OECD to India: Provide social, labour protection to workers irrespective of status, size, activity of firms

By A Representative
Even as seeking removal of existing “barriers to formal employment” and abolition of “the most restrictive provisions" of the Industrial Dispute Act that require "prior government permission for employment termination and exit decisions", the apex body of European nations has asked the Government of India that any new changes in labour laws should aim at providing “a minimum floor of pay and social and labour protection conditions” for all workers, “irrespective of the status, size and activity of the firm.”
The Organization for Economic Cooperation and Development (OECD), in a new report on India, has said, the Government of India requires introduction of “a comprehensive labour law which would consolidate and simplify existing regulations. In turn, this would reduce uncertainty surrounding regulations as well as compliance costs for manufacturing companies. The report was discussed a seminar in the Indian Institute of Management, Ahmedabad, during a seminar addressed by OECD chief economist Catherine Mann on February 19.
The report, “OECD Economic Surveys: India 2014”, has said that there are “multitude of labour law”s are not only inconsistent but are creating “confusion and uncertainty and raise labour costs”, the report says, some companies are not even aware of their precise obligations” leading to a situation where what may appear to be non-compliance actually open “the door to corruption by labour department inspectors.”
Particularly referring to what it called “employment protection legislation (EPL)”, the report states, the protection is particularly high for “regular employment … in industrial establishments with more than 100 workers, largely because industrial firms are required to obtain prior government permission to dismiss one or more workers.”

India's labour laws are more restrictive than most countries: OECD

Favouring moves by India in favour of labour “reforms”, the OECD said, “Bolder steps are needed”. It added, “Initiatives have been taken at the central and state government levels to reduce the detrimental impacts of labour regulations.” Thus, the central government has already “allowed states to exempt enterprises in various economic zones (e.g. NMIZs, SEZs or Export Processing Zones) from several labour laws.”
In 2014, the new government introduced Bills for “amendment in the Factories Act and Apprenticeship Act” and is considering to introduce “a single window – a website – to help businesses meet compliance requirements for various labour laws”, OECD said, adding, “The new system would also make labour inspections more transparent by using a random computerised method and the redressal of grievances more effective.”
But there is uncertainty in the country, it insisted. “At the state level, there is considerable variation in the implementation of the provision of the Industrial Dispute Act (IDA) which requires government permission for layoff and retrenchment of workers and closures of industrial establishments.”
“Some states (e.g. Maharashtra and Gujarat) do not apply the EPL as contained in the Industrial Dispute Act (IDA) and several states have exempted selected industries and sectors from its application. In contrast, others (e.g.West Bengal) have made the IDA more restrictive”, it said.

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