November 04, 2014

India’s Labour Law Problem Can Only Be Fixed In Phases

Amidst considerations by the Central government to reform labour laws in India (with Rajasthan and Madhya Pradesh seemingly leading the way), Manish Sabharwal, Chairman of Teamlease Services, and IDFC Institute Advisory Council Member, has written in Quartz that the issue can only be fixed in phases.

He says: “...recent labour reform proposals… are seen as too timid by people who believe that labour laws are responsible for 100% of net job creation happening informally in the last twenty years, and too aggressive for people who believe that current labour laws only protect 10% of the labour force so any reform will only reduce this number. 

India is in a jobs emergency; 1 million kids will join the labour force every month for the next 20 years besides the 300 million current workers who need to be moved to higher productivity occupations (50% of our labour force working in agriculture only generates 15% of GDP)… only 12% of Indian workers work in manufacturing… Labour law reform should be sequenced in five phases: workflow and processes of labour laws, consolidation of definitions, benefits, trade union reform, and employment contract reform.”

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