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India will benefit from agile labour codes. Look at China, Bangladesh and Vietnam for results

The Economic Times, India, 25 September 2021 - Most of India’s labour laws were framed shortly after independence when it was a predominantly manufacturing/agrarian economy, often stuck in the quagmire of a License Raj. The protectionist and socialist undertones determining the labour laws at the time led to the creation of a labyrinth of over 40 different legislations regulating different aspects of employer and employee relationships, which primarily catered to the needs and rights of the worker.

India’s existing laws focus on income and job security rather than boosting job creation. This is evident from provisions such as prohibition of contract workers, strict laws pertaining to termination of employees, unionising and strikes. However, India’s liberalisation drive has placed it in the centre of a globalised world economy by boosting the services sector. Particularly IT/ITeS contributes over 7 percent of India’s GDP and that number is set to rise to 10 percent by 2025 and create 3 million jobs. In an increasingly shrinking world, workers need to cater to global norms and supply chains which needs to be fostered by Indian legislation.

The pandemic has brought into sharp focus the scuffed edges created by trying to use square pegs of India’s existing labour laws to plug the round holes of a service and technology. Covid-19 has highlighted new trends, such as work from home, part-time workers and gig workers, while exposing the failures of the existing system to facilitate ease of doing business. Multiple compliances and administrative procedures covering key issues such as business registration, rules governing migrant workers make it difficult for employers to unlock the potential of India’s skilled and unskilled workforce. The proposed labour codes will play a cardinal role in sparking India economy’s V-Shaped recovery. China, and more recently Bangladesh and Vietnam, have shown the benefits of agile labour codes which India should look to emulate.






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