Investors And Employers have reasons to Cheer

With the rising pace of economic globalization, competition in India is increasingly affected by rapid changes in technology, nature of human resources, training & retraining of manpower that spurs the need to globalize products. In the globalised world marked by rapid changes in technology leading to frequent need for updated talent pool, if India has to make its mark the labour law regime shall be far more modern than what is available today

A Labour Law regime that ensures flexibility for business with regard to their ability to manage labour while guaranteeing protection for the labour force is a sine qua non for the Indian Industry to flourish and realize its “Make in India” dream. Also such a regime should promote and encourage self regulation, healthy relationship of mutual respect between capital and labour, enlightened enforcement which caters to the real protection of labour. Labour law compliance is the backbone of gaining faith and confidence of customers, investors and financiers. Steep rise and fall in economy over a period of time, fast pace of industrialization, varying customer demand revolutionized the labour market. However, the Indian Labour Legislations primarily catered to clerical stereotypes. Prevalent Indian Labour compliances benefitted neither investor nor end user.

While it is heartening to note that the New Government from day one has been earnest in its desire to achieve the above ideal, there is anxiety in the progress that is made by the government to translate this desire into reality. The new government, from day one has been keen on inviting investors to participate in transforming Indian professional landscape.

Anxiety of Industry/Business is understandable as every step towards reforming the labour law regime has always met with stiff resistance and governments in the past irrespective of which grouping have made only tentative efforts at it since the days of liberalization in 1992. Anxiety of labour as represented by the trade unions (may not be fully representative of whole working class) could be considered anachronistic but are not fully void of justification.

While Industry would cite motivated union leaderships not really catering for a amiable industrial atmosphere, rigid laws meant for ways of work of earlier years, lopsided enforcement as causes for change, Labour can always argue about, Widespread misuse of Contract Labour System, casualisation of labour, stifling of unions etc.

There have been significant improvements in administration of Social Security laws like Provident Fund and ESIC. They are rapidly moving from what has been inefficient paper based system harassing the labour to more efficient paperless mode. Eventually the labour friendly tech enable administration should enable these schemes to meet their social objectives. The new government definitely infused more vigour to this transformation and one hopes this leads to removing many a cobwebs in these social security laws that hinder unhesitant participation by labour.

On the substantial legal reform, effort to unify various laws under broad categories is a welcome initiative. However, will the government have its way is a question, answer to which seems uncertain. There appears to be determination as well as intention to take all stakeholders along and therefore hope that India might ultimately have a regime that it deserves.

Regulation and Abolition of Contract Labour (R&A) Act, 1970 & Rules framed under, has been utilized optimally since 1980.Creation of the concept of “Fixed Term Employment” was recognized through insertion in Section 2(oo)(bb) of the Industrial Disputes Act, 1947 and Industrial Employment Standing Orders Act, 1946.

Implementation of ESIC Scheme across widespread rural areas has improved Social Security coverage of workforce. Amending the Schedule Employment in Minimum Wages for certain jobs, publishing wages for employment and adding designated trade in the Apprentices Act, 1961 through Gazette Notification was a key step by the government towards professionally enabling employable youth.

Trade Union and Unionism in its different form and culture has influenced the labour market in India since the pre-independence period. Though the purpose of the Unionization was to protect the common workforce, the pattern of leadership and Union demands started over-powering the employer rights causing serious industrial set-backs and dwindling foreign investment.

With a view to tackle this issue, both the State and Central Governments are showing adequate support to the industry to create & maintain a work place environment with requisite safety, security and health benefits.

A travel through Europe gives us the glimpse of how a state mechanism can perfectly sustain an environment where the educated labor clientele &respective unions market their world class manufactured products.

In U.S.A, the Fair Labor Standards Act of 1938 (FLSA) establishes minimum wage and overtime rights for most private sector workers, with few exemptions and exceptions. Congress amended the Act in 1974 to cover government employees. Local governments have also adopted a number of “living wage” laws that require those employers that contract with them to pay higher minimum wages and benefits to employees. The federal government, along with many state governments, requires employers to pay the prevailing wage, as per standards established by unions’ collective bargaining agreements in the area.
Can India emulate this? If yes, can it sustain? The answer as of now looks grim, but definitely hopeful.


Beneficiaries and key outcomes from these reforms

Organized reforms in labour laws will equally benefit employees, employers, the industry at large and the eventually the government.

The Central Government has taken classic measures by publicizing the reforms. Noteworthy are – the end of Inspection Raj, usage of Unique Labour identification Number, access to online updates of welfare schemes, updating of Inspection reports within 72 hours and more importantly doing away with incorrect quantification of labour legislation reports.

The Central government has encouraged the Central and State agencies to be more practical and act as a mentor/guide to the investor. Only time will tell the actual result of this step.


Challenges and Implementation

Industrial and Labour Laws are viewed as pro-worker by most employers and any change or amendment is considered as pro-employer by workers. Government does not intervene in the matter unless a complaint is raised by either employee or employer.

However, for the last one decade, against the high level of criticism from various sections of the society the Government has started reviewing all such proposals received from concerned parties for amending the laws.

Some of the industrial houses and firms in India helped identify areas in Labour Laws and provided the government with suggestive measures that would have a positive effect on the society. Few major amendments were made in the Labour Laws during 1st half of the last decade. These were welcomed by the working classes. However certain provision such as abolition of the concept of overtime, regulation of contract labour, fixing minimum wages uniformly across the country, flexing the provision for retrenchment, transfer & termination and resolving industrial disputes have still not been amicably accepted by the Unions.

In India, industrialization was leveraged to open up the economy to the World. USA and Europe were the first to make good use of this development.

Labor Law and its outdated provisions, established 50-60 years ago, were never reviewed for amendment. No research was done on the changes in the labour market studied which could be used to overhaul the labour laws. The inability to adequately employ academically qualified individuals resulted in Indian job seekers exploring overseas for lucrative career opportunities.

However, if all the proposed labour law changes are viewed seriously by all stakeholders and effected via the respective Acts, the days are not far, when India will be the preferred destination for pursuing professional careers internationally. The Largest Democracy will have a strong economy that will steer us from a third world developing nation to a developed one.

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