The Hindu Business Line : Weaving in labour reforms

Going by current trends, the textile industry may just set the pace for labour reforms, keeping in mind the need for sustained employment and the industry's requirements for manpower flexibility. Even more significantly, the suggestions now under consideration by the Centre may also help all concerned get around the legislative roadblock that has stalled changes in the labour market. Last month, after persistent requests by the textile industry, the Centre set up a sub-group of the Group of Ministers (GoM) to study the possibility of contract labour. The sub-group comprising the Commerce, Textile and Labour Ministers also includes representatives of trade unions. This is a welcome move because the textile industry has, historically, been the most unionised and, therefore, the most resistant to labour reform.

No other sector needs revamping of labour laws more than the textile industry, given its workforce requirements after the abolition of the global quota system this January, and the need to make it globally competitive. The industry is prone to fluctuations in orders from global buyers and the existing labour regulations do not give textile units the flexibility to be responsive to such a market. Though uppermost in the minds of successive policymakers, labour reforms have been stymied by political compulsions. Even now, the Government's Left partners are sure to object to the idea of contract/seasonal employment in an industry that has the dubious distinction of having been the most strike prone as also of being mismanaged. But there has been a sea change in the industry. One of the star export performers, it is putting through a four-year, Rs 1.4-lakh-crore upgradation programme.

The textile industry best showcases the changes sweeping labour markets in long-regulated economies. China, for instance, has revamped its labour legislation and, as the Economic Survey noted, it has a mobile labour force that can be redeployed, enjoys higher wages, and additional/self-employment opportunities. In India rigid job provisions have had little effect in retaining levels of employment; certainly they have not helped increase the rate of job growth in the organised sector, especially after the mid-1990s when increasingly contract labour began to man mills. Studies show that the proportion of the latter increased from 12 per cent of the total workforce in 1990 to 23 per cent in 2002 despite the regulations. Market conditions and the need for higher productivity coupled with technology are driving this process across the manufacturing sector.

The choice before the policymakers and the UPA partners opposing change is to have a protected but declining workforce or a flexible regime that creates labour mobility, redeployment avenues and higher incomes for a wider section of the employable that for want of anything better enters the unorganised sector at wages far below the prescribed minimum. The textile industry is a good place to start.

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