Monday May 21, 2018
Home Opinion How Labor law...

How Labor laws are affecting implementation of Make in India

0
//
168
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

Microsoft to hardsell AI to transform Indian businesses

Through the use of remote-sensing data from satellite images, the farmers are given sowing advisories for each climate and also predictions for the prices of crops

1
//
41
Microsoft to pay $250,000 to help them catch chip bugs. Wikimedia Commons
Microsoft's Sangam is a cloud-based platform. Wikimedia Commons

Microsoft on Wednesday said it would work with 650 Indian vendors to deploy its Artificial Intelligence (AI) solutions for improving and transforming Indian businesses across verticals.

“We are working with our partners to bring AI to all sectors in India, which offers a huge opportunity to create a positive impact in the world over. Our partners will give solutions to solve societal and business problems,” said Microsoft India President Anant Maheshwari at the company’s conference here.

AI will help Indian businesses to grow.

The Indian arm of the US-based tech firm showcased its recent AI solutions at the event on “AI for all in India”, where its partners converged to drive the new disruptive technology. The multinational technology firm is working to “democratise” the AI technology and make it available for all, said Microsoft’s Executive Vice President, Business Development, Peggy Johnson.

“As we discover newer challenges in the world we live in, AI can help us find better and more sustainable solutions,” she said. Through a tie-up with city-based healthcare firm named Forus Health, Microsoft said it has put together its AI-based retinal imaging interface into Forus Health’s digital imaging devices to examine and evaluate a human eye.

Also Read: Microsoft completes renewable energy deal for Bengaluru facility

The AI technology is expected to help in identifying diabetic retinopathy (a complication of diabetes that affects the eye) among diabetic population. Microsoft is also working with other partners and vendors like Indian e-tail major Flipkart, Indian online cab aggregator, Ola, for its automated entertainment system Ola Play among others for AI-based solutions including demand forecasting, fraud detection, customer segmentation etc.

This AI can also predict prices of crops.

The technology is also being put to use to forecast the agricultural output, for which Microsoft is working with the Karnataka Agricultural Price Commission, under the state’s Department of Agriculture.

Through the use of remote-sensing data from satellite images, the farmers are given sowing advisories for each climate and also predictions for the prices of crops such as “toor dal” depending on the output, in advance, thereby helping farmers manage their crops better. Several of Microsoft’s partners are also making use of facial recognition and text analytics solutions, which make use of AI. IANS