Raje to dump archaic labour laws to spur investments, jobs

The complex and age old labour laws of the country that are in the concurrent list of the Constitution have often been cited as the bane of the development.

Governed by both the state and Union governments, who rarely agreed or ever thought of making the colonial laws more flexible, the ‘orphaned’ status of these laws have been a major impediment in industrial and infrastructure growth.

But Rajasthan, under chief minister Vasundhara Raje, for the first time in the country, has taken a courageous decision by approving several proposals to amend the Industrial Disputes Act, 1947, the Factories Act, 1948, and the Contract Labour Act, 1970. Despite the expected resistance by industrial and trade bodies, the decision is likely to generate immense employment opportunities by attracting fresh investments and increasing the industrial production in the backdrop of present resources. 

The proposed amendments include various innovative measures like registration of labour union with a minimum of 30 per cent of employees of a unit, time limit of 3 years for raising labour-related disputes, dispensing with permissions for hiring and retrenchment of up to 300 workers, compensation to labour in terms of 3 months’ salary and 6 months’ bonus at the time of retrenchment, doing away with permissions for hiring up to 50 contract labourers and several other changes that are included in the new bill which the government is planning to place before the state Assembly shortly.

Immediately after clearing the proposed amendments in the cabinet Raje said, “I had promised 15 lakh jobs and this is one area which desperately needs to be opened up. I don’t have a choice. it’s a move to create a healthy atmosphere for job creation.”According to industry experts, without amending the labour laws state government could never have been in the position to attract the  massive amount of investment required for infrastructure and industrial development that would come because of the Delhi- Mumbai golden quadrilateral highway project, the proposed Dedicated Freight Corridor (DFC) and the Delhi-Mumbai industrial corridor. Besides, a fresh investment of over Rs 32,000 crore is also reportedly  in the offing which include new industrial units or expansion by existing giants.

“The amendments in labour laws will not only lead to creation of new job opportunities but will definitely lead to less of Inspector raj. Earlier, the government inspectors from various departments would keep troubling the industrialists now and then over minor issues. At least now we can focus on our work,” said SN Kabra, president of Sitapura industrial association. Now that relaxations have been given, the new investment will certainly go up leading to generation of new employment opportunities, he added.

Flexible reforms

Industry experts believe that the protests by trade and industrial unions would be minimal considering that flexible labour reforms would certainly ensure fair compensation to employees and long-term flow of capital to entrepreneurs and more opportunity of generating employment.

“Today an entrepreneur has to take permission for hiring more than 100 workerss. Now that the limit has been increased to 300, he can increase the production with the same resources. On the other hand, the sick units will get relief with no restrictions on hiring or retrenching upto 300 workers without any government interference,” said Nitin Gupta, director CII, Jaipur. According to him, more than 1,800 cases of labour dispute are pending in various forums. 

The new reforms will not only clear the pendency but it will also be a big relief to unprofitable units who want to close down.

“What was relevant in 1947 or 1958 is certainly not relevant today. Needs, priorities and means... all have changed. How can you handle challenges of 2020 with the laws framed in 1947? The new amendments are in the interests of both employees and employers and obviously the state,” said Sandeep Jain of Vertex soft plus, a software firm. Officials of labour department, on condition of anonymity say that the present reforms are industry and investor friendly. Once they are cleared in the state Assembly,  they will be sent to the President of India for approval. The entire process may take another three-four months time.

Meanwhile, many state level industrial and trade unions have strongly opposed the proposed amendments and termed them as opposed to the interests of the workers. They also blame the Raje government of not consulting them before taking such ‘anti-labourer decisions’ in the state. “Capital growth cannot take place unless the interests of workers are taken care of. The chief minister has been working under the influence of capitalists which is evident from such anti employee amendments,” said Rah Bihari Sharma, the state general secretary of Bhartiya Majdoor Sangh.

Leaders of trade unions said that an all India convention has been called in Jaipur in the month of July to decide on further course of action. “At the convention all trade unions will jointly decide on how to deal with such errant decisions. If necessary we will hit the roads and hold protests,” said Sharma. They claim that the focus of the government is to scrap the trade unions which is why the exemption limit has been raised to 300 employees. After these amendments only 50-60 industries will come under the labour laws. In the rest of the units, there will be no one to take care of the interest of the labourers, said Jagdish Chand Srimali, the state convenor, All India Trade Union Congress.

The union leaders allege that in her previous tenure also Raje had shown little interest in the formation of labour advisory boards and this time too her policies were against the interest of labourers. “So, we will now have laws made to suit the whims and fancies of foreign investors. This is a repeat of what the previous NDA government tried and Raje will also have to withdraw these decisions,” Srimali said.