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A promising start has been made on labour reform. It is a reminder of the work undone.

By: Express News Service |
October 17, 2014 12:19:12 am

The Central government announced a slew of long-overdue labour reforms on Thursday. Among other measures, a unified portal is to be launched, which will significantly ease the filing of compliance reports for 16 Central laws as well as make information on regulation more accessible. The Centre also took welcome steps to dismantle the “inspector raj” and block rent-seeking. Under the proposed “labour inspection scheme”, inspectors will no longer enjoy the discretion to choose where to strike, they will be directed where to go by a computerised algorithm and will have to file an inspection report on the portal within 72 hours. This could be a game-changer. If rent seeking as well as the number and duration of disputes on violations decrease — in 2000, for instance, 28,864 of the 5,33,038 pending labour regulation-related disputes were over 10 years old — entrepreneurial energy could be directed to more constructive matters.

But labour reform is an ongoing project, piloted jointly by the Centre and the states. While a good start has been made, much more needs to be done. Even if businesses can now file one compliance report for 16 laws, they still have to comply with a whopping 44 Central acts as well as more than 150 state laws on labour. Pruning and rationalising this list — for instance, there are 27 definitions of “worker” — is desperately needed. On provident fund reform, the government did well to announce the assignment of universal account numbers in order to make PF accounts mobile across employers and jobs, but the more pressing questions are yet unanswered. Why shouldn’t employees have the freedom to choose between the EPFO, a limited and inefficient fund manager, and the National Pension System? Or, take the issue of apprenticeships. The government announced 50 per cent support for training in MSMEs yesterday, and earlier, the Lok Sabha had passed progressive amendments to the Apprenticeship Act, including doing away with provisions that prescribe jail terms for violations. But the amendments don’t go far enough — there is still too much micromanagement of apprenticeship programmes — and they are hanging fire in the Rajya Sabha.

It is the states that have shown the way on the big-ticket reform related to Chapter VB of the Industrial Disputes Act, governing retrenchment. However, the fact that Rajasthan’s amendments are yet to receive the president’s assent sends a bad signal — they were sent to him in August. The Centre should, at least, give the states the green light.

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