The door to labour reform

The government has, at last, woken up to the need to initiate labour reforms. A high-level central panel will look into an offer, made by the domestic textile industry, guaranteeing a minimum of 150 days of work a year to contract employees. This is welcome. In the era of globalisation and intense competition, labour reforms are crucial for generating productive employment opportunities and ensuring sustainable growth. Currently, the textile industry is smarting under regressive labour laws. The garment manufacturing industry is facing a critical shortage of temporary contract labourers and, therefore, is unable to execute the high-volume foreign seasonal orders. To that extent, the industry’s proposal to omit Section 10 of the Contract Labour (Regulation and Abolition) Act, 1970, which provides for the abolition of contract labour, is legitimate. Making the hiring of contract labour simpler will create a more cost-effective and flexible atmosphere for the industry. Concurrently, the payment of minimum wages and proper social security cover for the workers must also be ensured.
Certain provisions of the Industrial Disputes Act (IDA), 1947, make it virtually impossible for owners of textile firms to retrench surplus labour and close down loss-making units. This needs to change as it pushes the industry into a self-propagating trap of lower investment and even fewer jobs. In keeping with the industry’s proposal, Chapter VB, which restricts the removal of surplus workers even in financially unviable firms, leading to accumulation of losses, must be deleted from the IDA. Sections 25M and 25N of the IDA, which disallows employers to lay off or retrench workers without prior permission of the government needs to be modified. Employers must be able to retrench workers without any strings attached along with adequate compensation to those retrenched. Additionally, Section 25O prohibiting closure of a firm without prior permission, resulting in illegal lockouts, must be amended.


-- The Economic Times Editorial