INDIA’S labour laws are archaic, complex and sometimes utterly meaningless, which discourage entrepreneurs from expanding their workforce for fear of attracting the attention of greedy labour inspectors.
Small and medium enterprises run by industrialists, traders and other entrepreneurs prefer not to hire additional staff, even if the business demands taking in new people, as they fear they would be noticed by the dreaded labour inspectors, who can make life miserable for senior executives.
The multiplicity of labour laws in the country — both central and state — has discouraged generation of new jobs. Yet, many existing businesses including factories and shops blatantly disregard labour laws, often bribe the inspectors and continue to exploit workers.
There have been a myriad number of instances when new companies are set up, employees are hired and they are paid way below the minimum wages. The firms deduct a portion of the wages as the contribution of the employee to Provident Fund, a state-supervised social welfare scheme. Shockingly, many of the companies do not actually transfer the money deducted from the worker’s salary to the Provident Fund account.
This is a criminal offence, but the perpetrators manage to stay out of trouble by bribing the labour inspectors.
The existing labour laws have resulted in severe harassment of businesses.
The Modi government at the centre now wants to simplify the rules and also ensure that India’s ranking in the World Bank’s ‘Ease of doing business’ index, also improves. Currently, India is placed 134 out of 189 countries in the World Bank’s publication.
