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Change labour laws to speed up industrial growth, says HR expert

Our Bureau Chennai | Updated on January 24, 2018 Published on February 19, 2015

Successive coalition governments in the Centre have hindered the paceof labour reforms as most of the unions have a political background

Lack of flexibility in recruitment leads to employment of more contract workers



There is an urgent need to change labour laws for an accelerated industrial growth. Due to rigid labour laws, companies deploy contract labourers, according to Sridhar Rajagopalan, Country Manager (HR and Head), India Labour Relations, Caterpillar India Pvt Ltd.

The situation now is that of archaic laws versus the government trying to make India the most favoured investment destination; and customer-driven market economy versus rigidity in manpower engagement, he said.

There is nearly a 46-crore workforce of which 2.8 crore are in the organised sector. There are 47 Central laws and 150 State-level laws, he said at a seminar on “Labour Law Reforms: Industrial Relations and HR Practices with the Changing Scenario” organised by the Indo-American Chamber of Commerce.

State-level laws

States are competing with each other to attract new companies. They should have the freedom to enact their own laws and more so those pertaining to labour reforms, he said.

“Where the legislature and executive have failed, the Judiciary has helped in labour reforms,” he said.

Successive coalition governments in the Centre hindered the pace of labour reforms as most of the unions have a political background. However, with a majority in the Centre, this is a good chance to change the labour laws, he said. Rajasthan took the lead by making labour laws ‘employment friendly’ by amending the Industrial Disputes Act. For example, prior permission for retrenchment is required only if 300 or more employees are engaged, he said.

With no flexibility in employing people, companies take shelter by engaging contract workers, said K Varadan, COO (Factory Compliance and Consultation & Audit), Aparajitha Corporate Services.

The Centre is trying to push for labour reforms. However, its implementation will be critical, he said.

Unethical practices

Manishi Pathak, Senior Partner, Kochhar & Co, said it is not difficult to recruit people, but it is difficult to terminate them.

Unfortunately, companies look at unethical and indirect ways to terminate services of employees. Laws should be good for both the employer and employees, he said.

“We need huge leap, not inches, in policy making and labour reforms. We think only for five years while the policy decisions should look at 20 years or more, and decide what should be the shift required,” he said.

Published on February 19, 2015
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