Wage Growth and Labour Issues in India
Wage growth in India remains stagnant across both organized and informal sectors. This stagnation is commonly attributed to poor skilling, which is believed to stem from inadequate basic education and inefficient skilling services. However, not all states have poor education systems, as evidenced by Kerala, Tamil Nadu, and Himachal Pradesh, indicating that education is not the sole issue.
Challenges in Labour Laws
- Current labour laws do not adequately address modern manufacturing needs, particularly in flexible production processes like quick response manufacturing (QRM).
- Criticisms include:
- Inadequate worker benefits and safety.
- Archaic laws and inflexible unions driving industries to prefer informal sectors.
Need for Evolution in Labour Relations
Modern industry demands a shift in how workers are perceived—from mere cogs to active participants in a dynamic production environment. This requires a transformation in the roles of unions and the legal framework governing labour relations.
Labour Codes and Their Implementation
The Union Government introduced four Labour Codes between 2019 and 2020 to consolidate 29 existing laws. These codes aim to create a unified framework for wages, social security, industrial relations, and safety. Despite being passed by Parliament, their implementation is stalled, likely due to opposition from industry and unions.
- The Labour Codes are seen as a significant step toward coherent and cooperative solutions among governments, unions, and industry.
- The codes aim to be more inclusive, explicitly covering gig workers, platform workers, women, informal sector workers, and migrants with benefits like social security and workplace safety.
- They also introduce simplified compliance, digital mechanisms, and reduced criminal penalties to facilitate industry operations.
- The threshold for worker rationalization flexibility is increased from 100 to 300 workers, aligning with practices in major manufacturing states.
Call for Ongoing Reform
There is an urgent need to implement the Labour Codes to initiate change. The government should foster continuous consultation for improvements. Unions and industry should collaborate on further reforms, focusing on:
- Flexibility in task and location allocation.
- Variable reward mechanisms.
- Protection of worker consumption.
- Greater industry accountability for skill enhancement.
- Revising working-hour regulations and overtime.
In conclusion, while the Labour Codes are not flawless, their implementation is crucial for the growth of India's manufacturing sector, economic security, and global competitiveness. Immediate action and ongoing improvements are essential for progress.
Disclaimer: These views are personal opinions of the author and do not necessarily reflect those of Business Standard.