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The lagging manufacturing sector

  • Despite low wages, India is not a global manufacturing hub, even while being one of the fastest growing service sectors in the world
  • India’s service sector has grown at an annual rate of 9% since 2001, and contributed 57% of the GDP in 2012-13
  • The industrial sector, meanwhile, only recorded a negligible increase and contributes nearly half at 26% of GDP
  • Despite the availability of human resources, India has not been able to leverage its demographics for industrial development

This disparity is considered to be an outcome of:

  1. High rates of corruption
  2. Excessively complex worker-centric labour regulations
  3. Low labour productivity

Issues in Indian labour laws:

#1. Archaic laws

  • In the pre-independence period, British colonialists in India suppressed labour rights, trade unions and the freedom of association among workers. As a result, labour activism became a part of the Indian freedom struggle
  • In 1950, the newly framed Constitution of India looked to undo these wrongs by including fundamental labour rights, along with complex labour laws. These laws made hiring additional workers increasingly difficult
  • Despite several decades of economic progress, these laws have not been amended or reformed in order to foster a friendlier climate for business

#2. Labour productivity

  • India has low labour productivity in comparison with other developing nations
  • As a result, in the early days of offshoring, Western firms showed greater interest in setting up manufacturing facilities in Thailand, Mexico, China, Vietnam and Philippines rather than in India
  • All of these countries had as bad a record of bureaucratic corruption as India did at the time, but labour productivity was found to be higher

#3. Politics

  • In Kerala alone, for example, there were nearly 363 hartals between 2005 and 2012, causing loss of working days
  • In addition, in the 1970s and 1980s, Indian politics was dominated by socialists who created the impression that profit making by private enterprises is undesirable
  • Policymakers also further strengthened India’s complicated labour laws

#4. Complexity

  • Labour is a subject in concurrent list of the Constitution of India. Thus both centre and states can enact laws on labour matters
  • There are about 45 central government laws and more than 100 state statutes, sometimes overlapping or contradicting

#5. Rigidity

  • India has one of the most rigid labour regulatory frameworks in the world
  • Example- Industrial Disputes Act of 1947 stipulates that a firm with 100 employees or more cannot close down without government permission
  • Such laws curtail the growth of a firm by forcing it to hire fewer workers and remain small

#6. Cost of compliance

  • There are also high costs involved in complying with several labour laws
  • Example- under the Factories Act, firms with 10 or more workers and firms which use electric power are required to keep records and file regular reports on matters such as overtime work, wages, attendance, sick leave and worker fines

Need for reforms:

  • As early as in 2002, the Second National Commission on Labour suggested the formulation of labour codes similar to those in Russia, Germany, Poland, Hungary and Canada
  • The commission recommended that labour legislation be divided into five broad areas: industrial relations, wages, social security, safety and welfare, and working conditions
  • It is predicted that the size of India’s workforce will swell to 249 million by 2050, while China’s is set to decline to 166 million during the same period

So how should the Indian government and Indian industry build India’s human resources for the cause of future growth?

Way ahead:

  • Legislative reforms such as those taken up recently by central government and states such as Rajasthan, Gujarat, MP are very much needed
  • Empowering women to enter the workplace and providing them additional support
  • Physically challenged- Increasing current 3% reservation in governmental and government-funded jobs. Also ensuring that workplaces are disabled-friendly
  • Example- Karnataka granted exemptions to IT industries from the Industrial Employment (Standing Orders) Act of 1946. It undermines the employer’s autonomy in determining the terms of employment, working hours, leave grant and similar matters
  • Providing social security to workers in the informal sector would also pave the way for a more satisfied and productive workforce
  • Training and skilling- India has a demographic advantage but in order to utilize this dividend, India needs to invest heavily in training its talent
  • India’s supply of labour presently outnumbers industry’s demand for them. As a result, the government and manufacturing firms need to invest in training and skilling


The guiding principle for India’s labour policy reformers should not merely be ring fencing jobs but safeguarding workers through social assistance, re-employment support (such as that which is provided in several Western nations) and skill building, and supporting employers in employee training and development.


  • From our collection on Govt schemes:
  1. Pandit Deendayal Upadhyay Shramev Jayate Karyakram
  2. From Jan Dhan to Jan Suraksha

Published with inputs from Swapnil

Any doubts?

  1. SuDhAnSu Swain

    Payment of Bonus Amdmt Act 2015: Many private companies don’t pay bonus at all, many pay to those who are drawing not less than 50000 per month. So what is the implementation of this bill?

  2. Ashutosh Sharma

    It is true that the new laws might be misused by some firms. But, these changes are largely aimed at generating more emloyment opportunities. Indian labour laws are archaic and need some changes. However, the government must follow a balanced approaching while handling the matter. But the recent changes are a welcome move.

    1. Devesh Tiwari

      the situation is already unbalanced in favor of medium scale Industrialist, Government wants to give more free hand .

  3. Surej Abraham

    Well said Mr.Devesh. The government is in a way or the other helping industrialists and corporates. Labour rights are being snatched away.

  4. Deephan Balachander

    According to the small factories bill 2014, factories deliberately will reduce their employees to below 40 to get exemption from 6 major labour laws. At the same time new small factories will form due to benefits and this will lead further employment development.

    1. Devesh Tiwari

      company wont reduce number of labours, instead they will go for contract labours and technically they are not employ of company. thats what happening in gujraat and Hariyana . condition in maharashtra is better bcz of strong labour unions.
      but if you look at Odisha , 36gadh ; quality of living is worst than hell.

      1. Deephan Balachander

        I agree with you.

  5. Devesh Tiwari

    Sadly all these reforms will push our poor labour into darkness, by amending trade union act and industrial dispute act they are giving free hand to industriallist, of course it is kind of incentive to create more jobs but at what cost ? At the cost of snatching rights of poor labour ?

    1. Vamsi Simham Kadali

      Struggle for existence ,,makes humans better ,,,same applied here ,,,,quality of work increases

      1. Devesh Tiwari

        Labour reforms should be for labours , not for industrialist , I am not leftist but we can’t simply leave poor workers , present condition is still very poor and by diluting this law we will make it worst !

      2. Devesh Tiwari

        Then I won’t prefer that outstanding quality which is framed with tears and blood of my poor citizens .

New metric for jobs growth to include informal economy


Mains Paper 3: Economy | Development & employment

From UPSC perspective, the following things are important:

Prelims level: Labour Bureau, NITI Aayog, TDS, GSTN, sixth economic census

Mains level: Job growth and related issues


Expanding the scope of job creation in the country

  1. The government has now decided to start counting jobs created in the non-farm informal sector
  2. The government has asked labour bureau under the Union labour ministry to begin counting jobs created in establishments deploying less than 10 people
  3. It means establishments and shops run by a single owner or with one employee too will be counted as employment generation

A pragmatic definition of workers

  1. In July 2017, a government task force headed by then NITI Aayog vice-chairman had suggested adopting a “pragmatic definition” of formal workers
  2. It recommended that workers covered under private insurance or pension, those subjected to tax deduction at source (TDS) and those working in companies excluded from the Goods and Services Tax Network (GSTN) should be considered for counting of jobs

Data coverage

  1. The labour ministry will take the 2013-14 sixth economic census as the base for the new survey of informal jobs
  2. The annual household survey by the department of statistics, the quarterly establishment survey by labour bureau covering eight sectors and 18 subsectors and now the new survey of establishments with less than 10 employees will give a comprehensive picture of jobs in India

India needs to create more salaried jobs: World Bank


Mains Paper 3: Economy | Development & employment

From UPSC perspective, the following things are important:

Prelims level: World Bank, Systematic Country Diagnostic, Demographic dividend, employment-unemployment surveys

Mains level: Rising number of job seekers and low employment opportunities


Draft Systematic Country Diagnostic

  1. India needs to create regular, salaried jobs with growing earnings rather than self-employed ones
  2. This needs to be done in order to join the ranks of the global middle class by 2047—the centenary of its Independence
  3. The World Bank said this in a draft Systematic Country Diagnostic (SCD) for India

About SCD

  1. The SCD is an analytical exercise that the World Bank conducts in all countries
  2. It articulates an analysis of the most important opportunities and challenges to achieving, in that country, the two goals the World Bank Group holds itself accountable for—eliminating extreme poverty and boosting shared prosperity

Demographic dividend may turn into a demographic curse

  1. Between 2005 and 2012, the Indian economy generated about 3 million new jobs per year, while an extra 13 million people entered the working age population each year
  2. There is no recent credible jobs data as India conducts the comprehensive employment-unemployment surveys only once in five years
  3. The World Bank warned that with an increasing number of youths needing employment, the jobs deficit that India faces has the potential to turn the much-awaited demographic dividend into a demographic curse

Reforms in land and labour markets required

  1. The existing stringent labour regulations create a segmented labour market with a high level of protection for a very small fraction of workers in jobs
  2. It creates high barriers for the entry of other workers into the protected segment of the formal labour market
  3. Flexible labour markets that facilitate the reallocation of workers in response to market conditions are important for productivity and job growth
  4. Well-functioning land markets require clearly defined property rights, a reliable land registry, and predictable processes for investment and changes in land-use

[op-ed snap] The manufacturing muddle


Mains Paper 3: Economy | Effects of liberalization on the economy, changes in industrial policy & their effects on industrial growth

From UPSC perspective, the following things are important:

Prelims level: Union Budget, inverted duty structure, GST, Sarva Shiksha Abhiyaan, Annual Labour Bureau survey, Economic Survey 2018, Employees’ Provident Fund Organisation, twin balance sheet problem, Insolvency and Bankruptcy Code

Mains level: Rising youth population and lowering jobs


Correction in IDS

  1. The Union Budget has reinforced the correction of the inverted duty structure (IDS)
  2. An IDS means higher duty on intermediate as opposed to final/finished goods
  3. Final/finished goods often enjoy concessional customs duty under some schemes

Effects of IDS

  1. Chinese/other imports have swamped India’s small- and medium-sized enterprises and large manufacturing companies
  2. It has raised the import-intensity of manufacturing as well as dampened job growth by raising capital intensity
  3. The share of manufacturing in GDP and employment has not risen since 1991

Benefit by GST

  1. The goods and services tax (GST), especially the IGST or Integrated GST component, has begun to erode the advantage that the IDS was giving to foreign exporters in Indian markets

China’s strategic industrial policy

  1. China had followed a strategic industrial policy for two decades and thus stolen a march on India in labour-intensive manufacturing exports
  2. China reduced the absolute numbers and percentage of the poor in the population by absorbing surplus labour in manufacturing
  3. One major reason for this was that China’s agricultural and rural income growth was much higher
  4. It sustained consumer demand and also generated industrial jobs much faster
  5. India’s policy structure failed to utilise its labour advantage to grow labour-intensive manufacturing exports

Return to pre-1991 ‘protectionism’?

  1. Customs duties have been raised on capital goods and electronics, and silica for use in manufacture of telecom-grade optical fibre
  2. Duties have also been raised on labour-intensive manufactures such as food processing, footwear, jewellery, furniture, toys and games

Effect of tariff reductions

  1. Reduction of tariffs (1991-1998) was precipitous, from an average rate of 150% to 40% by 1999
  2. Indian manufacturers, unreasonably protected till 1990, were suddenly exposed to competition
  3. A slower reduction would have enabled them to adjust to import competition, upgrade technology, and compete
  4. The sudden onslaught of lower-priced imports decimated many domestic enterprises
  5. This overexposure gathered momentum as from the early 2000s, free trade agreements with much of East/South-east Asia reduced tariffs further

Rise in informal employment

  1. Beginning 2000, the number of those joining the labour force grew sharply to 12 million per annum till 2004-05
  2. As domestic manufacturing employment growth was slow, they could only be absorbed in agriculture or traditional services
  3. Two fortuitous, though policy-induced, developments have saved the day since 2004-05
  4. As population growth fell from 1990 onwards, entrants to the labour force fell
  5. As school education access grew rapidly, post-Sarva Shiksha Abhiyaan, children remained in school

Present challenge

  1. These entrants, much better educated than the earlier cohort, are now entering the labour force
  2. They want either white-collar jobs in the private or preferably public sector or in industry or in modern services
  3. Data from the government’s Annual Labour Bureau survey and the Centre for Monitoring Indian Economy indicate that job growth is lower than entrants to the labour force
  4. The only sector with a significant increase in labour absorption has been services

Way forward

  1. The GST, Economic Survey 2018 has rightly claimed, led to a formalisation of some informal firms, and hence workers (by registration in the Employees’ Provident Fund Organisation)
  2. The resolution of the twin balance sheet problems (of companies being over-leveraged and banks unable to lend due to mounting non-performing assets), together with the Insolvency and Bankruptcy Code, should now open the floodgates for new manufacturing investment
  3. Policy must attempt to close the loop between rising demand and supply through consumer demand

India improves global talent competitiveness ranking to 81st


Mains Paper 3: Economy | Development & employment

From UPSC perspective, the following things are important:

Prelims level: Global index of talent competitiveness

Mains level: India’s position in various indexes and reforms required to improve ranking


Global index of talent competitiveness

  1. India has moved up on a global index of talent competitiveness to the 81st position
  2. India has improved its position from 92nd last year
  3. India was at the 89th place in 2016 on the index

About the index

  1. The index measures how countries grow, attract and retain talent
  2. It is released every year on the first day of the World Economic Forum (WEF) annual meeting
  3. The study was released by Adecco, Insead and Tata Communications this year

First labour code on wages likely to be passed in Budget session

Image source


Mains Paper 2: Governance | Government policies & interventions for development in various sectors & issues arising out of their design & implementation.

From UPSC perspective, the following things are important:

Prelims level: Wage code bill, Payment of Wages Act, 1936, the Minimum Wages Act, 1949, the Payment of Bonus Act, 1965, and the Equal Remuneration Act, 1976

Mains level: Reforms in labour laws


Wage Code Bill for labour reforms 

  1. The government will push its first labour code – Wage Code Bill – in the forthcoming budget session
  2. This would enable government to set benchmark minimum wage for different regions

About the bill

  1. The draft Code on Wages Bill 2017 was introduced in the Lok Sabha in August 2017
  2. The bill seeks to combine Payment of Wages Act, 1936, the Minimum Wages Act, 1949, the Payment of Bonus Act, 1965, and the Equal Remuneration Act, 1976 into one code

Important provisions of the bill

  1. The new Code on Wages will ensure minimum wages to all and timely payment to employees irrespective of the sector without any wage ceiling
  2. The bill proposes a concept of statutory National Minimum Wage for different geographical areas
  3. It will ensure that no state fixes the minimum wage below the benchmark decided by the Centre for that particular area
  4. It also provides for an appellate authority between the claimed authority and the judicial forum which will lead to speedy, cheaper and efficient redressal of grievances and settlement of claims

Restructuring labour laws

  1. The Ministry of Labour and Employment aims to combine over 44 labour laws into four broad codes in wages, industrial relations, social security, and occupational safety, health and working conditions
  2. The other three codes are at different levels of consultations with the stakeholders

[op-ed snap] A job crisis, in figures


Mains Paper 3: Economy | Development and employment

From UPSC perspective, the following things are important:

Prelims level: Not much

Mains level: Employment data discussed in the newscard. Employment issue is specially mentioned in the Mains Syllabus, and is therfore very important.


What is the main issue?

  1. Much of the debate on employment performance over the last few years has been mired in ambiguity due to the absence of high-frequency employment statistics

Step taken by the government

  1. The government has put in place a taskforce to revamp India’s employment data architecture, but new employment numbers are unlikely to come out anytime soon

Statistics which underscore the severity of India’s job crisis
First: Data from the Labour Bureau’s Annual Household Employment survey

  1. It shows a decline in total employment from 480.4 million (2013-14) to 467.6 million (2015-16)
  2. The only sector to have witnessed a significant increase in employment was wholesale and retail
  3. In the manufacturing sector ( both organised and unorganised) employment has declined over the same time period

Second: data from the Annual Survey of Industries (ASI)

  1. It is an enterprise survey which covers only the organised manufacturing sector
  2. It is found that employment to have increased from 12.94 million to 13.25 million between 2013-14 and 2014-15
  3. Given that there is no ASI data beyond 2014-15
  4. Calculations suggest that between 2014-15 and 2015-16, employment in the private corporate manufacturing sector (PCMS) increased by approximately four lakh
  5. In the following time period (2015-16 to 2016-17), a little over three lakh jobs were created in this sector
  6. Given that this is the organised sector where the “good productive” jobs lie, the pace of job creation is far from adequate

Third: NSSO’s recently-released report, “Unincorporated Non-Agricultural Enterprises” (73rd round)

  1. It provides data on unregistered/unorganised firms in the non-agricultural sector (excluding construction) for the year 2015-16
  2. It is found the total number of workers engaged in unorganised manufacturing enterprises increased from 34.88 million to 36.04 million between 2010-11 and 2015-16
  3. On the other hand, the total number of workers engaged in non-household establishments (which employ at least one hired labourer) declined by 0.67 million
  4. Household enterprises pay lower wages and have lower productivity as compared to non-household establishments
  5. The increasing employment in household enterprises is thus a disturbing phenomenon
  6. It seems to be a consequence of the lack of alternative decent employment opportunities

Fourth: Statistics from various administrative data sets

  1.  A noteworthy source in this context is the government’s recently launched National Career Services (NCS), which attempts to provide a nation-wide online platform for jobseekers and employers
  2. As of March 2016, 36.25 million job seekers were registered on the NCS portal. By October 2017, this had increased to 39.92 million against a mere 7.73 lakh vacancies posted on the exchange
  3. An analysis of the NCS data is fraught with several challenges such as limited coverage
  4. And the fact that job seekers registered on the exchange are often already employed in low paying establishments and are in search of better paying jobs in the organised sectors of the economy

The way forward

  1. The numbers given above reinforce the enormous gap between the pace of job creation and demand for productive jobs.
  2. An examination of multiple datasets reaffirm the acuteness of India’s jobs crisis
  3. It is time we stop citing the lack of reliable and timely data as an excuse for having a meaningful debate on job creation


[op-ed snap] Two myths about automation


Mains Paper 3: Economy | Development and employment

From UPSC perspective, the following things are important:

Prelims level: Particulars of Automation

Mains level: Automation is an important topic of discussion these days because of its affect on jobs. This article supports automation and suggests some measures which can lessen the affects of it.


What is automation?

  1. Automation can be defined as the technology by which a process or procedure is performed without human assistance
  2. In other words, Automation or automatic control, is the use of various control systems for operating equipment such as machinery, processes in factories, boilers and heat treating ovens, switching on telephone networks, steering and stabilization of ships, aircraft and other applications and vehicles with minimal or reduced human intervention, with some processes have been completely automated

Reports on Automation

  1. According to a report, Automation Will Eliminate 9% Of US Jobs in 2018
  2. And one-third Of US workers could be jobless by 2030 due to Automation
  3. Reports like these leave the impression that technological progress and job destruction are accelerating dramatically (First Myth)
  4. But there is no evidence of either trend

Are jobs really at risk?

  1. Everyone thinks they know is that previously safe jobs are now at risk (second myth)
  2. Once upon a time, it was possible to argue that robots would displace workers engaged in routine tasks, but not the highly skilled and educated
  3. In particular, machines, are not capable of tasks in which empathy, compassion, intuition, interpersonal interaction, and communication are central
    Automation in law
  4. Machines are already more efficient than legal associates at searching for precedents
  5. But an attorney attuned to the personality of her client still plays an indispensable role in advising someone contemplating a messy divorce whether to negotiate, mediate, or go to court
  6. Likewise, an attorney’s knowledge of the personalities of the principals in a civil suit or a criminal case can be combined with Big Data and analytics when the time comes for jury selection
  7. The job is changing, not disappearing
    Automation in medical field
  8. It’s not that nurses’ aides are being replaced by healthcare robots; rather, what nurses’ aides do is being redefined
  9. And what they do will continue to be redefined as those robots’ capabilities evolve from getting patients out of bed to giving physical therapy sessions and providing emotional succour to the depressed and disabled
  10. Thus, the coming technological transformation won’t entail occupational shifts on the scale of the Industrial Revolution
  11. Important concern: But it will be more important than ever for people of all ages to update their skills and renew their training continuously, given how their occupations will continue to be reshaped by technology

What is the real problem?

  1. In the US, board membership for workers’ representatives, strong unions, and government regulation of private-sector training are not part of the prevailing institutional formula
  2. As a result, firms treat their workers as disposable parts, rather than investing in them (for their skill development)
  3. And government does nothing about it

What is the solution?

  1. Instead of a “tax reform” that allows firms to expense their capital outlays immediately, why not give companies tax credits for the cost of providing lifelong learning to their employees?

Railways halts 2004 job scheme for children of staff opting for VRS


Mains Paper 2: Governance | Government policies & interventions for development in various sectors & issues arising out of their design & implementation.

From UPSC perspective, the following things are important:

Prelims level: Principle of equal opportunity, Article 14 and 16 of the Constitution

Mains level: Schemes/provisions that violate basic principles of Constitution


Employment initiative for family members of employees stopped

  1. Railways has stopped an employment initiative launched in 2004 when it started giving jobs to children of employees in the lower tier in return for voluntary retirement
  2. The Liberalised Active Retirement Scheme for Guaranteed Employment for Safety Staff (LARSGESS) was suspended indefinitely last month
  3. Railways decided to approach the Supreme Court to determine if the scheme is Constitutionally tenable

Why suspension of the scheme?

  1. The move comes after the Punjab and Haryana High Court said in July while hearing a case over the scheme, that it violated the Constitution on the “principle of equal opportunity” for all in government jobs
  2. Such a policy was violative of Article 14 and 16 of the Constitution of India the court found

Divergent views of judiciary

  1. In the past, the Kerala High Court and Patna High Court had found merit in the scheme
  2. So, railways wants SC to decide this matter for entire country as jurisdiction of high courts is limited in their respective states

[op-ed snap] Aiming high, looking far


Mains Paper 3: Economy | Development and employment

From UPSC perspective, the following things are important:

Prelims level: Not Much

Mains level: It is important to know ‘the other side of the story’, as in last few months we had many articles which criticized demonetisation. But this article shows opposite views and how it will be helpful in countering employment issues.



  1. The article talks about the positive side of the demonetisation

Is unemployment our real problem?

  1. Our unemployment rate of 4.9 per cent is not  vague but a wages problem(i.e. low wages)
  2. This diagnosis is important
  3. As our real problem is wages, India needs the higher productivity that comes from structural change: Formalisation, industrialisation, urbanisation, skilling and deep financial markets

How demonetisation made India a better habitat for formal job creation?
There are five reasons behind this:

FIRST: Rs 18 lakh crore new lending capacity

  1. Demonetisation has reduced cash with citizens
  2. Bank deposits have increased by somewhere between Rs 2.8-4.3 lakh crore
  3. Currently, banks are lending this liquidity to the RBI but when they start doing their jobs well, this liquidity  will boost investment and formal job creation

SECOND: 7.6 crore new monthly digital transactions

  1. Demonetisation exploded the number of digital payments on UPI/Bhim from 1 lakh in October 2016 to 7.7 crore in October 2017
  2. Digitisation is important for formalisation because it makes regulatory arbitrage and tax evasion difficult

THIRD: 3 lakh crore new financial savings

  1. Demonetisation has catalysed a savings shift away from gold and real estate
  2. The eight months after demonetisation saw mutual fund inflows of Rs 1.69 lakh crore and the three months after demonetisation saw Life Insurance Premiums rising by 46 per cent
  3. Greater financialisation of savings creates a virtuous cycle for formal job creation because they deepen and broaden domestic capital markets

FOURTH: 2 per cent lower interest rates

  1. Expensive loans are better than no loans but the cost of money has been crippling for India’s entrepreneurs
  2. Lowering interest rates is a policy priority and banks had been only passing on 50 per cent of lower policy rates to customers; in the year after demonetisation this has risen to 100 per cent
  3. India’s economic trajectory suggests interest rates could reduce another 3 per cent over time
  4. sustained formal job creation needs the lower interest rates that come from macroeconomic stability, fiscal discipline, muted inflation expectations and an Independent Monetary Policy Committee

FIFTH: permanent damage to our sense of humour about the rule of law

  1. Demonetisation targeted a less-cash society because cash is the primary tool of corruption
  2. Demonetisation did not end corruption but raised its costs
  3. And ending our sense of humour about the rule of law that bred a riskless view of cash is an important pre-condition for sustained, formal, high-wage job creation

The way forward

  1. The problem for India’s youth is not jobs but wages
  2. As India completes a year of demonetisation, it’s early for conclusions but the early results are encouraging

To reverse women leaving the workforce, policies must change behaviour before they change beliefs

Image Source


Mains Paper 2: Governance | Welfare schemes for vulnerable sections of the population by the Centre and States and the performance of these schemes; mechanisms, laws, institutions and Bodies constituted for the protection and betterment of these vulnerable sections.

From UPSC perspective, the following things are important:

Prelims level: Not much

Mains level: Important issue of women’s workforce is discussed in the article. The UPSC is known to ask questions on these kind of issues.



  1. In most countries, higher numbers of educated women have resulted in the improvement of their societal status and economic participation
  2. But in women’s participation in economic sector is very low
  3. The article talks about this serious issue

Low participation of women in the economic sphere

  1. Only 27 per cent of working-age women in India work
  2. The number fell sharply in the last decade from 43 per cent to 27 per cent
  3. Nepal and Bangladesh are way ahead, leaving only the Arab countries and Pakistan behind India

The World Bank report, ‘Precarious Drop: Reassessing Patterns of Female Labour Force Participation in India‘

  1. According tot the report, participation of women in economic sector depends on their marital-status, age, education, family labour composition and whether in rural or urban India
  2. Stability in family income levels also lead to women dropping out of the workforce
  3. Other factors include lower levels of job creation, availability of very low paying jobs in the informal sector, poor infrastructure, safety issues, and boys outnumbering girls in technical and professional education
  4. The study concludes that “education skilling and legal provisions may not be sufficient”

What are the acceptable norms of work in India?

  1. In a heterogeneous country like India, ‘acceptable’ norms of work may differ based on income, caste, rural/urban and informal/formal sector
  2. One belief is allpervasive: women are primarily homemakers and men breadwinners

Is breaking stereotypes really difficult?

  1. Research in neuroscience states that deep-seated ‘typical’ beliefs regarding race, caste, gender and other social categories get embedded or hardwired in the brain
  2. Inaccurate to start with, the brain finds it difficult to ‘unlearn’ them even when the reality has changed. It interprets new data in a biased manner to confirm originally held beliefs (confirmatory bias)

Can behavioural changes counter these stereotypes?

  1. Research in behavioural design provides evidence that this is indeed possible and has been successfully pursued in many countries
  2. There are ‘behavioural insights’ groups advising governments in the US, Britain, Australia and Germany

Misguided policies

  1. Government and corporate sector policies, instead of taking steps to encourage and hasten this permeability, have been misguided
  2. The flawed legislation introduced recently increasing maternity benefits from three to six months is a case in point
  3. For ensuring that women don’t opt out of work, it reinforces gendered norms and unwittingly places women at a disadvantage
  4. What could have helped instead is a combination of maternity and paternity leave, on a ‘use it or it lapses’ basis

The way forward

  1. Involving women in the decisionmaking process and in leadership roles, rather than providing benefits passively, can have far-reaching benefits
  2. Behavioral design, when complemented by a judicious mix of legislation and incentives, can go a long way in resetting norms sooner

[op-ed snap] Tapping potential of India’s other half


Mains Paper 1: Role of Women

The following things are important from UPSC perspective:

Prelims: Not much

Mains level:  Female labour force participation rate in India is around 27% which is abysmally low in comparison to China and Western nations. This article gives some reasons for the same and solutions of how to increase female work participation.




India has a low female work participation ratio.

In global context women outnumber men in positions with lower salary, and are employed in industries that pay less.

Why low female labour force participation?

  1. Among professionals, where equal pay for equal work is the norm, women fall behind because of significant transitions of their lives such as child bearing and rearing.
  2. An American study put the so-called motherhood penalty — the average by which women’s future wages fall at 4 per cent per child, and 10 per cent for the highest-earning and most skilled women.
  3. Society at large gains from its quality reproduction, but the bulk of the cost is borne by women
  4. Wherever there are fewer jobs, men corner the available jobs, as they are seen as the primary wage earners.

What can be done to get more women working and narrow the gender gap?

  1. Flexible working hours and decent conditions of work, including security at the workplace and during the commute to and from the workplace.
  2. The need is for liberal policies such as letting both men and women have equal access to flexible working hours and leave for care.
  3. To let women continue with their work after child birth and enhance the participatory effort by both parents to raise families.
  4. Most countries have adopted contributory pension plans because women who take time out from work to look after the young and earn less than men at a similar stage in their working lives will not be able to build a decent retirement nest.
  5. This is important especially in the West, given high divorce rates among the elderly; but could be a problem in this country as well.

Forgoing women in the workforce is to forgo a large part of the nation’s economic potential.



From Textile to IT: Wave of Job Losses Hits New And Old Economy


Mains Paper 3| Indian Economy: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment

From UPSC perspective, the following things are important:

Prelims level: Schemes: TWRFS and RGSKY

Mains level: Understanding the phenomenon of unemployment in the economy



  1. The article elaborates on the series of job losses witnessed by the economy in multiple sectors in the last 2 years.
  2. The author has tried to collate data from various ministries and has tried to connect the dots.


The main reason for job losses is following-

  1. There is hardly any growth in private investment, private consumption and exports. The growth in economy is fuelled by government spending only.


Scenario in textile sector-

  1. Exports and production is down due to slump in both external and domestic demand
  2. Demonetisation and transition to GST has hit small players
  3. Labour issues and cost of production is also causing structural issues in the sector
  4. Most of the units that have been shut in the sector belong to power loom textile
  5. The government does not capture data from the small and medium scale textile sectors, hence the distress in these areas is not visible.

 Important observations

  1. Capital goods firms are struggling as most of the downstream sectors are saddled with excess capacity and low demand.
  2. Labour bureau’s Quarterly Employment Surveys (QES) are also showing downslide in employment growth because of the layoffs in IT/BPO and financial services sector, which were earlier the key drivers of growth in these surveys.

Textile Workers Rehabilitation Fund Scheme (TWRFS)

  • The scheme was introduced in the year 1986
  • Aim: to provide relief to workers rendered jobless due to permanent closure of non-SSI (Small Scale Industry) textile mills in private sector
  • Relief: workers who have suffered job loss are given wages for three years on tapering basis
  • This scheme has been merged under Rajiv Gandhi Shramik Kalyan Yojana in 2017

Rajiv Gandhi Shramik Kalyan Yojana (RGSKY)

  • Introduced in 2005
  • This is an unemployment benefit scheme when the unemployment is caused due to closure of a factory or permanent invalidity arising out of non-employment injury
  • The unemployment benefit is provided for the period of 12 months
  • This also covers medical care for the beneficiary and the beneficiary’s family


  1. New Economy and Old Economy:
    Old Economy includes industries embedded in the industrial revolution and the mass production of physical goods. Eg Energy, automobile, steel etc
    New economyis the result of the transition from a manufacturing-based economy to a service-based economy. Eg. IT and IT-es industry
  2. Capital goods are goods that are used in producing other goods
  3. Meaning of excess capacity and low demand: when a factory is not utilising its full capacity due to low demand then there is bound to be stress in the sector
  4. Private Investment: the investment coming in from private players in the economy to purchase assets eg. Roads built by private players, spectrum sale etc
  5. Private consumption: it is the consumption of goods and services by private households.




Women employment rate in India sees dramatic drop in last 20 years


Mains Paper 1: Social issues | Role of women and women’s organization

From UPSC perspective, the following things are important:

Prelims level: Not much

Mains level: The data in the article presents an important issue related to Indian Society.


World Bank report on Indian Women

  1. A team of economists from the World Bank released a report on the labour force participation of women in India
  2. Using data from the NSSO, this report shows that labour force participation rate of women in India has slipped dramatically in the last 20 years

Particulars of the report

  1. The drop has been most dramatic among women in rural India
  2. Research shows that while nearly half the rural women aged 15 years and above were “in the labour force” in 1993-94, the number dropped to less than 36% in 2011-12
  3. Labour force participation rate of urban women has also dropped in the same period


Centre sets up panel to suggest on new jobs

Image Source


Mains Paper 2: Polity | Functions and responsibilities of the Union and the States, issues and challenges pertaining to the federal structure, devolution of powers and finances up to local levels and challenges therein.

From UPSC perspective, the following things are important:

Prelims level: Not Much

Mains level: Important step taken by the government for countering unemployment issue in the counrty.


A new Task force

  1. The government has constituted a new task force led by NITI Aayog to recommend measures to increase employment by promoting labour-intensive exports
  2. Task force will give its report on recommendations in November this year

What is the strategy behind it?

  1. An important strategy is to enable a shift towards more labour-intensive goods and services that are destined for exports
  2. Given the importance of exports in generating jobs, India needs to create an environment in which globally competitive exporters can emerge and flourish

[op-ed snap] The republic of statistical scramble

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Mains Paper 2: Governance | Important aspects of governance, transparency and accountability, e-governance- applications, models, successes, limitations, and potential

From UPSC perspective, the following things are important:

Prelims level: Particulars of the NSSO and Labor Bureau

Mains level: Accurate Data collection is very much needed for better policy prescription



  1. The article talks about the employment data in the country and the issues related to its collection

Contradictory Data on Employment

  1. One set of numbers claims the current phase of economic growth as jobless
  2. Other set of data have accompanied vigorous assertions of rising employment

Different Employment surveys

  1. The National Sample Survey Organization (NSSO), under the ministry of statistics and programme implementation (Mospi), conducts a comprehensive household survey once every five years
  2. NSSO also conducts an unorganized units survey
  3. The labour bureau in the ministry of labour and employment also conducts two household surveys—a quarterly quick employment survey and another on an annual basis
  4. Finally, various government administrative bodies, such as the EPFO or ESIC, provide some indication of organized sector employment trends

Issues with employment data collection

  1. All the surveys given above suffer from some infirmity
  2. Why: Because of methodological issues, unviable sample size, inability to distinguish between different types of employment, long gaps or irregular frequencies
  3. But one thing is common: the findings only provide a partial picture and are therefore useless as a tool for policy design

Comments of the Economic Survey on Employment data

  1. Part two of the Economic Survey says: “The lack of reliable estimates on employment in recent years has impeded its measurement and thereby the Government faces challenges in adopting appropriate policy interventions”

Recommendations from the NITI Aayog

  1. NITI Aayog has recommended
    (1) vast improvements to existing surveys
    (2) institutional and legislative changes
    (3) improved physical and digital infrastructure
    (4) more aggressive use of technology to crunch the time-gap(in employment surveys)

The way forward

  1. The infrastructure of employment data collection needs an urgent improvement to maintain credibility, perceive economic trends and deliver appropriate policy prescriptions

[op-ed snap] Private power, public apathy: labour laws for domestic workers

Related image

Image source


Mains Paper 2: Governance | Welfare schemes for vulnerable sections of the population by the Centre and States and the performance of these schemes; mechanisms, laws, institutions and Bodies constituted for the protection and betterment of these vulnerable sections.

Once you are done reading this op-ed, you will be able to attempt the below.

Discuss the need for the Parliament to urgently enact a comprehensive law covering the rights of the country’s domestic workers?

From UPSC perspective, the following things are important:

Prelims level: Not much

 Mains level: International Labour Organisation’s Convention 189 on Decent Work for Domestic Workers. Why  India is unwilling to ratify it.



  • Domestic workers are among the most exploited sections of the Indian workforce. 

Domestic labourers in India

  1. The 1931 Census recorded a large pool of labour, i.e. 27 lakh, as domestic workers, or ‘servants’
  2. These high numbers reduced considerably with the growing intensity of the anti-feudal struggle and development of occupational diversities in the post-Independence era. 1971 Census recorded only 67,000 domestic workers.
  3. However, this trend has been reversed since the early 1990s and  1991 Census recorded 10 lakh domestic workers. 
  4. The NSSO data of 2004-05, for example, has recorded 47 lakh domestic workers in India; the majority of whom, i.e. 30 lakh, were women. 

Noida issue

  • The recent confrontation between this otherwise docile workforce of domestic workers and their wealthy employers in Noida(Uttar Pradesh) brought to light, the widespread exploitation of domestic workers, and the huge antagonism between their interests and those of their employers

Over exploitation

  1. Employer-dominated, domestic work industry is characterised by low, stagnant wage rates. Wages are particularly low for Bengali and Adivasi workers.
  2. Irregular payment of wages by employers
  3. Extraction of more work than agreed upon at the start of employment
  4. Practice of arbitrarily reducing wages

Reasons behind over-exploitation

  1. Indian state’s unwillingness to ratify the International Labour Organisation’s Convention 189 on Decent Work for Domestic Workers, and thereby, to modify landmark labour laws to bring domestic work under the purview of state regulation. 
  2. Private power of regulation enjoyed by the employer.
  3. Private nature of regulation has allowed the employer to exercise quasi-magisterial powers over the domestic worker in India.
  4. Workers’ attempts to renegotiate their terms of work or to leave such employment are outbid by verbal, and often, physical assaults by employers
  5. Domestic workers are on an almost absolute risk of unemployment or criminalisation when they try to obtain their dues.


International Labour Organisation’s Convention 189 on Decent Work for Domestic Workers


  1. Each Member shall take measures to ensure the effective promotion and protection of the human rights of all domestic workers, as set out in this Convention.
  2. Each Member shall, in relation to domestic workers, take the measures set out in this Convention to respect, promote and realize the fundamental principles and rights at work, namely:
    • (a) freedom of association and the effective recognition of the right to collective bargaining;
    • (b) the elimination of all forms of forced or compulsory labour;
    • (c) the effective abolition of child labour; and
    • (d) the elimination of discrimination in respect of employment and occupation.
  3. Each Member shall take measures to ensure that domestic workers enjoy effective protection against all forms of abuse, harassment and violence.
  4. Each Member shall take measures to ensure that domestic workers, like workers generally, enjoy fair terms of employment as well as decent working conditions and, if they reside in the household, decent living conditions that respect their privacy.


States to get Rs7,000 crore for skill development II

  1. Besides, it will disburse some Rs 3,000 crore or 25% from the funds earmarked for the Pradhan Mantri Kaushal Vikas Yojana (PMKVY)
  2. PMKVY is a flagship skill development scheme of the Union government to train 10 million people over the next 4 years
  3. Why: The ministry feels that the centre will not be able to achieve the target of skill development all on its own and taking states along will be the key
  4. India wants to skill train some 500 million people by 2022 but has been largely behind the curve in last five years
  5. Baring 2013-14, the skill development initiative has fallen short of target each year between 2011-12 and 2015-16 as per official data

States to get Rs7,000 crore for skill development I

  1. What: The Union government will disburse around Rs7,000 crore to states to help align them with the centre’s skill development agenda
  2. And also persuade them to create an ecosystem of entrepreneurship for youngsters
  3. How: The ministry is taking soft loan of $1 billion (nearly Rs 6,660 crore) from the World Bank for skill development initiatives
  4. Most of the amount will be disbursed to states

Lesser wages for equal work is violation of human dignity: SC

  1. SC judgment: It terming the denial of equal pay for equal work to daily wagers, temporary, casual and contractual employees “exploitative enslavement,”
  2. The SC has held that they should be paid at par with regular employees doing the same job as them
  3. Such classifications resulting in disparity and denial of the principle of “equal pay for equal work” is esseantially oppressive, suppressive and coercive conduct by employers
  4. It is also antithetical to the ideal of a Welfare State

Centre rethinks plan to widen EPF coverage

  1. The centre is reconsidering a plan to widen the social security net for workers by bringing more factories under the provident fund coverage
  2. The Labour Ministry has proposed to bring down the threshold limit for coverage of firms under the Employees’ Provident Fund (EPF) to factories with at least 10 workers
  3. At present, the EPF Act is applicable to factories with minimum 20 workers
  4. Contradiction: On the one hand, there is a proposal to bring larger number of people under the EPF fold and on other hand, there is another proposal to give workers an option to opt out of EPFO and move to NPS- this needs a re-think

Govt widens scope of jobs survey- II

  1. New Survey: In its place, Govt has started another, more broad-based survey, which captures the employment market in India
  2. Instead of just eight manufacturing and export-oriented sectors, the labour ministry has zeroed in on 18 sectors and sub sectors, including services that make up most of the non-agriculture labour market in India
  3. The new quarterly employment survey will have a sample size of over 10,000 industries—five times as large as the previous survey’s

Govt widens scope of jobs survey- I

  1. Gone the old: Govt has discontinued the quarterly employment survey, more than seven years after it started the exercise
  2. It was aimed at gauging the impact of a global recession on manufacturing and export-oriented industries
  3. Why? The quick employment survey has outlived its purpose
  4. Now we need to have a broad-based focus keeping in mind the new realities of Indian economy
  5. While manufacturing sector is important, ignoring the service sector will not give a complete picture of the employment generation in the country quarter-on-quarter

Increased rural spend fails to cheer real rural wages

  1. Source: A recent Yes Bank report with the help of Centre for Monitoring Indian Economy (CMIE) database
  2. Spending growth: Govt’s rural spending has seen a marked uptick this year including spending on rural roads
  3. Employment generation under MNREGA too has seen robust growth in the June 2016 quarter
  4. Wages stagnant: But these measures haven’t led to any rise in rural real wages yet
  5. Real rural wages have been in the negative territory since October 2015 and continued to be so until May 2016

Minimum wage hiked, but unions firm on strike plan

  1. News: The Left-affiliated central trade unions will go ahead with the one-day nationwide strike, even as the Centre announced sops in a bid to placate the unions
  2. Govt offers: A hike in the minimum wage for unskilled non-agricultural workers in central public sector units from Rs. 246 to Rs. 350 a day
  3. Formation of a committee to look into extending benefits under the Employees’ State Insurance Corporation Act to unorganised sectors, including anganwadi, mid-day meal and Asha volunteers
  4. The Finance Ministry also issued a notification on higher bonus to government employees for 2014-15 and 2015-16

Govt links job creation sops to growth in company’s headcount

  1. Concern: Companies may let go of existing employees and hire replacements to avail of the incentives offered by the Govt
  2. Step taken: Govt has specified that companies will have to increase the headcount they had as of 31 March 2016 to qualify for the benefits in the current financial year
  3. Background: Govt is trying to incentivize employers for creating new jobs at a time when new jobs are scarce
  4. Stats: Some 12 million people enter the job market every year but employment hasn’t kept pace

Panagariya blames industry for employment crisis

  1. News: Indian entrepreneurs’ tendency to invest only in capital-intensive businesses or those requiring high-level skills is to blame for the employment crisis in the country, according to Arvind Panagariya, Vice-Chairman, Niti Aayog
  2. These sectors did not create well-paid jobs for those at the bottom of the pyramid
    Indian firms have succeeded in sectors such as automobiles, software, telecom, finance and engineering
  3. However, investments in clothing, light manufacturing or food processing, where jobs could be aplenty for people with less or no skills, have been abysmal
  4. This is the reason why the transition in India of taking the workforce out of agriculture towards industry and services is the slowest in the world
  5. It was transformational growth of 8.3% from 2003-04 to 2011-12 but we didn’t see a transformation in the workforce because not enough well-paid jobs were being created for those who could migrate from agriculture
  6. That is actually an issue that industry associations need to take up on a war-footing

Know about Pradhan Mantri Rojgar Protsahan Yojana

  1. Launched in Union Budget 2016-17, it is a pension scheme contribution in a bid to create more formal sector jobs
  2. The scheme will be applicable for the new employees, earning Rs.15,000 a month, who have worked for 240 days during a year in an establishment
  3. About 3.5 lakh establishments, which hire more than 20 workers, will be covered under the scheme
  4. Govt will pay 8.33% of wages to Employees Pension Scheme (EPS) on behalf of employers for workers during first three years of employment
  5. For this, an allocation of Rs.1,000 crore had been made in the Budget
  6. Reimbursement: The payment of the EPS contribution will be in the form of reimbursements to employers
  7. Regulatory fear: It will increase regulation in the labour market which firms would not prefer as there will be increased scrutiny of their books

Govt. to define ‘new employees’ for EPS

  1. Govt is likely to come out with a definition for the term ‘new employees’ for Pradhan Mantri Rojgar Protsahan Yojana
  2. Accordingly, ‘new employees’ may be defined as those in excess of the average employee base of a firm for the previous three years

Law to increase workers’ bonus faces fresh hurdles

  1. Context: The Payments of Bonus Act of 2015 has hit an embarrassing roadblock with High Courts in eight states staying the payment of such benefits
  2. It is considered as Govt’s attempt to appease the working class by paying higher bonus, with retrospective effect from April 2014
  3. Act: Was passed by Parliament in December 2015 and notified on January 1
  4. It doubled the statutory bonus paid to employees and made more workers eligible for bonus by raising the salary ceiling under the law from Rs.10,000 to Rs.21,000 a month
  5. Why stay? Industry bodies had approached the courts because retro-active amendments would be very difficult for employers

Ministry plans Rs.10,000 minimum monthly wage for contract workers

  1. Context: The issue of wages to contract labour had led to increasing labour unrest in the past
  2. News: The Labour Ministry has proposed a minimum monthly income of Rs.10,000 for contract workers
  3. At present, employers give the fixed minimum wages to workers for 45 economic activities,as mentioned in the Minimum Wages Act, 1948
  4. Criticism: Out of estimated 3.6 crore contract labourers, only 60 lakh were covered under the Contract Labour (Regulation and Abolition) Act, 1970
  5. Impact: It will increase the minimum wages of contract labourers from around Rs.6,000/month that is paid to them in a few sectors at present
  6. Fact: Of the 3.6 crore contract workers about 32% are employed by contractors in the public sector

Pace of job growth slows to six-year low

  1. Context: The Labour Bureau report on changes in employment in selected sector
  2. News: New jobs in 8 labour-intensive industries fell to a six-year low in the first nine months of 2015
  3. Reason: Industrial growth has been low and employment takes place only when production is up
  4. A lot of rationalisation of staff is taking place in the corporate sector and the govt itself is not recruiting people
  5. Criticism: The data doesn’t give a comprehensive pciture of the job growth in the country as it doesn’t capture many sectors
  6. Challenge: The main idea of growth is to create jobs at all levels, which is not happening
  7. 8 crucial sectors: Textiles, leather, metal, automobiles, gems and jewellery, transport, IT and handloom

New labour reforms in way

  1. Context: Govt plans to introduce five new labour bills in the second half of the budget session
  2. Aim: To accelerate labour reforms that have been on the back-burner for the past year
  3. Bills: Industrial Relations Code Bill, Wage Code Bill, Small Factories Bill, Shops and Establishments Bill, EPF Bill
  4. Simplification: Govt wants to club around 40 existing labour laws into 4-5 acts
  5. For example, all wage-related laws will be made part of the wage code and all industrial relations laws included in the related code

PF benefits may reach all contract employees

  1. News: Employees Provident Fund Organisation will make public as well as private sector companies accountable for providing PF benefits to contract workers
  2. Background: The govt. decision to be strict with large employers who increasingly rely on contract workers often without paying them their statutory dues
  3. Reason: Fresh instances of industrial strife due to pay disparity between contract staff and regular employees
  4. Contract Labour Act: It requires employers to pay equal pay and benefits for work done by contract employees that is similar to regular employees’ role

NSSO data on unemployment

  1. Statistics: In urban areas, the unemployment rate had reduced from 4.5% in 2004-05 to 3.4% in 2011-12
  2. In rural areas, the rate has been stable at around 1.7 per cent during this period
  3. Self-employment is the major source of income for almost half the households, across all religious groups, in rural areas, followed by casual labour
  4. Christians have the highest rate of unemployment in both rural and urban areas in 2011-12
  5. Reason: Christians are economically better off, so they have the capacity to be unemployed as they look for the right job
  6. Christians are also the most educated group, hence unemployment rate is higher among them

Learn about Unemployment rate

  1. Unemployment rate is defined as the number of persons unemployed as a proportion of the labour force, not the total population
  2. Labour force includes persons who are either ‘working’ or ‘seeking or available for work’
  3. Unemployment level in India is highest among those people who are richer and more educated
  4. Reason: Poor people can’t afford to stay unemployed, and hence, opt for any kind of work, irrespective of the nature of the job

Learn about proposed structure of 4-tier system for authority?

  1. Structure: A 4-tier system to cover the entire population of country, including both formal and informal sector workers, through a common Social Security Code
  2. First tier: would include the destitute and people below the poverty line
  3. Second tier: would have workers in the unorganised sector who may be covered under a subsidised scheme
  4. Third tier: would cover workers who can, with the help of employer, can make contribution to the schemes
  5. Fourth tier: would include people who “are comparatively affluent and can make their own provisions for meeting contingencies or risks as and when arise.”
  6. The Note: “visualised” that the social assistance programmes for the first tier shall be based on tax revenue

Labour Ministry moots National Social Security Authority

  1. Context: To provide social security to the entire population in a bid to prop up the government’s pro-worker credentials
  2. The News: The authority may have all ministers and secretaries dealing with social security programmes along with state officials as members
  3. Functions of Authority: To formulate the National Policy on Social Security to co-ordinate the central and state level programmes
  4. To ensure that the objectives of the policy are achieved within the time frame prescribed
  5. Policy Objective: The proposed Social Security Department within the Labour Ministry will provide “policy inputs” and “secretarial services” to the body
  6. Idea comes: when the trade unions have announced fresh nationwide protests on March 10 against the government’s “anti-labour policies”

Haryana to set up police stations in industrial parks to check unrest

  1. Context: Recent incidents of labour unrest and violent industrial strife in and around the Gurgaon-Manesar belt
  2. News: Haryana govt. is setting up police stations within industrial parks and an industrial intelligence unit
  3. Purpose: To look out for any signs of festering industrial unrest so as to improve security for investors
  4. They are expected to quickly track and react to ‘unwanted activities’ that could trigger industrial strife
  5. Updates: State has also approved many labour reforms as it competes with neighbouring Rajasthan
  6. Future: The state is planning to declare IT, auto, textiles and electronics as public utilities, making it difficult for workers to go on strike
  7. It is also bringing in a new regime to ensure investors are not harassed by frequent inspections

Ministry rejects smart card plan for unorganised workers

  1. Context: Finance Ministry rejecting the latest Labour Ministry proposal to issue one card per family as an impractical idea
  2. Background: The Unorganised Workers’ Identification Number (U-WIN) scheme, first mooted in September 2014
  3. Aim: To provide a smart card to the unorganised workers for entitled to benefits under various schemes such as Rashtriya Swasthya Bima Yojana (RSBY) and other schemes
  4. Relevance: There are around 40 crore unorganised workers, which accounts for around 89 per cent of the total workforce
  5. Idea: The portable smart card would have details of bank account, mobile numbers and benefits of social security schemes that can be availed by the workers
  6. Why Rejection? The Finance Ministry has asked for individual smart cards to the unorganised workers irrespective of the cost implications

Labour ministry to restructure job survey

Union labour ministry will revamp its quarterly job survey to reflect the latest employment data

  1. Data will be from both the manufacturing and service sector
  2. Aim is to make it more structured and sync it with policymaking and have regular up-to-date jobs data for both policymaking and public consumption
  3. More job-creating sectors, like banking, insurance, e-commerce and small and medium enterprises, will be added to “get a complete picture”
  4. Labour bureau to visit over 10,000 firms every quarter, more than four times present number, to track employment
  5. So far, employment data collection in India has been ad hoc, patchy and irregular

Trade unions to hold nationwide protests in March

  1. Trade unions across the country will hold nationwide protests in March.
  2. It will be against the govt’s labour law concessions for start-ups and its failure to hold negotiations on the unions’ charter of demands.
  3. The unions have also questioned the govt’s continued push for contentious labour law reforms.

Soon, annual and quarterly reports to replace once-in-5-year job surveys

  1. The govt. could soon launch a first of its kind annual employment survey.
  2. It will have the ability to generate quarterly reports on job market trends in certain segments like urban India.
  3. The plan is to release such employment data soon after the surveys by using modern technology.
  4. This will enable policymakers to react faster to labour market movements and track job creation goals.
  5. An estimated million people are joining India’s workforce every month.

How employment data is released currently?

  1. Currently, the only employment data in India is available through quinquennial (once every five years) surveys.
  2. It is a limited ad-hoc survey of employment in a few sectors that was initiated by the Labour Bureau after the global financial crisis in 2008 and the Annual Survey of Industries.
  3. Done by: National Sample Survey Organisation

Cabinet to soon consider law to retrench workers

  1. The Union Cabinet will soon consider a law to combine India’s 3 archaic labour legislations.
  2. To make it easier for companies to retrench employees and to raise severance pay.
  3. The Bill will club the Trade Unions Act, 1926, the Industrial Employment (Standing Orders) Act, 1946, and the Industrial Disputes Act, 1947, into a single code.
  4. Trade unions continue to oppose the proposed law, which allow firms with a staff of 300 to sack workers without govt permission, up from the present requirement of up to 100 workers.

    Constant protests from the trade unions have derailed the government’s proposed labour reforms.

Let’s know some provisions of proposed Industrial Relations Bill

  1. The proposed bill says that the workers affected by retrenchment or factory closure will be re-skilled by employers
  2. Employers will contribute 30 days’ wage of every retrenched worker immediately before the retrenchment, in a re-skilling fund.
  3. The compensation for a retrenched worker is proposed to be increased 3 times to 45 days’ pay for every completed year of work.
  4. It will also tighten norms for establishing unions, as no outsider will be allowed to become office-bearer of a union in the organised sector.
  5. The proposed law would put an end to flash strikes as workers will have to give a strike notice of at least 2 weeks.

Bonus Act notified

  1. The Union govt has notified the Payment of Bonus (Amendment) Act, 2015.
  2. It will allow lakhs of workers to become eligible to bonus retrospectively from the last financial year.
  3. The decision has enthused workers, but the industry is unhappy and it has written to the govt suggesting ways to simplify bonus distribution.
  4. It says that the new Act will lead to financial stress, especially on small and medium enterprises.

Parliament approves backdated bonus hike

  1. The Rajya Sabha approved amendments to the Payment of Bonus Act of 1965 in the winter session.
  2. It approved a retrospective bonanza for employees by changing the effective date for a hike in statutory bonus payments to April 1, 2014.
  3. It will make millions of employees eligible for bonus arrears for 2 years.
  4. The financial burden on the central govt. is expected to be around Rs. 6,115 crore.

Lets know about 5 labour reform legislations

  1. Payment of Bonus (Amendment) Bill, 2015: To make more workers eligible for bonus and double bonus payouts.
  2. Child Labour (Protection and Regulation) Amendment Bill, 2012: Bars children from hazardous occupation till the age of 18, but allows those under 14 to work in a family enterprise.
  3. The Small Factories (Regulation of Employment and Conditions of Services) Bill 2014: To exempt firms up to 40 employees from compliance with 6 major labour laws.
  4. Labour Code on Wages Bill,2014: To replace 4 laws pertaining to minimum wages, payment of salaries and benefits.
  5. Labour Code on Industrial Relations Bill, 2015: To replace 3 labour laws, including Trade Unions Act of 1926 and Industrial Disputes Act of 1947.

Government aims to move five more reforms to labour laws

  1. The govt is striving to introduce 5 more labour reform legislations in the winter session of Parliament.
  2. It will introduce bills for new wage and industrial relations code and amend laws governing child labour and bonus payments.
  3. The key thrust of these reforms was creating more jobs and improving the ease of doing business.

Gujarat’s controversial Bill gets President’s nod

  1. President has given assent to the contentious Labour Laws Bill of Gujarat.
  2. The govt. passed the Bill to relax labour laws to give an impetus to industrialisation in the State.
  3. It has provisions to ban strikes in public utility services for up to 1 year.
  4. The bill provides for out of court settlement between mgmt. and the labourers by paying certain fee to the govt.
  5. It also allows employers to change the nature of job of the employees without prior notice.

Gender gap becoming a chasm in labour market

UN report says women are forced to work under harsh conditions.

The Progress of the World’s Women 2015-2016 report comes 20 years after the landmark Fourth World Conference on Women in Beijing.

  1. In developing regions, up to 95% of women’s employment is informal, in jobs that are unprotected by labour laws and lack social protection.
  2. In South Asia, the gender pay gap is 35% for women with children compared to 14% for those without.
  3. This is a care penalty that unfairly punishes women for stepping in when the State does not provide resources

What policy challenges exist in bringing labour reforms in India? (2/2)

  1. Reforms must be linked to worker benefits, while simultaneously easing the compliance burden on small and medium enterprises.
  2. Women workers require legislation too – Scheme based workers (Indira Kranti Patham/ Anganwari) should have social security as well.
  3. For urbanisation and development to take place, labour must be formalised in India.

What policy challenges exist in bringing labour reforms in India? (1/2)

  1. With an average age of 29, India’s population is in the middle of a demographic boom.
  2. In 2014, 93% of India’s workforce was in the unorganised sector.
  3. Primary challenges – Increase the employability + shift labour from agricultural to non-agricultural jobs + social security measures.
  4. Low wages, limited security  Rurban jobs don’t offer much better + Women have difficulty participating in the industries.
  5. Reforms at slow pace – India’s labour law regime & the ease of doing business have always been at loggerheads.

What do we know about informal employment?

  1. Activities and income that are partially or fully outside government regulation, taxation, and observation.
  2. Neither taxed, nor monitored, it is also called ‘grey’ economy.
  3. The financial contribution to economy not included in GDP and GNP.
  4. In India – 75% of employment in rural area and 69% in urban area are under informal sector.

Discuss: NSSO surveys are used to identify these Informal Sectors. What more do we know about NSSO’s methodology?

:( We are working on most probable questions. Do check back this section.

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