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Quick Edit | Another law, more trouble

Quick Edit | Another law, more trouble
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First Published: Sun, Jan 17 2010. 10 50 PM IST
Updated: Sun, Jan 17 2010. 10 50 PM IST
When governments say they want to protect wages, they often end up killing employment. They, of course, deny that, but that is what minimum wages and legalized job security imply.
As detailed in a Mint story today, the Union labour ministry plans to amend the Contract Labour (Regulation and Abolition) Act, 1970. This amendment will allow labour commissioners and other officials to fix minimum wages for seasonal workers.
You may say that a law that prescribes minimum wages will only make people get their due. Instead, it leads to incentives that are detrimental to the workers. It will permit appointed officials to harass employers. Worse, it will permit collusion between firms and officials.
If you take the law and the officials out of the equation, then wages are set by the market. A firm requiring labourers will have to pay market wages if it wants to get workers. But with officials in the picture, as the new amendment will ensure, chances are that they will pay much less. Official collusion and loopholes will ensure that.
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First Published: Sun, Jan 17 2010. 10 50 PM IST