Following up on Rajasthan’s lead, a few states have begun to simplify their labour laws but the Centre is now trying to nudge all states into reforming their labour legislations.
While the labour ministry is in discussions with state labour officials, the issue was also taken up by the labour minister Bandaru Dattatreya over the past month in meetings with state labour ministers.
“The states should take action for reform in labour laws at their level to promote a simplified and rationalised labour regime aimed at higher productivity and economic growth,” he had said at meetings with state ministers of North Central region and eastern region.
Earlier, the Prime Minister’s Office too is understood to have written to state governments encouraging them to take forward labour law reforms.
Rajasthan, which kicked off labour reforms last year and amended provisions of the Factories Act, Industrial Disputes Act, Apprentices Act and Contract Labour Act, is also working on amending the Rajasthan Shops and Commercial Establishments Act, 1958 that would help simplify approvals and improve safety conditions for workers.
The draft amendments, that are expected to be taken up by the state Cabinet soon for approval, have significantly also proposed to include BPOs and electronic data processing firms as commercial establishments.
Since this is a state law, it would not require any assent from the Centre and the state is hopeful of that the amendments would be cleared by the end of the year.
“The response form investors has been very good since we amended labour laws. Our aim is not only to attract investments but also create jobs in the state. Now, we are working on further simplifications,” said a senior state labour official, adding that the state is also planning to highlight its simplified labour law regime at the state’s investment summit in November.
Job creation too seems to be getting a boost in the state with as many as 600 private industrial training institutes opening up in the last one year.
Apart from Rajasthan, Madhya Pradesh has amended its labour laws while Gujarat and Maharashtra too have initiated the process.
The Union government too has amended the Apprentices Act, 1961 and the Labour Laws (Exemption from Furnishing Returns and Maintaining Registers by Certain Establishments) Act while amendments to the Factories Act, 1948 are pending with the Parliament. It has also finalised changes to the Child Labour (Prohibition and Regulation) Act 1986 and is working on a new umbrella legislation for small factories.
Stressing that the Centre is not trying to push states, a senior official said, “Discussions are going on with states as many of these labour laws are outdated and they do need to be reviewed based on state-specific requirements.”
Sources said the government is hopeful of having BJP- ruled states on board. “It could have a domino effect. Once states see that other states that have simplified labour laws are getting more response from investors, others too will follow,” said a person familiar with the discussion.
Being on the concurrent list of Constitution, labour laws are in the domain of both the Centre and the states and each can legislate and administer on it.
For employers, the multiplicity of labour laws can be a huge compliance burden. At present, there are 44 central and about 100 state laws on labour issues.
“It seems fairly simple as some laws are administered by the Centre and others are by the states. But it is a huge challenge for businesses. Ultimately, businesses will get stifled if there are too many labour laws,” said Micheal Dias, secretary of the Employers’ Association in Delhi.
Simpler labour laws are also one of the key factors on which the government’s Make in India campaign that seeks to turn the country into a global manufacturing hub hinges on. The World Bank terms Indian labour laws as one of the most rigid in the world.