The Hindu Business Line : China's labour reforms

THE demand for a comprehensive second look at the labour scenario in India has been gaining in intensity in recent years. Associations of chambers of commerce and industry, as also foreign investors, have been urging it as a way of speeding up reforms and increasing the tempo of economic development.

The existing labour laws, in their view, are not conducive to the promotion of competitiveness in a free market economy. They base this criticism mainly on three grounds: There is too much pampering of labour; labour unions have become holy cows and laws unto themselves; as a result of these two factors, the work culture and productivity are far below the levels obtaining even in countries such as Korea, Malaysia and Taiwan, leave alone the US and countries of the EU. Aggravating the situation is the helplessness of employers in the face of indiscipline and incompetence, forcing them to incur needless expenditure on carrying large numbers of passengers eating into the return on investment.

Sympathisers of labour are also have their arguments handy: In the specific context of India, where unemployment and under-employment are rife, it is essential to institute and enforce safeguards against arbitrariness and avarice on the part of employers; without the social safety nets that the laws provide, labour will be the victims of ruthless exploitation in a country lacking in social conscience and social responsibility; and unbridled power to hire and fire, and change the service conditions to the detriment of employees is unsuited to conditions prevailing in India whose strength lies in its adherence to the principles of the welfare state and human rights.

In this background, is there anything one can learn from China, with its avowedly pro-working class ideology? The detailed working paper on China's labour reforms prepared by the IMF staff and available at its Web site contains a lot of data and insights, from which it is clear that China has been boldly forging ahead implementing in the labour sector whatever it takes to bolster competitiveness and globalisation, even vesting the undertakings in private and public sector the right to lay off. As a result, between 1998-2002, about 25 million employees of collectives and state-owned enterprises have been laid off, and herded into reemployment centres where they could stay until they found a job or for three years whichever is less. China is steeling itself to face job losses of upto 15 million following accession to WTO.

Communist China can easily be the model for India. It is both tested and capable of silencing vociferous critics of the Left.

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