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Why in news?

  • States such as Madhya Pradesh, Uttar Pradesh and Gujrat have scrapped Labour laws as a move to bring about reforms to attract new investors who are looking to exit from China.
  • Employers’ associations have urged the central government to do away with most labour rights to address temporary labour shortages.
  • The abrogation of labour laws raises many constitutional and political questions.

Click Here to read all about Labour Laws in India and the recent Labour Law reforms

Deterring Worker Retention

  • Income support to workers to retain them in their places of work has been lacking.
  • Migrant labour will be critical to restore production once the lockdown is lifted.
  • Instead of encouraging workers to stay back or return to cities by ensuring livelihood support and safety nets, State governments have sought to strip workers of their fundamental rights, which will deter them from considering to continue working.

This is the time to Provide Income Support and Restore Job

  • There are no inherent shortages at the moment as the inflation rate remains moderate.
  • Agricultural produce is rotting in farms for lack of transport.
  • Industrial production is held up as migrant workers have fled for their lives.
  • The slowdown is due to lack of demand, not of supply, as widely suggested.
  • With massive job and income losses after the lockdown, aggregate demand has totally slumped, with practically no growth.
  • Therefore, the way to restart the economy is to provide income support and restore jobs.
  • This will not only address the humanitarian crisis but also help revive consumer demand by augmenting incomes.

What will be the effect of scrapping labour laws?

  • Scrapping labour laws to save on labour costs will actually reduce wages, lower earnings (particularly of low wage workers) and reduce consumer demand.
  • Further, it will lead to an increase of low paid work that offers no security of tenure or income stability.
  • Presently, over 90% of India’s workforce is in informal jobs, with no regulations for decent conditions of work, no provision for social security and no protection against any contingencies and arbitrary actions of employers.
  • Abrogation of labour laws will free more employers from the Formal sector obligations they currently hold for ensuring the job security, health, and social protection of their workers.
  • It will increase informal employment in the formal sector instead of encouraging the growth of formal work.

Way Forward

  • Surely, India’s complex web of labour laws, with around 47 central laws and 200 State laws, need rationalisation.
  • However, now more than ever before, reforms need to maintain a delicate balance between the need for firms to adapt to ever-changing market conditions and workers’ employment security.

-Source: The Hindu

November 2023