Billionaires Azim Premji and Kiran Mazumdar Shaw argue against the labour ‘reforms’ in Indian states⁠— and they are not alone

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  • Indian states including Gujarat, Uttar Pradesh and Madhya Pradesh have suspended several labour laws including minimum wages.
  • However, the idea does not resonate well with the experts.
  • It will only exacerbate the conditions of low wage workers and the way we do business and industry,” said Azim Premji, the founder of Wipro.
  • In fact, this might push more women out of the workforce — which will further drop the Female Labour Force Participation in the country.
Indian states including Gujarat, Uttar Pradesh and Madhya Pradesh have suspended several labour laws including minimum wages. Of these, at least 10 states introduced amendments to the Factories Act — increasing the daily working hours from 8 to 12 hours. The state governments said that diluting these laws will attract more foreign direct investments as well as local investments post COVID crisis.

However, the idea does not resonate well with the experts.

“It was shocking to hear that various state governments, encouraged by businesses, are considering suspending — or have already suspended — many of the labour laws that protect workers. It will only exacerbate the conditions of low wage workers and the way we do business and industry,” said Azim Premji, business tycoon and the founder of Wipro.
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“The migrant workers we find fending for themselves and their families have almost no social security and too little — not too much — worker protection,” he added.

After a notice from the Allahabad High Court on hearing a plea from the UP Workers Front, the UP government also pulled back the order to increase the daily working hours. However, this makes no change to the key labour laws that have been suspended for three years.

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According to Gurcharan Das, a renowned author and the former CEO of Procter and Gamble India, and Kiran Mazumdar Shaw, Executive Chairperson of Biocon, the country needs a model that protects workers — that can help the workers with some protection when they lose their job — before doing away with the labour laws.

There is a need for creating an unemployment Welfare Fund for labour that is funded by the employers and government,” Shaw said in a tweet.



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Impact on female workforce

In fact, on the gender employability front, this might push more women out of the workforce — which will further drop the Female Labour Force Participation in the country — which has already been falling for two decades.

“Be it agriculture or manufacturing, there is already a decline in women’s participation. Women are employed in textiles or food processing, services, hospitality, which will take longer to revive. Only as domestic workers, their work might not see a decline. But even there, their wages will have to co-relate with middle-class household incomes as many households will make cuts or reduce their work to only physically-intensive tasks such as cleaning,” Neetha N, director of the Centre for Women’s Development Studies told ET.

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44 labour laws to be compressed

Meanwhile, the government of India is set to introduce several initiatives for the welfare of workers including universalization of minimum wages, implementing national floor wage to eliminate the regional disparity in wages and more.

The Finance Minister Nirmala Sitharaman recently announced that 44 labour laws have been compressed into four codes, awaiting the approval of the Parliament and the Standing Committees.

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“Such an extreme measure may actually drive a shift in the workforce from the formal to the informal sector. If different states engage in regulatory competition, this could put pressure on systemic wages, hurting both the revenue and mark-ups of staffing companies,” according to a staffing report by Motilal Oswal Group, a financial services company.

See also:
Indian women don’t like being gig workers ⁠— the potentially $455 billion industry has to woo them with fair pay to start with

From minimum wages for all to social security for gig workers ⁠— these are the broad outlines of upcoming ‘labour reforms’ in India
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India's top lawyer Harish Salve says this may not be right time for labour reforms
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