Deregulating labour law restrictions can create significantly more number of jobs in the economy, the pre-Budget Economic Survey has said.
The survey for 2018-19, tabled on Thursday in Parliament by Union Finance Minister Nirmala Sitharaman, referred to the example of Rajasthan where labour reforms were introduced in 2014.
"The recent changes in Rajasthan are significant when compared to the rest of the states. No major labour reforms were initiated by the states from 2007 to 2014. In 2014, Rajasthan was the first State that introduced labour reforms in the major Acts. Thereafter, many States followed Rajasthan," stated the survey.
"A comparison between the indicators for labour, capital and productivity of manufacturing firms makes it clear that flexibility in labour laws creates a more conducive environment for growth of industry and employment generation. The States which are rigid in respect of their labour laws are suffering in all dimensions and are unable to create enough employment and cannot attract adequate capital into their States," it said.
"On average, plants in labour-intensive industries and in States that have transited towards more flexible markets are 25.4 per cent more productive than their counterparts in States which continue to have labour rigidities," the survey further stated.
The labour acts which are applicable for organizations are Industrial Disputes Act 1947, Trade Union Act 2001, Industrial Employment (Standing Orders) Act 1946, Factories Act 1948, Contract Labour (Regulation & Abolition) Act 1970, The Minimum Wages Act 1948, Employees' State Insurance Act 1948 and Employees' Provident Fund & Miscellaneous Provisions Act 1952. The applicability of these laws on organizations is on the basis of their sizes.
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