Recommendations of Second Labor

Commission
Recommendations:
• According to the Payment of Bonus Act – 1965 e ployees
means any person employed on a salary and wage not
exceeding Rs. 3500 per month in any industry to do any skilled
and unskilled, manual, supervisory, managerial,
administrative, technical or clerical work for hire or reward.

• The second National Commission on Labor (NCL) has

recommended that the present system of two wage ceiling for
reckoning entitlement and for calculation of bonus should be
suitable enhanced to Rs. 7500/- per month and Rs. 3500/- per
month respectively.
• The Second National Commission on Labor (NCL) has
recommended that there is no need for any wage board,
statutory or otherwise, for fixing wage rates for workers in any
i dustry .

• However, Govt. decided not to accept the recommendations

regarding the statutory wage boards i.e. Wage Boards for
Working Journalists & Non – Journalists News Paper
Employees under the Working Journalists and Non –
Journalists New Paper Employees (Condition of Service) and
Miscellaneous Provisions Act, 1965.
• A Contract Labor is a person who is hired, supervised,
contracted and remunerated by a contractor, who, in turn, is
compensated by the user enterprises.

• To improve the working and living conditions of contract Labor

contract Labor (Regulation and Abolition) Act, 1970 was
enacted.
• The Central Industrial Relations Machinery (CIRM) has been
entrusted with the responsibility of enforcing the provisions of
the Act and rules made there under.

• Articles 24 and 39 of the constitution provides for protection

of the children from involvement in economic activities and
from avocations unsuited to their age.
LABOUR REFORMS IN INDIA
"Labour reforms in India, in the context of economic
liberalization and globalisation, are much desired, but also
feared and misinterpreted. The issue has been a touchy one
ever since the liberalisation era began in the early 1990s. The
Common Minimum Programme (CMP) of the United
Progressive Alliance (UPA) promises to carry out much
awaited labour reforms in the Indian economy.

The CMP has clearly indicated the need to streamline labour

laws and enact Employment Guarantee Act. However,
implementing these reforms would require much
imagination and political will. The previous government had
also proposed certain labour reforms but could not muster
the courage to carry them out.
• The need to enact labour reforms to compete with
other countries arises because of the following
reasons:
• Despite the advantage of cheap labour, the Indian
textile industry's productivity is low compared to
China and other major exporting countries because
other exporting countries have set up giant
manufacturing capacities which bring improved
productivity while in India, exporters farm out their
manufacturing to smaller units which results in low
productivity and quality.
• Recent trend in garments is for 'smart clothes', which
require better equipment and skills as otherwise the
Indian exporter will lose out on competitiveness.
• The ID Act states that if a company employs more than 100
workers, the company cannot close shop without the permission of
the government. Further appointment of contract labour, which is
crucial to the garment industry, is not permitted.
• An analysis of India's labour laws such as the ID Act has
indicated that such legislation, enacted to protect
worker interests, actually leaves them worse off. Over
the years, the statutory protections of the ID Act
neither protected employment in the organised sector,
which employs more than 100 workers, nor did it
adequately address their compensation issues in
establishments that turn sick.

• This is evidenced in the cases of textile mills of Mumbai

and Ahmedabad where workers have been denied their
terminal benefits as the companies continue to languish
as sick units.
• India's share of the global garment business is
2.75 per cent and under the new trade regime it
has the capability to capture 6 per cent of the
business by the year 2010. To achieve that,
additional capacities need to be built up. The
money for additional capacities can come from
the Indian public through the IPO route or
through FDIs.

• The catch however, is that neither the Indian

entrepreneurs nor the foreign ones are
particularly keen to set up plant and machinery in
India owing to the archaic labour laws existing
here.
• Some reforms have been initiated in the past five
years but the Industrial Disputes (ID) Act, 1947,
which is the major bone of contention, has been
left untouched.

• The ID Act makes provisions for the investigation

and settlement of industrial disputes. When any
employer discharges, dismisses, retrenches or
otherwise terminates the services of a workman
without complying with the conditions of
retrenchment provided in the ID Act, the dispute
or difference that can arise as a result between
the workman and the employer is deemed to be
an industrial dispute.
• A commission, called the Second National Commission on
Labour (SNCL) was set up to look into the various aspects of
labour laws and also the impact of globalisation on labour.

• SNCL's recommendations were submitted about a year ago.

The report accepted globalisation and liberalisation
processes as something that couldn't be wished away. It
recommended the unification of all existing legislation,
including the Industrial Disputes Act and the Trade Unions
Act.
• SNCL has recommended that the management's demand on closure,
lay-off, etc. whittling the number to 300, as an unfettered option. On
contract labour, the tenor of the report is ambiguous, seeking to
create distinction between core and non-core activities. The report
recommends disallowing of contract labour in core activities except
to meet sporadic demands. However, neither core nor non - core
activities have been defined.

• The SNCL further recommended that if employees make an

application for closure, permission will be deemed to be granted if
that approval has not been granted within 60 days.
• If India wishes to shine better, it has to boost the
marketability of its human resources. India's labour laws
have to work towards `drawing in' human resources —
entrepreneurial talent and employees — into the market
so that natural resources and savings will follow.

• When natural resources and savings follow human

resources into the market, the nation's marketable and
measurable output rises. If labour laws work towards
`keeping out' human resources from the market, natural
resources and savings too will stay outside the market. The
nation's non-marketable and unaccountable output may
rise, if at all.
• The reform of the economy began 12 years ago, but significant
labour reforms have yet to be initiated. Policy-makers and
lawmakers have to enunciate new policies that would allow
India's human resources to play the leadership role in growing
the economy. It is time for change. India needs an `economic
approach' to labour laws because human effort is the principal
determinant of economic well being.
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