2 min read.Updated: 27 Dec 2021, 12:56 AM ISTJagadish Shettigar,Pooja Misra
Four new labour codes are likely to be implemented in 2022-23. With labour being a concurrent subject, states are in the process of pre-publishing draft rules for these reforms that will be a key driver of improving the ease of doing business in the country. Mint explains
Four new labour codes are likely to be implemented in 2022-23. With labour being a concurrent subject, states are in the process of pre-publishing draft rules for these reforms that will be a key driver of improving the ease of doing business in the country. Mint explains:
What are the new labour codes all about?
The new labour codes are aimed at facilitating ease of doing business in the country and seek to replace 29 cumbersome laws. The objective is to encompass over 500 million organized and unorganized sector workers—90% of the workforce which has been outside labour laws. The idea is to ensure that they receive wage security, social security and health security, gender equality in terms of remuneration, a minimum floor wage, make the lives of inter-state migrant workers easier, add 15 day wages for re-skilling workers during retrenchment.
What is the current status of the codes?
The four codes—the Code on Wages, Industrial Relations Code, Social Security Code, and the Occupational Safety, Health and Working Conditions Code—are likely to be implemented in FY23. While the central government has completed the process of finalizing the draft rules, state governments are in the process of drafting the same—24 states have pre-published the draft rules for the Code on Wages; 20 states for Industrial Relations Code; 18 states for the Social Security Code, and 13 states for the Occupational Safety, Health and Working Conditions Code.
How many labour laws do Indian states have?
The simplification of 29 labour laws into the four labour codes is expected be a watershed moment for labour reforms. India currently has a web of multiple labour legislations, over 40 central laws and 100 state laws involving labour. The Second National Commission on Labour (2002) recommended simplification to bring about transparency and uniformity.
What are the major goals in these codes?
With organized sector workers being approximately 10% of the total workforce, the new codes may ensure that social security benefits are for all. As per the proposed labour codes, total allowances such as house rent, leave, travel etc. are to be capped at 50% of the salary, while basic pay should account for the remaining 50%. This will result in lower take home salaries for a certain section, but will increase contribution to retirement funds. There could also be a permissible four-day work week of 12 hours per day.
How will it affect ease of doing business?
Labour productivity is likely to improve with both employees and employers developing a sense of being partners in wealth creation. A transparent environment in terms of workers’ compensation, clear definition of employee rights and employer duties, and simplified labour codes making compliance easier are likely to attract invest-ments. With more workers in the organized sector, leakage in terms of direct as well as indirect taxes may be plugged.
Jagadish Shettigar and Pooja Misra are faculty members at BIMTECH.