BackGovt firm on labour reforms
Team of civil servants makes presentation at PMO about plans, briefs top officials of NITI Aayog on strategy
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New Delhi: Undeterred by opposition from trade unions, the Narendra Modi government appears to have made up its mind to pursue labour reforms to boost manufacturing that could potentially absorb millions of workers in a country that will have the world’s largest workforce within the next 15 years.
The labour ministry is understood to have got the go-ahead from the Prime Minister’s office (PMO), according to two government officials. A team of civil servants led by labour secretary Shankar Aggarwal made a presentation at the PMO about the reform plans on Friday, following it up a day later with a briefing for top officials of the NITI Aayog, including its vice-chairman Arvind Panagariya, to chalk out a future strategy, they said, requesting anonymity.
“Consolidation of labour laws and the industrial relations code were among the issues that were discussed. The ministry also explained the tripartite consultations they have undertaken following a direction from Prime Minister Narendra Modi on 20 July (during his address at the Indian Labour Conference)," said one of the two officials cited above.
The changes are likely to make it less onerous for businesses to comply with labour laws that have stymied entrepreneurship and discouraged investments for decades. The proposals have, however, stirred a political backlash, particularly from labour unions, which claim that the new rules will hurt workers’ interests.
“The basic understanding (from both the meetings) is that the government will stay the course on labour reforms. What the centre cannot do, progressive states may take the lead in," the first official said.
The labour ministry also informed the PMO about its discussions with trade unions and the offer a group of ministers led by finance minister Arun Jaitley had made to the unions before the nationwide labour strike on 2 September, the official said. The government had set up a group of ministers led by Jaitley to discuss the issues with unions and industry.
On 27 August, the group of ministers unveiled a feel-good labour reforms agenda that, among other things, promises a mandatory national minimum wage, under which skilled workers in developed states may stand to earn a minimum of ₹ 20,000 per month.
The labour ministry’s efforts to consolidate 44 labour laws into four or five broad labour codes are aimed at reducing compliance hassles for companies. The official said manufacturing will not only help the economy grow, but also create more jobs for the youth.
“The ease of doing of business is key for promotion of manufacturing and creating jobs. Too many labour laws and overlapping provisions create bottlenecks and a not-so-conducive atmosphere for business growth," said the official.
Labour reforms—both in the states and by the centre—are important and the government understands the need for them, said Rituparna Chakraborty, senior vice-president at staffing company Teamlease Services Pvt. Ltd. She said that protection of workers’ rights and job creation are equally important.
Nearly a million people enter the labour market every month in India, according to the labour ministry.
The second government official said the presentation to the NITI Aayog was more detailed than the one to the PMO and that it talked about all the planned labour reforms, including the factories bill, the small factories bill, minimum wages and the industrial relations code.
While the proposed factories bill talks about redefining a factory in order to allow separate departments of a company to be shown as separate factories, the industrial relation code talks about easing hiring provisions. The industrial relations code also has a provision that would allow companies to sack as many as 300 employees without having to seek government approval, Mint reported on 2 May.
At the NITI Aayog meeting, the labour ministry also discussed proposed amendments to the Employees’ Provident Fund (EPF) Act that seeks to make a national pensions system as an alternative to the EPF and to allow small factories to deduct 10% of their workers’ salary as provident fund contribution instead of 12% at present.
D.L. Sachdeva, national secretary of the All India Trade Union Congress (Aituc), said that before the labour ministry gave its presentations to the PMO, the ministry had called a meeting of a sub-committee on the industrial relations code on Thursday. “In the sub-committee, they invited only three of the 12 national trade unions. We (Aituc) and the Indian National Trade Union Congress did not participate. We told them that unless you call all national unions, the tripartite discussions (involving industry and the Union government) won’t be possible," Sachdeva said.
The labour ministry seems to be adamant on labour reforms though it knows it is disturbing workers’ bargaining power and their job protection, Sachdeva said. After the 2 September nationwide strike, the ministry “has not even got in touch with them creating a sense of suspicion on what is their motive", he said.
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