LABOUR: Small but significant reforms this year

OUTLOOK 2008

Even as industry waits for the government to ease hire-and-fire rules, small but significant labour reform initiatives that are in the works could come to fruition in 2008 and benefit both employees and employers.

After more than three years of consultations, the government introduced the Unorganised Sector Workers Social Security Bill, 2007, in the monsoon session of Parliament.

The Parliamentary Standing Committee's recommendations are likely to be taken on board. When the Bill is passed, 93 per cent of the workforce in India "" which is unorganised "" will be covered by social security schemes like health and life insurance.

Parliament has cleared the Payment of Bonus (Amendment) Bill, 2007, in the last session. This will facilitate a rise in the eligibility limit for the payment of bonus from Rs 3,500 per month to Rs 10,000 per month.

"According to amendments to the Payment of Bonus Act, 1965, employees, including those employed through building contractors, will be entitled to bonus according to the revised ceilings, from 2006-07 onwards," an official said.

Apart from this, the labour ministry has initiated the concept of a national floor-level minimum wage and its revision from Rs 66 per day to Rs 80 per day, has constituted two wage boards for working journalists and other newspaper employees and has tried to make the shifting of Employee Provident Fund (EPF) accounts easier when an employee changes jobs.

The government has also made incremental changes in laws that make it easier for units to function.

Employers who have a small workforce will get some relief. Later this year, the Standing Committee of Parliament is likely to clear the Labour Laws (Exemption from Furnishing Returns and Maintaining Registers by Certain Establishments) Amendment Bill, 2007, first introduced in Parliament in 2005. This will reduce labour force-related paperwork significantly for units employing up to 40 people.

In December, the state-owned Employees State Insurance (ESI) Corporation, which runs a chain of dispensaries and hospitals for private sector employees below a certain income threshold, approved a fresh amnesty scheme for withdrawal of cases against defaulting employers (those not contributing to ESI schemes).

Starting January 1 this year, the scheme will remain effective till December 31, 2008. The amnesty scheme envisages that court cases against those who have not paid ESI contributions will be withdrawn if they pay 25 per cent of the dues, interest and give an undertaking that they will not default in future.

Also, ESI will exempt units having 40 or less employees from having to provide a chartered accountant's return certifying contributions to ESI. Self-certification by these units will be sufficient, bringing down operating costs. Smaller entities will be spared 'inspector raj', an ESIC official said.

Differences between trade unions and the labour ministry continue to hold up big ticket labour reform. There is no consensus on the Participation of Workers in Management Bill (pending since 1990), the Industrial Disputes Amendment Bill, 2007 (which permits lay-offs and retrenchment of units and the compensation that should be paid to workers), amendment to the Factories Act (allowing the employers flexibility in labour legislation implementation) and the issue of women working in the night shift.

Centre of Indian Trade Unions (CITU) president M K Pandhe said, "All these Bills are pending because of the indifference shown by the government. While we have suggested measures that would benefit workers, the ministry does not take our point of view into account."

"The Central Trade Unions, particularly the Left- affiliated CITU and AITUC, are against every reform we propose," a senior official said.