New Delhi: The Union government has signalled a mindset reset in its approach to generating employment, proposing to amend rules to encourage fixed-tenure, or contract jobs.
Not only will the move vest companies with greater flexibility in their hiring (a longstanding demand), it also signals a shift in emphasis to job creation over job security.
The problem of jobless growth is emerging as a political challenge and the government is keen to step up job creation in the Indian economy.
The draft proposal has been put up for comments and suggestions on the website of the labour ministry with a deadline of 9 February. It states that the government is for extending fixed-term labour contract rules beyond the textiles and apparel sector, where it was introduced in 2016.
“In the Industrial Employment (Standing Orders) Act, 1946... for the words “fixed-term employment workmen in apparel manufacturing sector", the words “fixed-term employment" shall be substituted," says the draft.
The proposal, to be called the “Industrial Employment (Standing Orders) Central (Amendment) Rules, 2018", says subject to the Industrial Disputes Act, “no notice of termination of employment shall be necessary in the case of temporary and badli workmen; and no workman employed on fixed-term employment basis as a result of non-renewal of contract or employment or on its expiry, shall be entitled to any notice or pay in lieu thereof, if his services are terminated". Mint has reviewed a copy of the draft.
The Economic Times first reported about the fixed-term employment proposal on Thursday.
The move, once implemented, is expected to allow for “free labour movement" and promote a hire-and-fire policy, overriding the existing retrenchment requirements.
“Contract labour will not create decent jobs but may add to the job count. In an election year, it may be a good talking point for the government," said K.R. Shyam Sundar, a labour economist and professor at XLRI Jamshedpur.
“The government, of late, is showing indications that contract work is not bad and that seems to be a change in mindset. But a footloose working community may not help the improve living conditions of workers," he added.
The proposed plan is expected to be rolled out via an executive order. While the industry will find the measure to be a key reform in labour laws and aid ease of doing business, it could invite opposition from political parties and workers’ unions.
The draft rules, however, assure that pay parity and statutory benefits will be applicable to fixed-term contract workers. It also says any fixed-term worker who has served for three consecutive months will be given 15 days’ notice and those who have not will be informed of the reason for their retrenchment in writing.
In India, while the overall unemployment rate is around 3.5%, the bigger worry is that the unemployment rate in the 15-24 age group—or those believed to be first-time workers—is much higher; it jumped from 10% in 2014 to 10.7% in 2019, according to an International Labour Organization report released on Tuesday.