Two decisions taken by the National Democratic Alliance government in the past fortnight have expedited labour reforms in two key sectors of the economy - apparels and retail trade. Garment manufacturing units, according to the first decision, will now be able to hire workers with a fixed term - a demand made for quite some time by the textiles industry to meet the seasonal requirements of employing workers for short periods from a month to six months or a year. In the second decision of the Union Cabinet, a model law for employment and conditions of service in shops and establishments was cleared to pave the way for retailers, restaurants and malls to remain open 24X7, ie round the clock and all through the year. The law will now be sent to states so that they could consider adopting them in its entirety or after suitable modification.
At the heart of both these decisions is the Union government's commendable objective to introduce flexibility in hiring, depending on the employers' specific needs without forcing them to keep workers on the rolls even when they actually do not need them. This is bound to increase job opportunities in both textiles and retail sectors. Additionally, the government move to provide financial support to lowly paid workers to help them contribute to the employees' provident fund scheme is a step in the right direction as it helps them provide for their old-age security.
The textiles sector accounts for four per cent of India's gross domestic product estimated at around ~135 lakh crore, contributes almost 14 per cent to industrial production and constitutes 13 per cent of its export earnings. It is one of the largest sources of employment generation and currently provides direct employment to over 45 million people. Its employment potential, however, is not fully exploited because of labour rule rigidities. The garments sector, in particular, requires the flexibility of hiring workers for short durations to meet sudden demand surges that may not last for a long period. However, labour laws in the country do not allow employment with such short and fixed tenures. It is heartening that the government has recognised this shortcoming and decided to remove it to give the sector a boost at a time when it can still recover the global market share in garments that it has lost in the last several years.
The puzzle, however, is that the decision to introduce fixed-tenure jobs in the garments sector did not require any legislative change. The government, it seems, can bring about this major change in the hiring rules for the garments sector through notifications. Why, therefore, this change was not introduced earlier shows how past governments have remained indifferent to such concerns and contributed to the steady decline of the sector's share in global markets. Now that a big step has been taken, the government must make sure that employers of both retail outfits and garment units maintain healthy job conditions and address safety concerns for workers, particularly women, who would now be allowed to work round the clock. Necessary and transparent safeguards are as important as steps to ensure that the proposed flexibility is not misused.
