Model Shops law: Centre’s move may spark social change in India

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Updated: July 8, 2016 7:37:12 AM

The move may usher in the next round of social change in the country

mall-reu-LEven lack of sufficient police force, possible violations of labour laws and the additional costs of maintaining the infrastructure and staff are some of the things to worry about. (Reuters)

In yet another move aimed at improving the ease of doing business in the country, the Cabinet has cleared the Model Shops and Establishment (Regulation of Employment and Conditions of Service) Bill that allows shopping malls, restaurants, movie theatres and other similar establishments to remain open 24 hours a day.

According to the new law, establishments employing 10 or more workers—except manufacturing units—will be allowed to operate 365 days, with the flexibility in hours and better work facilities without compromising labour welfare measures. However, establishments under the Factories Act, 1948, are not covered under the legislation.

Terming the Model Shops and Establishment Act as a bold move towards employment generation and labour reforms, Union labour minister Bandaru Dattatreya said it will provide a boost to job opportunities for women as they will be permitted to work during night shifts with adequate safety and security provisions. The Bill would provide opportunities for women to join the retail sector, thus improving gender diversity, which is now 20-23%, way below the global average of 50%.

The new law also makes it mandatory for establishments to provide cab services, night creches and ladies’ toilets for women working during night shifts.

In addition, job creation will get a boost with the approval of the Bill. Hiring experts feel the Bill, if adopted by states, could lead to a 10% growth in jobs across retail, IT and services sectors.

Industry experts feel the changes suggested in the Bill will benefit industries across the board and could emerge as a game-changer for retailers. The new law has the potential to translate into growth across sectors such as e-commerce, organised retail and the overall services industry, including the daily management of these establishments. Besides, the provision of operating 24×7 will give customers flexibility and convenience to shop any time.

According to industry experts, the legislation is expected to boost footfalls, open new avenues of growth and give retailers a level-playing field with e-commerce players. However, retailers need to realign their internal operations in terms of stocking, inventory management and housekeeping to ensure quality consumer experience, they said.

The retail sector accounts for about 15% of the country’s GDP, and this is expected to increase further with round-the-clock operations. The total number of people employed by the retail industry could go up by 50%, to six crore by 2020. At present, the retail industry employs four crore people.

The Retailers Association of India said this is merely one of the steps for facilitating ease of doing business, as the Act covers only certain aspects of retail. The need is to look at retail as a driver of India’s economy and address all aspects through a comprehensive national retail trade policy, Kumar Rajagopalan, chief executive officer, Retailers Association of India, said.

Although hospitality players have welcomed the move, the sector has had mixed reactions with regard to numerous challenges that need to be considered before the law is implemented, like night life, additional manpower, utility bills and safety.

Even lack of sufficient police force, possible violations of labour laws and the additional costs of maintaining the infrastructure and staff are some of the things to worry about.

Labour law experts are apprehensive about the legislation. According to senior lawyer Colin Gonsalves, the existing regulatory regime converts “labour into slaves.”

Gonsalves said that under the prevailing statutes, overtime has been doubled, minimum wages have been undermined, no labour protection is there in small establishments, and even the right to form a trade union is partly curtailed. “Besides, inspection system is hardly there,” he said.

“The whole purpose is to take away the legal protection given to the labour class and turn them to slaves. The laws are going in a wrong direction. Instead, the Narendra Modi government should have adopted the German model—higher wages, skill development, equipment safety and workers’ happiness,” the Supreme Court lawyer said.

However, overall, there is much to cheer about the model law. The onus to implement the law lies with states—it is a model law that gives liberty to them to fine-tune it to suit their requirements. If all goes well, these changes may usher in the next round of social change in the country, eliminating the licensing bureaucracy and corruption, and creating a vibrant environment which is critical for economic growth.

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