Govt cautious but decisive on labour reforms

Jul 30 2014, 01:42 IST
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SummaryWhen Prime Minister Narendra Modi underscored the need for “skill, scale and speed” to compete with China, it was just an indication

When Prime Minister Narendra Modi underscored the need for “skill, scale and speed” to compete with China, it was just an indication of what the NDA government intends to do in the days to come to help the economy come out of a slump.

While many expected some big-bang labour reforms in the form of amendments in the Industrial Dispute Act to make hire-and-fire easy, the government is treading slowly but decisively on reforms with focus on skill development and youth employment. It is likely to move amendments in the Apprentices Act to help absorb many of the freshers in manufacturing while changes in Factories Act is being considered to allow companies to scale up operations through extended hours of work.

In case of the Apprentices Act, a labour ministry note said the proposal is to enhance the scope of apprenticeship training to all graduates in various fields such as BA, BCom and BSc, other than the those having a technical education from ITIs or engineering colleges. Also, the proposal is to make it mandatory for industry to keep the number of apprentices to 2.5-10% of the total workforce with the flexibility to take into account seasonality in operation. The government also wants to extend the period of apprenticeship training to a maximum 5 years from the present 6 months to 4 years.

Also, companies can be allowed the flexibility to frame their own policies on whether to retain an apprentice or not after completion of training. Under the present rule, companies are not bound to offer any employment to any apprentice after the completion of training period, nor it is obligatory on the part of the apprentice to accept an employment under the employer. While this is an impediment which discourages youth to join the apprenticeship training as they are not sure whether they will get employment after completion of the apprenticeship training, companies are also wary fearing that employees may join competitors at a higher salary after the training.

What could be a game changer is a proposal to dilute the penalty under Apprentice Act. Due to fear of imprisonment, employers tend to avoid coming under the purview of the Act and training facilities available with them go unutilised. The government may propose that the penalty should be R1,000 every occurrence of the offense of not meeting the apprentice quota.

Industry experts and trade union leaders are not averse to changes

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