Labour Laws and Employment in IndiaTarun Das, Economic Adviser, Ministry ogf Finance, India
1 Labour Laws in India
Labour is highly protected and Indian labour laws do not allow
hire and fire policy.
As per existing laws under the Industrial Disputes Act 1947, no employer cannot close anestablishment or declare lock out or retrench any labour without taking prior approval of the concerned government authority if the establishment employed more than 100laborers on permanent basis in the previous 12 months. Various researchers in the pasthad concluded that this clause stood in the way of further organised employment and ledto growth of more capital-intensive industries. Therefore, this protection was counter- productive and acted against the overall interest of the workers.Labour figures in the Concurrent List (for both Centre and States) of distribution of legislative powers in the Constitution. As both Centre and States can legislate in this area,India has perhaps the largest number of legislations on labour in the world. There areover 47 labour related laws enacted by the Central government dealing with industrialrelations, social security, industrial safety and health, child and women labour, minimumwages and bonus, labour welfare, emigration, employment exchange and miscellaneousissues (
There is a considerable degree of overlap among these acts. Manystudies have suggested simplification of rules and procedures and to group these actsunder five or six broad and comprehensive acts dealing with basic issues.
The National Common Minimum Program (NCMP)
The UPA rejects the ideaof automatic hire and fire. It recognizes that some changes in labour laws may berequired but such changes must fully protect the interests of workers and families and must take place after full consultation with trade unions. The UPA will pursue a dialoguewith industry and trade unions on this issue before coming up with specific proposals. However, labour laws other than the Industrial Disputes Act (IDA) that create an Inspector Raj will be reexamined and procedures harmonized and streamlined
.”At present, amendments to 13 acts are being examined by all stakeholders viz. centre andstate governments, trade unions and industry associations. These are indicated in
It may be observed from the table that even amendments of simple issues relating todefinitions and scope have taken much longer period than expected due to existing parliamentary procedures for amendment of an act. In some cases like a Bill relating toworkers’ participation in management is lying in the Parliament for 15 years since 1990without any discussion or debate due to lack of interest by political parties.In order to achieve a consensus among various stakeholders, the present Union Minister for Labour and Employment Mr. K. Chandrasekhar Rao held a meeting with professionals and chambers of commerce and industry on the 29
March 2005 andanother meeting with trade union leaders on the 31
March 2005. But, the discussions in1