Many states have tweaked their labour laws recently to woo investors. Examine the constitutional provisions that enable states to do so. Also state the positives as well as the downside of such measures. ( 15 marks )
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A distinction can be made between labour reforms and what the states have done. Like UP has summarily suspended almost all the labour laws. That can hardly be said as labour reforms. Reforms means reducing the cost of compliance, reducing the no of laws, rent seeking etc. That would lead to greater formalisation ( now 90 % informal). But summary suspension of labour laws like this will rather make the distinction between formal and informal irrelevant. And regarding investment, the present slowdown is mainly demand side(capacity utilisation is far below the optimum in many plants). So such measures which will rather reduce the wage will reduce demand, and hence reduce investment. .. these points can be added in the negatives . Way forward- an overarching labour reforms like the 4 labour codes mooted by the centre is the need of the hour.
Another point in the downside- may violate ILO convention
In India, the reforms in labour laws have been demanded since long not only by the industrial sector but also from the labour unions. But it is not possible to satisfy each and every stake-holders and also political parties have their own secured political agenda, that's why this demand always has been neglected by the govt. This also became the reason why multinational companies are also hesitant to invest in India.
Now, Due to this COVID-19 outbreak, our creeping Indian economy is in serious need for labour reforms. states like U.P., Rajasthan, M.P., Gujrat even laid the foundation of reforms in labour laws through ordinances. It is also known to us that "Labour" is a subject matter of concurrent list under the constitution. So, it is obvious that the state legislature can make laws and enact them with the kind approval of the union.
Positives:-
--> It can be a good step to eradicate the problem of unemployment up to a greater extent.
--> Our Indian economy will get a bump boost up and hike in G.D.P. growth can be witnessed as reforms in labour laws will attract the foreign companies and surely they will invest.
Downsides:-
--> The suspension of the minimum wages act by the states can create an environment of exploitation by the companies to their labourers.
--> Due to the suspension of the labour laws, the workers will stuck into travails of the capitalists, which again invites the environment of "Forced Labour" in practice.
--> Reforms in labour laws is a threat to the social security of the labourers.
--> Organised sector jobs will also be converted into Unorganised sector which will lead to sharp drop in the wage rate of the labourers for sure.
More organized sector jobs will be created. You have written the opposite. Other things i will discuss. Keep following the discussion. Your flow is good.
@Ashis Panda ohk sir .... I will rectify it !!! One thing I want to ask u that whether the language should be flowery means some more far-fetching vocabs should be used or is it ok ??
Language sd be simple
Evolution, preparation and implementation of constitutional laws in order to improve the working condition, provision of socio-economic security of workers and their family members can be termed as "labour reforms." The reforms mooted by the Uttar Pradesh and Madhya Pradesh governments are wide-ranging in their scope and they will have severe consequences on labour welfare. They appear to be aimed less at wooing investors and more at taking advantage of the opening in policy 'agendas' created by the covid-19 crisis. Manpower shortage has been a major obstacle for companies as more and more migrant workers return to their hometowns. There is a need for greater flexibility at this juncture, which the MP and Up governments have responded to. One of the most critical constituents of the economic activity is the wellbeing and security of the workforce that enables higher productivity and success. This labour reforms has not only a positive impact but also a negative impact. Rarely, investors are attracted by easier labour laws. World Bank surveys revealed that labour law is only the fifth-biggest problem employers face. Also, MP and Up are poorly governed states with poorer infrastructure and human capital. FDIs will suddenly not flood into Uttar Pradesh and Madhya Pradesh merely because of labour law relaxation. If domestic investment was growing slowly pre-covid,then with the post-covid collapse in demand will lead to less economic growth. State governments will face severe shortage in revenue post-lockdown. Migrant workers have returned to MP and Up from Kerala, Delhi, Gujarat and Maharashtra. So allowing longer hours with overtime may enable to find work.
You misinterpreted the 1st part of the question. It is asking about how a state law can prevail over a central law which is already existing ? Well, the state law can override if the bill was reserved for president Art 201. Let other answers come then i ll talk about 2nd part.
Answer is not following coherence bit haphazard though you have covered relevant points. Try to maintain a flow. Answer in simple terms with our own vocabs. No need to appear very artistic. But yes that flare sd be there It can be with simplicity as well.
Thank you sir..I will rectify it.
Labour laws and Contract comes under the Concurrent List of Seventh Schedule. Hence both the State and Centre could make laws related to it.
In order to promote manufacturing, states like Madhya Pradesh, Haryana etc tweaked their laws under the domain of Central Laws and state like Uttar Pradesh had over ridden Central Laws.
Issues with the Old Archaic Laws:
1- Too much boundations on employers. Example: Prior permission required for retrenchment, Limits on Overtime work etc
2- Multiplicity of Laws led to corruption and harassment of employers.
3- Led to informalization of jobs and hence detrimental for workers.
4- Dwarfism: Industries didn't grew much and remained old and small.
The current changes made by the State government are bold and could lead to:
1- Growth of Industries: More labour and Capital will lead to Industrial growth.
2- Increase in Global Competitiveness
3- Formalization of jobs: Increase in capital will inspire the industrial units to work on improvement of skills of workers.
These reforms has downsides too but could be resolved using proper measures:
1- Environment degradation: Industrialization leads to deterioration of air, water etc.
Effective measures like use of technology could be used to reduce the impact
2- Forced Labour: Labourers would have to work for long time with less wages which in itself is violation of Right to dignified life.
Transparent contracts and effective social security measures could be a key to reduce worker distress.
3- States demeaning Central Laws will set dangerous precedence and it is not good for Indian Federalism.
Centre and State should work in tandem for the welfare of employers and employee.
4- Informalization of jobs: Retrenchment could become a common phenomenon.
Our Justice system should be made more robust to tackle this issue.
Covid -19 is expected to shift the manufacturing and could provide opportunity to Labour surplus states. An equilibrium should be maintained which would benifit both the Workers and the Industries.Centre and States should work together with the spirit of Co-operative Federalism.
Try answering on these lines ( brief) 1. 7th sch. Concurrent 2. Art 201. So overrides +ves competitiveness, eodb, excessive union activism will come down( you remember what had happened in Manesar Maruti) Preference to labour over capital. More formal employment Will open way for national labour codes (4 already designed- you know that ) Will push/necessitate skill development -ves Loss of employment More hire and fire Top management ll hv more say. Social unrest. Adequate skill for joining formal jobs is unavailable in our workforce.
Nd guys join the mobile app called wix. You can be better connected. *utkal Pragati doesn't do any promotion whatsoever of any business organization.
Labour reforms mean taking steps in increasing productivity and employment opportunities in the economy in such a way that the interests of the workers should not compromise. In Indian Constitution Labour laws and contract comes under the Concurrent list of seventh schedule. In the constitution Fundamental Rights and Directive Principle of State Policies enshrined in part - 3 and part - 4 mentions working class related laws. 1) Article 23 - prohibits forced labour. 2) Article 41 - Right to work 3) Article 42 - Provision for secured working environment and maternity leave 4) Article 43 - Right to living wage and conditions of work. Central Government is comprising of 44 central labour into 4 codes, i.e; 1) wages 2) social security 3) industrial relations 4) occupational health and safety. Due to corona virus pandemic and induced lock down economic activities have slowed down. To bring economic activity back on track Uttar Pradesh, Madhya Pradesh, Rajasthan, Gujarat state governments have changed their labour laws by the way of ordinance or executive orders for the next three years. But labour laws related to bonded labour, deployment of women and children and timely payment of salaries are not changed. Merits - 1) Encourage industrial activities by relaxing labour laws and give opportunity for attractive investment. 2) Providing employment to workers who have migrated back to their respective states. 3) Increase revenue of the states which have fallen due to closure of industrial units during COVID - 19 lock down. 4) Generate more employment with fewer labour regulations which will increase formal employment. Demerits - 1) Exemption of provision on rights of workers which includes obtaining details of their health and safety at work, to get a better work environment which include drinking water, ventilation, creches, weekly holidays and intervals of rest etc. 2) Employees will exempt from penalties in case of violation of labour laws. 3) Create insecurity among the labourers which cause loss of employment 4) Violates I.L.O. provisions regarding labour laws. 5) Inadequacy of formal employers. Conclusion- Government should focus on 4 labour codes for sustainable industrial growth in India.
At the onset of COVID-19, governments have been trying to save businesses and bring in new investments.Some states like Rajasthan and UP have tweaked their labour laws to woo investors.Labour being a concurrent subject gives the Parliament and Legislatures to make /amend laws on labour.
However,these actions might not go well with constitutional provisions.
•Article 23 might be violated if forced labour (begar) takes place.
•Article 24 which prevents employment of a child under 14 years in hazardous areas,factories and mines can also be violated
•This would be contrary to the Directive Principles of State Policy which directs the state to preserve the health and safety of workers and children against forcible abuse.
Positive Implications:
•This would help companies avoid complex labour laws of the state and nation thus ensuring was of doing business.
•More investment can result in creation of.jobs and thus in line with Make In India program.
Negative Implications:
•Health and safety of workers would be compromised.Sanitation ,creche facilities and other provisions will go for a toss.
•Job security would be compromised and wages would go low which would push the workers into poverty.
•People would often work for extensive hours in inhumane conditions.
Despite all the efforts of the government to ensure the viability of businesses,labour laws shouldn't be completely wiped out.Reforms to facilitate ease of doing businesses is the need of the hour.
and will go a long way in fulfilling the SDG goals of (no poverty)1,(good health and well being)3 and decent work and economic growth)8.
Recently some states like gujarat, himachal pradesh diluted labour laws by increasing working hours of the labourers while madhya pradesh and uttar pradesh have frozen their labour laws. Seventh schedule of our constitution has 3 lists that dictate the distribution of powers between centre and state. Labour is in concurrent list and hence, both centre and state can frame laws and implement it. This decision of many states has both positive and negative implications on economy and country as a whole. Positives- - It will attract investors as flexible labour laws work in their favour. - State's own revenue like state excise, state VAT etc has been affected due to lockdown. When more manufacturing activities take place in a state it can boost state's fiscal needs and help them cope with the pandemic. - The pent up demand can aggravate after lockdown. So this will need flexible working hours to meet the demand and avoid inflation. - It will lessen the risk of workers losing their jobs if companies(that are hit due to lockdown) can earn good profit through flexible labour laws. - This can be seen as an attempt to revive our slumping economy. Negative implications- - Exempting companies from minimum wages act puts a direct risk on the workers on getting their wages reduced and bare necessities cant be met through this. - The slump in economy is mainly due to low consumer demand. Reducing wages will also further reduce demandand can worsen the economic situation. - Unregulated labour laws tend to informalisation in the job sector. So these workers can get stripped off their social security benefits. - Such decisions have an effect of creating political instability because trade unions and labour unions network are strong. This will be counter productive since investors prefer a country with political stability. Article 41 says that state should secure its citizens the right to work whereas article 42 talks about securing just and humane working conditions for the workers. Hence a balance needs to be struck between the two to realise the objectives of a welfare state.
Good analysis. You have missed Article 201. Add some points from the answer I have posted. That will complete your answer.
Thank you sir i will keep those points in mind