- Prime Minister Narendra Modi is preparing to launch India’s biggest overhaul of labour laws since independence in a bid to create millions of manufacturing jobs, at the risk of stirring up a political backlash that could block other critical reforms.
- The ministry is drafting a bill for the upcoming parliamentary session that proposes to loosen strict hire-and-fire rules and make it tougher for workers to form unions.
- The changes, if approved by parliament, would be the biggest economic reform since India opened its economy in 1991, but it is likely to meet stiff opposition in parliament and from labour activists.
- As part of the proposed revamp, a factory employing fewer than 300 workers would be allowed to lay off workers without government permission. Currently, factories employing 100 workers or more need approval for layoffs.
- And the planned changes would make all employees eligible for minimum wage.
- Some 84 percent of India’s manufacturers employed fewer than 50 workers in 2009, compared with 25 percent in China, according to a study published by consultancy firm McKinsey & Co. last year.
- Only 8 per cent of manufacturing workers in India are in formal employment, the rest are short-term contractors who enjoy minimal social security benefits.
- It will take skillful political management to ensure a speedy passage for the bill.