Creating more jobs is the key electoral pledge of the current government, which is mid-way through its five-year term. However, government initiatives are too little and too late and creating 120 million jobs in 24 sectors by 2020 will be difficult to accomplish, says the TeamLease Labour Law Report 2017 by human resources company TeamLease Services.
The report said that domestic and global economic factors have impeded job creation. The number of jobs created in 2015 stood at a mere 135,000. A cash crunch following demonetization of high-value currency notes has led to job losses in the informal economy, impacting many small manufacturing units, according to TeamLease.
In the last 2 years the central government has effected 54 changes in the Apprenticeship Act, Factories Act and Labour Laws Act. The report said that it does not address the core of the problem.
“To kick-start the job creation engine the government must immediately overhaul the most regressive labour laws in India, viz., Trade Union Act, Industrial Disputes Act and Contract Labour Act,” the report added.
India has between 47 central labour laws and 200 state labour laws. Sonal Arora, Vice President, TeamLease Services, said that our labour laws have remained dysfunctional, disharmonized, protracted and overreaching. She added that the complex anatomy comprising harassment, corruption and compliance overreach chokes businesses on productivity and competitiveness.
Manufacturing and its allied sectors are burdened the most by this regressive labour law regime. Equally impacted are textiles & garments, automobile and leather & footwear industries. According to the report, single window clearance is the most commonly needed change across all states.
CK Mendiratta, Head HR, Imperial Auto, an auto ancillary company that employs more than 5000 workers and staff across their multiple factories and offices said, “While women employees are more diligent but still restriction on employment of women at night shift makes it difficult for us to engage more women, the provision to employ women at nightshift needs to be eased off.”
The report has suggested structural reforms at three levels. These include abolition of archaic laws that refer to permission to lay off, retrench, close; permission to employ and thresholds of contract labour; involuntary imposition of employee benefits and advance notice for change in service conditions.
The second reform is rationalization and the need to give advance notice for closure of a firm, multiplicity of unions, employment limits as per Factory Act, time limit for raising disputes and filing claims, payment of bonus as linked to productivity and requirement of strike notice.
Further, the report also called for unified definitions of the labour market entities and consolidation of registers, returns and notices.
The TeamLease Labour Law Report 2017 also profiles the labour law ecosystem by state and by laws versus demand and supply of skills. With a few exceptions (notably, Andhra Pradesh), states scoring well on their labour law regime parameters carry demand-supply surplus as well.
Gujarat tops the list of Indian states with the most demand-supply surplus with Andhra Pradesh and Odisha having a big lead in the ease of setting up business. Jharkhand and Chhattisgarh score 100 percent on compliance and have a 5 percent demand-supply surplus each, but are the poorest (18 percent) on setting up business.
Maharashtra (87 percent), Madhya Pradesh and Gujarat (75 percent each) lead on infrastructure and have the best demand-supply surpluses (28 percent, 7.4 percent and 25 percent). Karnataka (99 percent) and Andhra Pradesh (90 percent) lead tax compliance and carry demand-supply deficits of 3.6 percent and 25 percent, respectively.