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Labour law reforms need consensus
By Our Special Correspondent
NEW DELHI
JAN. 25.
The government will not push through amendments in labour laws till a consensus among all the social partners is created as each stakeholder is responsible for enhancing efficiency in use of capital and productivity of labour.
This was disclosed here today by the Minister of State for Labour and Employment, Muni Lall, who underlined the need for raising the GDP growth to 8 per cent to absorb the eight million additonal people entering the job market annually. Inaugurating a Round Table on "Tripartite Initiatives to deal with the Economic Slowdown'' organised by the Associated Chambers of Commerce and Industry (Assocham), he said significant reduction in the incremental capital-output ratio was imperative to increase the efficiency of industrial production. The huge stock of existing capital assets were idle or had not been put to optimum use, he said.
While concern over rigidity of labour laws and discretionary powers of labour inspectors would be examined, he said the views of trade unions and workers were that without increasing commensurate social security net, any reform in labour laws would be one-sided. These would have to be taken into consideration, he stressed.
Responding to concerns expressed by the Assocham, he said the efficiency and productivity of various economic activities in this country were well below the international standard. The average level of inventory holding, for instance, was much higher than in other countries. This resulted in a large account of investible resources being kept and reserve for contingencies rather than being put to productive use. He felt the existence of unjustifiably high capital intensity in many sectors was a cause of great concern as these resources could have been applied for creating additional capital.
Delivering the keynote address, the director, Rajiv Gandhi Institute for Contemporary Studies, Bibek Debroy, said the biggest constraint to entrepreneurship and investment in this country was the plethora of rules and regulations and not the statutory laws. These regulations had led to inter-State and inter-regional disparities that had become more pronounced since 1991. While the southern States with their progressive and pro-reform policies had marched forward, he noted that eastern India had lagged behind. Prof. Debroy warned that if trade unions did not wake up to the reality, they will be bypassed. Investment, both foreign and domestic would then move to the more advanced states, further widening the disparities, he pointed out.
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