Every Change in Labour Law is Not Necessarily Reformist

Context: Government should narrow the gap between organised and unorganised sectors of economy through unified labour code and other inclusive labour reforms.

Labour Code Unification Exercise

• Labour is a Concurrent list subject : both the centre and state can legislate labour laws.

• Unification of Laws: Governments intent of unifying all statues into labour code (where statute is administered by a specific ministry or department, at the Union or state level) excludes certain statutes from its purview like Apprentices.

• Distinction between manufacturing and services laws: 

• labour laws for manufacturing will be at Union-government level, driven by the Factories Act 
• Service-related laws will primarily be at state-government level, driven by the Shops and Establishment Act.

• State driven exercise for unification of labour code (Article 254(2)) is better than Union-driven changes because of the underlying diversity in labour and employment conditions across states. 

Labour Reform Agenda

• Minimum International Labour Organization norms followed for everyone irrespective of the distinction of organized and unorganized sector will lead to a drop in wages (or cost of labour) in former and an increase in latter.
• Prerequisite for a unified employment code, includes registration system for employers (not just corporate) and employees (excluding domestic help, part-time and agricultural workers). 
• Bilateral employer-employee relationship, with recourse to government only in case of disputes. 
• Individual Productivity-based incentives can be extended to the enterprise-level.