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How Labor laws are affecting implementation of Make in India

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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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Young Women Keen to Learn The Skills Needed To Go Online: GoDaddy

The US-based Internet domain registrar and web-hosting company is equipping web professionals and local resellers with the right tools, knowledge and skills they need to help grow their ventures online.

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GoDaddy CEO Blake Irving joins the celebration during New York Stock Exchange opening bell ceremonies for his company's IPO, April 1, 2015. VOA

GoDaddy, the world’s largest Cloud platform dedicated to small and independent ventures, is empowering small and medium businesses (SMBs) in tier 2 and 3 cities of India and, to its surprise, is finding young women more keen to learn the skills needed to go online.

The US-based Internet domain registrar and web-hosting company is equipping web professionals and local resellers with the right tools, knowledge and skills they need to help grow their ventures online.

“As we go deeper into the country, we see huge numbers of young web developers and entrepreneurs waiting to be trained, in order to help local companies grow online in the New-Age technological environment,” Nikhil Arora, Managing Director and Vice President, GoDaddy India, told IANS in a free-wheeling chat.

“To our surprise, we find women more forthcoming and eager in tier 2 and 3 cities to learn new digital skills. We are also excited to see the positive response among web professionals and SMBs alike,” Arora noted.

Women entrepreneurs continue to face several challenges like gender bias and access to financial funding or venture capital in the country. According to a recent Mastercard Index of Women Entrepreneurs (MIWE) report, India is ranked 52 in the list of 57 countries surveyed when it comes to empowering women to run successful businesses.

Even the technology hub Bengaluru and capital New Delhi ranked 40th and 49th, respectively, on a list of 50 women entrepreneur-friendly global cities, said another report by US tech giant Dell Technologies last month.

The growing enthusiam among young women to learn digital knowledge and skills is a welcome sign, said Arora.

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The GoDaddy inc. logo is shown on a computer screen in this illustration photo. VOA

Today, one million people in India rely on GoDaddy’s products to get their ideas online and Arora wants to quickly add the next million in GoDaddy’s bucket.

Formed as Jomax Technologies in 1997, the company launched its first website building software and hosting services in 1999. In 2000, the name GoDaddy came into existence.

Today, with more than 17 million customers worldwide, GoDaddy has over 75 million domain names under management.

For the second quarter that ended on June 30, GoDaddy reported revenues of $651.6 million — up 16.8 per cent year-on-year — and international revenue s were at $233.3 million, up 24.3 per cent (year-on-year).

“We are very bullish on India. We have seen 8-10 million Indian SMBs — out of more than 25 million — taking their businesses online and next on our radar are the rest which are eager to go digital but don’t have the right tools, guidance and skill-sets,” Arora emphasised.

According to him, in a growing market like India, web developers are interested in learning new processes with new tools to help manage their clients while, at the same time, ensuring quality and expanding their business.

GoDaddy has already trained over 700 web professionals in Pune, Jaipur, Kochi and Ahmedabad.

“Web developers are a driving force in helping SMBs increasingly do business online and helping to shape the growth of the digital economy,” Arora told IANS.

As part of GoDaddy’s initiative, web professionals receive extensive education on how to amplify their business, develop and upgrade skills while accessing GoDaddy resources to help create and manage an effective digital presence for small business clients.

GoDaddy launches next-generation 'Virtual Private Server'
The US-based Internet domain registrar and web-hosting company is equipping web professionals and local resellers with the right tools. (IANS)

In its recent “Global Web Developer’s Survey”, GoDaddy found that nearly 50 per cent of developers in emerging markets like India tend to have more new businesses when compared to developers in other regions.

The findings showed that the primary drivers of small business websites are: Selling new services to existing clients (40 per cent); providing support to existing clients (31 per cent); and finding new clients and reselling products/services (28 per cent).

The research also found that in the US, developers and designers are more likely to work for a small firm and concentrate their work on fewer clients who provide larger retainers. However, in India, web developers primarily work in formal office environments.

According to Arora, web developers in India are now regularly guiding and engaging with small businesses to help them get online — given the “Do-It-For-Me” nature of the customers.

The pervasiveness of smart devices and increasing affordability has further encouraged millions of small businesses to leverage mobile to enhance their business. Over two-thirds of web pages designed by web developers for small businesses in India are more likely to be tailored and targeted for mobile.

Also Read: GoDaddy Launches Next Generation ‘Virtual Private Server’

According to Arora, the next wave of small businesses will rely heavily on web designers and developers.

“Supporting our customers in India, with increased training and support, and being available to help them create and grow their online presence for their business, has always been a key element of our value proposition,” said Arora. (IANS)