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1. Labour’s Landscape In India 

  • The report of International Labour Organisation, Employment and social outlook, has underlined that " Poor job quality remains a pressing issue " worldwide.As per the same ILO Report, 2.4 million unemployed persons will be added to the global labour force in the next two years and India is projected to account for 17.6 million or nearly 60 per cent of all unemployed in South Asia by 2017.2 Clearly, generation of employment

  • India's population approximately 70 percent live in villages and 40 - 45 percent of this population can be categorised as working population. This worker population ratio remained same since Independence and it is a worrying cause. The world of work is segmented along the line of caste, religion, gender etc., This leads to several problems like labour immobility for different groups, in particular women, huge differential wage discrimination etc. The women participation in Indian workforce system is very much low. Moreover the wage differential phenomenon which exists also hampers the women to enter into the workforce.

  • Another important feature of India's labour domain is the overwhelming dependence on Agriculture which accounts for close to 50 percent of the workforce.

  • The non agricultural sector contributes half of the workforce and 80 percent of GDP only 10 percent of the workforce are in formal sector. That formal sector mainly comprises of Government and defence

  • has tended to decline across almost all sectors. The growth pattern is centered on the expansion on service sector, which has a preponderance of both vulnerable casual and self - employment. Major worrisome trend is the relentless informalisation of work in the formal sector. In 1999 - 2000 the share of informal sector workers in the so called organised sectoe is 37.8 percent and increased to 54.5 percent in 2011 -12. The changing organisation of production and the smallness of production system impacts on the access to decent working system. Majority share of the workforce are outside the scope of the any labour legislations and social security schemes which sets out the parameters of worker's rights. Though India has a potential demographic dividend majority are unskilled and it hinders them to take part in a proper workforce. The labour market needed skill sets must be promoted to reap the benefits of demographic dividend.

  • Except for the Minimum Wages Act in some states and some sectors, informal sector activities, for all practical purposes remain unaffected by the existence of the major labour laws which were enacted to address the relevant labour issues in organised sector.


2. Informal Labour Market In India

Policy initiatives by Government to protect Informal sector:

  • In one of the major low skilled employment sector viz construction, the building and other construction workers (Regulation of employment and conditions of service ) Act,1996 and the Building and other Construction Workers cess Act, 1996 was enacted to regulate the wages, working conditions of these workers.

  • The Unorganised Workers social security Act 2008 was enacted to provide social security and welfare of unorganised workers.

  • Rashtriya Swasthya Bima Yojana was launched in 2008 to cut the out of pocket health expenditure of unorganised workers.

  • Contract Labour (Regulation and Abolition) Act, 1970 was enacted to regulate the employment of contract labour. Applicability of Act is restricted to companies employing more than 20 contract labours and so lot of contract labours are outside the ambit of the act.

  • To regulate the employment of interstate migrant workmen and to provide their conditions of service the Interstate Migrant Workmen Act 1979 was formed.

  • The social security schemes like Atal pension yojana, Pradhan mantri jeevan jyoti bima yoja, Pradhan mantri fasal bima yojana provides the necessary credit protection to the informal sector.

  • Under the Skill India Misson, through the Pradhan Mantri Kaushal Vikas Yojana and skill development schemes are implemented to the new entrants of workforce so that they get high paid jobs.

  • Under the Ease of Doing Business initiative the process of registration, compliance to labour laws, inspection etc have been simplified to encourage more number of enterprises to set up and provide good quality jobs.

  • The efforts are taken to promote entrepreneurship through initiatives such as Startup India, Standup India, MUDRA, ASPIRE, Atal Innovation Mission, etc as an entrepreneur would inturn create more jobs.


2.1. Informal Labour Market In India

Labour Reforms in India

  • Government of India is truly committed to ‘Make in India’ and attracting the investors and large businesses to set up their manufacturing bases in the country.

  • Labour market in India remains poker faced when it comes to attracting foreign direct investments especially in labour-intensive sectors such as leather goods, textiles (apparel, accessories, etc.), gems and jewellry, sports goods, weapons and ammunitions, furniture, rubber products, fabricated metal products etc.

  • Government itself has become one of the largest employers of contract labour disregarding the Contract Labour Act. protecting the rights of labour in a number of areas e.g. to form unions for purposes of collective bargaining, laying down minimum obligations which employers must meet with regard to social benefits, health and safety of workers, provision of special facilities for women workers, establishing grievance redressal mechanisms,

  • Government has been involved in piecemeal reforms in labour laws from time to time

  • National Manufacturing Policy, National Policy on child Labour, National Policy on Skill Development, National Employment Policy, NationalPolicy on HIV/AIDS and World of Work, National Policy on Safety,    and Environment at Workplace, etc.

  • Globalization and liberalization unleashed in 1991 allowed international players in Indian market thereby fundamentally changing the business and trade ecosystem. It is essential to have labour laws in sync with emerging trends such as casualization of labour, third-party employment, etc. At the same time, it is equally important to ensure that basic rights of the workers are protected and labour standards are implemented across industries and formal as well as informal sectors

  • The Indian Labour market is dichotomous in nature wherein 92 percent of the workforce is in informal employment and less than 10 percent is in the formal employment.

  • Informal Employment: It is defined as all unincorporated private enterprises owned by individuals or households engaged in the sale and production of goods and services operated on a proprietary or partnership basis and with less than 10 workers. The reason for the large proportion of workforce in the informal sector draws back to the socio economic conditions prevailing during the British times. The Industrial revolution in Britain failed to create an impact on Indian economy.

  • Hence at the time of independence we were left with a largely peasant economy and the labour force was a minority and driven by inter caste rivalry as nonfarm occupations were mostly caste driven. After Independence the Mahalanobis focussed on capital intensive industries and the policy focus on the labour intensive sector was through formation of rural cooperatives in the non farm sector and by reservation of certain industries for the small and medium sector.

  • More than 50 percent of the workforce is self employed and engaged in the unorganised farm sector. In the manufacturing sector due to the emphasis on heavy industries and size restriction on the wage goods sector due to the SMEs reservation policy not much quality employment was created as the units remained small to avail of the subsidies and concessions.

  • The growth of MNCs offshore outsourcing and international sub contracting has increased which has also led to the shift towards temporary vis a vis permanent employment.The process of engaging contract labour removed the hassles of hire and fire policy of Industrial Disputes Act 1947, so companies favoured contract labours which in turn contributed to the growth of informal sector.

  • Rapid technological advancements and innovations reduced the demand of manpower and policies like duty free import of capital goods made a reduction of workforce in the organised sector.


3. Social Securitiesi In Labour Welfare

  • In order to provide social security benefits to the workers in the unorganised sector, the Government has enacted the Unorganised Workers' Social Security Act, 2008. The 2008 Act stipulates formulation of suitable welfare schemes for unorganised workers on matters relating to:

  • The social security schemes being implemented by various ministries/departments for unorganised workers listed in Schedule I are mentioned below:

  • Indira Gandhi National Old Age Pension Scheme (Ministry of Rural Development);

  • National Family Benefit Scheme (Ministry of Rural Development);

  • Janani Suraksha Yojana (Ministry of Health and Family Welfare);

  • life and disability cover

  • health and maternity benefits

  • Old age protection.

  • Handloom Weavers' Comprehensive Welfare Scheme (Ministry of Textiles);

  • Handicraft Artisans' Comprehensive Welfare Scheme (Ministry of Textiles);

  • Pension to Master Craft Persons (Ministry of Textiles);

  • National Scheme for Welfare of Fishermen and Training and Extension (Department of Animal Husbandry, Dairying & Fisheries);

  • AamAadmiBimaYojana (Department of Financial Services);

  • RashtriyaSwasthyaBimaYojana (Ministry of Health and Family Welfare)

  • Further, Central Government has also launched the Atal Pension Yojana, Pradhan Mantri Jeevan JyotiBimaYojana and Pradhan Mantri Suraksha BimaYojana for all citizens especially targeting unorganised workers to provide them comprehensive social security


3.1. Labour Policies And Labour Welfare: An International Comparison

  • Labour policies and Labour welfare  in international comparison

  • Some flexibility in the use of labour has to be allowed while recognising that a reasonable degree  not commodities. Therefore labour policies need to have an significant social or welfare dimension to them.  to make labour as productive as possible by providing suitable work incentives for working well through wage, bonus and promotion policies. ensure smooth industrial relations by creating proper mechanism for resolution and conflict.

  • keep labour use flexible to deal more effectively with various shocks to the economy and with shifts in its sectoral comparative advantage.

  • minimise distortions and interventions in the market.


Labour policies in worldwide

  • China created a highly disciplined workforce because of its labour policy measures. Lay off clause is widely used in Chinese laws to bring efficiency and accountability to the workforce. Layoffs will be accompanied by the severance pay and social seurity benefits.

  • Most other countries of east Asia have somewhat similar policies although finer details of the law may vary from country to country. Most of the Asian countries have a policy of giving huge bonuses to often equal to several month wages which makes a motivated and committed workforce.

  • UK gives the severance pay of only a week as it is a well developed economy and all the citizens are covered by extensive social security schemes.

  • In United States labour laws allows employers to dismiss workers at will unless specific labour union contract is exist in which case the conditions of the contract should be respected.

  • Japanese have a tradition of lifelong employment with the given company and termination is extremely rare. However they found a way of maintaining labour efficiency and productivity despite permanent employment by providing large bonuses.

  • The experience of China, East Asia and India demonstrates that excessively protective labour policies are not in the long term interest of workers and might do them more harm than good by reducing worker productivity, raising the prices of goods and makes less competitive in the export market and it hurts growth and employment.

  • In East Asian countries cooling off period is available before a strike could be called and through the use of voluntary and compulsory arbitration. As a result strikes and work stoppages are uncommon.

  • Some flexibility in the use of labour has to be allowed while recognising that a reasonable degree of job security is a genuine worker need. At the same time to give complete job security under all circumstances makes it very difficult to maintain worker discipline and reduces worker motivation and productivity.

  • Raising the length of service after which an employee cannot be laid off from 240 days to three years and some amount of bonus package model of Japanese must be introduced.

  • We should make Labour laws flexible at least in export promotion zones so as to attract better foreign direct investment.

  • Greater effort needs to be made towards improving the education and training of the workers to make them more productive.


4. Ensuring Gender Justice In Labour 

  • India has one of the lowest workforce participation rates of women which even lower than sub Saharan nations and middle East and is drastically lower than the participation of men.

  • Though female literacy rates and educational enrolment rates have been moving favourably during a period of higher economic growth, female employment remains a challenge.

  • Apart from lack of employment opportunities, many women cannot participate in full time employment given the larger social expectation on women to undertake house hold domestic work.

  • In the secondary sector, there has been increase in the proportion if women in construction sector over the period, where the nature of employment is the issue.

  • For rural women unpaid workers / helpers are the largest group and then casual workers. For urban women workers, the situation at the overall level seems improving since we see a trend of increasing number of regular workers.

  • Absence of state laws is an issue, with many states yet to extend the coverage of Minimum Wages to these workers.

  • Education is perhaps the most promising area in terms of providing women a status as independent workers. Unfortunately, with the increasing privatisation at all levels often women who work in this sector are in uncertain employment, exploited in various ways, and not paid the wage due to them.

  • Another point to note is the increasing number of scheme workers who are in central in the running of many state schemes and programmes such as Anganwadi or ASHA workers.

  • The implementation of the Act is a matter of concern. Even after many years of passing of Equal Remuneration Act,1974 wage gap between women and men remains a reality affecting women of all ages, classes, communities and regions.

  • The recent amendment in the Maternity benefits Act makes the increase in the women participation in the organised sector.

  • The compulsory provision of crèche facilities in the organisations which have more than 50 employees is a welcoming step in promoting workforce.

  • The recent amendment to Apprenticeship Act allows the employers to recruit a large number of apprentices for extended periods and to fix the hours of work and leave as per their convenience.

  • Growing concerns around the safety of women is also a clear deterrent to women's employment. The ban on night shift for women is under review by central government as part of amendments in the Factories Act 1948.


5. Reforms In Child Labour Law

  • Child labour Law is the pivot around which the strategies for addressing hard labour at tender age cluster. Child labour is a twin term ant ethical to each other. the term 'child' denotes innocence and term 'labour' denotes toil and hard work.

  • Children in workforce are paid very low wages and at times work unpaid in lieu of the debt taken by their parents or their family members.

  • In some occupation child labour is involved in all stages of production, from gathering of raw materials to assembling the finished product.

  • Child labour is one of the areas of concern in global supply chains and child labour adversely affects the children and impedes their overall development. A clear national level policy and government action focusing on the range of interrelated factors like poverty is required to end such exploitation in India.

  • Government of India has been proactive in addressing the issue of child labour which is evident from provisions of the Constitution of India, provisions in various laws and policies.

  • The Government has introduced various schemes for rehabilitation of children withdrawn and rescued from work and has conceptualised the rehabilitation projects and to contribute to their planning, implementation and monitoring.

  • By the enactment of the Right to Children to free and Compulsory Act, 2009, the Government made the education as a fundamental right to every child in the age group of 6 - 14 years is to be provided with free and compulsory education.

  • The recent amendment made to the Child Labour Act, 1986 prohibited the child under 14 years of any kind of employment and the adolescent category is prohibited from taking hazardous employment. Exceptions are given to children helping their families or family enterprise after the school hours. Children working in Audio visual industry also exempted from these Act provisions. Offences under the act includes the parents and the employers as well to hefty fines and rigorous imprisonment. Separate provisions also mentioned for first time offenders and repeated offenders.


Labour Identification Number (LIN)

  • The aim to start ShramSuvidha portal was to do away with all employer codes being issued by separate labour enforcement agencies such as ESIC, EPFO, CLC(C) and DGMS etc and by replacing them with new LIN (Labour Identification Number).

  • As a single point of contact between employer, employee and enforcement agencies, it is also bringing in transparency in their day-to-day interactions.

  • For integration of data among various enforcement agencies, each inspectable unit under any Labour Law has been assigned one Labour Identification Number (LIN)

  • The portal also facilitates reporting of inspections, and submission of returns.

  • A unit registered with different labour enforcement agencies is identified uniquely and allotted a single unique LIN. LIN is the pivot around which all other services work.

  • The LIN would gradually subsume the multiple registration numbers presently being issued separately by Labour Enforcement Agencies i.e. ESIC registration Number, EPFO number, Registration or license number issued under Contract Labour (Regulation and Abolition) Act, 1970, etc.

  • ShramSuvidha Portal also facilitates businessmen to get all kinds of registrations and submit returns that are required under labour laws at a single online window.

  • It also makes available to them the inspection reports prepared by the enforcement agency inspectors online.

  • The procedures have been simplified; returns and registration forms have been unified to provide a business environment that encourages compliance by reducing transaction costs and promoting ease of business.


5.2. Reforms in Labour Laws

  • Ministry of Labour & Employment have taken several reform initiatives, both legislative reforms as well as Governance reforms through use of technology, to reduce the complexity in compliance and bringing transparency and accountability leading to better enforcement of the Labour Laws. These initiatives, inter-alia include

  • Enhancing the ceiling of wage limit for the purpose of eligibility for Bonus and for the purpose of calculation of Bonus as Rs. 21,000/- per month and Rs. 7,000/- per month respectively by amending the Payment of Bonus Act 1965.

  • Prohibition of employment of children below 14 years in all occupations and processes through amendment in the Child Labour (Prohibition & Regulation) Act, 1986.

  • Extending the coverage of Employees State Insurance by increase in the wage ceiling from Rs. 15000/- per month to Rs. 21000/- per month.

  • Enabling provision under the Payment of Wages Act 1936 for payment of wages through Bank accounts.

  • Launching of unified ShramSuvidha Portal for allotment of a Unique Labour Identification Number (LIN) for establishments, filing of self-certified and simplified Online Annual Return and a transparent Labour Inspection Scheme through computerized system

  • Portability of Employees Provident Fund accounts through Universal Account Number (UAN)

  • The process of Legislative reforms includes consultations with stakeholders including Central Trade Unions, Employers' Association and State Governments in the form of tripartite consultation. During recent months, several such tripartite meetings have been held for considering suggestions on various legislative reform proposals where the representatives of all stake holders/State Governments participated and gave their suggestions on the legislative proposals.

Yojana April 2017

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