LABOUR REFORMS-- ESSAY FODDER-- the hindu

ESSAY FODDER—the hindu

LABOUR REFORMS ENIGMA:

WHY IS IT NEEDED?

India still does not use its vast labour force productively or judiciously. 93 per cent of this force was in the unorganised sector. Over the last decade, the compounded annual growth rate (CAGR) of employment has slowed to 0.5 per cent

Average daily wage rates are quite low, in rural and urban areas.

agricultural and industrial labourers affected by a doubling of the consumer price index (332 in 2004 to 764 in 2014).

Benefits are equally minimal. Women, in particular, have difficulty participating in the industrial labour force. The Maternity Benefit Act (1961) is largely underutilised.

Railway and mine workers have faced 1,082 and 32 accidents, respectively, mostly fatal, while their dependents receive an average compensation of Rs.2.6 lakh and Rs.9 lakh, respectively. 

REFORMS HAPPENING, BUT...SLOWLY:

LEGISLATIVE INITIATIVES:

India’s labour law regime has always been at loggerheads with industrial development and the ease of doing business. Over the past year, the government has attempted to reconcile this by amending the Apprentice Act (1961), making it more responsive to industry and youth, and substituting complex inspection regimes with technology friendly portals.

ShramSuvidha, a unified labour portal scheme, has been launched to provide timely redress of grievances and facilitate self-certification by industry. This also encourages a more transparent labour inspection regime, with inspection reports uploaded within 72 hours.

A focus on cutting down red tape, by amending nearly 40 Central and 150 State labour laws, has been launched, with significant consequences on hiring and firing.

Draft proposals for exempting small-scale industries, employing up to 40 workers, from 14 basic laws, including the Factories Act, the Industrial Disputes Act and the Maternity Benefits Act, are being considered. 

WHAT NEEDS TO BE DONE?

Labour reforms must be linked to the ease of doing business, creating a habitat where jobs can be fostered. Reforms must be linked to worker benefits, while simultaneously easing the compliance burden on small and medium enterprises. The labour law must be rationalised by defining minimum wages and linking them to inflation. Minimum wages ought to be revised annually, with penalties for their violation dramatically raised.

According to the National Skill Development Corporation (NSDC), we need 120 million skilled people in the non-farm sector. Amendments to the Apprenticeship Act are welcome. With no labour laws applying to apprentices, care must be taken to ensure that they are not transformed into contract labour. MGNREGA should be restructured and linked to apprenticeship programmes in industry and agriculture.

Women workers require legislation too. Female employees of government schemes like Indira Kranti Patham or Anganwadi Worker remain out of the purview of laws. Scheme-based workers should be treated as regular employees and offered decent wages and social security. Equally, contract labourers must be protected.

India’s push towards urbanisation and development must address both businesses and workers. The answer lies in formalising labour and supporting it with a modern regulatory framework.

WHAT’S HAPPENING RIGHT NOW? AND WHAT IS THE NEED FOR REFORMS? SOME STATS

Over 25 per cent of the world’s workers are Indian.

And 300 million young people are set to enter the labour force by 2025. 

With an average age of 29, India’s population is in the middle of a demographic boom. By 2020, when the global economy is expected to run short of 56 million young people, India, with a youth surplus of 47 million, could fill the gap. It is in this context that labour reforms are often cited as the way to unlock double-digit growth in India.

The primary policy challenge is to increase the employability of our labour force. And to shift labour from agricultural to non-agricultural jobs (where there is a projected need for 120 million skilled hands), along with social security measures.

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