States put freeze on labour laws to get business going

NEWDELHI: Undertaking a radical set of politically controversial economic reform measures, the Bjp-ruled Uttar Pradesh and Madhya Pradesh, two states with substantial workforces, have frozen major labour laws, except basic ones, in the hope that businesses will recoup from the blow of the Covid-19 pandemic and create more jobs on a net basis.

The changes give industries more flexibility in hiring and firing employees, determining their wages, and reduce their liabilities in terms of providing employee benefits. Some economists welcomed the move for clearing structural bottlenecks, possibly leading to greater investment, creating employment opportunities for migrant workers returning home, and positioning India to be able to take advantage of disruptions in global supply chains.

The move, however, also sparked intense criticism from the Opposition, particularly the left parties, trade unions including those affiliated to the RSS, and civil society activists for undermining worker rights, removing protective measures and dismantling the welfare architecture.

To be sure, 90% of India’s workforce, which is employed in the informal sector, won’t be affected by these changes. These apply to those who are in the organised workforce.

While UP suspended key labour laws for three years through an ordinance, MP said it was taking a similar course to put most labour laws on hold for 1,000 days. Gujarat and Uttarakhand are likely to follow suit.