Industrial Policy (DAMP)
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Contents
- Discuss the major features of the four recently introduced labor codes in India. Also, analyze the potential benefits and concerns related to their implementation.
- Discuss the urgent need for labour law reforms in India to address the challenges faced by the workforce and businesses. Also, highlight initiatives taken by government in this regard.
- What factors have contributed to the increasing informality of the workforce in India? Examine the initiatives taken by the Indian government to address the issue of rising informalization of the workforce.
- Identify and explain the factors contributing to the low Female Labour Force Participation Rate in India. Discuss the policy measures and initiatives undertaken by the Indian government to enhance Female Labour Force Participation.
- Highlight the features and significance of National Logistic Policy 2022. Suggest way forward to improve NLP.
31-07-2023
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Answer :
The Indian government introduced four labor codes with the objective of reforming and modernizing the country’s labor laws. These codes aim to streamline and consolidate existing labor regulations, bringing greater clarity and efficiency to the labor market. Each code focuses on specific aspects of labor relations and social security, collectively addressing the challenges faced by both the workforce and businesses in the country.
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Four Labour Codes: |
Code on Wages 2019
1) Floor wage to be fixed by centre.
2) Minimum Wage by Centre/state to be greater than or equal to Floor Wage. The Code provides for universal minimum wage across employments in organized and unorganized sector. Also, periodic revision of minimum wage by centre/state every 5 years.
3) Provision for fixed working hours and overtime wages which is at least twice the normal rate of wages
4) The Code prohibits gender discrimination in matters related to wages and recruitment of employees for the same work or work of similar nature done by an employee.
Code on Social Security 2020
1) to extend social security to all workers both in the organised and unorganised sectors (unorganized workers, gig workers and platform workers)
2) Social Security fund for unorganised workers, gig workers and platform workers will be setup by central government (and separately by state govt)
3) National Social Security Board – for welfare of unorganised workers, gig workers and platform workers
4) Schemes for gig workers and platform workers may be funded through a combination of contributions from central govt, state govt and aggregators.
Code on occupational safety, health & Working Conditions 2020
1) Coverage
a) Factories –
i) 20 Workers + Manufacturing process using power
ii) 40 Workers + Manufacturing process without using power
iii) All establishment engaged in Hazardous activities
iv) Establishment or contractors employing 50 or more workers including contract labour
b) Prohibits use of contract labour in core activities and defines a list of non – core activities where the prohibition would not apply
c) Provides for daily work hour limit at eight hours per day
d) Defines interstate migrant workers; Provides for benefits of interstate migrant workers; Database of interstate migrant workers to be maintained by Centre / states
e) Mandatory annual health checkup to be provided by the employer
Code on Industrial Relations 2020
1) Threshold limit for government approval needed for layoff/retrenchment increased from 100 to 300.
2) Registration of Trade Unions.
3) Sole negotiating Trade Union (with more than 51% of the workers as members).
4) Fixed term Employment.
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Benefits of Labour Codes: |
1) Simplification and rationalisation of plethora of laws will lead to better compliance.
2) Fixed term employment – they will get all statutory entitlements, similar to regular workers.
3) Provides for night shifts to women for various works (may increase FLFPR).
4) Social security for – gig workers + platform workers + self-employed.
5) National Social Security Board – to recommend and monitor schemes for gig workers, platform workers,
unorganised workers.
6) Co-operative Federalism – states given power to decide their own minimum wage above floor wage.
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Concerns of Labour Codes: |
1) Several important features of the labour laws are not specified in the Codes and have been delegated to be formulated by the government through rules. (eg – power to increase the threshold for establishments that have to seek permission before retrenchments).
2) No universalization of social security à only enterprises above certain threshold mandatorily covered (gig workers, platform workers, unorganised sector workers continue to be covered by discretionary schemes.
3) Fixed Term employment may be offered for role earlier given to permanent workers (Code do not restrict the type of work in which fixed term workers may be hired).
4) Wide Discretion to central and state government in providing exemptions from these codes.
Together, these labor codes represent a comprehensive effort by the Indian government to modernize labor laws, strike a balance between worker protection and business interests, and promote a more inclusive and efficient labor market. However, their successful implementation and impact on the workforce and businesses will require close monitoring and ongoing evaluation to address any potential challenges and ensure the overall well-being of all stakeholders involved.
29-07-2023
Answer :
India has around 44 Central Labor Laws and more than 100 state labor laws and regulation. The current labor laws in India are outdated, cumbersome, and often not aligned with the dynamic nature of the modern economy. These labor laws are not conducive neither for business nor for worker.
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Why Labour Law Reforms are needed: |
1) Multiplicity/ plethora of Laws
- a) center >40 and in states >100
b) separate law for different industry (mines, plantation, journalism etc)
c) multiple laws each on wages, industrial safety, industrial relations, social security, industrial disputes etc.
d) Several laws have differing definitions of common terms such as “appropriate government”, “worker”, “employee”, “establishments” and wages, resulting in varied interpretations.
e) Increases compliance costs and negatively impacts ease of doing business.
2) Disincentivises growth of firm
a) Adverse incentive for firms to remain small to avoid high compliance cost of labor laws
b) The 6th Economic Census (2013-14) reported that there were 5.9 crore establishments in India employing 13.1 crore people. But around 79% workers were in establishments with less than ten workers.
c) Lack of an easy exit option
3) Encourages informalisation – increased use of contract labour resulting in exploitation of labour
4) Firms engaging in capital intensive sector rather than labor intensive sector
5) Labour laws only cover organized sector (<10% of work force)
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Key Government initiative for Labour Reform: |
1) Simplification, amalgamation and rationalisation of 29 central labour laws into four codes – viz Code on Wages, Industrial Relations Code, Occupational Safety, Health and Working Conditions Code and Code on Social Security.
2) SAMADHAn Portal – An e-dispute portal for filing industrial disputes by workers/employer
3) Social Security Measures
a) Pradhan mantri Shram Yogi Maan Dhan Yojana – Pension scheme for unorganised workers
b) Atal Beemit Vyakti Kalyan Yojana – compensation to insured persons when rendered unemployed
4) Legislative Measures
a) Maternity Benefit (Amendment) Act – paid maternity leave for 26 weeks
b) Child Labour Prohibition and Protection Amendment Act 2016 – complete prohibition of employment of children under 14 years with few exceptions).
5) Pandit Deendayal Upadhyay Shramev Jayate Karyakram – Shram Suvidha portal, Apprentice Protsahan Yojana
Labor law reforms are crucial for India’s economic growth and social welfare. By striking a balance between business interests and worker rights, these reforms can pave the way for a more inclusive and prosperous future. The government’s initiatives are steps in the right direction, but continuous efforts and stakeholder consultations are essential to ensure effective implementation and successful outcomes.
26-07-2023
Answer :
The increasing trend of informalization in India’s industrial labor, both in the unorganized sector and organized manufacturing through subcontracting and temporary workers, raises concerns. Informalization leads to low productivity, wages, and social protection, contributing to poverty, inequality, and hindering significant economic development.
Key Facts
• Workforce employed in unorganised sector – 85%
• Workforce employed in informal jobs (organised + unorganised sector) – 90%
• Share of informal workers in the organised sector – 60%
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Reasons for rising Informalisation of workforce in India: |
- Complex labor laws lead to small-sized firms and the Missing Middle phenomenon, hindering job creation and productivity.
- Emphasis on capital-intensive industries under industrialization strategy neglects labor-intensive sectors.
- Skill deficit in organized manufacturing and services hampers employability.
- GDP shift from agriculture to services leaves manufacturing stagnant, lacking formal, well-paying jobs.
- International competition encourages informal labor due to low wages and cost reduction.
- Excessive regulation and taxation perpetuate informal activities.
- Rise of Gig Economy impacts formal job creation.
- Contract workers receive lower pay and provide flexibility for employers. Third-party agents reduce compliance costs. Worker protection may be compromised.
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Government efforts: |
- Pradhan Mantri Rojgar Protsahan Yojana (PMRPY) with the objective to incentivise employers for creation of new employment and aimed to bring informal workers to the formal workforce.
- Aatmanirbhar Bharat RozgarYojana (ABRY): It has been launched to incentivize employers for creation of new employment along with social security benefits and restoration of loss of employment during COVID-19 pandemic.
- E – Shram portal
- Improving Employability through skill training
- Labour law Reforms – Consolidation of plethora of Labour laws into four labour codes
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Way forward: |
- Legal framework mandating absorption of contract workers employed for greater than a threshold
- Protection of rights of contract workers
- Government recently allowed contract workers in textile sector and set a minimum wage for them also.
- Social security measures for all.
25-07-2023
Answer :
As per the latest available Annual PLFS Reports, the estimated Labour Force Participation Rate (LFPR) on usual status for women of age 15 years and above in the country was 30.0%, 32.5% and 32.8% during 2019-20, 2020-21 and 2021-22, respectively, which shows an increasing trend.
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Why does improving Female Labour Force Participation rate matter: |
1) Boost to economic growth
a) A 10% permanent increase in female labour force participation would lead to increase in growth rates by 0.3 per cent (UNESCAP 2007). It also improves potential economic growth rate.
b) A recent Bloomberg Economics analysis estimated that though Indian women represent 48% of India’s population, they contribute only around 17% of GDP, compared to 40% in China. An Asian Development Bank study said that if the participation of women were to equal that of men, India’s GDP could be 60% higher in 2025.
2) Inclusive Development – It increases household incomes, which helps families escape poverty and increase their consumption of goods and services.
3) Women Empowerment – Rise in income level improves women ability in decision making within household and society
4) Demographic Dividend – The benefits of the demographic dividendFootnote1 are likely to be deterred if women stay out of work.
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Factors explaining low female labor force participation in India: |
Supply Side Constraints:
- Rising household incomes elevate domestic work status, leading women to exit the labor force.
- Higher education delays women’s entry into the workforce.
- Nuclear families burden women with childcare, reducing workforce participation.
- Extended maternity leave can deter companies from hiring women.
- Sociocultural norms and dual burden of household work hinder women’s workforce engagement.
- Safety concerns and lack of suitable jobs also limit women’s participation.
Demand Side Constraints:
- Insufficient job opportunities for women, especially in non-agricultural sectors.
- Gender wage gap and discrimination in recruitment affect women’s job prospects.
- COVID-19 pandemic led to disproportionate job losses for women.
- Automation poses a higher risk of displacing women from employment.
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Initiatives to Improve Female Labour Force Participation Rate: |
- Women’s vocational training through Women Industrial Training Institutes and Vocational Training Institutes.
- Promoting female entrepreneurship with Stand Up India, MUDRA, and Mahila e-Haat.
- Labor law reforms ensuring maternity benefits, non-discrimination, and safe night shifts for women.
- Aatmanirbhar Bharat Rojgar Yojana incentivizes job creation during the pandemic.
- Employment-generating projects like PMEGP, MGNREGS, DDU-GKY, and DAY-NULM.
- Production Linked Incentive schemes to create 60 lakh new jobs in 5 years.
- Enhancing youth employability through NAPS and PMKVY.
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What more needs to be done: |
- Increasing investment in Human Capital: investment in human capital is abysmally poor, with 3.1% of GDP spent on education (2021-22), around 1% on health.
- Focus on Skill Development: Only 4.7% of India’s total workforce have undergone any formal skills training (3.8% of adult women and 9.3% of adult men, by NSSO’s 68th round)
- Ensuring equal pay for work of equal value through legal protection, wage transparency, and gender-neutral job evaluation.
- Eliminating gender discrimination and harassment through legislation, effective remedies, and
awareness campaigns.
18-07-2023
Answer :
The vision of NLP is ” to develop a technologically enabled, integrated, cost-efficient, resilient, sustainable and trusted logistics ecosystem in the country for accelerated and inclusive growth“
- The Targets for achieving the vision of NLP are to reduce the cost of logistics in India to be comparable to global benchmarks by 2030.
- Improve the Logistics Performance Index ranking – endeavor is to be among the top 25 countries by 2030, and create a data driven decision support mechanism for an efficient logistics ecosystem.
- The policy thus seeks to pave the way for India to become a logistic hub by leveraging technology, processes, and skilled manpower.
- The Policy has four key features (four key pillars): Integration of Digital System (IDS); Unified Logistics Interface Platform (ULIP); Ease of Logistics (ELOG); and System Improvement Group (SIG).
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Significance: |
- NLP has the potential to bring a revolutionary approach to the nation’s logistics environment, boosting the effectiveness of supply chains.
- It would increase warehousing capacity and facilitate quicker movement of goods closer to the consumer.
- It will also lead to the strengthening of other sectors like manufacturing tourism etc.
- It is going to improve the overall productivity of the workforce by reducing their time spent travelling.
- The improved logistic sector can also be an important factor attracting foreign investments.
- It will benefit the farmers greatly as it would allow farmers to market their goods more swiftly, reduce waste, and avoid unnecessary delays, all of which would cut overall price.
- It will contribute to improved competitiveness of Indian export
- Reduce complexity by reducing multiplicity of authorities through ULIP.
- ULIP will also enhance visibility for customers and enable logistic companies to adopt digitization on a much larger scale.
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Way Forward: |
- Railway freight trains’ speed have remained stagnant for many decades at around 25km/hour. This must be improved on priority to make Logistic sector more effective.
- Inland waterways have huge potential in the country and have remained underutilized for a long time.
- NLP must function in conjunction with Gati Shakti, Sagar Mala, Bharat Mala etc. to achieve the goal.
- Take feedback from all the stakeholders and evolve the policy and its implementation with changes in technologies and feedback.
The National Logistics Policy thus aims to bring ease of doing business in the logistics sector by simplifying the logistics processes, improving its efficiency bringing in transparency and visibility, and reducing logistics cost and time.