Saturday December 15, 2018
Home Opinion How Labor law...

How Labor laws are affecting implementation of Make in India

0
//
Modi
Image source: digitalindiainsight.com
Republish
Reprint

By Abhik Ghosh

What’s the one assurance investors want before setting up a manufacturing base in India? The ease of making workforce adjustments in line with changing market conditions. In this area, Indian labor laws are among the most restrictive.

The Industrial Disputes Act of 1947 has two provisions in the way of workforce adjustments. Chapter VB of the Act requires prior approval of the appropriate government before resorting to any layoff, retrenchment, or closure in establishments employing 100 or more workers.

The draft Labor Code on Industrial Relations currently in circulation seeks to raise the threshold to establishments employing 300 or more workers, but it is still work in progress.

Another major contentious provision is Section 9A of the Act, which mandates 21 days’ notice before affecting any change in established conditions of service of any employee, including any change necessitated by “rationalization, standardization, or improvement of plant or technique”. This is anathema for investors, particularly in this age of fast changing technologies and manufacturing processes.

Contract labor is yet another major area of concern. Investors would surely want to know if engaging workers on temporary contracts would run afoul of the law. The Contract Labour (Regulation and Abolition) Act, 1970, as the name suggests, is enforced to regulate the practice and abolish it in certain cases.

In other words, the practice is not prohibited. Engaging contract workers for temporary, intermittent or seasonal work is allowed, but using them for work of perennial nature violates the letter and spirit of the law.

Why would investors want to engage workers on temporary contracts in the first place? To meet surges in demand for goods and services requiring urgent workforce adjustments. The Immediate deployment of regular workers is not always feasible and pruning them alongside falling demand often meets legal obstacles. Moreover, regular workers are increasingly becoming less productive and more expensive.

The central government has yet to initiate any action in this area. Rajasthan has taken the early lead, raising the threshold for applicability of the law to cover industries or contractors engaging 40 or more contract workers, up from the original 20. Other state governments are expected to follow suit. The move has been welcomed by employers and criticized as anti-worker by trade unions.

But changing the applicability clause is like nibbling at the edges. Plunging into the core, the status of temporary workers must be redefined and extended beyond the present limit of 240 days in a year. That should take care of the persistent demands by the traditional trade union movement for regularization of all contract workers.

On this aspect, the experiment by India’s largest carmaker is innovative and instructive. In 2012, Maruti introduced a new category of directly recruited temporary workers, substantially reducing the role of intermediaries. It has appreciably narrowed the gap in emoluments and allowances between regular and contract workers, which is the main bone of contention.

Temporary workers get on-the-job training as apprentices and become eligible for regular appointment in due course. Maruti pays such workers a stipend for the period they must wait out for regular appointment. This also promotes a sense of belonging and solidarity with the company. It is the habit of institutions to give birth to loyalties. The policy has worked well and has brought industrial peace to what was a volatile workplace.

The big question is: How soon can the central government bring about meaningful changes in the existing laws to facilitate quick workforce adjustments?

For investors, this is the major sticking point. Can the government drive the labor reforms agenda through the legislative route and achieve desirable outcomes?

Given the present party alignments in the Rajya Sabha, this is like building castles in the air. Alternatively, can executive orders be employed to achieve the desired results? Some quick thinking is needed in this direction, followed by swift action.

As the reforms package unfolds, pragmatic solutions will have to be discovered to assure investors that their business interests would not suffer by mindless application of the law, while taking care to ensure that workers’ interests are not compromised.

Labor reforms are critical to the “Make in India” campaign. Investors have been waiting with anticipation. Brand India cannot afford to disappoint.

Abhik Ghosh, IAS (retd), was with the International Labor Organization (ILO) as a senior specialist in industrial relations and labor administration. (IANS)

Click here for reuse options!
Copyright 2016 NewsGram

Next Story

How to Maximize Your Chances of Being Approved for a Credit Card

Apply for a credit card with Bajaj Finserv to ensure strong security, enjoy a host of rewards and benefits and get up to Rs 55,000+ annual savings.

0
Credit Card
Opt for a credit card that offers multiple benefits.

While you may see many credit card offers regularly, getting approved for one isn’t as easy. Maximising your chances of being approved begins way before the application stage and here are a few tips to help you:

Take your time to research

Jumping at the first credit card deal you see is often a mistake many make when they are starting out with a credit card. Just because a deal is advertised to you, doesn’t mean you will get approved.

Hence, you should take your time to assess three important things

  • Your requirements
  • The NBFC or bank
  • Terms offered by different issuers
credit card
Another step towards digitizing India is Encouraging Digital Transactions by exempting service tax on Cards (Wikimedia commons)

Terms like interest rates, annual fees, and rewards and bonuses are essential features of every card, which you should carefully check and compare.

For example, the Bajaj Finserv RBL Bank Credit Card offers up to 20,000 reward points as a welcome gift as well as the possibility of earning reward points on every transaction you make. Free movie tickets and other benefits can be enjoyed every time you reach a milestone.

Check the eligibility criteria

Every financial institutions issuer has different credit card eligibility criteria, like age, income and credit history, which you should check thoroughly before applying. Skipping this step may result in rejection which is going to negatively affect your credit score and the chances of getting approved for any other card as well.

Review your credit score

The first thing any credit card issuer looks at when you apply for a card is your credit score. It’s on the basis of this that the lenders assess your financial behaviour and the degree of risk they face in issuing you a credit card.

credit card
A person using credit card for transaction, Pixabay

You should request for a copy of your credit report before applying for a card so you can review it and see if your credit score is ideal. If not, then you should take the time to improve your credit score before applying for a card to increase your chances of approval, by applying for a lower category card, and making other payments as well on time.  

Lower your credit utilisation ratio

The credit utilisation ratio shows how much of your available credit you actually utilise against the total available limit. Having a ratio of 30% or less is advised by financial experts because having a higher ratio is an indicator of being credit-dependent. Hence, maintaining a low credit utilisation ratio is going to help you improve your chances of getting approved for a credit card.

Be careful with the details and the documents

While applying for a credit card, you will be required to provide a lot of information in your application including current and previous employment, salary, current debts, contact numbers and addresses among other things.

Make sure to be accurate with even the minutest of details and ensure to not miss out on any field because an incomplete application is grounds for rejection. The application usually requires several other documents which you must submit as per the issuer.

Credit Card
Every financial institutions issuer has different credit card eligibility criteria. Flickr

Apply for a credit card online and get instant approval with minimal annual and joining fees.

Ask your spouse to add you as an authorized user

If your spouse has good credit history, ask them to add you as an authorized user on their credit card. This is easy to do and will give your credit score a boost, increasing your chances of being approved for a credit card.

Things to note

In addition to the above tips, remember to pay of all your outstanding bills on any other credit cards you own, and steer clear of applying for multiple cards at once or within a short time period.

Instead, opt for a credit card that offers multiple benefits. For example, the Bajaj Finserv RBL Bank SuperCard is a card that gives you the power of 4 cards in 1. It’s a credit card, cash card, loan card and an EMI card, all rolled into one that provides industry-first features.

Also Read: Mobile Banking Becomes Main Personal Banking Channel In Singapore

Apply for a credit card with Bajaj Finserv to ensure strong security, enjoy a host of rewards and benefits and get up to Rs 55,000+ annual savings.

You can also avail easy financing by the way of pre-approved offers for a host of financial products. The pre-approved offers make the process of availing loans easier and quicker like never before.