India has most likely pipped China as the most populous country on Earth, amid cries of wasted demographic dividend and the potential to emerge as a manufacturing behemoth.
In the base case scenario, if replicating China’s success story is one of the bars, India needs to pay heed to companies seeking uniformity and modernisation of labour laws.
India’s labour codes have long been criticised for favouring job security, rather than job creation, a remnant of socialist-era policymaking.
Prohibition of contract workers, strict laws pertaining to employees’ termination, and unionising are some examples.
“India's current labour laws are strewn with redundancy, and overlap, creating a high compliance burden. Although many states have already issued rules and draft notifications are available, the government has yet to implement the new labour codes,” said Rishi Agrawal, CEO and Co-founder of Teamlease Regtech.
Among India’s 63 million enterprises, only 1 million are formal enterprises, covering their workforce under labour laws. 62 million enterprises are small and informal and more than 90% of India’s labour force works in them. As a result, less than 10% of India’s workforce benefits from the labour laws.
Agrawal says that under India’s current labour compliance framework, employers face a host of challenges like several different permutations of minimum wages, and numerous registrations/licenses/exemptions under different acts.
There is vast scope for physical interaction...
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