State cleared 72 factory closures in 20 yrs, nearly 40% of applications
Mumbai: As the state moves to reform laws on factory closures and retrenchments, the latest available data shows that it cleared the closure of only 72 factories with 100 and more workers in Maharashtra in the two decades between 1994 and 2013.
During this period, 185 such factories had applied for closure permissions. The state cleared 39% of cases and rejected 23.7% or 44 cases. Also, 24 cases were withdrawn and 42 referred to the industrial court, according to data from the labour commissioner’s office. This is a small fraction of the state’s factories. Maharashtra has 37,234 factories with 25.16 lakh workers.
Officials say this shows very few factories opt to close down and those that do are facing heavy losses. As a result, laws need to be liberalized to allow for easier closure options as long as workers are compensated, they
(for factories with over 100 workers)
hout state nod if they give 60 days’ notice and 60 days’ compensation to workers for each year of continuous service.
Major trade unions including those affiliated to the ruling parties have opposed the reforms. “The requirement of state clearances meant there was a check on companies. There were negotiations with workers which often resulted in higher compensation than that offered in the Act,” said Sanjay Wadhavkar of Hind Mazdoor Sabha. “Currently, factories prefer to shift to states which offer concessions. This is a loss to the state and a setback to workers.”
But companies say under current laws, they are shackled to loss-making factories. “If they can easily close loss-making factories, there will be greater investment. No business can survive heavy losses. See what happened after Mumbai’s textile mill strike,” said former Indian Merchants Chamber president Prabodh Thakker.