Labour laws in India

Abstract

At a Conference, India’s Planning Commission deputy chairman Montek Singh Ahluwalia said - “India will not have manufacturing growth like China because of exports. Infrastructure isn't good enough. Labour laws don't allow for large scale employment in sectors that are labour intensive. The government is convinced that greater flexibility is required in labour laws but is concerned about big labour unions. Labour unions listen to us, what is required is better enforcement of labour rights, health standards. Indian trade unions need to learn from China on labour law flexibility.” Surveys have found that the states that have actively carried out labour reforms like Haryana, Himachal Pradesh and Gujarat have less unemployment compared to states like West Bengal and Kerala that have pursued pro-labour policies. The unemployment rate in Bihar (8.3%), West Bengal (7.8%), and Kerala (9.9%) is more than the national average of 3.8% whereas Gujarat has an unemployment rate of just 1%. This brings us to question whether the resisting of the Labour Ministry to liberalize the Labour laws is justified. There have also been instances of many work-around by firms to avoid higher payment or liabilities under the labour laws. Such findings only reiterate the need for labour reforms to promote industrial growth. Labour being one of the prime resources in any industry requires set norms for labour administration, labour welfare, regulation of relations between employees and the management. India too, has a plethora of Labour laws panning both centre and state. These laws, though have been constantly questioned as to if they serve their purpose or hamper the manufacturing industry instead. This study attempts to find out how effective these laws actually are and what are the improvements foreseeable.