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Indian government passes major labour reforms

(ATF) India on Tuesday passed three crucial labour reform bills, which the government said would be a “game changer” for more than 500 million organised and unorganised workers.

But while heads of industry have hailed the “big-bang” structural reform as a promise of better days for both workers and businesses, labour rights activists and opposition members fear the new rules will lead to a loss of labour rights amid a push for profits.

For, although the new laws streamline labyrinthine regulations and could provide a “safe work environment” and ensure global-standard “social security benefits” for workers, activists say they also exempt tens of thousands of smaller firms from oversight and rob workers of the right to strike or receive benefits.

The new labour code will also make it easier to hire and fire almost 90% of India’s workers, who operate in the informal sector with no security, low pay and little or no benefits, activists said.

‘Game changing reforms’

Three crucial labour codes that became law yesterday are the Industrial Relations Code, the Code on Occupational Safety, Health and Working Conditions and the Social Security Code. They follow the Wage Code, which was passed earlier, and together have replaced 44 older labour laws.

Junior Labour Minister Santosh Gangwar said the new rules reset the entire regulatory framework to benefit over 500 million organised and unorganised workers.

The rules also provide enterprises with flexibility, transparency and clarity, and are in sync with Prime Minister Narendra Modi’s resolve for a universal social security system, he said.

“The move truly represents the big bang structural reforms which will go a long way towards improving the climate for both workers and industry,” the Confederation of Indian Industry said. “We believe that these new legislations would facilitate expansion of establishments to create employment opportunities and help India become a preferred investment destination.”

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Indian industry and business representatives have been demanding some of these changes for years, arguing that the 73-year-old laws were out of sync with current times.

However, members of the opposition Congress party, and activists say the regulations were rushed through without proper debate or discussion. They also make it easier to lay off workers and put restrictions on their right to protest.

The Industrial Relations Code Bill, for instance, allows businesses with up to 300 workers to lay off workers without approval from a state government; but this benchmark had been relaxed from 100 workers. The law, also bars workers from going on strike without a 60-day notice.

Pushing India to top-10

Still, the Labour Ministry hopes that with these comprehensive reforms, India could be among the top 10 countries in the World Bank’s ease of doing business, and that the country will attract more investment and generate greater employment.

According to the ministry, the current web of complicated labour laws make compliance difficult and deters people setting up businesses.

“The ultimate goal of the government is to see India figure in top 10 nations in ease of doing business index of World Bank with completion of long-pending labour reforms,” a senior labour ministry official told the local news agency, PTI .

In the ”Doing Business” 2020 report, India featured as number 14 in the ease of doing business rankings.

With reporting by Reuters and PTI

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Indrajit Basu

Indrajit Basu is an India-based correspondent for Asia Financial and wears two hats: journalist and researcher (equity). Before joining AF he reported on business, finance, technology, wealth management, and current affairs for China Daily, SCMP, UPI, India Today Group, Indian Express Group, and many more. He is also an award-winning researcher. If he didn't have to pay bills, he would be a wanderer.


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