Employment Data 2021-22
| Total labour force | 56cr |
|---|---|
| Employed | 53.5cr |
| Formal | 6cr (11%) |
| Informal | 47.5cr (89%) |
Issues with current laws
- Industrial Disputes Act 1947 (ID Act): any firm employing more than 100 workers needs to get permission from the state government before retrenching workers (1980 amendment)
- this has kept workforce size small in many companies
- multitude of labour laws (around 200 incl. centre & state) which create confusion and not entirely consistent w/ one another
Critique of many labour laws
You cannot implement Indian Labour laws 100% without violating 20% of them.
- burden on smaller firms in terms of paperwork, requirements, compliance
- only large firms manage to comply
- less rigid nations have more efficient economies, higher wages and smaller share of long term unemployed labours
New Labour Codes
Summary
Central Govt merged 29 labour laws into 4 labour codes. These have become acts and will be in force soon. Key highlights are:
- Gives industries flexibility in doing business and hiring & firing
- Make industrial strikes difficult while promoting fixed term employment
- Reduces influence of trade unions
- Reduction of cost & complexity in compliance
- Lead to formalization of jobs resulting in increase in wages to employees
- Universalization of minimum wages and making it statutory rights
- Universalization of social security by expanding benefits to informal sector workers
Benefits
- demand of changing time
- some laws date back to even pre independence era
- balances labour welfare and industry welfare
- simplify labour laws, ensure conducive env for doing business
- Ease of Doing Business
- promote investment
- increases flexibility, modernizes regulations
- safety and working conditions are a welcome additions
Criticism
- tiled in favour of employers and would adversely affect industrial peace
- bargaining power of worker diluted
- power given to States to exempt provision of codes can have serious implications on workers’ rights & safety
The Code on Wages 2019
- statutory concept of Floor Wage
- MGNREGA wages excluded though
- 5yr review
- overwork charge atleast 2 normal wage
- cut-off date for salary advanced to 7th of subsequent month
Occupational Safety, Health & Working Conditions Code 2020
- duties of employer in respect of workplace safety, working conditions etc
- specifies leave and working hours (limited at 8hours)
- requires health & safety norms
The Code on Social Security 2020
- proposes social security benefits to all employees in country (~52cr)
- incl. those in unorganized sector
- new definitions like aggregator, gig worker, platform worker etc have been added
- Social Security Fund to be created
The Industrial Relations Code 2020
- layoff ceiling pushed from 100 to 300
- if company with 300 workers apply for layoff but authorities don’t respond, then deemed approved
- prohibit employment of contract workers in any core activity
- fixed term employment been made applicable for all industries
- ”strike” now includes mass casual leave
Fixed Term Employment (FTE)
Summary
Company hires for short term and gives all benefits.
- enterprise hires labour for specific period of time, specific task, payment fixed in advance (not altered)
- given for temporary jobs
- earlier contractual worker
- employee on contractor’s payroll
- now with FTE, employee on company’s payroll
- no need for govt permission to remove FTE worker after his tenure
- all statutory benefits available (PF, gratuity, medical, insurance etc)
Benefits
- flexibility in employment
- more job creation in formal sector
- industries can hire for short term without going through contractor
- short term workers also get all benefits as permanent worker
Downsides
- companies may convert even full time workers into FTE workers
- so that hire & fire is even easier
See also: