Labour laws in India• Labour falls in concurrent list of Constitution of India.
• There are over 200 state laws and close to 50 central laws dealing with labour. The major laws related to labour in India or:
• Factories Act,1948
• The Contract Labour(Regulation and Abolition) Act,1970
• Shops and Commercial Establishments Act
• The Minimum Wages Act,1948
• Payment of Wages Act,1936
• Employees’ Provident Fund Act,1952
• Workmen’s Compensation Act,1923
• Employees State Insurance Act,1948
• The Industrial Disputes Act,1947 etc.
• Let’s discuss some of the main laws. The main objective of the factories act is to ensure safety measures on factory premises and promote health and welfare of workers.
• The shops and commercial establishments act aims to regulate hours of work, payment, annual leave etc.
• The industrial disputes act relates to terms of service such as layoff, retrenchment and closure of industrial enterprises and strikes and lockouts.
• Indian labour laws are considered to be inflexible. We can see that firms( those employing more than hundred workers) don’t want to hire new workers because firing them requires government approvals. We also see that Organised sector tends to employ workers without formal contracts. This has resulted in the constrained growth of firms.
• The other problem with labour laws is that there are too many laws and they are very complicated and not effectively implemented. This has resulted in corruption in the system.
• If labour laws are made simple, then this will not only result in the expansion of the firms but also results in greater formalisation as about 90% of India’s workforce still work in an informal sector.
• The suspension of labour laws might strip the labour of its basic rights but it also might drive down wages.
• In India there is a wide gap between formal and informal wage rate. If all labour laws are removed, then there will be rise of informal sector which will bring down wage rate sharply.
• Also experience of the states that have relaxed labour laws in the past suggest that removing labour laws have failed to attract investment and increase employment.
• Government can partner with industry and allocate some percentage of GDP towards sharing the wage burden and ensuring the health of labourers, which is of utmost importance. Also there are many impediments which the firms face like weak enforcement of contracts, shortage of skilled labour etc.
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