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India – Teamlease calls on government to overhaul ‘regressive labour laws’

05 July 2017

Indian staffing firm Teamlease Services has called on the government to overhaul its labour laws and said that the government’s goals of creating 120 million jobs by 2020 would be hard to meet.

According to the Teamlease Labour Laws Eco-system Report 2017 which referenced labour bureau data, there was a slowdown in jobs created per calendar year-from 1,256,000 in 2010 to 493,000 in 2014, which further dropped to 135,000 in 2015. The firm added that the goal of creating 120 million jobs in 24 sectors during 2015 -2020 would be difficult.

“Between 47 central labour laws and 200 state labour laws, India has an over regulated and poorly governed labour law system,” Sonal Arora, Vice President, TeamLease Services said. “Our labour laws have remained dysfunctional, disharmonized, protracted and overreaching. These multiplicity of rules and procedural delays impose unreasonable legislations and transaction cost on businesses. The complex anatomy comprising harassment, corruption and compliance overreach chokes businesses on productivity and competitiveness.”

The report stated, "To kick start the job creation engine the government must immediately overhaul the most regressive labour laws in India, viz., Trade Union Act, Industrial Disputes Act and Contract Labour Act."

Teamlease also cited a cash crunch caused by the demonetisation of high-value currency notes, which affected many small manufacturing units, as a crucial factor behind job losses in the informal economy.

“The central government has effected 54 changes in the Apprenticeship Act, Factories Act and Labour Laws Act during the past two years but these "initiatives are too late and too little,” the report said.

The report analyses the labour law ecosystem by state and links it to the ease of setting up businesses, demand for talent and supply gaps and compliance with regulatory frameworks in the states. The report showed that with a few exceptions (notably, Andhra Pradesh), states scoring well on their labour law regime parameters carry demand-supply surplus as well.

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