Tight laws, safety net to fix labour pains

Written by fe Bureau | New Delhi | Updated: Feb 28 2013, 10:39am hrs
With job growth almost stagnant in the organised sector, the Economic Survey for 2012-13 on Wednesday advocated abolition of excess labour regulation while ensuring adequate protection and minimum safety nets for workers, better infrastructure and financing to increase employment.

"Regardless of what one believes about causes, the fact is that India is not creating enough productive jobs. Moreover, India has the dubious distinction of having some of the most comprehensive labour laws in the world, even while having one of the largest fractions of the working population unprotected," said the survey tabled by finance minister P Chidambaram in Parliament.

The survey said it was imperative to build a consensus on labour market reforms soon to ensure growth of the formal sector to create productive jobs.

The survey said government should continue to create a minimum safety net for informal workers by, for example, extending the reach of national-level schemes such as the Rashtriya Swasthya Bima Yojana and the New Pension Scheme and introducing unemployment insurance schemes like the Supplementary Unemployment Benefits Fund to be created by automotive firms.

Service jobs are relatively high productivity, but employment growth in services has been slow in recent years. "India's challenge is to create the conditions for faster growth of productive jobs outside of agriculture," it said.

If India wants to follow China, the survey said, the country has to increase savings and investment, both of which will follow from the demographic transformation and increase in the productivity of jobs.