India deals with issue of low-quality employment

Last updated on September 21st, 2023 at 11:31 am

India – The difficulties a large majority of Indians experience in making a good living is the country’s most serious socioeconomic issue. Their issue goes beyond jobs. Wherever they work, the employment is of poor quality, with little pay, unpredictable income, and unpleasant working conditions.

The most popular “theory-in-use” to boost employment is to make conducting business easier, with the hope that investments in enterprises will make it easier for people to live well. According to this idea, formal, large businesses provide quality employment, and “flexible” labour rules are necessary to draw in capital. Investors claim that labour is too protected by legislation. 

The UPA government began implementing reforms. Their main goal was to enhance administration through digitalization and the simplification of processes. 

Both employers and employees valued those advances. They did not, however, make the labour rules more accommodating to employers. As a result, the NDA administration took a more daring stance in 2014 and tried to alter the laws’ text.

Since labour is a state concern, the government created a framework for reforms and urged states to carry them out. Rajasthan got things started. Then came other states. Reforming the economy involves learning. The preliminary study “Impact Assessment Study of the Labour Changes Undertaken by the States” from the V V Giri National Labour Institute sheds light on the effects of the reforms thus far. 

Payment of salaries, safety requirements, social security, job conditions, and dispute resolution are all covered by labour laws. The Industrial Disputes Act revision, which will increase the number of people to whom laws pertaining to employment conditions and mechanisms of dispute settlement (the functions of unions), are applicable, will be the main emphasis of the study.

The report covers the years 2004–2005 through 2018–19. It focuses on the six states—Rajasthan, Maharashtra, Andhra Pradesh, Tamil Nadu, Jharkhand, and Uttar Pradesh—that have adopted reforms. The study reminds readers that the main thing influencing corporate investment decisions is labour legislation. 

Due to how simple it is to terminate employees, investors don’t actively seek out new hires. The market for an enterprise’s products must be expanding, and many different resources, not simply labour, must be combined to produce for the market. Consequently, it must be beneficial to hire additional workers before letting them go!

After reading the report, one conclusion is clear as day. Labour law changes haven’t done much to boost employment in big businesses. According to the research, it would take time for the consequences of labour changes to become apparent. Rajasthan was the first state to implement the changes, therefore it is significant that it appears to have benefited the least from them.

Overall, the tale might be far worse. Between 2010–11 and 2014–15, when administrative reforms were emphasized, the share of employment in plants with more than 300 employees increased from 51.1% to 55.3%. From 55.3% to 56.3%, it increased slightly in 2017–18, when some states implemented more radical reforms that were more favourable to employers. 

Although numerous variables influence overall employment, the more radical policies implemented after 2014 were intended to encourage bigger enterprises. This seldom ever occurred because labour changes that raise the Industrial Disputes Act’s applicability bar are fundamentally wrong. They cannot encourage the development of enormous businesses to which the regulations will still be applicable.

According to the research, “formal” employment is defined as having a signed contract, paid leave, and some type of “social security.” A business shouldn’t have to have more than 300 employees before offering these perks. 

These are the basic “essentials” that all employers are required to offer to all of their employees, whether they work in small businesses or as domestic assistance, along with the right to be heard and dignity at work. The rights of workers in small businesses to organize and be represented are restricted when the legal requirements are raised.

Whether the reforms have helped employees is the unresolved issue in the study. After all, the main goal of labour laws is to safeguard employees, not advance capitalist interests. Of course, employees’ opinions should also be considered while evaluating the advantages of changes. 

Sadly, the study just briefly mentions the opinions of employees and unions in one chapter that is entirely devoted to employer organizations’ assessments of the advantages of the reforms. The revisions, according to the employer associations, have been advantageous. Who is it useful for, exactly?

The conclusion is obvious when you go past the report’s study of the numbers and employment patterns to see the larger picture once more. Our economy is not where it needs to be, and the gap is widening. Every 1% increase in GDP between 1980 and 1990 added over two lakh new employment; from 1990 to 2000, this number dropped to one lakh; and from 2000 to 2010, it only added half a lakh. 

The idea of economic growth needs major revisions because rising GDP doesn’t always translate into rising incomes for the poor. In addition, the paradigm guiding employment and labour laws have to alter in order to provide better-quality livelihoods for Indian residents right now.