OPINION: Streamline and soften impracticable labour laws

Government of India has the habit of responding to every emerging situation in terms of political gains and losses overriding the economic aspects.  The current strike by the labour and others has many implications for our country which is passing through a very delicate economic situation.  The Current Account Deficit (CAD) is a very sensitive index to feel the economic pulse of the country.  It is running at more than 5% of  GDP when it was only 3% in 1990-91.  The fiscal deficit is also at a dangerous level and is fuelling the already high inflation.  Our dwindling exports are one of the main reasons for this unfortunate situation.  With this background government is supposed to respond in a manner befitting this sensitive situation.

On the labour front Government of India has at once come to the conclusion to enact law to ensure uniform minimum wages in the country.  Government has also proposes to link minimum wages with inflation.  Government little knows that its MGNAREGA Scheme has already taken a heavy toll of industry, agriculture and allied activities.  It has resulted in unaffordable labour wages with acute labour scarcity.  These sectors have hurt the pervasive labour intensive industry.  This in turn has lowered our exports resulting in high current account deficit.  Rise of wages in agriculture has resulted in food inflation.  Now report after report is coming that MG Narega scheme is a total failure and scandals are emerging.  Even CAG’s report is awaited in this regard.  So it is high time for the government to keep low stance on the scheme if it is helpless to withdraw.

Industry has been crying horse for the last many years to streamline and soften labour laws in tunes with global environments so that industry becomes competitive.  In the year 1976 government made the Industrial Dispute Act very restrictive.  No industrial enterprises can retrench, work or close unit itself without the permission of the government if it has more than 300 employees. 

Later in the year 1982 the threshold limit was lowered from 300 to 100. It hurt the employment potential for the labour force.  For instance in the year 2010 organised manufacturing accounted for a mere 1.5% of nation’s total work force.  From 0.44 between 1999-2000 and 2004-05 the employment elasticity fell to as low as 0.01 between 2004-05 and 2009-10.  As a result while GDP grew 1.6 times between 1999-2000 and 2004-05 and the employment from 396.8 million to 457.5 million.  Later on between 2004-05 and 2009-10 GDP grew two times while employment grew only marginally from 457.5 million to just 460.2 million.

Of late some political elements have started instigating the labour.  As a result between January to October 2012 there were 100 large strikes in the country against only 38 in the same period in 2011.  Due to strike in the Maruti-Suzuki only labour has suffered.  This company is shifting in a major way to Gujrat and it has sacked 540 permanent workers.

The industry is facing a very tough time which is making our economy nervous. NPA of our banks has reached alarming level.  Public units like BSNL and MTNL which were profitable PSU’s are now bleeding the exchequer.

Our labour force is not that illiterate as earlier.  It should understand the position in perspective which is in its own interest.  Apart from the increased wages labour has also raised the point of interest in the employees Provident Fund.  It should note that over 50,000 crore hole is suspected in EPFO.

Government is urged to streamline and soften the impracticable labour laws in the interest of country’s economy.

(Disclaimer: The views expressed by the author in this article are his own and do not necessarily reflect the views of City Air News.)