Rajasthan shows way in labour reforms

RAJE Govt: Clears amendments to Industrial Disputes Act, Contract Labour Act, Factories Act

Written by Vaidyanathan Iyer | Mumbai | Updated: June 8, 2014 7:50 am
The related Bills will be introduced in the Assembly early next month and then referred to the President for his assent. The related Bills will be introduced in the Assembly early next month and then referred to the President for his assent.

The Vasundhara Raje-led government in Rajasthan has taken the lead in bringing about dramatic changes to Central labour laws, which reformists have long argued are holding back job creation in the country. Labour laws form part of the Concurrent List and the Union government has often claimed pre-eminence in allowing amendments proposed by states to the legislations framed by the Centre.

The Raje Cabinet on Thursday cleared state-level amendments to three critical and archaic Central government labour legislations — the Industrial Disputes Act, Contract Labour Act and the Factories Act — seeking to liberate the corporate sector from the shackles of stringent requirements of the laws. The related Bills will be introduced in the Assembly early next month and then referred to the President for his assent.

When contacted, Raje said, “I had promised 15 lakh jobs and this is one area which desperately needs to be opened up. I don’t have a choice.” Describing it as “creating a habitat for job creation”, she said she would try to find innovative ways to further reforms.

“Policy-level changes require political will. For decades, everybody has advocated an overhaul of labour laws. What we did will change the paradigm,” Rajiv Mehrishi, Chief Secretary, Rajasthan, told The Sunday Express.

According to the changes in the Industrial Disputes Act, government permission will not be required for retrenchment of up to 300 workers. The Act, as it stands now, allows retrenchment of up to only 100 workers. The Rajasthan Cabinet has also introduced a three-year time limit for raising disputes and increased the percentage of workers needed for registration as a representative union from 15 per cent to 30 per cent. In the context of politicisation of trade unions, this raises the bar.

As far as the Contract Labour Act is concerned, the amendments raise the applicability of the Act to companies with more than 50 workers from the current 20. In the Factories Act, currently applicable to premises with more than 10 workers with power and 20 without power, the amendments raise these numbers to 20 and 40, respectively.

Senior BJP leader and former disinvestment minister Arun Shourie had recently said that should Narendra Modi become the Prime Minister, he could bring about genuine federalism by allowing more progressive states to change their laws. When contacted, Shourie said Section 254 (2) of the Constitution of India allows states to enact laws that do not necessarily conform to the Central law provided they receive the President’s assent.

“As Gujarat Chief Minister, Modi has himself complained in the past that the Central government was sitting on many of the changes proposed by his state,” said Shourie. “Such changes to laws can be brought about in a variety of issues and this will ‘unfreeze’ policy environment,” he added.

In the past, Modi has accused the Centre of adopting a policy of “coercive federalism” and pushing states to a subordinate position by monopolising all powers of financial allocations, reducing even the constitutional rights of states. Rajasthan’s bid to reform labour laws will be a test case for the Centre and will set the direction for all 29 states which plan to bring about progressive changes to issues that are part of the concurrent list.

When asked if having the same political party at the Centre would help Rajasthan in obtaining the President’s assent, Mehrishi said, “The Central government is equally keen to create jobs. All industry associations have been saying for decades that labour law changes are a must for creating more employment opportunities.”

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  1. A
    abhinav bhaskar
    Jan 5, 2015 at 1:45 pm
    amazing arguments..you guys are so filled with your own self
  2. A
    abhinav bhaskar
    Jan 5, 2015 at 1:42 pm
    sir, because a person running the industry can not be trusted be doing good for the society . Governements are formed for the welfare of its people and not for increasing the GDP. its distribution amongst the citizens has to be considered as well .
  3. H
    Hemen Parekh
    Jun 30, 2015 at 5:47 pm
    Hire , when you need : Fire , when you don't ! What is the amount of investment required to create 1 Million jobs per month ? ( = No of jobseekers joining India's labour market each month ) That would depend upon the " Industry " for investment There are some , " Capital Intensive " industries which would require a huge investment , whereas , there are some " Labour Intensive " industries , where a much smaller investment can generate 1 Million jobs For example , to generate 1 Million jobs would need : * Industrial Instruments ( Labour Intensive )................... Rs 10,000 Cr * Boilers / Steam Generating Plants ( Capital Intensive )... Rs 500,000 Cr { Source : DIPP , Investment and Job Creation from Aug 1991-Mar 2014 as reported in Times of India / 17 March , 2015 } Of course , we don't have to create all of those 1 Million jobs per month , in just one or two industries If we take an " Average Investment " required across ALL the industries , then , may be , we need : Rs 200,000 Cr to generate 1 Million jobs every month ie : Rs 2 Lakh*Crores per month ie : Rs 24 Lakh*Crores every year Now , who has got that kind of money to invest , even if we ume that > there is a " Ready Market " for all of those products , here and now ? > this market will not shrink in the foreseeable future ? Obviously , the Governments ( Central States ) , don't ! If we include FDI , may be Private Sector can raise that kind of money But will it invest in " Capital Intensive " industries or in " Labour Intensive " industries ? Given the current labour laws , it is clear that the investors will choose to invest in Capital Intensive industries Even if that means , creation of only 1 Lakh jobs instead of 10 Lakh jobs ! At this point , it is worth researching whether USA succeeds in creating some 150,000 / 200,000 new jobs every month , due to its policy of : " Hire when you need : Fire when you don't " Before hiring , do USA industrialists ask of themselves : " If things go wrong and I am forced to trim my work-force , will this recruit become a permanent burden ? " -------------------------------------------------------------------------- hemen parekh June 30 , 2015 B2BmessageBlaster
  4. A
    Jun 8, 2014 at 7:22 am
    Good step. Minimum wage Act application should also have some limit - like not applicable to 5 or less employees.
  5. J
    Jagadish G
    Jun 9, 2014 at 3:51 am
    आखिर् और् अच्चे दिन् आहि गये मालिक् लॊगोंको !Even better days arrived for the business cl!
  6. J
    Jun 23, 2014 at 11:48 am
    More investment will invariably bring more jobs
  7. J
    Jun 23, 2014 at 11:45 am
    That's right. Moreover, if a prospective employer knows that he can get rid of excess workforce if there is no need for them later, he will hire people without fear. If that fear is there, he will rather not expand his work and the loss will not be entirely his.
  8. J
    Jayanarayan Kongasseri
    Jun 8, 2014 at 3:25 am
    The lead by Vasundhara Raje Government is very laudable. When our leaders work together for the good of the Nation, the bright future is not far away. Our congratulations to Vasundhara Raje government. The nation awaits such fast and decisive action from our leaders. The only caution is that the leadetrs should eschew the ego cult and wirk together learning from each others acjievements and good work.
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