HALLUCINATION IS ENGULFING SOME STATES IN THE CENTRE’S MARCH TOWARDS IMPLEMENTING THE LABOUR CODES !!!!
Karma Management Global Consulting Solutions Pvt. Ltd. One of the top 5 consultancy firms, established in the year 2004, with headquarters in the business district of Santacruz East, Mumbai, India, and full-scale operation in all the States, having about 200 direct and indirect staff on its roll, is a leading service provider for payroll and payroll compliances, outsourcing, facility services, HR services, Training & Development, Recruitment & Talent Acquisition, Legal and Para legal services, Disputes and Litigation Handling, Inspection Management and Liaisoning, Advisory Services, Social, Environment and Vendor Audits, Regulatory compliances ad Governance.
Compliance with labour and employment laws has become one of the most important issues that many establishments in India have to deal with. Many employment disputes result in litigation. Karma is an Indian HR, Payroll, and Compliance firm advising clients worldwide on local, regional and global regulatory compliances in relation to their business goals, business strategies, and resolving disputes.
It gives valuable suggestions and advice to Corporates, Investors, Institutions, Contractors, Establishments, Industries, SMEs, etc. on the need for lowering employment risk across all levels and adhering to the laws of the land. It has a lot of expertise on employment-related compliance issues, as well as day-to-day support for the human resource department and in-house counsels. Karma Management is also into employment agreements and policies, structuring of compensation and benefits, employment aspects of merger and takeover, etc.
Karma’s force, strength, and reach have brought tremendous change over from its earlier image of being a consultancy firm in the period 2000, to now embarking on setting practices abroad in highly regulated markets and competing in the global arena.
With India overtaking the UK to emerge as the fifth largest economy in the world and setting to become the third largest by2029, Karma Global is all poised for long-term value in terms of clients outreach and giving state-of-the-art technology and excellent services to global clients better than ever before,
The Fight Of Flexibility Against The Cry Of Rigidity Comes To A Stand Still ….Owing To Harmonisation Issue Between Govt, Employer, Workers, And Union!
Labour law is the area of law that signifies the relationship between a worker, trade union, and government at large. It plays a major important role in protecting the rights of labour, their union, their wages, and moreover building a link between government and workers. It is a protective code for laborers, workers, and employees as well, to make them aware of their rights and also, to establish a standard and flexible4 law regarding labour work practice. Labour law is often incorrectly conflated with Employment law. However, Employment law is the area of law that specifically deals with the relationship between an employer and employee.
Before Going To The“Flexible ” Nature Of Labour Reforms, Let Us Analyse What “Employment Elasticity” Means?
“Employment elasticity” is a measure of how employment varies with economic output.
To give you an example, an employment elasticity of 1 implies that with every 1 percentage point growth in GDP, employment increases by 1%.
Looking back to yesteryears, when India was on a high growth trajectory, its growth was jobless growth. Jobless growth means that the high growth in GDP did not accompany a similar growth in employment, resulting in a low Employment Elasticity.
As a missed opportunity, the extraordinary growth during yesteryears didn’t lead to any employment growth at all. For example, between 2004–05 to 2009–10, the employment elasticity of India was as low as 0.01, which implies that with every 1 percentage point growth in GDP, employment increased by just one basis point.
In recent years, the highest employment elasticity has been shown by the Construction and utility sector (which includes energy, water, and waste management). These are the biggest job generators in our country as against the farm sector in India which has shown negative employment elasticity. This simply indicates that growth in the farm sector is accompanied by a reduction in farm employment as more and more people leave this sector and go out for jobs in the non-farm sector.
percentage point growth in GDP, employment increases by 1%.
Looking back to yesteryears, when India was on a high growth trajectory, its growth was jobless growth. Jobless growth means that the high growth in GDP did not accompany a similar growth in employment, resulting in a low Employment Elasticity.
As a missed opportunity, the extraordinary growth during yesteryears didn’t lead to any employment growth at all. For example, between 2004–05 to 2009–10, the employment elasticity of India was as low as 0.01, which implies that with every 1 percentage point growth in GDP, employment increased by just one basis point.
In recent years, the highest employment elasticity has been shown by the Construction and utility sector (which includes energy, water, and waste management). These are the biggest job generators in our country as against the farm sector in India which has shown negative employment elasticity. This simply indicates that growth in the farm sector is accompanied by a reduction in farm employment as more and more people leave this sector and go out for jobs in the non-farm sector.
This is an indication that on the one hand, the Government has to put in efforts to revive growth; on other hand, it has to provide new and better-paying jobs for a growing workforce.
India’s economy grows by 7.6% percent but misses target !!
Indian economy is projected to grow 7.1-7.6 percent in the current financial year despite shifting geopolitical realities across the world, a report said on Wednesday.
In its India’s economic outlook – July 2022 report, leading consultancy Deloitte India said that as 2021 was coming to a close, there was optimism in the air but the optimism received a jolt early this year as a wave of Omicron infections swept through the country and Russia’s invasion of Ukraine happened in February.
These events aggravated the pre-existing challenges such as surging inflation, supply shortages, and shifting geopolitical realities across the world with no definite end in sight.
“And the subsequent confluence of headwinds such as surging commodity prices and disruption in trade and financial transactions quickly deteriorated economic fundamentals that were trending up a few months back,” the report said.
Rising commodity prices, surging inflation, supply shortages, and shifting geopolitical realities across the world weigh on the growth outlook. Still, India will likely reign as the world’s fastest-growing economy, it noted.
“India is expected to grow by 7.1-7.6 percent in 2022-23 and 6-6.7 percent in 2023-24. This will ensure that India reigns as the world’s fastest-growing economy over the next few years, driving world growth,” the report said.
The Reserve Bank of India (RBI) has projected a GDP growth of 7.2 percent for the current fiscal ending March 2023.
It is expected that inflation and supply chain disruptions to remain entrenched for some time.
Much Overdue Labour Policy Reforms Are Seriously Hampering Employment Generation
Labour policy reforms in India are overdue for a very long time, as the period in which they were legislated has all been outdated in the current context of doing business aimed at economic growth and prosperity.
The Laws framed mainly to cater to the manufacturing sector have been one-sided, without the intent of addressing the problems of the service sector, which today, accounts for 55 percent of our GDP.
The outdated and inflexible nature of labour laws protects a handful of say 6-7 percent of the workforce, seriously hampering employment generation capacity of the organized sector, and most of the 10-12 million youth joining labour force every year, are forced to join the informal economy, where the working conditions are pathetic and earnings are also abysmally low.
The multiplicity of labour laws – 44 central and about 100 state laws – present operational problems in implementation and compliances that need to be looked into.
Adding to these issues are the complications arising from different definitions contained in various acts in relation to who is an employee, workman, worker, wages, basic wages, salary, compensation, and all emoluments, and these have made compliance very cumbersome, thereby multiplying litigations.
In the market economy of today, the average shelf-life of a product is less than 6 months. Companies are under pressure to innovate, redesign and technologically upgrade their products to suit consumers’ choices which is not possible without restructuring and rightsizing.
Chapter V-B of the Industrial Disputes Act, 1947 enacted during the emergency puts all these processes under legislation purview which has promoted industrial sickness. Due to these serious policy flaws, India is losing investments to its neighboring countries. Chapter V-B of the Industrial Disputes Act, 1947, which provides for obtaining prior permission of the Government for effecting rationalizing measures like lay-off, retrenchment or closure where the industry employees more than 100 workers, is hampering the industry’s initiative to be competitive and face global challenges.
Most of the labour laws were enacted 40-70 years back, to address the then needs of regulating the manufacturing sector. Today, the service sector has taken the lead with a 55% share of the GDP. Labour Laws need to be reoriented to address the emerging needs of the service sector and the new technology-intensive manufacturing sector.
Currently, there are 44 labour laws under the purview of the Central Government and more than 100 under State Governments, which deal with a host of labour issues. Unfortunately, these labour laws protect only 7-8 percent of the organized sector workers employed at the cost of 93 percent of unorganized sector workers. The entire gamut of the labour laws should therefore be simplified, clubbed together wherever possible and made less cumbersome to make the environment more employment friendly.
Conclusion
The nature and type of various inspections associated with these outdated labour laws, have affected an enterprise in all three stages of its growth for survival viz.
(1) At the starting point of a business,
(2) then the operational level, and lastly
(3) the exit or the closure of an enterprise for whatever reasons.
Adding to these issues of governance, there is a report which documented some 30,000 compliances and 3,000 filings associated with labour laws.
With such and all other issues, challenges, and the archaic nature of labour laws, it was with this in mind that the Government took the initiative of labouring 4 codes to bring flexibility to the system.
However, the implementation process is delayed as states are yet to finalize their rules under these codes.
What are the Benefits of Labour Codes?
Simplification of the Complex laws:
- The Labour Codes simplify labour laws by consolidating 29 central laws that have been on the table for at least 17 years. It will provide a big boost to industry & employment and will reduce the multiplicity of definitions and authority for businesses.
- Easier Dispute Resolution: The codes simplify archaic labour laws and revamp adjudication processes, which will lead to quicker dispute resolution.
- Ease of Doing Business: Several economists and industry experts say these reforms will boost investment and make doing business easier. They predict that these reforms will reduce internal contradictions, increase flexibility, and modernize safety and working conditions regulations.
- Gender Parity: All sectors must allow women to work at night, but employers must ensure that security arrangements are made for them, and women must consent before working at night.
What are the obstacles Related to the Current Labour Reforms?
- Inspector cum Facilitator: The new codes have thrown light on the role of an Inspector cum Facilitator who has the responsibility of checking for compliance as well as facilitating businesses in achieving that compliance
- The “facilitator” role seems to be a new element and this role could clash with the traditional responsibilities of an “inspector”.
- Lack of Clarity in Defining Workers and Employees: More clarity was needed regarding matters such as the distinction between workers and employees, overtime compensation (particularly in light of covid’s remote working policies), and the relationship between organizations and the Gig workers
- Small Startups and Informal Sector Left-out From Social Security Coverage: There are no specific provisions for social security of employees in small startups, Micro, small or medium enterprises, or workers in small establishments having less than 300 workers.
- Migrant workers, self-employed workers, home-based workers, and other vulnerable groups in rural areas are not covered under social security benefits. This would enable companies to introduce arbitrary service conditions for their workers.
- Non-Inclusion of Charitable or Non-Profit Based Establishments: Code on Occupational Safety, Health and Working Conditions does not include charitable or nonprofit based establishments In fact, there is no central legislation that lays down the law governing charity or charitable organizations in India.
- No Recognition for Invisible Labour: Invisible labour is the part that goes unnoticed and unrecognized and is thus unregulated. Generally, unpaid work is called invisible labour
- Childcare, household work, and looking after the elderly are some examples of unpaid work and constitute invisible labour.
A majority of invisible workers are women, and they have the most tedious work schedules with no weekends off, no working hours, no vacations, no recognition, and thankless chores.
With the introduction of the four new codes, none of the new codes talk about invisible labour. Invisible labour has the most tedious work profile with no weekend offs, no working hours, no vacations, no recognition, thankless chores, and of course unpaid too.
The Economic Survey 2018-19 classified states into those with flexible labour laws and these included Andhra Pradesh/Telangana, Delhi, Gujarat, Haryana, Himachal, Karnataka, Madhya Pradesh, Maharashtra, Punjab, Odisha, Rajasthan, Tamil Nadu, Uttar Pradesh, and Uttarakhand.
We are hopeful that sooner or later, good sense will prevail among all the parties concerned so that all types of workers, the invisible labour, gig and platform workers, contract labourers, temporary and casual, apprentices, commercial employees, factory workers, migrant labourers, informal setup, small setup, all the SMEs, the employers, establishments and unions, institutions, can get connected and covered up by these flexible changes and reforms.
Proprietory blog of Karma Global Tech Management Firm
This blog has been compiled by the internal staff of Karma with the knowledge and expertise that they possess, for its monthly newsletter Issue 04 of October 2022 in case of specific or general information or compliance updates for that matter, kindly reach out to the
Marketing Team – Kush@karmamgmt.com / yashika@karmamgmt.com