covid and changing labour laws

    Recently, number of state governments made key changes in the application of labour laws. What are the labour laws in the country, and how can such changes impact firms, their workers, and the economy?

    As the economy struggles with the lockdown and thousands of firms and workers stare at an uncertain future, some state governments last week decided to make  significant changes in the application of labour laws, UP, the most populous state, has made the boldest changes as it summarily suspended the application of almost all labour laws in the state for the next three years.

    On the face of it, these changes are being brought about to incentivise economic activity in the respective states. Keeping aside the questions of law — labour falls in the Concurrent List and there are many laws enacted by the Centre that a state cannot just brush aside — the key question is: Are these the long-pending reforms of the labour market that economists used to talk about, or is the suspension of labour laws an ill-timed and retrograde step that critics have made it out to be?

    The Minimum Wages Act covers more workers than any other labour legislation. The most contentious labour law, however, is the Industrial Disputes Act, 1947 as it relates to terms of service such as layoff, retrenchment, and closure of industrial enterprises and strikes and lockouts.

Could the government have done something else?

instead of creating exploitative conditions for the workers, the government should have — as most governments have done across the world partnered with the industry and allocated 3% or 5% of the GDP towards sharing the wage burden and ensuring the health of the labourers “because if Covid hits them, the whole country would be sunk”.

Moreover, beyond labour regulations, firms faces a lot of other hurdles like the shortage of skilled labour and the weak enforcement of contracts etc.

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