Indian labour laws restrictive: World Bank

The World Bank has said that India needs to have more flexible labour laws to spur employment growth. In its latest report, the biggest lending agency for India has termed the  Industrial Disputes Act (IDA) 1947 as ‘restrictive”.

‘The World Development Report 2013: Jobs’ also argues for acceleration in urban development for job growth.

Incidents of violence in the National Capital Region (NCR) of Delhi, particularly, at the Maruti factory in Mansar, have forced a rethink among decision makers on the emerging scenario of labour relations.

Union Labour Minister Mallikarjun Kharge made it clear that strict adherence to laws is imperative on the part of employers. “Enforcement of the labour laws has to be followed strictly. Failure in this area has led to the recent flaring of incidents like Maruti Suzuki in Haryana, Regency Ceramics, Yanam, Puducherry and Neyveli Lignite Limited, Tamil Nadu,” said Kharge, while addressing the State Labour Ministers’ Conference held in Delhi over a month ago.

The World Bank, in its report, complains of too many laws and their being “complex and cumbersome”.

The bank also pointed out that labour-intensive sectors have not been growing employment-wise. “Instead, despite India’s buoyant economic growth during the past two decades, the performance of the labour-intensive manufacturing sector has been sluggish. The bulk of the growth in non-farm employment has been in the informal sector.”
However, the global lending agency has expressed apprehension over the possibility of changes in labour laws.

“The conventional wisdom, when a country is riddled with misguided labour regulations, is to repeal them. This repeal may be easier said than done, however,” says the report.

 “India’s complex labour regulatory system has been in place for 60 years; even the ambitious reform programme triggered by the balance-of-payment crisis of 1991 left labour regulations largely untouched,” the report added.

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