NEW DELHI: After the conclusion of the Assembly elections in five states, the Centre is likely to embark on spearheading reforms in the labour laws in a bid to give a boost to formal economy and push employment growth. The NITI Aayog claims that the objective of the demonetization to enlarge the size of the formal economy could not be achieved until concrete reforms in the labour laws are not carried out across the country.
“Demonetization has forced the informal and unorganised sector economy to become formal. But it’s under compulsion due to cash in circulation suddenly squeezed due to the decision of demonetization. But once the cash returns back into the system, with the Reserve Bank of India remonetising the economy, the objectives of expanding the formal economy may get hurt. Therefore, reforms in the labour laws have to be carried out not just by the Centre, but the states as well to give incentives to the small enterprises to join formal economy,” said a senior official of the think-tank panel.
While the Parliament enacted the Model Shops and Establishment law along with the amendment in the payment of wages, the NITI Aayog is of the opinion that the pace of reforms in labour laws is too slow to give results in the short span of time. The Centre has shared the Model Shops and Establishment law with all the state governments, which besides other relaxations allows women to work in the night shift subject to the safety conditions. “We hope that all state governments soon roll out the law to give a boost to retail activities in the country and boost employment,” added the official. However, trade unions, including those affiliated to the RSS, have ensured that such reforms are not taken up by the state government barring a few.
“In place of too many labour laws (there are about 40) in the country working as roadblock to the expansion of the formal economy, the Centre will soon unveil a slew of measures to compress them into a set of four or five to help achieve better compliance and enforcement. The NITI Aayog is working with the state governments also to arrive at a consensus on the needed reforms in the labour laws,” said the official, who added that except for Rajasthan, Haryana, Jharkhand, Maharashtra, Telangana, not much have been seen from other states.
The think-tank has also impressed upon the Ministry of Skill Development to give more thrust in skilling of the marginalized people in the rural areas to make them available for absorption in the coming days in small enterprises joining the formal economy to take the benefits of the tax relief to the Small and Medium Enterprises announced in the Budget for 2017-18.