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PM Narendra Modi announces labour reforms to boost ease of business

Industry welcomes the move, says it will boost manufacturing sector growth

Somesh Jha  |  New Delhi 

Prime Minister Narendra Modi on Thursday unveiled a slew of measures aimed to change labour laws for the better and to make inspections more transparent and devoid of unnecessary harassment.

The measures include a taking away of inspectors' discretionary powers, easy portability for provident fund users, a worry-free labour law compliance web portal and a scheme for training apprentices.

Modi announced these measures at a ‘Deendayal Upadhyay Shrameva Jayate’programme here, with the government also sending around 20 million SMS text messages apprising organisations, labourers and youth about these schemes. Deendayal Upadhyay was a key founding figure and organiser of the Bharatiya Jana Sangh, ancestor party to Modi's Bharatiya Janata Party, now the country's ruling one.

Modi asserted these steps would lead to greater ease of doing business. “For the success of ‘Make in India’ (his recently announced programme to promote manufacturing), ease of doing business should be given priority,” said the PM.

Chambers of business welcomed it, saying these had been long-pending demands of the sector. “We welcome the 'Shram Suvidha Portal' to facilitate a single window for compliance with labour laws. Simplification of procedures has been a long-standing concern for industry…(this) will bring in a lot of transparency and accountability,” said Chandrajit Banerjee, director-general at the Confederation of Indian Industry.

He said with greater ease of doing business and availability of skilled personnel, growth of the manufacturing sector will get a big fillip.

The Union government also announced that work was in progress on reforms in the area of child labour (in the following the Nobel award to Kailash Satyarthi for work in this area) and the micro, small and medium enterprises sector. "The labour ministry is working on these. The details will be revealed in the coming days," minister Narendra Singh Tomar said.

Modi on labour, governance
Modi said white-collar jobs were seen as dignified "but people often look down upon the working class…The labour class provides solutions to many problems surrounding our lives”.

Terming the new inspection scheme a part of e-governance, he said it would save industries from needless harassment. “Through technology intervention in the new inspection system, it will be easy, effective and economic governance which will lead to transparency,” he said.

He said a computer will decide where the inspector has to go for inspection and he will have to file his report within 72 hours, helping both labour and industry. The area of inspection will be divided into three parts: mandatory (extreme situation), optional (system-generated) and compliance-based. The inspector will get an auto-generated list.

The government also made operational the Universal Account Number (UAN) facility for EPFO subscribers, for ease and quick portability of PF funds on switching jobs anywhere in the country. It was possible, noted Modi, to easily switch mobile numbers while shifting to a different state but a poor labour is unable to mobilise his own PF while switching his job.

He underlined the fact that Rs 27,000 crore was currently with the Employees’ Provident Fund Organisation (EPFO) in inoperative accounts. “I want to return the money to those poor people,” said Modi. He termed the UAN a good initiative to link industries and banks.

Modi said these steps were directed towards his government’s motto of ‘minimum government and maximum governance.’

He also announced a unified labour portal for ease of compliance with four central government organisations – EPFO, Employees State Insurance Corporation, Directorate General of Mines Safety and chief labour commissioner. This will facilitate a common window for online registration of units, reporting of inspections, filing of annual returns and redressal of grievances.

Modi said a single-sheet compliance system had been introduced online for 16 labour laws.

He termed skill development a “big opportunity” for the country. “By 2020, we need millions of skilled people. Either he becomes a job creator or a job opportunity comes knocking on his doors.” He added people do not give due respect to students of Industrial Training Institutes.

Another scheme, ‘Apprentice Protsahan Yojana’, announced on Thursday, is aimed to increase apprenticeship coverage to 2.3 million from the 490,000 at present. The labour ministry will reimburse manufacturing units half the stipend paid to apprentices during the first two years of training. The scheme will support 100,000 apprentices up to March 2017.

The Centre also announced convergence of three schemes for the unorganised sector -- Rashtriya Swastha Bima Yojana, Aam Aadmi Bima Yojana and Indira Gandhi National Old Age Pension Scheme. Initially, the government will link all these schemes to a single 'smart card' and will have a "single point of contact for service delivery ".


Launch of labour schemes:
1) New inspection scheme
Aimed to take away discretionary powers of inspectors
Inspectors have to file report within 72 hours
Inspection divided in three areas: mandatory, optional and compliance-based
Inspector to get auto-generated list about inspection location
At present 175,000 inspections by 8,000 inspectors take place in a year
2) Unified labour portal (named Shram Suvidha) for four Central government organisations – Employees Provident Fund Organisation (EPFO), Employees State Insurance Corporation (ESIC), Directorate General of Mines Safety (DGMS) and chief labour commissioner
Compliance sheet reduced from 80 pages to a single sheet
A common window for online registration of units, reporting of inspections, submission of annual returns and redressal of grievances
A unique labour identification number or LIN will be allotted to each employer after registration.
3) Universal Account Number (UAN) facility for 2 million EPFO subscribers for portability of PF funds on switching jobs
4) Apprentice Protsahan Yojana
Union labour ministry to contribute 50% of stipend cost to train youths during first two years of training programme
282,000 apprentices undergoing training under on-going government scheme; aim to raise this to 23 million
Amendments to Apprentice Act already passed in Lok Sabha

First Published: Fri, October 17 2014. 00:48 IST
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