On labour law reforms, Dr V. Krishnamurthy, Chairman of the National Manufacturing Competitiveness Council, wants better understanding of the issues by both employers and the trade unions.

M. Ramesh

Chennai, Oct. 14

AFTER the National Manufacturing Competitiveness Council (NMCC) put out its `draft strategy for achieving 12 per cent growth in manufacturing' for public feedback, some experts have commented that there is an inherent contradiction in the twin objectives of the council achieving competitiveness, on the one hand, and small scale sector development and employment generation, on the other.

Among them are economists Dr Isher Ahluwalia and Dr Subir Gokarn. But Dr V. Krishnamurthy, Chairman of the council, is personally not of that view. In an interview to Business Line on Friday, he said that he saw competitiveness as a means to employment generation. As regards SMEs, he said that given its role in the economy, they could hardly be ignored.

On labour law reforms, Dr Krishnamurthy called for better understanding of the issues by both employers and the trade unions.

People on both sides are obsessed with two acts the Industrial Disputes Act and the Contract Labour Act, Dr Krishnamurthy said. He added that both the acts had lost their relevance.

The ID Act has not hindered companies from reducing their labour force. "Tata Steel used to have 75,000 people on their rolls when they produced one million tonnes of steel. Now, they are going to produce seven million tonnes with half the number of people," Dr Krishnamurthy pointed out.

On the other hand, the ID Act has given some companies an alibi to act against the interests of the labourers such as by employing them for short periods so that they do not have to be taken on rolls, he said. This also results in sub-optimal utilisation of training provided to them, which is a "national waste."

As regards the laws relating to abolition of contract labour, Dr Krishnamurthy said, "Even today, the number of people on contract labour exceeds the number on permanent employment." Blaming "excessive politicisation" for the waste of time and energy on discussing these labour laws, he noted that there were many other areas where constructive work was possible. For example, both employers and trade unions are worried about the continuing Inspector Raj. There is scope for reforms here, he added.

Dr Krishnamurthy wanted the trade unions to understand that the employers are not asking for freedom to `hire and fire' but flexibility in labour laws, which would allow them to employ people, whenever the companies had more business. He observed that the trade unions, in "over-stressing conditions of service and security," seemed to be more in favour of those already employed, but really against job seekers.

Employers, on their part, should be fair, he said. He called upon them to provide some basic necessities to a laid-off labourer, such as an assurance that he would be first offered employment when there was business, and other basic facilities such as subsidised food and medical assistance. Dr Krishnamurthy said that both employers and trade unions shared a responsibility to train labourers.

(This article was published in the Business Line print edition dated October 15, 2005)
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