By Kevin Gandhi

Edited by Liz Maria Kuriakose, Associate Editor, The Indian Economist

 Don’t worry; “Aam Aadmi” here has not been used in reference to Arvind Kejriwal or his party. Simply put, the “Aam Aadmi” is the nation’s common man, the ‘mango’ person. So how exactly is our new Prime Minister, Shri Narendra Modi, the saviour, emancipator or the superhero for the working population of India? That’s precisely what has been discussed. It should be noted, however, that the term ‘working population’ here should not be taken lightly, especially in the case of India, which is home to a whopping 487 million workers (as per the survey conducted by the CIA, USA in 2012)

The polarised nature of debate on the Indian labour laws has retained the same in the controversy cloud, ever since our country reified independence. On the one side, pro-labour law advocates argue that had it not been for the restrictive labour laws in the country, the economy of India would have experienced a higher growth of employment. On the other, those who have observed the growth and great power of trade unions and labour groups fervidly challenge this view.

Either way, it is more than crystal clear that there is an urgent need for change and that the new government under Modi has thankfully shed light to the nation on this issue of India’s archaic labour regime.

The very first problem of the Indian labour laws is that of contradiction. Various labour laws under the Indian Constitution seem to give the lie to others. A couple of examples are cited below:

  • The Child Labour (Prohibition and Regulation) Act of 1986defines a child as any person who has not completed his fourteenth year of age and prohibits their employment. However, The Minimum Wages Act 1948 allows those between 14 and 18 to work.
  • The Factories Act of 1948 defines adolescents as anyone between the ages of 15 and 18 whereas The Juvenile Justice (Care and Protection of Children) Act of 2000 does not define adolescents but claims that children are those who are under the age of 18.

Next, the Indian labour laws have been inculpated as being anachronistic.For example, the Factories Act calls for the provision of spittoons in the work place. There are various such laws, which haven’t been amended and remain redundant and superfluous in the 21st century.

Another important parameter that should be taken into consideration while discussing the problems associated with the Indian labour regime is that of the unorganised sector. Approximately 93% of India’s working population resides in the unorganised sector. The predominant reason for this seems to be the cumbersome labour laws which most employers tend to circumvent by setting up smaller production units in order to avoid various kinds of taxes and other legal obligations. This consequently has a huge impact on productivity because efficiency of workers at superior manufacturing units tends to be excessively higher than that of those working at smaller and inferior informal units for a wide variety of psychographic and physiological reasons. This in turn has pushed down profits and wages which, again, have resulted in a push down of the manufacturing employment rate significantly from 52.7 million in 2004-05 to 48.06 million in 2009-10.

All this and more has led the World Bank to report in 2014, that India has one of the most rigid labour markets in the world.

Labour reform, whatever kind of issue that it is, is a huge stone to move. There have been several attempts in the past to amend and modify them, but most have remained unaltered and virtually perpetual. Enter the Modi dominion. Not only has the government under the iron leadership of Mr. Modi made this issue a top priority for its first 100 days in office, but there already have been amendments to three significant labour legislations:

  1. The Industrial Disputes Act, 1947.
  2. The Contract Labour (Regulation and Abolition) Act, 1970.
  3. The Factories Act, 1948.

Not to bore you with specifics, but what needs to be noted is that these amendments, more than anything, deal with the unclasping of the stiff requirements of these laws.

Although the new government has been successful in making a few amendments to the aforementioned labour laws, whether or not our economy is on the apex of a much-needed labour-law reform will be evident as times passes. But the fact that this issue is one of the top priorities of the first 100 days of the new regime cannot be ignored. The situation seems to be promising and seemingly, it is quite possible that Mr. Modi might just be destined to change the course of labour laws in India.


Kevin is a second year, undergraduate business student at NMIMS University, Mumbai. His hobbies include listening to bands such as Coldplay and Oasis, writing, going on nightly runs and occasionally playing the guitar. He has also participated in various Model UNs across the country. He loves to travel and is an enthusiastic supporter of the Kolkata Knight Riders.

 

Posted by The Indian Economist | For the Curious Mind