Over 25 per cent of the world’s workers are Indian. And 300 million young people are set to enter the labor force by 2025. With an average age of 29, India’s population is in the middle of a demographic boom. By 2020, when the global economy is expected to run short of 56 million young people, India, with a youth surplus of 47 million, could fill the gap. It is in this context that labor reforms are often cited as the way to unlock double-digit growth in India.
Why reforms? Because India still does not use its vast labor force productively or judiciously. In 2014, India’s labor force was estimated to be about 490 million, or 40 per cent of the population, but 93 per cent of this force was in the unorganized sector, ranging from vegetable vending to diamond trading.
Average daily wage rates are quite low, in rural and urban areas. The average daily wage rate in September 2014 for ploughing was just Rs.267.70 for men and Rs.187.17 for women. Any sowing work done by children would earn a further Rs.124.17 per day. A fisherman earns between Rs.268 and Rs.311 a day, depending on his catch, while animal husbandry workers earn around Rs.150.
Electricians and construction workers average around Rs.367.16 and Rs.274.06, respectively, while non-agricultural laborers average Rs.237.20.
Benefits are equally minimal. Women, in particular, have difficulty participating in the industrial labor force. The Maternity Benefit Act (1961) is largely underutilized. In 2012, just 2,441 women claimed maternity benefits across 84,956 factories. Only 3,289 factories provide creches, with 58 in Gujarat and 2,389 in Tamil Nadu.
India’s labor law regime has always been at loggerheads with industrial development and the ease of doing business. Over the past year, the government has attempted to reconcile this by amending the Apprentice Act (1961), making it more responsive to industry and youth, and substituting complex inspection regimes with technology friendly portals.
Labor reforms must be linked to the ease of doing business, creating a habitat where jobs can be fostered. Reforms must be linked to worker benefits, while simultaneously easing the compliance burden on small and medium enterprises. The labor law must be rationalized by defining minimum wages and linking them to inflation. Minimum wages ought to be revised annually, with penalties for their violation dramatically raised.
According to the National Skill Development Corporation (NSDC), we need 120 million skilled people in the non-farm sector. Amendments to the Apprenticeship Act are welcome. With no labour laws applying to apprentices, care must be taken to ensure that they are not transformed into contract labour.
Female employees of government schemes like Indira Kranti Patham or Anganwadi Worker remain out of the purview of laws. Scheme-based workers should be treated as regular employees and offered decent wages and social security. Equally, contract labourers must be protected. They should be covered by the Workmen’s Compensation Act (1923) for accidents, with inflation-linked wages and limited social security benefits from the Employees State Insurance Act (1948) and Maternity Benefits Act (1961) extended to them.
source: the hindu
