Wednesday, September 21, 2016

After GST, focus is on labour reforms

NEW DELHI: The government is gearing up for bold labour reforms after putting the goods and services tax (GST) back on track. An inter-ministerial group on labour headed by finance minister Arun Jaitley is slated to meet on September 15 to reconsider the labour ministry's proposal to introduce two legislations aimed at significantly enhancing ease of doing business in the country.

"The inter-ministerial group will meet to consider afresh the Wage Code Bill and the Small Factory Bill a senior labour ministry official told ET on condition of anonymity. The high-level group had met in December last year to discuss the two legislations.

Although everybody was on board regarding the content of the legislations, the group decided to put them on hold till the passage of GST Bill, the single most crucial taxation reform being pushed by the government at the time. "The group was of the view that let us not create any straw of resistance until the GST goes through. Now the road ahead seems to be clear for the government to push for more big-ticket legislation," the official said.

The labour code on wages provides for a minimum floor level national wage which will be mandatory for all states. This will give a boost to the government's recent initiative of increasing minimum wages 42%, a provision that currently applies only to central government employees and is only an advisory for states.

Besides, the labour ministry plans to streamline the definition of wages by amalgamating four wage-related statutes.

These include the Minimum Wages Act, 1948; the Payment of Wages Act, 1936; the Payment of Bonus Act, 1965; and the Equal Remuneration Act, 1976 to simplify the process of operating business in India. At present, there are about half a dozen definitions of wages in various acts across Centre and states which employers have to grapple with.

The Small Factories (Regulation of Employment and Conditions of Services) Bill, 2014 intends to make life simpler for small and medium enterprises, which are expected to flourish under the improved ease of doing business regime and in turn create employment.

The bill, pending for two years, aims to bring all small factories under a common regulation and exempt them from 14 central labour laws. It envisages rules for wages, overtime hours as well as social security.

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