covid. It is worth monetising a part of the government debt for this project, along with raising investment in public health infrastructure.