The rapid surge in coronavirus cases may further delay the implementation of the Centre’s ambitious labour reform proposals. This means businesses will have to wait longer for the freedom to retrench workers or close units without prior government permission.
Of course, for workers too, minimum wages and timely payment ensured in the laws may not become a reality soon.
Amalgamating 29 central labour laws into four codes, the Centre wanted to bring in a sea change in the way business and industry functions today. While the code on wages was passed in August 2019, the Parliament approved three other codes – on industrial relations, social security and occupational safety & health – on September 23 last year.
The Centre had earlier put on hold the original plan to roll out the codes from April 1, 2021 citing the lethargy displayed by several states. Though no fresh deadline was given, senior government officials hinted that by June rules may be implemented in the central sphere hoping that major industrialised states will come out with the rules to implement them in their arena.
The codes have a concept of the appropriate government. The central government is the appropriate government for public sector undertakings, railways and ports. But for the vast majority of the industry, which practically covers all the private sector, the state government is the appropriate government. Until the states come out with their own rules, then there is no framework at all that will apply to those entities.
However, as of now, not more than half a dozen states have framed draft rules and also, while some of them have drafted rules for all codes, others have drafted for only a couple of them.
On its part, the Centre is ready with the rules for implementation under all the four codes – codes on wages, industrial relations, social security and operational safety & health — but while central rules are applicable for the central sphere such as ports and railways, the codes empower the states to make rules, modelling on central rules, for establishments under their jurisdiction.
The delay in implementation of the codes might hit India’s prospects of attracting fresh investments, at a time fixed asset creation in the economy needs to gather pace for the much-awaited economic rebound.
The delay would also prolong the wait for increased labour flexibility by the existing establishments. Apart from various industry-friendly proposals, the new laws propose to bring all workers under the social security net.