The proposals regarding the laws governing industrial labour have been in the works for over two years, and it has found a brief mention in the Budget speech this year.
One of the primary criticisms directed at the present Indian government has been its failure to address these laws.
It is an important reason why the manufacturing activity not taking off as hoped.
What the proposed changes offer?
The proposed changes offers flexibility in operations to the smaller companies, better compensation for the retrenched employees, a more representative character for trade unions, and a new framework for minimum wages.
It has put in place a study-cum-work arrangement. Workers earn while they learn, and the training is linked to the prospect of real employment. It will give a new thrust to the skilling programme. It also offers better pay to those who join as apprentices.
One proposal that is going attract criticism is – A proposal to allow units employing 300 workers to shut down operations without seeking permission of govt. If approved, this would take the vast majority of companies out of the framework.
The flip side is: those who get retrenched should get 45 days wages for every year worked. Retrenchment becomes easier and more expensive. So companies will not resort to it lightly.
Another proposal aims to raise the qualifying floor for the formation of trade unions.
Also, smaller units will be offered a freer labour market. The binary division of the labour market into organised and unorganised segments would give way to more categorisations that enable easier transitions.
