TISSNET GK – Changes in Labour Laws and Implication

Questions related to labour laws are of atmost importance for TISSNET. Let’s see the changes that have been brought and its implications .

Recently, some of the state governments have decided to make significant changes in the application of labour laws in order to incentivise the economic activities, as the economy struggles with the COVID-19 induced lockdown.

Reasons for the changes in Labour Laws

  • Labour law reforms by states may make it easier for factories and businesses to run efficiently amid the COVID-19 pandemic which will boost economic activities, generating employment and will help in tackling the economic crisis 
  • The shutdown of factories made a severe dent on employability conditions of labour  and now there is a need to create an environment in which the business can run in the present and foreseeing future
  • The unemployment rate rose to the highest level of 27.1 per cent in the last week which is alarming and needs to be addressed now. 
  • These new reforms will promote ease of doing business in the state.

Various Indian labour laws:

There are certain Indian labour laws which regulate and addresses the employment-related issues:

  • Factories Act– The act ensures safety measures in factory premises, and promotes the health and welfare of workers.
  • Shops and Commercial Establishments Act– The act aims to regulate hours of work, payment, overtime, a weekly day off with pay, other holidays with pay, annual leave, employment of children and young persons, and employment of women.
  • The Minimum Wages Act- The act sets the minimum wages that must be paid to skilled and unskilled labours. It covers more workers than any other labour legislation.
  • Industrial Disputes Act, 1947-  The act relates to terms of service such as layoff, retrenchment, and closure of industrial enterprises and strikes and lockouts.

Why are labour laws often criticised?

  • Indian labour laws are often characterised as inflexible.
  • Due to legal requirements, firms (those employing more than 100 workers) hesitate from hiring new workers because firing them requires government approvals.
  •  Even the organised sector is increasingly employing workers without formal contracts.
  •  There are too many laws, often unnecessarily complicated, and not effectively implemented.
  •  If India had fewer and easier-to-follow labour laws, firms would be able to expand and contract depending on the market conditions.
  •  At present 90% of India’s workers are part of the informal economy and this would have helped workers as they would get better salaries and social security benefits.

Criticism of the recent  move:

  • Even before the COVID-19 crisis, due to the deceleration in the economy, wage growth had been moderating.
  • The removal of all labour laws will not only strip the labour of its basic rights but also drive down wages and will turn the existing formal workers into informal workers as they would not get any social security.
  • Instead of providing protection to the most marginalised and vulnerable, as exposed by the COVID crisis, these moves will further exacerbate the crisis for those who are worst affected by it.

Trade unions threaten to move ILO against labour law changes:

  • Many central trade unions are considering lodging a complaint with the International Labour Organisation (ILO) against the anti-worker changes in the labour laws in some States.
  •  According to them, this move was the second phase of anti-worker policies after six state governments increased the working hours from eight to 12 hours.
  • Central trade unions consider these moves as being a gross violation of the Right to Freedom of Association [ILO Convention 87], Rights to Collective Bargaining [ILO Convention 98] and also the internationally accepted norm of eight hour working days.
Changes in labour laws- TISSNET GK by TISNETPrep.com

 Way Forward:

  • Even though the industry and free-market experts have been demanding labour reforms for long, it needs to be ensured that the worker welfare is not compromised.
  • The change in labour laws should be beneficial for both the industry as well as the labourers.
  •  It is crucial that companies safeguard the interests and well being of the labourers. 
  •  Change is important, but the change should come with a focus on worker well-being working conditions and living conditions.

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