It is undoubted that a comprehensive view on labour market reforms is required, one that addresses the needs of both employers and workers. Therefore, on 7th Feb, 2015, Samarth Bharat Vyaspith (SBV) along with Thane Manufacturers Association (TMA), National Institute of Personnel Management (NIPM) and Thane HR Group (THRG) brought together a symposium on “Labour Law Reforms” with an aim to bring to a single platform, the views of the tripartite bodies of Industrial Relation – Government, Union and Management.
The uniqueness of this symposium rested in the fact that it provided a holistic understanding on the topics of labour laws reforms, not only through the perspective of Management and Union, but also presented the viewpoint of Government.
The Chief Guest for this event was Honourable Shri Prakashji Mehta, Minister of Labour, Government of Maharashtra. (See:- http://www.mediapartner.in/nirdhar-parishad/)
The eminent speakers on the Labour Law Reforms were:-
Mr. Sharad Gangal – Executive Vice President HR, Admin, IR, Thermax
Mr. Deepak Gadekar – HR & IR, Voltas
Mr. Arvind Shrouti – Employee Relations Expert
Mr. D. P. Pagar – Ex-Joint Labour Commissioner, Mumbai
The event was facilited by Mr. Alok Sheopurkar, Executive Vice President & Head – HR at HDFC. Mr. Prashant Sawant, Chief – HR at Jupiter Hospital played an important role in organising the entire event.
Background on Labour Reforms
India needs jobs; 1 million kids will join the labour force every month for the next 20 years. This is why the Government is stressing on the ‘Make in India’ initiative. However, the biggest hurdle to this initiative is the ‘ease of doing business’ in the country.
Problems for Labour Law Reforms in India
The 67 Licenses Problem
In his speech, Hon. Minister Prakashji Mehta mentioned that to open a factory in Maharashtra, one has to apply for 67 licenses. Complying with these licenses lead to a stumbling block to the start-ups in the country. Mr. Mehta informed audience that his government is proposing a reform where the licenses, to be complied with, will come down to as low as 25 in number. Moreover, efforts are also being made to provide for all the 25 licenses in a single go.
Reactive Approach to Labour Reform
Mr. Sharad Gangal threw light on how Indian labour law reformations are unstructured in India. They have a legacy of following a reactive approach. There were times when exit policy was much talked about. Eventually, when the organizations started facing the problems of talent drain, the exit policies no longer remained a problem. The hot topic for the country today is the problem of Contract Labour. Mr. Gangal mentioned, “There exists a problem, and we simply react to it. There is a need for comprehensive reforms.” Therefore, it becomes important to set a direction for the reforms. We should not make the reforms a reaction to the labour law issues. Instead, the reforms should be proactive towards what the country wants to achieve. The key lies in acting for the long term sustainable solution.
Wage Arbitrage or Job Arbitrage?
It is a wide known fact – ‘Compensation ∝ Risk’. However, in the case of contract workers, the realities are completely the different. Contract labour are not only paid the lowest but also without any social security. Another widely observed fact, Mr. Gangal, says is that, “We all know that permanent workers act as supervisors to the contract labourers and most of the work is performed by the contract labour workers.” Contract workers are not only underpaid for the hard work but they also have risk of losing the job. Interestingly, it is not Job security that employees look for. It is the wage security. Mr. Gangal suggested that Contract workers should be paid higher than their permanent counterparts. If the contract workers are paid more wages, the employers hire less Contract labours. This will play an important role in diffusing the current problem of increasing Contract Labourers in India.
Social Cost for Short Term Saving
In a research made by Mr. Arvind Shrouti, sampling 500 companies in Pune, he found out that about 70% of people are either trainees or casual labourers or they work on contracts. The minimum wages for this class earns about Rs. 4000/- per month, leading to Rs. 130/- per day. Mr. Shrouti expressed that we are creating a weak society for ourselves because Rs. 130/- cannot provide for basic education.
Link between Contract Labour and Rapes in Pune
Another shocking fact in Mr. Shrouti’s report depicted that because of the poor conditions of the informal sector in Pune, they do not get married. This has resulted in the increase of rapes in the region. Therefore, we see that Labour Law reforms not only have an economic implication, but also a social and psychological impact.
With the changing time, there is a need to make the laws relevant to the changing needs of the labour market. Mathadi Act, started by Annasaheb Patil, was a beautiful act which ensured income protection to those who carry loads on their heads. However, today, as new technologies emerge, it becomes difficult to identify works to be listed as manual. In order to get workers from the Mathadi board, industries would have to replace existing staff employed on factory jobs.
Another provision which becomes difficult to implement falls under Factories Act which mandates the appointment of a doctor having a diploma in Occupational Health and Safety (OHS). There are about 200 OHS doctors in the State. Therefore, such conditions becomes difficult to comply with.
Small Factories Act Debate
According to Mr. D. P. Pagar, India must aim for an inclusive growth, which not only takes care of doing ‘ease of business’ for large scale industries but also for the Medium and Small Scale Industries (MSME’s). For this reason, the government of India has proposed a draft which clubs 14 existing Acts applicable to the sector, making labour law compliance easier for owners of small factories in India.
A contrary argument was proposed by Mr. Deepak Gadekar. He stated that small factories act would lead to creation of a new class within the existing class. Unorganised sector is deprived of many benefits. Implementation of the Small Factories Act, would lead a classes, one which provides the bare minimum and the other which is even deprived of the same.
Implementation of the basic labour law provisions still remains a challenge in the country. Management goes for cheap labour and ignores the skills essential for running the business. The short – term gains of reducing the labour cost proves costlier in the long run.
Have a Vision
Before drafting the “Make in India” policy, we need to first understand how “Made in India” dimension would look like. We need to have a clear vision for the kind of Industrial Society we want be a part of.
There are 44 labour laws under the purview of Central Government and more than 100 under the State Government. This leads to tremendous complexity in implementing them. It is, therefore, suggested to prepare a ‘Labour Code’, which will help to simplify the Labour Laws.
Having uniform definition for the Labour Laws related to wages and social security will help reduce the complications of implementation of the different laws.
Organising the Unorganised
Our current labour laws, focus only on the 7-8% of the organised sector. Attempts should be made to provide equal benefits to the 98% of the unorganised sector. It is suggested that we should pay 20% more than the Minimum wages to the Contract workers. This will also help reduce the emerging problems of increasing contract labourers in India.
Social Benefits for All
The basic social benefits like PF, Gratuity, ESI and so on should be provided to all – irrespective of whether one belongs to the formal or informal sector. There should be no compromise on the social benefits to the informal sector.
Management needs to focus on Labour Rate and not on the Labour Cost. It is the HR’s role to check if their workers are getting a fair living condition, and if they have dignity of labour.
For a successful ‘Make in India’, there is a need for labour reforms. However, implication of each reform will have a long lasting effects. India needs to have a vision for an industrial society it wants to be, and accordingly make holistic reforms, rather than hastily reacting on the current labour issues faced by the nation.
About Thane HR Group
Thane HR Group was founded in the year 1996 with an objective of getting the HR Professionals staying or working in Thane District on a common HR platform. Over a period of 18 years, Thane HR Group had many HR experience sharing meeting. Thane HR has successfully arranged for more than 150 such programs, absolutely free of cost!
You can connect to Thane HR Group through the following website –
About National Institute of Personnel Management
National Institute of Personnel Management is the premier all-India Institute of professionals engaged in personnel management, industrial relations, labour welfare and human resources development. NIPM is a professional, non-profit-making society registered under Societies Registration Act, 1960. It has a nation-wide membership of over 8,000 Individual Members and over 250 Institutional members spread over 49 chapters.
You can connect to National Institute of Personnel Management through the following website –
About Samarth Bharat Vyaspeeth
Samarth Bharat Vyaspeeth is a forum established by and within Shram Seva Nyas, on 3rd September 2005. Assisted by numerous selfless organisations and individual volunteers, it aims to transform India from a developing Country to a Developed Country by 2020 and the First Country among All Countries by 2047.
You can connect to Samarth Bharat Vyaspeeth through the following website – http://samarthbharatvyaspith.com/index.html
About Thane Manufacturer’s Association
In early sixties representatives of a few pioneering industries in Thane started the practice of meeting periodically at an appointed place. These meetings gradually developed into a Manufacturer’s’ Association Thane. The need to have a registered body was felt and Thane Manufacturer’s Association (TMA) was incorporated under the Bombay Non-Trading Corporation Act 1959 on 5th April,1963.
You can connect to Thane Manufacturer’s Association through the following website –
About LNML Maharashtra Institute of Labour Studies
LNML Maharashtra Institute of Labour Studies is an independent department under Maharashtra Labour Ministry. It is one of its kinds in the field of labour studies. It has a glorious past of 67 years and has emerged as a stronger body which has contributed to the economy and industry in many ways.
You can connect to LNML Maharashtra Institute of Labour Studies through the following website –
Website – http://www.mils.co.in/
Maharashtra Government Website – http://mahakamgar.gov.in/MahLabour/mils-index.htm