Well begun

Prime Minister Narendra Modi has signalled his intention to get his ‘Make in India’ project going with a slew of measures aimed at reducing bureaucracy, enhancing transparency and curbing the arbitrary exercise of the powers vested with labour inspectors. Living up to his promise to do away with ‘Inspector Raj’ — the arbitrary exercise of power by the petty bureaucracy — he has curbed the power of labour inspectors to choose which premise they will visit. Instead, inspections will be on a random, computer-generated basis, and inspectors will have to upload their reports within 72 hours of a visit, reducing the delay and scope for malpractice. This is a welcome move, one that will go some way in enhancing transparency and accountability. It will be a relief for small and medium enterprises, which lack the financial muscle to buy their way out of trouble.

Other measures, including portability for Employee Provident Fund (EPF) subscribers, as well as a unified labour and industry portal, are also further steps in the direction of better governance. However, the key issues relating to a more rational set of labour laws are still unaddressed. Simpler and more sensible laws will benefit both industry and workers and will play a big part in attracting fresh investments into the manufacturing sector. The present set of laws — as many as 250 laws at the Central and State level impact either directly or indirectly on labour — are broken beyond repair. And workers have suffered the most as a result. According to the Labour Ministry, as much as 93 per cent of the workforce is now in the informal sector, without legal protection and without recourse to the benefits provided therein. In its note on the proposed Universal Health Insurance Bill, the ministry admitted: “The Government has been implementing some social security measures for certain occupational groups but the coverage is miniscule. Majority of the workers are still without any social security coverage.”

There are some indications that the Government is attempting to redress the situation. In July, changes to three key labour-related Acts — the Factories Act, 1948, the Apprenticeship Act, 1961 and the Labour Laws Act, 1988 — have updated several outdated provisions, freed very small enterprises from the yoke of the labour inspector, and have also tried to protect the worker better, by raising minimum wages to bring them under the ambit of EPF and providing better safety and facilities at the workplace. At the same time, some of the provisions which made industry see red — including provisions for arrest of business owners for petty infarctions — have been done away with. This is welcome, but just the beginning. The serious challenge is to ensure that industry gets the flexibility on labour that it craves, while ensuring that workers are compensated equitably, and their basic rights honoured. Above all, the Centre needs to build consensus on this with States, so that these do not remain mere paper reforms.