JOIN USPrime Minister Narendra Modi has announced a slew of measures which will help change the way industry functions in the country. Along with adequate capital, supportive infrastructure and good management skills, an efficient and productive labour force is an important and essential requirement for the success of business and industry. In a way labour is more important because of the human dimension it gives to the working of industry. But labour laws in the country are known to be too restrictive to allow industry to grow and develop, and ultimately against the interests of the labour force itself.
Therefore the need for labour reforms, which involve changes in laws, rules and procedures, has been felt and articulated for many years. India’s position is very low among countries with regard to the ease of doing business. Rigid and archaic laws have been an important factor in making it difficult to do business in the country.
The measures announced by the Prime Minister are mainly at the executive level and concern the procedures which are being followed now. Shifting to a system of self-certification by industries and replacement of mandatory inspections by random checks will reduce the power of inspectors. The inspector raj, which is entrenched in industry, has often been a source of harassment and corruption. The provision for single window online compliance for labour laws will help to reduce delay and make industry managements more responsible for their actions. The launching of the universal account scheme for all provident fund contributors will benefit workers because it will ensure portability and tracking of the scheme’s benefits. These are procedures and changing them is the easier part of the reforms. There is a wrong feeling that changing the existing system and body of laws is harmful to the interests of workers. The high degree of politicisation of labour unions, involvement of politicians in their working and the growth of vested interests in the movement are the main reasons for the failure to change the laws and regulations in keeping with the demands of the modern industry.
The government will have to take the initiative to make changes in a number of laws which are not conducive to the growth of business and industry. There are 44 central laws and over 150 state laws on labour. Some of them need amendments and others should be simplified. Since labour is in the concurrent list, both central and state governments can legislate on it. The NDA government has proposed changes in three key laws, including the Factories Act, and they are pending in Parliament. These should be expedited so that the reforms process gains pace.