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Chapter # 2.Employment and Labour Reforms

Objectives

  • Complete codification of central labour laws into four codes by 2019.
  • Increase female labour force participation to at least 30 per cent by 2022-23.
  • Disseminate publicly available data, collected through rigorous household and enterprise surveys and innovative use of administrative data on a quarterly basis by 2022-23.
  • Encourage increased formalization of the labour force by reforming labour laws, easing of industrial relations and ensuring of fair wages, working conditions and social security through significant productivity improvements in the economy.

Current Situation

To capitalize on its demographic dividend, India must create well-paying, high productivity jobs. Of India’s total workforce of about 52 crore, agriculture employed nearly 49 per cent while contributing only 15 per cent of the GVA. Comprehensive modernization of agriculture and allied sectors are needed urgently. In contrast, only about 29 per cent of China’s workforce was employed in agriculture (Figure 2.1).1 Industry and services accounted for 13.7 and 37.5 per cent of employment while making up for 23 per cent and 62 per cent of GVA, respectively.2

A significant number of workers, currently employed in agriculture, will move out in search of jobs in other areas. This will be in addition to the new entrants to the labour force as a result of population growth. By some estimates, the Indian economy will need to generate nearly 70 lakh jobs annually to absorb the net addition to the workforce. Taking into account the shift of labour force from low productivity employment, 80-90 lakhs new jobs will be needed in the coming years.

Micro and small-sized firms as well as informal sector firms dominate the employment landscape in India. As per the National Sample Survey (NSS) 73rd round, for the period 2015-16, there were 6.34 crore unincorporated non-agricultural micro, small and medium enterprises (MSMEs) in the country engaged in different economic activities providing employment to 11.10 crore workers. A large majority of these firms are in the unorganized sector. By some estimates, India’s informal sector employs approximately 85 per cent of all workers.3

India also exhibits a low and declining female labour force participation rate. The female labour force participation rate in India was 23.7 per cent in 2011-124 compared to 61 per cent in China, 56 per cent in the United States.5

Recognizing the high cost of compliance with existing labour regulations and the complexity generated by various labour laws at the central and state levels, the central government has recently introduced policies to make compliance easier and more effective. They are also simplifying and rationalizing the large and often overlapping number of labour laws. These measures include moving licensing and compliance processes online, simplifying procedures and permitting self-certification in larger number of areas. One of the government’s key initiatives is to rationalize 38 central labour laws into four codes, namely wages, safety and working conditions, industrial relations, and social security and welfare. Of the four codes, the one on wages has been introduced in the Lok Sabha and is under examination. The other three codes are at the pre-legislative consultation stage and should be completed urgently.

The government has put in place several schemes to help generate employment. These include the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), MUDRA Yojana, Prime Minister’s Employment Generation Programme and Pradhan Mantri Rojgar Protsahan Yojana. Additional initiatives aid job creation through providing skill development, easing access to credit and addressing sector specific constraints. The government also made the EPFO premium portable so that workers can change jobs without fear of losing their provident fund benefits.

The government has recently made publicly available the data on employment collected by the Employment Provident Fund Organization (EPFO), Employees’ State Insurance Corporation (ESIC) and National Pension Scheme (NPS). With MOSPI collecting employment data through its enterprises and household surveys – particularly the Periodic Labour Force Survey – and the focus on improving payroll data, the effort is to vastly improve availability of reliable employment data and release it on a regular basis.

Constraints

  • Productivity across all sectors. A large share of India’s workforce is employed in low productivity activities with low levels remuneration. This is especially true of the informal sector where wages can be one twentieth of those in firms producing the same goods or services but in the formal sector.6
  • Protection and social security. A large number of workers that are engaged in the unorganized sector are not covered by labour regulations and social security. This dualistic nature of the labour market in India may be a result of the complex and large number of labour laws that make compliance very costly. In 2016, there were 44 labour laws under the statute of the central government. More than 100 laws fall under the jurisdiction of state governments.7 The multiplicity and complexity of laws makes compliance and enforcement difficult.
  • Skills. According to the India Skill Report 2018, only 47 per cent of those coming out of higher educational institutions are employable.8
  • Employment data. We currently lack timely and periodic estimates of the work force. This lack of data prevents us from rigorously monitoring the employment situation and assessing the impact of various interventions to create jobs.

Way Forward

  1. Enhance skills and apprenticeships
  • The Labour Market Information System (LMIS) is important for identifying skill shortages, training needs and employment created. The LMIS should be made functional urgently.
  • Ensure the wider use of apprenticeship programmes by all enterprises. This may require an enhancement of the stipend amount paid by the government for sharing the costs of apprenticeships with employers
  1. Labour law reforms
  • Complete the codification of labour laws at the earliest.
  • Simplify and modify labour laws applicable to the formal sector to introduce an optimum combination of flexibility and security.
  • Make the compliance of working conditions regulations more effective and transparent.
  • The National Policy for Domestic Workers needs to be brought in at the earliest to recognize their rights and promote better working conditions.
  1. Enhance female labour force participation
  • Ensure the implementation of and employers’ adherence to the recently passed Maternity Benefit (Amendment) Act, 2017, and the Sexual Harassment of Women at Work Place (Prevention, Prohibition and Redressal) Act. It is also important to ensure implementation of these legislations in the informal sector. Further details may be found in the chapter on Gender.
  • Ensure that skills training programmes and apprenticeships include women.
  1. Improve data collection on employment 
  • Ensure that data collection for the Periodic Labour Force Survey (PFLS) of households initiated in April 2017 is completed as per schedule and data disseminated by 2019.
  • Conduct an annual enterprise survey using the goods and service tax network (GSTN) as the sample frame.
  • Increase the use of administrative data viz. EPFO, ESIC and the NPS to track regularly the state of employment while adjusting for the formalization of the workforce.

     5.   Ease industrial relations to encourage formalization

  • Increase severance pay, in line with global best practices.
  • Overhaul the labour dispute resolution system to resolve disputes quickly, efficiently, fairly and at low cost.
  • Strengthen labour courts/tribunals for timely dispute resolution and set a time frame for different disputes.
  1. Wages
  • Make compliance with the national floor level minimum wage mandatory.
  • Expand the Minimum Wages Act, 1948, to cover all jobs.
  • Enforce the payment of wages through cheque or Aadhaar-enabled payments for all.

      7.Working conditions and social security

  • Enact a comprehensive occupational health and safety legislation based on risk assessment, employer-worker co-operation, and effective educational, remedial and sanctioning. Workers housing on site will help to improve global competitiveness of Indian industry, along with enhancing workers’ welfare.
  • Enhance occupational safety and health (OSH) in the informal sector through capacity building and targeted programmes.
  • Ensure compulsory registration of all establishments to ensure better monitoring of occupational safety as well as recreation and sanitation facilities.
  • Enhance transparency in the labour inspection system by allowing online complaints and putting in place a standardized and clear mechanism.



Chapter # 41. Data Led Governance and Policy Making

Objectives Evidence based policy making should be made integral to the overall governance structure in New India, 2022-23. To achieve this, timely gen

Chapter # 40. Optimizing the Use of Land Resources

Optimizing the Use of Land Resources-Ensuring that land markets function smoothly, through efficient allocation of land across uses, provision of secu

Chapter # 39. Modernizing City Governance For Urban Transformation

Objective  City Governance For Urban Transformation To transform our cities into economically vibrant and environmentally sustainable habitats that p

Chapter # 38. Civil Services Reforms

Objective  civil-services-reforms To put in place a reformed system of recruitment, training and performance evaluation of the civil service to ensur

Chapter # 37. Legal, Judicial and Police Reforms

Objective To ensure the safety and security of citizens and ensure access to effective legal systems and speedy delivery of justice. Current Situation

Chapter # 36. The North-East Region

Objectives The North-East Region (NER) should: Have adequate road, rail and air connectivity, waterways, internet connectivity and financial inclusion

Chapter # 35. Balanced Regional Development: Transforming Aspirational Districts

Objective  Balanced Regional Development: Transforming Aspirational Districts Achieve balanced development in India by uplifting 115 districts, curre

Chapter # 34. Scheduled Castes (SCs), Scheduled Tribes (STs), Other Backward Classes (OBCs), Other Tribal Groups and Minorities

SCs, STs, OBCs, De-Notified Tribes (DNTs), Nomadic Tribes (NTs) and Semi-Nomadic Tribes (SNTs) Objective  To accelerate the socio-economic developm

Chapter # 33. Senior Citizens, Persons with Disability and Transgender Persons

SENIOR CITIZENS  Objective To ensure a life of dignity, social security and safety for senior citizens, enabling them to actively participate in econ

Chapter # 32. Gender

Objective  To create an enabling environment, sans institutional and structural barriers. To enhance the female labour force participation rate to at

Chapter # 31. Nutrition

Objectives  Under POSHAN Abhiyaan, achieve the following outcomes by 2022-23, compared to the baseline of 2015-16 (National Family Health Survey-4):

Chapter # 30. Universal Health Coverage

Objectives  On the strong platform of Pradhan Mantri – Jan Arogya Yojana (PM-JAY): Attain a coverage of at least 75 per cent of the population

Chapter # 29. Human Resources for Health

Objectives  Achieve a doctor-population ratio of at least 1:1400 (WHO norm 1:1000) and nurse-population ratio of at least 1:500 (WHO norm 1:400) by 2

Chapter # 28. Comprehensive Primary Health Care

Objectives  Under Ayushman Bharat, scale-up a new vision for comprehensive primary health care across the country, built on the platform of health an

Chapter # 27. Public Health Management and Action

Objectives  To revamp radically the public and preventive health system in the nation through the following strategic interventions: Mobilize public

Chapter # 26. Skill Development

Obejctives  For harnessing the demographic advantage that it enjoys, India needs to build the capacity and infrastructure for skilling/reskilling/up-

Chapter # 25. Teacher Education and Training

Objectives There cannot be a quality education system without quality teachers. Therefore, a thorough revamp of the entire ecosystem of teacher educat

Chapter # 24. Higher Education

Objectives  Increase the gross enrolment ratio (GER) in higher education from 25 per cent in 2016-17 to 35 per cent by 2022-23. Make higher education

23. School Education

Objectives Universal access and retention: o Hundred per cent enrolment and retention at elementary education and secondary education levels; achieve

Chapter # 22. Sustainable Environment

Objective  The objective is to maintain a clean, green and healthy environment with peoples’ participation to support higher and inclusive economic

Chapter # 21. Water Resources

Objectives By 2022-23, India’s water resources management strategy should facilitate water security to ensure adequate availability of water for l

Chapter # 20. Swash Bharat Mission

Objectives The key objectives of the Swachh Bharat Mission include: 1. Making India Open Defecation Free (ODF) by October 2, 2019. 2. Carrying out ext

Chapter # 19.Smart Cities for Urban Transformation

Objectives  Leverage the ‘Smart Cities’ concept in select urban clusters to: Drive job creation and economic growth. Significantly improve effici

Chapter # 18. Digital Connectivity

Objectives Given the relevance of digital connectivity to economic growth and the need to eliminate the digital divide by 2022-23, India should aim to

Chapter # 17. Logistics

Objectives Achieve multi-modal movement of cargo on par with global logistics standards. Reduce the logistics cost to less than 10 per cent of GDP fro

Chapter # 16.Ports, Shipping and Inland Waterways

Objectives  Double the share of freight transported by coastal shipping and inland waterways from 6 per cent in 2016-171 to 12 per cent by 2025. Incr

Chapter # 15. Civil Aviation

Objectives Enhance the affordability of flying to enable an increase in domestic ticket sales from 103.75 million in 2016-171 to 300 million by 2022.2

Chapter # 14. Railways

Objectives By 2022-23, India should have a rail network that is not only efficient, reliable and safe, but is also cost-effective and accessible, both

Chapter # 13. Surface Transport

Objectives Increasing the coverage and quality of roads and highways is critical to enhancing connectivity and internal and external trade. By 2022-23

Chapter # 12. Energy

Objectives The government’s on-going energy sector policies aim “to provide access to affordable, reliable, sustainable and modern energy”. At t

Chapter # 11. Minerals

Objectives Double the area explored from 10 per cent of obvious geological potential (OGP) area to 20 per cent.1 Accelerate the growth of the mining s

Chapter # 10. Travel, Tourism and Hospitality

Objectives  Increase India’s share in global international tourist arrivals from 1.18 per cent to 3 per cent. Increase the number of foreign touris

Chapter # 9. Housing For All

Objectives Provide every family with a pucca house, with a water connection, toilet facilities, and 24×7 electricity supply and access. Build 2.9

Chapter # 8. Financial Inclusion

Objectives Banking for the unbanked  o Bank accounts: Ensuring universal access to bank accounts, which are a gateway to all financial services.  o

Chapter # 7.Doubling Farmers’ Income (III): Value Chain & Rural Infrastructure

Objectives • Transform the rural economy through the creation of modern rural infrastructure and an integrated value chain system. • Leverage the

Chapter # 6.Doubling Farmers’ Income (II): Policy & Governance

Objectives Create a policy environment that enables income security for farmers, whilst maintaining India’s food security. Encourage the participati

Chapter # 5.Doubling Farmers’ Income (I): Modernizing Agriculture

Objectives • Modernize agricultural technology, increase productivity, efficiency and crop diversification. • Generate income and employment throu

Chapter # 4.Industry

Objectives Double the current growth rate of the manufac-turing sector by 2022. Promote in a planned manner the adoption of the latest technology adva

Chapter # 3. Technology and Innovation

Objectives India should be among the top 50 countries in the Global Innovation Index by 2022-23.1 Five of our scientific research institutions should

Chapter # 2.Employment and Labour Reforms

Objectives Complete codification of central labour laws into four codes by 2019. Increase female labour force participation to at least 30 per cent by

Chapter # 1 Growth (India @ 75)

Objectives Steadily accelerate the gross domestic product(GDP) growth rate to achieve a target of about 8 per cent during 2018-23 This will raise the

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