Article: Indian labour laws and the changing nature of work


Indian labour laws and the changing nature of work

How responsive have our labour reforms been to the changing nature of work?
Indian labour laws and the changing nature of work

A look at the workforce of India shows a unique dichotomy today. On one hand, the organized sector which is marked with fairly stable wage structure and is often highly regulated, employs a fairly low proportion of the total workforce. This, while the unorganized sector still employs a major share of the workforce who often work in unregulated conditions with fairly low wages. Out of the total employed within the formal sector, a significant population finds employment in the public sector while the private sector, although in news most of the times, ends up getting the least share of the pie.

Off late both the sectors, the private and public sector, are heading towards an increased usage of labour substituting technologies. Increased automation of processes and adoption of newer technologies have led to many talent shifts. And most of these talent shifts have come at the cost of many being fired or being redeployed. Take the recent case of the layoffs that have happened within the IT and Telecom sectors. And the impact of the changing nature of work is bound to spread across sectors.

According to the Future of Jobs report by the World Economic Forum published last year the landscape of skills is changing quite fast. Technological disruptions like machine learning and robotics will lead to the automation of specific jobs. Currently, mobile internet and cloud technology along with Big Data applications are considered the biggest drivers of change. But moving towards 2020 the report shows a significant rise in robotics, autonomous transportation, and artificial intelligence as drivers of change. These disruptions would free up workers for newer tasks and their employment would demand an update of their skill sets. Even the jobs which are relatively stable may require a regular upgrade of skill sets as they now operate in constantly evolving ecosystems. And by 2020, more than a third of the desired core skill sets of most occupations will comprise skills that are not yet considered crucial to the job today. Such shifts in talent preferences are bound to impact the global economy and by extension the way we look at growing the ambit of jobs within the organized sector in India. In order to counter the negative effects, many labour reforms are being into consideration.

Universal Basic Income

Universal Basic Income is the concept of providing each individual of the country a fixed amount of money that distributed through the government and other public means of distribution. Although the concept was originally discussed within the Planning Commission during the 1960s, it has recently resurfaced as a possible alternative the many welfare schemes currently operating within the country. The IMF recently came out with a statement that pegged UBI as more an effective solution to energy “tax subsidies” which are “typically characterized as fraught with inefficiencies and inequities”. Although many believe that an introduction of UBI might create distortions within the labour market and increase the fiscal responsibility of the government, the changing nature of work might soon require the government to create some kind of social security net as soon the workforce would find itself in need of adapting to changing talent preferences quite often. In addition, towards being a vital tool in eradicating poverty, UBI might soon become helpful in counteracting automation based unemployment.

Minimum wages

The Code of Wages Bill which is currently in the Lok Sabha is a part of the governments’ effort to rationalize the current Labour Acts of the country. As a part of this reform, The Code on Wages Bill 2017 will subsume 4 existing laws of wages — the Minimum Wages Act, 1948; the Payment of Wages Act, 1936; the Payment of Bonus Act, 1965; and the Equal Remuneration Act, 1976. Once the Code on Wages is enactment, all these four Acts will get repealed.

The aim of Bill is to provide a national framework of setting minimum wages, increasing the ambit of people who are impacted by it, and creating a system of updating minimum wages with the passage of time. It also introduces the concept of statutory National Minimum Wage for different geographical areas.

It will also ensure that no State Government fixes the minimum wage below the National Minimum Wages for that particular area as notified by the Central Government. Although helpful to employees in principle, its approval through Lok Sabha without significant changes and its eventual implementation would still remain a challenge.

Labour laws

The formation Code of Wages Bills is a part of a larger move by the central government to codify the various different Labour Act in place into four broad categories Code on Wages, Code on Industrial Relations, Code on Social Security and Code on occupational safety, health and working conditions. Many have suggested that such codification process of Labour Laws in India stand to benefit the working community as a whole—both employees and employers—as it reduces the complications and friction that arises and helps streamline the process. Labour Law reforms are also necessary to introduce greater flexibility in their implementation as it helps enhance the ease of doing business. This according to the NITI Aayog’s Ease Of Doing Business report is the reason why many firms tend to avoid labour-intensive sectors, owning to cumbersome compliance with labour related regulations. Although such moves might be beneficial, the debate for such a change should be more inclusive of the parties that it affects and taking a hasty approach wouldn’t not advisable.

Our Skill development programs

The final component of preparing the workforce of tomorrow is to create exhaustive skill building and training programmes that in tune with the incoming changes. This ensures their quick absorption into the economy again. Although in recent times there has been an effort in creating robust skilling programs, the reality seems quite far off the intended results. Data revealed regarding the Pradhan Mantri Kaushal Vikas Yojana (PMKVY) stated that of the 30.67 lakh candidates who had been trained or were undergoing training across the country in June 2017, only 2.9 lakh had received placement offers.

The impact of automation and changing nature of work is also spreading to many ‘urban-centric’ jobs where people require reskilling instead of the traditional skill-building activities. This is a gap where the private players, due to their quick response time and expertise in content, can effectively bridge. Our skill development plans should aim at addressing such issues in a comprehensive and relevant manner.

Economic growth is the bedrock of any job growth strategies. Thus it’s come as a little surprise that one of the ways that the government aims to boost productivity, and in turn create avenues for job growth, is to undertake significant labour law reforms. But the changing nature of work points to a world where increased productivity and efficiency don’t necessarily lead to the increase in number and quality of jobs. So in order to offset the negatives of changing talent preferences, both within the private and public sectors, steps have to be taken to that fulfil today's need to grow and tomorrows ability to sustain.

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Topics: Skilling, Employee Relations

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