The Hindu : National : Needed: labour reforms

Online edition of India's National Newspaper
Tuesday, Feb 28, 2006

National

National

Needed: labour reforms

Special Correspondent

"Laws of the country are highly protective of labour"

NEW DELHI: India perhaps, has some lessons to learn from China in labour reforms, according to the Economic Survey 2005-06. China, with a history of extreme employment security, has drastically reformed its labour relations and created a new labour market, making workers highly mobile.

"Although there have been mass layoffs and open unemployment, high rates of industrial growth especially in the coastal regions helped their redeployment. In spite of hardship, workers in China seem to have benefited from wage growth, additional job creation and new opportunities for self-employment," says the Survey.

Advocating the need for reforms in labour laws and markets, it says that the Indian labour market is characterised by a sharp dichotomy. While a large number of establishments in the unorganised sector remain outside any regulation, the organised sector has been regulated fairly stringently.

It says that studies indicated that the laws of the nation are highly protective of labour, and labour markets are relatively inflexible. These laws apply only to the organised sector, and consequently, they restricted labour mobility and led to capital-intensive methods in the organised sector, besides affecting adversely the sector's labour demand.

Labour being a subject in the Concurrent list, State labour regulations are an important determinant of industrial performance. Evidence suggests that the States that have enacted more pro-worker regulations have lost out on industrial production in general.

Taking note of frequent strikes and lockouts, the Survey underlines the need for labour law reforms to enhance productivity and competitiveness of industry.

The number of strikes and lockouts between January and September last year stood at 340. This came out to more than one strike a day. West Bengal experienced the maximum instances of industrial unrest, followed by Tamil Nadu and Gujarat. The industrial disturbances were concentrated mainly in textiles, engineering, chemicals and food products industries.

The number of strikes and lockouts went down 13.6 per cent from 552 in 2003 to 477 in 2004, with a sharper decline in strikes than in lockouts.

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