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India needs labor reforms

India needs laborThere has been a contraction in the Indian workforce between 2013-14 and 2015-16.About 1.2 million jobs were lost and total employment was down from 483.9 million to 482.7 million.

This ties in with the poor growth in sectors such as exports during this period. Countries with more practical labor laws such as Bangladesh have been growing their share in the global textile market at India’s cost.

India is fast losing its competitive edge in exports and enterprises at home are increasingly automating operations. But critical labor reforms are pending.

Companies, even smaller establishments, need to be able to hire and fire, or they will simply stop relying on permanent work-forces.

The crucial labor code on industrial relations—already diluted to pacify labor unions—is now unlikely to see the light of the day. Earlier it was said companies would be allowed to lay off 300 workers without approval but later the level of 100 workers was persisted with.

Instead the concept of a statutory minimum wage could soon become law. As would a universal social security scheme and changes that relate to more benefits for workers without hire-and-fire.

At a time when the economy has been slowing, business enterprises should be allowed to easily hire.

India needs labor reforms