Teamlease quoted Labour bureau data to highlight the slowdown in jobs created per calendar year—from 1,256,000 in 2010 to 493,000 in 2014, which further dropped to just 135,000 in 2015.
“To kick start the job creation engine the government must immediately overhaul the most regressive labour laws in India, viz., Trade Union Act, Industrial Disputes Act and Contract Labour Act," the report said.
Among other reasons, the staffing firm cited a cash crunch caused by the demonetisation of high-value currency notes, which affected many small manufacturing units, as a crucial factor behind job losses in the informal economy.
“Between 47 central labour laws and 200 state labour laws, India has an over regulated and poorly governed labour law system," the report said.
The central government has effected 54 changes in the Apprenticeship Act, Factories Act and Labour Laws Act during the past two years but these “initiatives are too late and too little", it said.
“…multiplicity of rules and procedural delays impose unreasonable legislations and transaction cost on businesses. The complex anatomy comprising harassment, corruption and compliance overreach chokes businesses on productivity and competitiveness," said Sonal Arora, vice president, TeamLease Services, in a media statement.
The report analyses the labour law ecosystem state-wise and links it to the ease of setting up businesses, demand for talent and supply gaps and compliance with regulatory frameworks in the states.
The states with good labour law regime parameters mostly carry higher demand-supply surplus, which means that the number of jobs outnumber the number of job seekers in the state. The report suggests that such states can “reap handsome rewards from reforming their labour law regimes".
For instance, the report’s findings show that Maharashtra (28%), Madhya Pradesh (7.4%) and Gujarat (25%) have the best demand-supply surpluses. Jharkhand and Chhattisgarh have 5% demand-supply surplus each. Some states that fared well on tax compliance have a shortage of jobs. Karnataka (99%) and Andhra Pradesh (90%) lead in tax compliance, but have demand-supply deficits of 3.6% and 25% respectively.
“At least 32 state and union territory governments submitted evidence of implementation of over 7,000 reforms. A total of 6,069 reforms were approved and implemented. The national implementation average has increased from 32% to 48.93%," the report said.