Reforms in Indian Labour Market in the Post-Liberalisation Period

Abstract

Economic liberalization has opened a gush of fresh air into the arena of labour market. First, there is an intense exchange of labour services among different countries (without crossing borders) for the purpose of production of commodities through investment flows and international trade. This has been facilitated through improved technology and better communications. Such a scenario generates a highly competitive climate of multiple agents leading to innovative cost cutting strategies, effects of which may be seen on the labour conditions and wage rates. Both the domestic labour market and international mobility of labour undergo tremendous changes in the context of macro economic reforms and global business strategies. An array of changes has taken place in India in recent past since the opening of economy has taken place. In the past, labour-related mobilizations have been crucial for the state and political parties. However, in the reform era these mobilizations have changed, particularly because technological and managerial changes in the production processes have demanded a new approach to handling this key factor of production. Extensive labour reforms have been carried out (though legislation has been slow, court orders and variation in implementation has marked this) in recent years. These reforms are influenced by the profit motives of trans-national companies in a deconstructed supply-value chain, and the strategy of the nation-states to benchmark with export-oriented market reforms for achieving economic prosperity. One of the key demand is the availability of flexible labour in the market (thus, traditional labour oriented mobilizations, demanding rights, become irrelevant). Challenge of labour flexibility is generated due to competing profit making as well as rapidly changing demands for products and services. However, the response by business groups, government and civil society shapes this, as unorganized sector constitutes a substantial portion. Therefore, new measures for flexibility, intensifies the already existing informalised labour processes. The study envisages investigating the aspects of legal reforms in India in the context of voices raised from various corners demanding flexible labour to facilitate steep economic growth. In particular recent changes in the legal framework for worker rights, working conditions, social security, provisions for decent work and termination of labourers will be carried out. The review of the legal reforms will also include documenting major collective bargaining by the labourers, industrial disputes and its implications for productivity and labour welfare. Particularly, in India, labour law is a federal subject as well as central subject. So, there are variations within the states. These variations have to be understood not merely by understanding the letter of law, but the practices those are created through the politico-legal environment in each states. By reviewing a picture of labour reforms in various states and its implementation will be extremely useful for an investor, who plans a labour intensive industry or service, to be informed about the labour environment in each of the Indian states.