President okays changes to labour laws in Rajasthan

President Pranab Mukherjee has given his approval to amendments to labour laws passed by the Vasundhara Raje state government of Rajasthan.

Economic observers say the move opens up the possibility of deeper changes to archaic labour laws across all states.

After winning a decisive mandate in state polls chief minister Vasundhara Raje had brought in changes to the Industrial Disputes Act, the Contract Labour Act, the Factories Act and Apprenticeship to enhance the ease of doing business, encourage industrial activity and generate new jobs.

"The state government has received the President of India's assent to the amendments in the labour laws governing Industrial Disputes Act-1947, Contract Labour Act-1970 and Factories Act-1948 on Friday. The amendments to Apprenticeship Act-1961 are still in the process," said Rajat Kumar Mishra, principal secretary (labour and employment) in Rajasthan government. The state government will notify the amended laws in the coming weeks.

Industry watchers said these changes in the labour laws effected by the Raje state government will trigger similar effort in other states as well as the Centre. This is also expected to go significantly help the Rajasthan government to attract investors.

"It's an innovation which opens a window of opportunities for every state to follow suit. Its brings us back to the debate on how 29 chief ministers in India can have more impact on India's job creation than one Prime Minister," said Rituparna Chakarborty, CO-founder and senior Vice President, TeamLease President, Indian Staffing Federation.

The Narendra Modi government at the Centre has taken steps to revamp archaic labour laws to boost manufacturing and create jobs.

Trade unions have been quick to raise howls at this move, claiming that the proposed changes “will hurt workers”. “The government was already on the industry's side. It was the laws that were protecting the poor labourers. With the support system now gone, India will degenerate into a country of contract labourers and regular workers will be few, to be kept on rolls only for strategic purposes," alleged Rajbehari Sharma, state general secretary of the Bharatiya Mazdoor Sangh.

After the amendment to the Industrial Disputes Act companies employing up to 300 workers will not need the approval of the state government if they want to retrench staff. Previously, the limit was capped at 100 employees. This is expected to provide relief to a large number of companies to realign their businesses. Because of the old norms, even though the promoters wanted to exit loss-making businesses or lay off workers due to tough market conditions, the lengthy process to get permission only added to their troubles.

Under the new laws, forming labour unions will also be difficult as it would require a membership of 30% of the workforce against the 15% earlier. The lower limit allowed many unions to emerge often increasing inter-union conflicts and multiplicity.

Similarly, there was no time limit for raising disputes. But the amendments have stipulated a period of three years within which such disputes can be raised. The move is aimed at reducing the volume of litigations.

Changes in the Contract Labour Act will now apply to establishments in which fifty or more workmen are employed against twenty earlier. "Because of threshold limit, employers while hiring personnel or procuring commodities from small entrepreneurs and petty contractors found it difficult to execute contracts, as the small units faced hardship in ensuring formalities under the Act. The lower limit also encouraged non-compliance," said Nitin Gupta, head CII-Rajasthan.

Courtesy India Tomorrow

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