Most of these regulations written for a different era, irrelevant to present conditions: ISF president

The number of people in formal employment in India will grow only if the country’s archaic labour regulations, that are irrelevant in today’s context, are fully scrapped, says Indian Staffing Federation (ISF), a staffing industry apex body.

The country has a total workforce of 463 million and 94% of them are informal workers employed with small and micro firms. These enterprises prefer to remain tiny (below 20 people) in order to stay away from the burden of unrealistic labour compliance demands.

ISF president Rituparna Chakraborty told The Hindu that the country currently had an overdose of labour rules and their irrelevant existence will only damage the growth of formal job market in particular and the economy in general.

“We have some 44 Central labour rules in addition to over 100 State-specific laws. Most of these regulations were written for India of a different era and therefore currently are not in use or are irrelevant to today’s conditions,’’ she argued.

As per ISF, if labour rules are updated and are made simpler the country will experience a boom in formal employment. “Small enterprises will not shy sway from scaling up their businesses or adding people if labour laws are made friendly. This will automatically boost formal employment in the country. It will also improve the ease of doing businesses and investment flow will pick up. Eventually, streamlining labour laws will bring in positive impact on the economy,’’ she said.

There should be consistency and uniformity in definitions. For instance, the existing labour laws, define ‘worker’ and ‘wage’ in 17 different ways. ``There are hundred different things like these that cause ambiguity and confusion in the minds of small entrepreneurs,’’ said B.S. Murthy, CEO, Leadership Capital, a people management firm.

Mr. Murthy added: “Irrelevant rules and unrealistic compliance have come in the way of job creation. Too many complex and ambiguous labour regulations have made India a hostile place for MSME players.’’