Renaming labour inspectors is of little use
It is good that the government has proposed to replace the word ‘inspector’ with the term ‘facilitator’ in its proposed labour legislation—the draft Labour Code on Wages Bill of 2015 is supposed to replace the Minimum Wages Act of 1948, the Payment of Wages Act of 1936, the Payment of Bonus Act of 1965 and the Equal Remuneration Act of 1976. The move is supposed to be more than a token change in that, while the ‘facilitator’ will have the same powers he had as an ‘inspector’, the attempt will be to give enough opportunities to the offending units to attend to their shortcomings before any action is taken against them. Given the various attempts to change, for instance, the taxman’s ways, it may be a good idea to hold the bubbly for a bit—after years of setting up Aaykar Sampark Kendras (ASKs) and e-filing of returns to keep the interaction with the taxman to the minimum, prime minister Narendra Modi had to take the Central Board of Direct Taxes to task in the first meeting of the multi-modal platform, Proactive Governance And Timely Implementation (PRAGATI), last month.
While changing the attitude of labour inspectors is important, it is important to keep in mind that, though labour laws are rigid, they have improved in many states over the past decade or so with the introduction of self-certification and online filing of various compliances. Yet, despite this, the capital intensity of production has only risen. As Niti Aayog
Member Bibek Debroy points out, a large part of the reason for this lies outside just rigid labour laws, important as they are. With the cost of capital coming down, the relative cost of labour has gone up; almost all tax incentives or even thae definitions of MSME are based on the amounts of capital invested, not the number of people employed. In other words, there is a natural policy bias towards more capital-intensive manufacturing. Also, with increasing competitiveness, automation is the order of the day—which means that it is only highly-trained or skilled labour whose demand will grow. Important in this context is the skilling minister’s admission at the Express Group’s Idea Exchange that the government had nowhere near the kind of money it needs—right now at least—for providing serious levels of skilling to India’s work force. Without that, it is difficult to see a meaningful change in India’s employment statistics in the near future.