Budget 2021

Time to fast-track labour reforms

Our Bureau New Delhi | Updated on March 12, 2018

Slowing employment flagged as a serious concern

The Economic Survey 2013-14 has put the Centre’s stamp on labour reforms initiated by the BJP Government in Rajasthan last month to amend four key Central Acts.

Laws, an impediment

Listing the ‘Issues & Priorities’ of the Government, the Survey notes “India has the potential of becoming a global hub in labour-intensive manufacturing. However, labour laws have hindered the creation of large-scale manufacturing in India.”

In a reiteration of the Narendra Modi Government’s resolve to push India up in the World Bank’s ranking of countries on the ‘Ease of Doing Business’ index, where India has been placed at 134th position out of 189 countries, the Survey notes that labour law reforms are key to business growth.

“Labour laws create strong incentives for firms to avoid hiring a large number of low-skill workers. An array of problems holds back the entry and maturation of new firms. This protects existing businesses, even if inefficient, and limits entry and competition,” it says.

Amendments soon?

With the Survey’s pitch for labour reforms, the proposed amendments to various labour laws, such as the Factories Act, the Apprentices Act and a separate law for Micro, Small and Medium Enterprises could soon see the light of the day.

The amendments, some of which were proposed by the previous UPA Government, have already been circulated for stakeholder comments.

The Survey also noted slowing employment as a “serious concern”. Farm employment decreased from 58.5 per cent of the entire workforce in 2004-05 to 48.9 per cent in 2011-12, whereas industry workers proportion increased from 18.2 per cent in 2004-05 to 24.3 per cent in 2011-12, while employment in services rose from 23.3 per cent of entire workforce in 2004-05 to 26.9 per cent in 2011-12, it noted.

Published on July 09, 2014

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