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Mains Practice Questions

  • Q. What are the key objectives of long pending labour reforms in India? Also, highlight the major constraints impeding labour reforms. (150 words)

    15 Jun, 2022 GS Paper 3 Economy

    Approach

    • Describe what constitutes Labour Reform and the need for its implementation
    • Enumerate the various objectives of Labour Reform
    • Discuss numerous barriers resisting its implementation
    • Conclude with the importance of Labour Reforms in job creation and economic growth

    Introduction

    Labour reform essentially means taking steps in increasing production, productivity, and employment opportunities in the economy in such a manner that the interests of the workers are not compromised. Labour policy reforms in India are due for a long time, as the context in which they were framed has changed drastically.

    Body

    Objectives of labour reform in India are as follows–

    • 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.
    • Complete codification of central labour laws.
    • Increase female labour force participation. According to Niti Aayog report, the female labour force participation rate has gone down from 49.7 per cent in 2004-05 to 26.7 per cent in 2015-16 in rural areas which is an alarming trend. Thus, the government needs to introduce reforms for increasing women participation in the labour force.
    • Disseminate publicly available data, collected through rigorous household and enterprise surveys and innovative use of administrative data on a quarterly basis by 2022-23.

    Major constraints in labour reforms:

    • Productivity across all sectors: A large share of India’s workforce is employed in low productivity activities with low levels of 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.
    • 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.
    • Lack of Skill: According to the India Skills Report 2018, only 47 per cent of those coming out of higher educational institutions are employable.
    • Employment data: We currently lack timely and periodic estimates of the workforce. This lack of data prevents us from rigorously monitoring the employment situation and assessing the impact of various interventions to create jobs.

    Conclusion

    Labour reform is a tedious process but once implemented, it will be beneficial for industries and ultimately help in job creation. As a country with a sizable youth population, we should strive to create a conducive atmosphere for industries for better employment generation. The reforms will give the required push for simpler labour laws, and help in economic growth.

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