PM advocates redefined labour laws for job growth - Atasi Das

The July 2010 Annual report of the Ministry of Labour and Employment has observed that India’s ‘impressive’ economic growth in the recent decade has not resulted in a commensurate growth in its employment; the fruits of development have failed to ‘trickle down’ to the bottom of the pyramid, necessitating the need for an inclusive growth policy. Reflecting the same concern at the inauguration of the 43rd session of the Indian Labour Conference, the apex body for discussing key policy issues related to labour and employment, Prime Minister Manmohan Singh said that, some Indian labour laws needed amendment as they were contributing to labour market rigidity and constricting employment growth.

Indian Labour Conference: key takeaways
The focus areas of the conference included issues like employment generation and skill development, problems related to contract labour and the impact of the global financial meltdown on job creation. PM Manmohan Singh reiterated the need for a faster and more ‘inclusive’ economic growth, as increased funds for social welfare programmes can be only be supported with an annual economic growth rate of 9 to10 per cent. Singh has also called for fortifying the micro and small enterprises sector, the second largest employer after agriculture. This sector encompasses a wide spectrum of economic activities and has helped to rein in rural-urban migration by generating gainful rural employment. The Union government is planning a ‘National Employment Policy’ primarily towards fostering organized sector employment growth.

The private sector has been asked to proactively support the government initiated skill development programmes. Labour Minister Mallikarjun Kharge has unveiled schemes for establishing 1500 ITIs and 5000 ‘Skill Development Centers’ under “Kaushal Vikas Yojna” along with demand oriented short term training courses aimed at augmenting the ‘employable skills’ of the workforce.

Trade union representatives are apprehensive that labour law reforms may actually grant greater freedom to the employers to arbitrarily dismiss workers in the name of labour rationalization. Business enterprises have justified capital intensive manufacturing industries and contractual workers over labour intensive enterprises and permanent employees citing the rigid Indian labour laws, which preclude large scale arbitrary dismissals. In a bid to make space for new recruitment PM Manmohan Singh wants to limit the protection extended to the employed labour force and has batted in favour of an economically efficient solution brought about by labour market dynamics. The Andhra Pradesh, Gujarat, Karnataka, Madhya Pradesh and Maharashtra state governments have sought labour law rationalization for incorporating Special Enclaves and Special Economic Zones in their states; issues include working hour regulations, minimum wages fixation and night shift for women workers etc.

Indian Labour Conference recommendations

• Extension of employment guarantee to 200 days from 100 days for rural employment programmes; bringing in similar job guarantee schemes for the urban sector.
• Opening up the public sector recruitment process and strict adherence to labour laws for ‘lay-offs, retrenchment, job losses and closure’.
• Unemployment insurance programmes and extension of the public distribution system to the unorganized sector labourers. Compensation for workers turned jobless due to the recession, building a comprehensive social security net.
• Implementation of the existing Contract Labour (Regulation and Abolition) Act, 1970; the employers’ group have opposed the idea of regularizing contract labourers. Payment to the contract workers to be channelized through banks

The Indian labour market
India is in the midst of a demographic transition, which is reflected in its burgeoning work force. The census projection puts the proportion of working population (15-59 years age group) at over 64 percent by 2021. In 2020, the average age for an Indian worker will be 29 years; policies are being in put in force to address this younger work force. Women’s participation in the Indian work force has been limited to 25 to 30 percent in rural areas and 15 to 18 percent in urban areas. The Indian labour market includes full time and part time workers, workers engaged in seasonal activities, workers performing multiple jobs, workers working at nominal wages and women labourers. The projected work force for 2014-15 is 574 million up from 520 million in 2009-10. The Constitution of India allows both the Central and State Governments to enact labour legislations, which explains the multiplicity of labour laws. There are 44 Central Labour Laws covering issues like industrial relations, wages, working conditions and social security. Labour laws are reviewed and amended continually by the government to protect the welfare of the working population and to maintain their relevance amidst changing global economic conditions. India’s plethora of employment guarantee and social security schemes include the Mahatma Gandhi National Rural Employment Guarantee Scheme, the Rashtriya Swasthya Bima Yojana and the Mid-day Meal scheme. The Unorganized Workers’ Social Security Act, 2008 ensures provision of social security to the unorganized sector workers. 

Analysis
The global financial meltdown (2007-09) had moderately affected the Indian economy. However it has once again scrambled back to economic recovery as displayed by the hike in manufacturing growth and overall economic growth. In order to successfully compete in a fast changing global market the corporate management needs ‘operational flexibility’ and must extend higher compensation packages to the retrenched workers. Training programmes for ‘re-skilling’ and ‘redeployment’ too are important along with expansionary stimulus packages.
To conclude, India now needs inclusive growth (which will ensure flow of economic benefits to the socio-economically marginalized population), augmented labour productivity and a robust social security net for pursuing a sustainable growth model. In this perspective, it remains to be seen as to how the government manages to handle the socio- politically contentious issue of labour reforms.