Slew of labour law changes in the works

Sep 17 2012, 00:59 IST
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SummaryAfter breaking the policy impasse with some big-bang initiatives, UPA may now speed up amendments in labour laws to boost jobs and raise wages to generate demand in a slowing economy.

After breaking the policy impasse with some big-bang initiatives, UPA may now speed up amendments in labour laws to boost jobs and raise wages to generate demand in a slowing economy.

Labour minister Mallikarjun Kharge told FE that his ministry was holding consultations with other ministries to push key labour Bills. “Amendments to Minimum Wages Act, Contract Labour Act and Mines Act are being considered. We are in the process of consultation,” he said.

These three Bills could be taken up in Parliament during the winter session. Archaic labour laws are one of the main hurdles for India to raise the share of manufacturing to 25% of the GDP from the current 17%, which, in turn, could generate 100 million jobs in the next 10 years.

While the government has been planning amendments in labour laws since 2010, the policy paralysis due to opposition protest and disruption of Parliament proceedings over corruption charges have held back reforms.

In recent days, the government has overcome the inertia and announced a spate of big-ticket reforms like hike in diesel prices, capping subsidised LPG sale, FDI in multi-brand retail and allowing foreign airlines to buy stakes in domestic carriers. Kharge confirmed that the labour ministry is in the process of preparing a cabinet note for a Bill to amend the Minimum Wages Act, which proposes to link wages of factory workers to inflation and enhance penalties for erring companies.

The Minimum Wages Act was amended four times since 1995-96, but annual increments have failed to keep pace with rising prices of essential items. In April 2011, the government raised the minimum wage of industrial workers to R115 per day from the earlier R100. It was R80 per day between 2007 and March 2011.

The proposed Bill was recently approved by a committee of secretaries with ‘broad consensus’ on linking minimum wages to CPI for industrial workers with recommendations for some ‘minor changes’, said an official.

Kharge's ministry also wanted to move ahead with a Bill to amend the Mines Act, which proposes increase in penalties on mining companies by as much as 100% and raise the term of imprisonment up to seven years from the present five years for violation of safety rules and death of workers.

The Bill also enlarges the coverage of workers in special economic zones, territorial waters, continental shelf and other maritime zones where oil explorations are being carried out.

The urgency to amend the Mines Act comes in

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