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Indian labour laws restrictive vis-a-vis Asian competitors: Assocham
The restrictive laws relating to layoffs and exit of weak companies coupled with low labour productivity have rendered Indian companies uncompetitive vis-a-vis other Asian countries, says a study carried out by the Associated Chamber of Commerce and Industry of India (Assocham).
The restrictive laws relating to layoffs and exit of weak companies coupled with low labour productivity have rendered Indian companies uncompetitive vis-a-vis other Asian countries, says a study carried out by the Associated Chamber of Commerce and Industry of India (Assocham).
The study found that these lacunae have also affected the growth of employment in the organised sector.
The chamber study which makes a comparison of labour reforms in
India with select Asian countries reveals that government approval
for layoffs, retrenchment and closure is not required in Korea,
Singapore, Indonesia and Thailand.
Exit of weak companies and retrenchment is common. Unions do not go on strike on these issues because such a course would result in further deterioration of the competitive position of the company and lead to more retrenchment. This, the unions clearly understand. A unique feature in India is the requirement that even the loss-making units including sick companies are required to pay bonus to its workers at 8.33 per cent of the annual wage. In comparison in other countries, payment of bonus depends upon profits. In Korea about 39 per cent of average blue collar workers wage is in the form of productivity-linked allowance. Korea's industrial scenario resembles that of Japan with a union for each company, rather than economy-wide or industry-wide union as in India. A union for the company generally restricts outsiders, while industry-wide does not restrict outsiders.
Besides, in India, the trade unions admit outsiders, mostly politicians, as union office bearers. Absence of election of office bearers, perpetuates these outsiders, whether workers like them or not. In Korea, government intervention is limited to situations where the entire industry is in distress. Intervention of government and other outsiders through trade unions in enterprise level disputes is peculiar to India. In Singapore and Malaysia, rights of the employer which cannot be disputed by the labour unions have been clearly stated such as recruitment, promotion, transfer, allocation of duties, retrenchment of an employee due to redundancy or reorganisation dismissal of an employee for misconduct etc. In China, export promotion zones (EPZ)/special economic zones (SEZ) are exempted from majority of labour laws, to make export-oriented units highly efficient and competitive. Bureau Report
Exit of weak companies and retrenchment is common. Unions do not go on strike on these issues because such a course would result in further deterioration of the competitive position of the company and lead to more retrenchment. This, the unions clearly understand. A unique feature in India is the requirement that even the loss-making units including sick companies are required to pay bonus to its workers at 8.33 per cent of the annual wage. In comparison in other countries, payment of bonus depends upon profits. In Korea about 39 per cent of average blue collar workers wage is in the form of productivity-linked allowance. Korea's industrial scenario resembles that of Japan with a union for each company, rather than economy-wide or industry-wide union as in India. A union for the company generally restricts outsiders, while industry-wide does not restrict outsiders.
Besides, in India, the trade unions admit outsiders, mostly politicians, as union office bearers. Absence of election of office bearers, perpetuates these outsiders, whether workers like them or not. In Korea, government intervention is limited to situations where the entire industry is in distress. Intervention of government and other outsiders through trade unions in enterprise level disputes is peculiar to India. In Singapore and Malaysia, rights of the employer which cannot be disputed by the labour unions have been clearly stated such as recruitment, promotion, transfer, allocation of duties, retrenchment of an employee due to redundancy or reorganisation dismissal of an employee for misconduct etc. In China, export promotion zones (EPZ)/special economic zones (SEZ) are exempted from majority of labour laws, to make export-oriented units highly efficient and competitive. Bureau Report