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How Labor laws are affecting implementation of Make in India

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Image source: digitalindiainsight.com

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)

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Top 5 Compelling Benefits of Implementing Employee Management Software in your Business Workplace

The software provides a simple and efficient platform where you can keep track and record all the data and information to enhance the working experience of your employees in the workplace

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employee management
Implementing the management software provides the employees with a platform to produce or show their contribution to their respective projects. Pixabay

Most business organizations have this absurd concept that employees demand too much from the company. As a result, the organization takes measures to curb down the demands or the opinions of its employees in the workplace. This eventually leads to the development of detachment between the higher officials and the general employees. This, in turn, reflects the poor output from the employees, and that directly affects the productivity/ revenue of the company.

All that, however, are primarily due to the existence of an ineffective employee management system in the workplace and not due to anything else. All the other aspects of your workplace environment go out the window if you have a poor management system. After all, the management system is what binds the entire system and all the resources that your business organization utilizes. This is clearly evident from the fact that almost 80% of all the employees quitting their job blame the poor management system in their respective workplace, making it the most valued component in any business organization.

However, implementing an effective and employee-friendly management system in the workplace is no ordinary feat. You have to invest a lot of your company’s resources into it in order to harness a successful outcome. However, there is an easier and simpler approach to implementing the system in the form of employee management software. The software provides a simple and efficient platform where you can keep track and record all the data and information to enhance the working experience of your employees in the workplace.

employee management
The employee management software, aka the HR Core software, is a single platform where the employees and the managers can interact and share their ideas. Pixabay
  • A single, yet multitasking platform

The employee management software, aka the HR Core software, is a single platform where the employees and the managers can interact and share their ideas. The employees can use the software platform to post/ share their leave requests, and likewise, the manager can make the approval using the software as well. Other than that, the employees can update their personal information, and the managers can produce their project analytics and reports as well.

  • Enhance workplace productivity

Relying on the traditional and ineffective manual management system can become chaotic and add unnecessary workload for your employees and managers as well. On top of all that, you are just investing your company’s resource in keeping the management in check instead of investing it on other productive aspects. Implementing the management software simplifies everything and provides a generous free-time to your employees to focus on other resourceful projects.

employee management
Implementing the management software simplifies everything and provides a generous free-time to your employees to focus on other resourceful projects. Pixabay
  • Keeps the employee engaged

An engaged employee can produce a massive and significant productive outcome for the company. Whereas, a disengaged employee can produce the exact contradictory outcome. Implementing the management software provides the employees with a platform to produce or show their contribution to their respective projects. It also acts as a platform to keep the managers and the employees engaged with one another, share and even express their opinions. As per several studies, approximately 70% of all the employees in any business establishments are disengaged; and that directly affects the poor performance of those companies. Hence, keeping the employees engaged through management software is an indispensable requirement.

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  • Secures the employee’s data

In the present generation of internet marketing, no business organization is entirely safe from the dreadful phenomenon that is hacking. Over the past few years, hacking has become a nightmare for every business establishment. Even the world leading business companies such as Adobe, Sony, and Yahoo have fallen victim to the hackers, compromising all their employee data. On top of all threat, if your company is relying on spreadsheet and paper files to store and record all your employee information, you are just making the work of hackers even easier and uncomplicated. The employee management software instead offers various security measures to protect all your employee data that they enter on the software; hence making their private information more secure and resistant from external manipulation.