Budget 2017: Plan to simplify labour laws irks industry

NEW DELHI: Finance minister Arun Jaitley’s announcement in the budget that the government intends to simplify labour laws hasn’t gone down well with the industry, which is apprehensive about action on the ground in the absence of any deadline given to rationalise the 44 labour laws.

Work on the four labour codes began immediately after the BJP-led NDA government came to power in May 2014 and at least two codes, the labour code on wages and the labour code onindustrial relations, are pending for Cabinet’s approval for quite some time.

Prime Minister Narendra Modi had in his Independence Day speech last year talked about labour codes but the entire process was put on the backburner in view of the assembly elections in five states in early 2017.


“We are not sure whether any action will happen around this anytime soon because there was no sense of urgency in the budget announcement related to labour codes,” a labour expert in the staffing industry said, requesting not to be identified. The expert further said,

“We understand that there is a political challengeto it but we have to work our way around considering manufacturing is the biggest need of the hour and that will not kick-start unless we ease our labour laws.”

According to another expert, who also spoke on condition of anonymity, the budget announcement is only to soothe investors coming to India and any progress on labour reforms will be a tough task for the government.

“Labour codes were announced only to send a message to potential investors that the government is seriously pursuing labour reforms. However, the fact that no major labour reform has been undertaken in the last one year may be because of the fear of its repercussions on the assembly elections or lack of intent. This makes it very difficult for industry to believe the government’s intent to simplify labour laws,” the second person said.

Jaitley had said in his budget speech on Wednesday that legislative reforms will be undertaken to simplify, rationalise and amalgamate the existing labour laws into four codes – wages, industrial relations, social security and welfare, safety/working conditions. Archaic labour laws have been cited by foreign investors as a major obstacle to investment.