Govt framing new policy to boost jobs

Written by Raj Kumar Ray | New Delhi | Updated: Dec 30 2012, 03:45am hrs
With the job scenario looking grim, the labour ministry has prepared a National Employment Policy (NEP) that may outline a raft of changes in labour laws and industrial policies to boost employment and ensure good working conditions for workers.

The new job policy will be in conformity with the 12th Plan growth target, and might propose changes in various laws like the Minimum Wages Act, Contract Labour Act and EPF Act to bring a major chunk of workers in unorganised sectors under the ambit of the formal sector.

In recent years, the growth in direct employment in the organised sector has been almost flat as companies have relied heavily on contract workers. Rigid labour laws have kept 93% of the workforce in the informal sector bulk of them in agriculture and the rest in small manufacturing units, construction and trade.

One of the major proposals for formalising the informal sector is to amend the Minimum Wages Act to make it mandatory for all workers across the country. As it was difficult to maintain nationwide uniformity in wages under the present law that was not mandatory for states, sources said the government is considering a mandatory national floor level minimum wage, a labour ministry official told FE.

Similarly, the government is planning to link the variable dearness allowance (VDA) to consumer price inflation to neutralise the effects of price rise on workers.

There is also a broad-based consensus on amending the EPF Act to raise the wage ceiling of R6,500 per month to R10,000 or R15,000 for an employee to be compulsorily covered under the EPF scheme. Also, there is a proposal to raise the minimum pension under the employees pension scheme to be not less than R1,000 per month, from the present Rs.541.

The policy might also propose steps to attract higher investment in labour-intensive industries. Already, the commerce and industry ministry has proposed in the national manufacturing policy that adequate support will be given to promote and strengthen employment-intensive industries. The policy will also outline steps to simplify labour regulations to arrest the increase in capital intensity of manufacturing.

The ministry has sought feedback from other departments and ministries. The controversial issues will be further debated with various stakeholders states, labour unions and industry bodies at the Indian labour conference scheduled for January 4, the official said.

The Planning Commissions 12th Plan has laid special emphasis on employment, especially in manufacturing, even though it pared growth projection to 8% from the initial 9-9.5%. Unless manufacturing becomes an engine of growth, providing at least 70 million additional jobs, it will be difficult for Indias growth to be inclusive. Since the pattern of development of the manufacturing sector so far has not delivered the desired growth in output and employment, a change in strategy is required, it said.

A survey conducted by hiring firm TeamLease and IIJT shows job growth may remain flat in the January-March quarter of 2013, but improve in the subsequent quarters. Most sectors have reported a stagnant growth in terms of hiring intent this quarter. However, the recent reforms announced in various sectors are expected to lift the market and result in more employment, said Sangeeta Lala, senior vice-president and co-founder of TeamLease.

Boston Consultancy Group listed labour law changes along with improvement in infrastructure, resolving land acquisition problems and easing regulatory hurdles to boost manufacturing sector and create 100 million jobs by 2022.

BCG said productive labour and harmonious labour relations are central to realising the demographic dividend that India is expected to reap. While the last ten years have seen marked improvement in industrial relations, with substantial decrease in the number of industrial disputes, and man-days lost, the recent spate of industrial violence brings back the question of deteriorating industrial relations, it said.

With 183 million additional income seekers expected to join the workforce over the next 15 years, the manufacturing and services sectors have to absorb the bulk of it, as agriculture cannot be expected to provide more jobs.