NITI Aayog bats for continued labour reforms

The think-tank wants fixed-term employment in all sectors

As part of its suggestions for a wide range of labour reforms, the NITI Aayog has argued for extending fixed term employment beyond apparel manufacturing to all sectors.

It has also said that all enterprises, which are less than five years old with annual turnover of less than Rs 25 crore, be considered start-ups, thereby significantly reducing the labour compliance burden on them.

The suggestions to streamline labour laws across the country are part of the Aayog’s three-year action agenda, the draft of which was shared with chief ministers in a recent meeting last Sunday.

While the last economic survey had made a case for arming labour-intensive manufacturing in apparel and leather to add steam to India’s export growth, the Aayog has pointed out that streamlining labour rules is crucial for increasing the number of formal jobs in the economy.

According to the fifth Annual Employment Unemployment survey conducted between April and December 2015, 83 per cent of all workers in the country were self-employed, casual or contract workers. In this regard, it has batted for making the regulatory atmosphere easier to draw entrepreneurs to invest in labour-intensive sectors.

Taking note of the seasonal nature of the garment industry, fixed-term employment had been announced in apparel manufacturing as part of the Rs 6,000-crore textile package back in June last year.

The textiles industry, of which apparel constitutes the largest share, is currently estimated at around $108 billion by government estimates. It’s also the second-largest employer after agriculture, providing employment to over 105 million people directly or indirectly and contributes approximately five per cent to India’s gross domestic product and 14 per cent to overall Index of Industrial Production.

To reduce laws restricting entry of newer players to the organised apparel industry, the central body has also advised that the government take the help of states.

Reform at the state level has been suggested for fixing the overtime hours and changing norms regarding the retrenchment of workers.

While the government has passed a law in the Lok Sabha to extend the cap on number of overtime hours to 100 per quarter from the earlier 50, it is stuck at the Rajya Sabha. On the other hand, while the Industrial Disputes Act, 1947, effectively forbids factories employing more than 100 workers from retrenching them under any circumstances, states such as Rajasthan, Haryana and Madhya Pradesh have raised the limit to 300 workers. 

Another issue raised by it is the regulatory burden placed on an employer when he reassigns a worker.

On the latest push to classify small and medium sector enterprises as start-ups, industry insiders said it is along expected lines of the government pushing for greater participation of such enterprises in sectors which can absorb them, such as apparel.

Prime Minister Narendra Modi’s had announced in January that the credit guarantee limit for small and medium businesses will be doubled to Rs 2 crore.