[India] Improve employment with labour reforms

Investments and job creation are a high priority need in the country but research suggests that labour laws must be reformed before they can have an effect, The New Indian Express reports.

SBI research says central and state governments should pursue labour law reform. Analysts believe there are more than 44 Central and 100 state labour laws currently preventing companies from improving employment.

Without labour law reforms, India reportedly numbers among the countries with the highest number of man-days lost. According to data from the International Labour Organisation, the man-days lost in India stood at 23.24 lakh. A massive figure when compared with the 10,000 man-days lost in Russia, 7.4 lakh in the US and 1.7 lakh lost in the UK.

Existing Central labour laws were categorised into four codes by The Ministry of Labour: Labour Code on Wages, Industrial Relations, Social Security and Welfare and Labour Code on Occupational Safety, Health and Working Conditions. SBI Research found that of the four codes, only the one on wages was introduced - in the Lok Sabha in August 2017 - the other three remain in the pre-legislative consultation stage.

The report noted, “Separately, a national policy for domestic workers needs to be brought in at the earliest to recognise their rights and promote better working conditions... steps may be taken from both state and Central legislation to take the labour reforms forward.”

The report also said that companies should do their part, adopting and implementing standard operating procedures across all segments of the business, adding, “While the company management can take administrative decisions based on the exigencies and business scenario, it should be ensured that hiring and firing should always lie within the laid down SOPs and should not be exercised outside the ambit.”

Expressing the opinion that initiatives taken towards labour law reforms until now were minuscule, the SBI report noted that in an economy like India - with such a large workforce - it was important to improve employment and employability, develop adequate means to absorb the labour in the economy and streamline labour issues. Labour law reforms are therefore essential because investors prefer stability and sustainability.