labor codes: India will benefit from agile labor codes. Look at China, Bangladesh and Vietnam for the results

Most of India’s labor laws were developed shortly after independence when it was a predominantly manufacturing / agrarian economy, often stuck in the quagmire of a License Raj. The protectionist and socialist nuances determining labor laws at the time led to the creation of a labyrinth of over 40 different pieces of legislation regulating different aspects of employer-employee relations, which primarily addressed the needs and rights of workers.

Existing Indian laws focus on income and job security rather than stimulating job creation. This is clear from provisions such as the ban on contract workers, strict laws regarding the dismissal of employees, unionization and strikes. However, India’s liberalization effort has placed it at the center of a globalized world economy by boosting the service sector. In particular, IT / ITeS contributes over 7% of India’s GDP and this number is expected to reach 10% by 2025 and create 3 million jobs. In an increasingly small world, workers must meet global standards and supply chains that must be encouraged by Indian law.

The pandemic has highlighted the scuffed edges created by trying to use square pegs from existing labor laws in India to plug the round holes in service and technology. Covid-19 has highlighted new trends, such as working from home, part-time workers, and concert workers, while exposing shortcomings in the existing system to make it easier to do business. Multiple compliances and administrative procedures covering key issues such as business registration, rules governing migrant workers make it difficult for employers to unleash the potential of skilled and unskilled labor in the workplace. ‘India. The proposed labor codes will play a key role in triggering the V-shaped recovery of the Indian economy. China, and more recently Bangladesh and Vietnam, have shown the benefits of agile labor codes that India should seek to emulate.

The pandemic and the emergence of technology have created new employment opportunities, such as working from home, part-time employment, contract workers and concert workers. This offers women and students the opportunity to participate in the Indian economy while empowering them. New labor codes must recognize contract workers and make arrangements for them. Sharp spikes usually rule services such as IT / ITeS and e-commerce activities. Unlike traditional manufacturing, these industries experience increased activity during festivals, holiday periods and sales. Adopting measures to recognize and promote contract work will help businesses during phases of increased activity while providing part-time employment to many Indians.

As India pushes for global leadership, it must abandon archaic practices and apply an agile approach to facilitate growth. Standing orders are one example. Standing orders were designed to protect factory workers by stipulating conditions, such as hours of work. The rigidity of such measures will affect the service sector, especially companies with global customers. Working according to clients’ time zones, establishing project-specific models and remote working options will be hampered if industries such as finance, consulting, IT / ITeS and e-commerce are not exempt from notification standing orders. Additionally, the IT / IT industry has strong grievance mechanisms in place and adheres to global work culture practices and therefore should be exempt. Numerous surveys show that IT / ITeS companies are recognized as great places to work because of their employee-centric policies and practices.

A critical factor for the success of industry in a market economy is its operational independence. The world’s major economies, including those of the United States, China and Japan, have a five-day work week. Studies have shown that employees who spend more time on leisure are happier employees and work more efficiently. This benefits the health of the employee and the establishment. In this context, an 8 hour work day will force companies to operate on a 6 day work week model, which will compromise employee satisfaction and also hamper hiring, as companies will be reluctant to hire people on the job. over time. The number of hours should be capped at 48 hours, with a daily limit of 10/12 hours to promote operational flexibility. With the new codes already providing for flexible working hours, states must ensure that this does not become an exploitation.

A large number of companies in India are recruiting employees across the country through remote work facilities. By law, an employer must register an establishment in each state where it has employees under the Business and Establishment Act (s). This translates into an avoidable increased compliance burden, increases costs for businesses without additional productivity, and hinders the ease of doing business for the industry. New codes should implement a single unified M&E record.

One of the defining legacies of this government has been the desire to digitize India and make it a world leader. India’s goal of becoming a trillion dollar economy can only be achieved by establishing codes to promote growth, employment and workers’ incomes, which in turn would promote security and employee stability. The service industry driven by technology intensive sectors such as IT / ITeS, e-commerce, financial services and consulting has immense potential. Labor laws should promote employment, job quality and income in these sectors by enabling companies operating in this sector.

(Aruna Sharma, IAS, is the former Secretary of the Government of India)

(The one-stop destination for MSMEs, ET RISE provides news, insights and analysis on GST, exports, finance, politics, and small business management.)

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