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Business News/ News / India/  Centre backs big labour reforms in UP, MP to attract investments

Centre backs big labour reforms in UP, MP to attract investments

The move comes just days after the UP CM held a video conference with US firms to persuade them to shift from China

Some economists and union leaders argue that the new labour reforms may lead to loss of workers’ productivity.  (Photo: Reuters)Premium
Some economists and union leaders argue that the new labour reforms may lead to loss of workers’ productivity. (Photo: Reuters)

The Centre on Friday came out strongly in favour of structural labour reforms to spur economic growth, saying it supports the sweeping labour law changes and exemptions brought in by Uttar Pradesh and Madhya Pradesh.

The Union government, like the governments of the two Bharatiya Janata Party (BJP)-ruled states, believes that the reformist mindset and labour compliance holidays will bring in more investments and ensure growth. However, workers’ unions and some economists argue that the changes may lead to “labour market anarchy and loss of workers’ productivity".

“Reformist zeal to push through structural reforms will alone ensure sustained growth. UP and MP emerging as big reformers," tweeted Amitabh Kant, chief executive of think tank NITI Aayog.

The statement comes a day after the UP government brought in an ordinance to exempt businesses from having to comply with all key labour laws except three for three years. The MP government has also made amendments in major Acts, including the Industrial Dispute Act and Factories Act, and reduced the paperwork for companies to help them recover faster from the covid-19 crisis.

“The pandemic has impacted economic and industrial activities badly, because of which workers’ welfare has also got hit. To bring economic activity back on track, new industrial investments opportunities will have to be created and old industrial activities need to be given a boost," the UP government has said. It has become necessary to provide businesses a temporary reprieve from labour laws to promote investment for establishing industrial units, it said.

“The labour law changes are steps that will give huge flexibility to industry in their labour practices. Coming at such disruptive times, when livelihoods have come under pressure and multitudes of people have had to move away from their work places, these policy interventions will come as a huge relief to economic activity," said Chandrajit Banerjee, director general of CII.

However, workers’ unions feel the states are using the opportunity to empower industries and take away the rights of workers through the back door.

Bharatiya Mazdoor Sangh (BMS), a national trade union and an affiliate of the ruling BJP, looked at the development with suspicion. “It has come as a surprise. We want to know what the plan is and how labour law exemptions will better economic activities. How will we justify the taking away of the rights of millions of workers?" asked BMS general secretary Virjesh Upadhyay.

Madhya Pradesh and Uttar Pradesh are using covid-19 as a ploy to give labour law holidays, a move that could create labour market anarchy, said K.R. Shyamsundar, a labour economist. “In labour market terms, they are using employment creation legitimacy, labour shortage legitimacy, and investment legitimacy theories to justify killing workers rights. This is the worst time to do this, more so when more than 100 million people are jobless. It will not quicken economic revival as labour productivity will take a hit because of the lack of dispute settlements and employee welfare," Shyamsundar said.

The move comes nine days after Uttar Pradesh chief minister Yogi Adityanath held a video conference with dozens of US-based firms to try and persuade them to shift their investment from China to the state, promising reforms.

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Updated: 09 May 2020, 12:00 AM IST
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