Union Budget: CII, FICCI suggest ideas to handle jobs crisis
Goutam Das June 24, 2019
In the run up to the Union Budget, industry lobby bodies have put forth their ideas on what the government could do about India's mammoth jobs problem. The country's working age population, or those above the age of 15, is expanding by 1.3 million a month. India, therefore, needs to create millions of jobs a year at a time of significant disruption - technology is disrupting every industry and thereby, employment; the age of anti-globalisation implies that export-oriented jobs could be under pressure.
The Confederation of Indian Industry (CII) has called for a National Employment Mission and setting up of an inter-ministerial and all-state National Employment Board for driving job creation in the country. "Employment generation extends to multiple dimensions and a national mission is required to address all aspects holistically. The Government National Employment Mission should include flexibility in hiring, tax incentives, education and skill development, and promotion of labour-intensive sectors," Chandrajit Banerjee, Director General of CII noted in a statement.
While CII wants flexibility in hiring, the industry seems to have climbed down from wanting a section of The Industrial Disputes Act of 1947 changed. Chapter V-B of the Act has often been described as 'black legislation' by the industry and at times, as 'marriage without divorce'. It mandates companies employing 100 or more permanent workers to seek prior permission of the government to lay off even a single worker. Some states have tinkered with the law, raising the bar to about 300 employees. Nevertheless, most states face significant pushback from labour unions. The industry's rationale is that at a time of significant technological disruption, this legislation prevents companies from exiting or downsizing quickly. Market changes may require newer products and factories and resources can get locked up in unproductive assets because of the Act. This, in turn, can impact both growth and new employment generation.
A CII statement now states that while the "industry is not asking for a hire-and-fire policy, a more flexible labour regime would enable India to align with multiple global trade challenges at a time when other nations are attracting new investments".
CII's flexible hiring ideas include Fixed Term Employment (FTE). Fixed term employment says that a company can enter into a contract with prospective employees for a specific time period and when the duration is over, the relationship is over as well. It can hire workers on their payroll, ensure social security and minimum wages. The Central Government first issued a notification on Fixed Term Employment in March 2018. Labour, however, is a concurrent subject where both the central and state governments have the power to legislate. Few states have notified the changes till date.
In its pre-budget jobs creation agenda, CII suggests that "states that introduce Fixed Term Employment and other labour law reforms should receive priority in new Central government infrastructure project funding. Transport and power projects along with industrial parks can be fast-tracked for these states to enable them to leverage such employment policies". In other words, unwilling states must be coerced.
Fixed Term Employment, theoretically, can provide dignified employment given the provision for social benefits for a fixed time. However, not everybody seems to be happy.
"Fixed term contracts promote expansion of precarious work without job security especially since the reality is that the statutory benefits that the worker should get are not given. Secondly, Fixed Term Employment is another way of casualising employment and turning an employment contract into a commercial contract - mostly outside the ambit of labour laws," independent labour activist Rakhi Sehgal says.
CII, meanwhile, also suggests that under Prime Minister's Rozgar Protsahan Yojana, the wage threshold should be increased to Rs 25,000 from the current Rs 15,000. PMRPY provides for government contribution to EPF and EPS for new employees for three years, applicable to workers earning less than Rs 15,000. With wages increasing, the threshold for applicability should also be raised, the industry body contends.
The Federation of Indian Chambers of Commerce and Industry (FICCI), another industry body, has also put forth their Budget recommendations. On employment, the body stated that creating jobs should be an intrinsic factor while preparing the Union Budget. "Greater public investments across sectors like infrastructure would create significant employment opportunities. We look forward to greater budget allocation in these areas. At the same time, additional fiscal incentives should be provided to sectors with potential of creating large employment opportunities such as textiles, leather, food processing, gems & jewellery, footwear, tourism, real estate, etc."