Labour reforms: Modi government's tough balancing act

The government has done a tactical retreat from ushering labour reforms. Instead it is targeting sector specific reforms

Faced with opposition from labour unions including its trade union wing, the Narendra Modi government has done a tactical retreat from ushering labour reforms. Instead it is targeting sector specific reforms.

In the recently textile policy, the Cabinet decided to introduce fixed-term employment and bring in parity between the contractual and permanent labourers in terms of wages and all other incentives — an important step that can potentially be replicated in other industries (for instance, automobiles) that have witnessed protests over pay disparity among workers and are struggling under rigid rules for contractual employment.

According to reports, the government has also raised the overtime work limits to 8 hours per week (which will translate into roughly 100 hours a quarter) against the current 50 hours per quarter and said the employees’ provident fund contribution will be optional for employees earning less than Rs 15,000 per month. 

The Bharatiya Mazdoor Sangh- the trade union wing of the ruling party had earlier said that the finance minister Arun Jaitley assured them that changes in labour laws are not essential for industrial growth and such steps will not be taken without taking the unions onboard.

“Jaitley conveyed to a delegation of BMS on the eve of the government completing two years in power (yesterday) that the government has realised that labour reforms are not essential for industrial growth in the country,” BMS said in a statement.

Some of the ambitious reform plans of the government includes the Industrial Relations Code Bill, Small Factories Bill and The Factories Amendment Bill which will allow easier retrenchment policy and removing unnecessary compliance issues. However, almost all of them have been stuck in the law.

Prime Minister Narendra Modi in an interview to Wall Street Journal had said that labour reforms should not just mean in the interest of the industry but also in the interest of the labourer.