THE GIST of Editorial for UPSC Exams : 22 JULY 2019 (Rebooting labour reforms (The Hindu))

Rebooting labour reforms (The Hindu)

Mains Paper 3 : Economy
Prelims level : Wages bill
Mains level : Positivity of the code on wages bill

Context

• The compression of 44 labour laws into four ‘codes’ or broad categories wages, social security, industrial relations and occupational health and safety forms a central aspect of the Centre’s labour reforms push since 2015.

Background

• This is not a bad idea, as it simplifies access to numerous provisions of the law by all stakeholders concerned.
• As part of this exercise, the Cabinet recently approved the tabling of the Code on Occupational Safety, Health and Working Conditions Bill in Parliament, which encapsulates 13 laws.
• The Wage Code Bill, on which the Parliamentary Standing Committee on Labour drew up its comments last December, will be introduced in Parliament soon.
• While piloting these changes, it is important that the Centre reaches out to a cross-section of stakeholders, some of whom have already expressed misgivings.

Positivity of the code on wages bill

• The Code on Wages has some positive proposals, such as extending the minimum wage law to all activities, not just the 45 ‘scheduled’ ones. A benchmark national minimum wage will set a floor.
• However, the definition of worker is not clear. The calculation of the level of minimum wage by an expert committee is at variance with ILO parameters.
• A lean inspector regime is all very well, but it must monitor workplace safety.
• The code on industrial relations has evoked strong reactions, as the right to form unions and accord them powers of representation has been severely curtailed.
• This can be both anti-democratic and economically counterproductive.
• An approach that regards workers as partners in production is likely to promote industrial harmony.
• Shutting out legitimate avenues of expression can lead to violent outbursts.
• Workforce entitlements should not be disregarded in the urgency to ease the conduct of business.

Highlights of the recent economic survey study

• The latest Economic Survey cites studies to observe that a 10 per cent rise in minimum wages leads to a 6.34 per cent increase in employment in rural areas in the case of both men and women, with a statistically insignificant impact in urban areas questioning the bias against raising wages.
• In an age when productivity and skills count for a lot, India is unlikely to gain very much from wage arbitrage alone.
• Its manufacturing is likely to prosper on the back of a skilled and well paid workforce, with a supportive ecosystem in terms of infrastructure and logistics, as Economic Survey 2017-18 suggests.

Way forward

• Speaking of the potential of the labour-intensive garments sector, it observes: “Clearly, India still has potential comparative advantage in terms of cheaper and more abundant labour.
• But these are nullified by other factors that render them less competitive than their peers in competitor countries.” Garment wages in not just China, but Vietnam and Indonesia are higher than in India and their yet their exports are growing.
• An approach to labour regulation that cuts out compliance headaches, while improving the lot of the employees should be the guiding principle — as in the developed world.

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Prelims Questions:

Q.1) With reference to the Defence Institute of Physiology and Allied Sciences (DIPAS), consider the following statements:
1. It is organised under the Life Sciences Directorate of Defence Research and Development Organisation (DRDO).
2. In a first, women personnel of the Central Reserve Police Force (CRPF) will soon get body gear designed specially for them by the Defence Institute of Physiology and Allied Sciences (DIPAS).

Which of the statements given above is/are correct?
A. 1 only
B. 2 only
C. Both
D. None

Answer: C
Mains Questions:
Q.1)While ‘codifying’ labour laws, labour interests shouldn’t be overlooked. Comment.