Labour Reforms in India
The Economic Survey 2024-25 highlights significant labour reforms that facilitate the ease of doing business while safeguarding workers’ rights. These reforms are pivotal in creating an enabling environment that promotes sustainable employment growth and economic inclusivity.
Key Aspects of Reforms
- Deregulation Benefits:
Deregulation, including labour deregulation, reduces business costs and reallocates resources towards capacity expansion, which boosts employment. - Overtime Regulations:
- Comparison with other countries reveals that India’s Factories Act, 1948, is restrictive, allowing only 75 hours of overtime in a quarter.
- Other countries permit significantly higher overtime hours: Germany (351 hours), the UK (364 hours), Malaysia (312 hours), while the US has no limit.
- Seven Indian states have increased the overtime ceiling to up to 144 hours per quarter.
- Old Compliance Burdens:
India’s previous labour regulations were highly detailed and burdensome, with specifications on trivial matters, creating administrative hurdles for businesses. - Women's Employment:
Reforms address barriers by allowing night shifts for women with safety measures, extending maternity leave, and ensuring equal pay and non-discrimination.
Impact on Employment
The Survey notes a robust growth in employment, highlighting recovery post-pandemic and increased formalisation of the economy. This growth is supported by improvements in entrepreneurship, skill development, and regulatory transformation.
Conclusion
The reforms present a balanced approach towards enhancing business flexibility and ensuring workers' welfare, fostering a cycle of job creation and economic growth.
