Labour reforms report by early next year, says Sengupta

Prime Minister Manmohan Singh recently voiced his concerns over the country’s rigid labour laws...

Prime Minister Manmohan Singh recently voiced his concerns over the country’s rigid labour laws, saying “rigidities of the labour legislations that we have, have created a situation where we have industry but it does not grow at a fast enough pace to create lot more jobs for our young. Problems of labour rigidity and labour flexibility are still hurdles in India realising its chosen destiny”.

However, two years after he entrusted the task of labour reforms in the organised sector to the National Commission for Enterprises in Unorganised Sector (NCEUS), headed by diplomat-economist and Rajya Sabha MP Arjun Sengupta, only one meeting has been held so far.

Even as the Indian textile industry, that attributes at least a 3-per cent margin loss to the lack of labour law flexibility, is feeling the heat of the rising rupee, Sengupta had recently called for a tax on FII inflows in the Rajya Sabha blaming the unimpeded FII money flowing in for “hurting” exports and domestic producers.

As for labour reforms, however, Sengupta only created a sub-group within the NCEUS under the leadership of Professor T S Papola, director of Institute for Studies in Industrial Development, to examine 43 central labour laws about two months back.

In a meeting with the PM on November 18, 2005, the Ministry of Labour had mooted two significant reform measures that could have the maximum impact on creating employment.

The first was changes in Chapter V B of the Industrial Disputes Act, 1947, that sets stringent conditions for industries to retrench workers and elaborate procedures for winding up units. The second, a change in Section 10 of the Contract Labour Act that empowers the Government to notify the type of jobs contract labourers can’t be used for.

At the time, the PM had decided to refer the matter to Sengupta’s NCEUS that was expected to give its report in six months. While routine reminders were sent on the subject by the ministry every two months, officials concede it was a “low-priority” item for Left-leaning Sengupta.

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While an NCEUS member says the Government shouldn’t have given this task to a commission set up for the unorganised sector, Sengupta told The Indian Express that the report will be ready by January or February 2008 and will recommend a substantial increase in flexibility “without hurting workers’ rights”. Incidentally, flexible labour laws in China have created 9 million new jobs in the first nine months of this year.