30/10/2020 - Indian Economy

KEY POINTS

·       Since the shift of the Indian economy to a market-driven, open economy in 1991, manufacturing has been losing its share in GDP – from 16.6 per cent in 1990 to 13.7 per cent in 2019, except for two years (2009-10). It has failed to function efficiently in a competitive market system.

·       Over-regulation and rigid labour laws are widely regarded as major impediments to their growth and competitiveness.

·       The obligatory requirement of industrial establishments to take prior permission of the government before lay-offs, retrenchment and closure have been hugely relaxed by raising the threshold level of workers from 100 or more to 300 or more.

·       Appropriate government initiative could even increase the threshold to higher numbers, by notification. Again, prior permission has been exempted if the lay-off is due to shortage of power, natural calamity, and in the case of a mine, if the lay-off is due to fire, flood, and excess of inflammable gas or explosion

·       Widening the scope of “retrenchment” in the IR Code would allow employers to practice arbitrary retrenchment and lay-offs. This would create a sense of insecurity among workers even with the provision for time-bound and defined compensation in lieu of retrenchment.

·       The IR code has introduced a new category of employment, “fixed-term employment”, which will enjoy the same benefits including gratuity as given to the permanent workers. This will give flexibility to industrial establishments to hire seasonal workers according to their requirements. There will be scope for shifting work and activities from permanent to fixed-term since no objective criteria are laid down for any minimum or maximum period nor any ceiling on the successive use of fixed-term contracts. “Contract labour” has been defined in the Social Security Code but it does not find any mention in the IR Code.

·       Under the provisions of the IR Code, dispute resolution between an employer and employee shall be dealt through arbitration on the basis of a written agreement. This will be governed by the procedure under the Code. The IR Code prescribes a two-year limit for the conciliation officer to take an industrial dispute matter into conciliation, which might not be enough in many circumstances.

·       Two-member industrial tribunals and the national industrial tribunal with one judicial and one administrative member will replace the existing multiple adjudicating bodies like the court of inquiry, board of conciliation and labour courts

·       Indeed, the IR Code seems to have been designed in a way that it would encourage negotiation between employee and employer on an individual basis and thereby reduce the role of collective bargaining by labour unions.

·       Overall, the IR code has given enormous flexibility to employers while commodifying labour. This is based on the premise that the flexible labour regime would enhance the competitiveness of the manufacturing sector. There are elements in the IR codes that would lead to labour insecurity. This will undermine the loyalty and commitment of labour, and consequently, productivity.

Please review

Please review.

Kindly provide feedback. Thank you sir