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Friday, 01 August 2014 23:58
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Partial moves on labour reforms, but welcome

Given how labour reforms are such a politicised issue despite their benefiting only a very small labour aristocracy and hurting the jobs prospects of the majority, it is not surprising that various governments have stayed away from major reforms. Indeed, it is not even clear that there would have been much of an impact, given the laws are concurrent in nature. Which means that, should the Centre decide to amend its law and say that companies with under 1,000 workers need not apply for permission before they shut down—the current limit is 100—the states are still free to keep their limits lower; this is the case in states like West Bengal right now. In which case, should a central government raise its limit and attract a lot of flak for it, there is no certainty the move will result in major states following suit. Which is why the government’s strategy is the correct one, let the states raise their limits—Rajasthan raised it to 300—and simply get the President to give his assent to them.

Even so, there are enough other central laws that come in the way of business, and some attempt has been made to fix them; in some cases, though, the change has been niggardly and will make little difference. It is not clear why, for instance, there should be any limit on the amount of overtime that workers can do; this should be a commercial discussion between the employers and employees. Yet, the Factories Act puts a limit of 50 hours per quarter, and the government has raised this to 100 instead of scrapping it altogether. Lifting restrictions on night shifts by women in factories, however, is a good idea; there is, for instance, no reason why women should not work at night provided there is adequate safety and transportation facilities—in areas like textiles and readymade garments where the pattern of work is seasonal, this is a critical relaxation. The inclusion of 500 new trades under the Apprentice Act is important as this will encourage greater use of apprentices—while companies get workers they can train and utilise without an obligation to employ them, workers get trained—a mandatory proportion of apprentices is not a good idea, though it will give apprentices some reassurance of remaining employed for a fixed period of time; how workable the scheme is will depend on how high the mandatory apprentice quota is. Raising the level below which firms no longer need to maintain records and file returns—this has been raised from 10 persons right now to 40—is a good step, but it could have been a lot more liberal as even SMEs hire more than 40 persons and such laws only add to the difficulties in doing business.


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