The Union Labour and Employment Minister has written to industry organisations and trade unions recently.
He asked them to join a consultation process on policy changes that would address India’s burgeoning job problem and increase India’s women labour force participation rate.
Why this step should be welcomed?
This is a welcome admission that job creation in India needs attention.
Centre for Monitoring Indian Economy’s recent figures - September, 2019 alone saw an increase in jobs by about 7 million.
National Sample Survey’s data - India hadn’t experienced such high unemployment since the 1970s, and confirmed anecdotal fears that large numbers of women were leaving the labour force.
The ministry is in the process of rationalising the existing labour laws into four codes.
Unfortunately, this at the moment falls short of real labour law reform, which would allow employers more latitude in hiring and firing workers.
It is to be hoped that the ministry’s outreach to unions is in part to convince them of the importance of such reform.
What should the government do?
However, the ministry must correct errors of the past in its outreach.
India’s labour laws are structured to please unions and those already engaged in formal employment.
This is part of the reason they are overly restrictive, and have retarded the growth of manufacturing.
Broadening the scope - Instead of talking only to insiders, the government must broadenthe scope of its consultation to include job seekers and informal workers.
This should be done in order to create a constituency in favour of real labour law reform.
A broader outreach would be useful in creating a counterweight to powerful interest groups.
It would also reflect the very real changes that are transforming the Indian economy at the moment.
Job creation - In a declining investment environment, many new job opportunities are being created in the logistics sector and the gig economy, and by internet platforms.
These jobs cannot be seen as being “formal” in the traditional sense, although the employers are frequently large companies that can indeed be regulated.
In some ways, they’re analogous to the contract workers who have begun to fill up the spaces in the formal sector.
These spaces are created by companies’ unwillingness to hire regular employees under conditions of uncertainty created by the current labour laws.
The government must find a way to reach out to such workers.
If necessary, they must be encouraged to organise among themselves to have a voice regarding their own welfare.
Focus - India’s long-term objective of formalising the economy shouldn’t ignore the rise of the gig economy.
[Gig economy - A labour market characterized by the prevalence of short-term contracts or freelance work as opposed to permanent jobs.]
A clearer and more universal approach to benefits, protections, and job creation is needed.
It is welcome that the Prime Minister’s Office is focused on ensuring that labour code rationalisation also becomes universalised.
The Union labour and employment ministry must now get on board.
