Labour law reform, or window for exploitation? Debate heats up after UP, others shed labour laws


If all labour laws are removed, most employment may effectively turn informal and bring down the wage rate sharply.

With various Indian states relaxing labour laws to a great extent, especially Uttar Pradesh getting rid of almost all labour laws for the next three years, a deeper concern has begun to float: Who is going to get benefited from this? While many industry bodies have appreciated the state governments’ move by calling it a long-pending reform, think tanks are also stating it as an enabling environment for exploitation. Apart from being a reform to improve the current conditions, the removal of all labour laws will not only strip the labour of its basic rights but also drive down wages, Radhicka Kapoor of ICRIER, told the Indian Express.

If there is no labour law, a firm may fire all existing employees and hire them again at lower wages, she added. Even the Minimum Wages Act that covers most of the workers has been abolished that has opened a huge opportunity for employers to underpay their workers. If all labour laws are removed, most employment will effectively turn informal and bring down the wage rate sharply, and there is no way for any worker to even seek grievance redressal, Amarjeet Kaur, General Secretary of AITUC, told the paper.

Also Read: Are India’s labour law reforms only a gift for factories, or will workers benefit too?

It has also been pointed out that increasing working hours from 8 hours per day to 12 hours per day will not increase employment, instead of making two shifts of 8 hours per day could have helped. Meanwhile, considering the economic crisis in this unfortunate time, the industry bodies are praising the move by identifying it as a welcome move to boost output, revenue, and employment.

“The relaxed laws will go a long way in inviting foreign companies to shift their manufacturing units and factories from China to India, especially in the state of UP, with the state offering a labour conducive environment, tailor-made factory setups and a best in class infrastructure,” D K Aggarwal, President, PHD Chamber of Commerce and Industry, told Financial Express Online.

With increased foreign investments coming into the state, more factories will be and manufacturing units will be set up, significantly increasing the creation of job and employment opportunities for the labourers and the workers, enhancement in output production and capacity expansion among others, he added.

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