Labour reforms needed in India to attract investors: says Sabharwal

By Jit Kumar
Photo by Shubham Verma on Unsplash

With over 40 central labour laws and 200 state-enacted legislations, India is not an easy place to set up or run a business. So, labour reforms are urgently needed to attract investors in the employment-generating sectors in India, says Manish Sabharwal.

In a recent podcast interview with The Wire media outlet, India’s leading human resources expert Sabharwal said that the country’s labour laws don’t protect employers, nor they are not pro-workers, “they are pro-labour inspectors”.

“You can’t comply with 100 of India’s labour laws without violating 10 of them. There are 17 definitions of wages, 19 definitions of workers, 21 definitions of an enterprise. So, I think that labour law reform does not mean no labour laws,” he said.

Of course, India’s Parliament recently approved three key labour reform bills that will remove impediments to winding up of companies and allow firing of staff without government nod in firms with up to 300 workers from the existing 100.

Manish Sabharwal

“But more is needed,” according to the chairman of Teamlease, India’s leading human resource services company. “Covid-19 has created a policy window for overdue reform, and that the country’s government must take the right step towards this direction.”

“I don’t think anybody is arguing that there should be a few non-negotiables, those should be social security, those to be safe working conditions, but 67,000 compliances, 6,700 filings and 18,000 of those provisions having jail is not protecting our labour.

“I think only a fool or a madman would set up a factory with 50,000 employees in a single location in India with. So, if you want to attract China factory refugees, we’ll have to improve infrastructure, do civil service reform, but have to start with labor laws,” he said.

Once investments come in, there will be jobs. “Unemployment figures have been quite poor for many quarters and it’s six percent as a headline rate but within that it’s the urban youth, the age is between 17 and 21, where it’s actually double digit percentage.”

“The best social security programme is formal job creation. India doesn’t have a jobs problem, it has a formal jobs problem, so formal jobs are the ones which pay higher wages, so if you want a formal job explosion in India, then I think we have no choice but to deal with labor laws,” Sabharwal asserted.

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