Act in haste...

...And repent at leisure. The classic exposition of this adage appears to be the Haryana government's reported move to announce a host of incentives to help exporters pare their wage bills after the government itself had increased the statutory minimum wage in the state by a whopping 40 per cent in one go. The sharp wage hike may have seemed like a good, populist move, except that it backfired because wages are not just income, they are also cost "" and many exporters in the state were forced to down their orders and begin laying off workers because the dramatically increased wages came on top of the crippling impact of the rupee's appreciation against the dollar. So, as this newspaper has reported, the state government is now toying with the idea of allowing exporters to use contract workers in core activities in the textiles, handicrafts and footwear businesses "" at the moment, such workers can only be used in peripheral functions such as security, canteen services and gardening. That could mean that workers lose job security in exchange for the higher minimum wage, and it is not certain that this is a bargain that they will welcome.

Less controversial suggestions being considered include allowing 'voluntary overtime', allowing women to work in the factories after 5.30 in the evening, and so on. Eager to make the most of the opportunity, reports suggest, exporters are asking the government to increase the floor area ratio (which would allow them to build more factory space on the same piece of land) and even the permitted height of buildings, on the grounds that these will allow firms to seat more people and therefore improve productivity. Surely, this must be a case where the law of unintended consequences applies with a vengeance.

It is not just the government of Haryana that acts first and thinks later. Datta Samant, the late labour leader, led a prolonged strike by textile workers in Mumbai in the 1980s, and the textile mills of the city never recovered; most of them are now into developing their real estate, while the workers have been left to their own devices. Indeed, when the global trade in textiles finally opened up a couple of years ago, most observers had expected China to benefit more than India "" however, with leading importers putting quota restrictions on Chinese imports, India gained the bonus of a two-year window. But since textile firms were not able to ramp up, in part because they were reluctant to expand operations in a situation where laying off workers is not possible, India's textile exports have remained a small fraction of what they could have been.

The lack of a labour law that allows for flexibility in operations has bedevilled not just textiles but a range of other industries, many of them labour-intensive. It is almost certain that the beneficiaries are not workers, for employment in the private, organised sector (defined as consisting of establishments that employ more than 10 people) accounts for barely 2.5 per cent of the total. The organised sector would hire many more people if it could only have the labour laws that existed before the last period when communists influenced national policy (after the Congress split of 1969, when a minority government led by Indira Gandhi survived with communist support, in return for which she introduced a slew of socialist legislation for which the country is still paying the price). But every attempt to restore the status quo ante has been thwarted, though the primary blame for this rests not with the communists but with the two principal parties who know what needs to be done but are too pusillanimous to do it.