Government's move to extend contractual employment to all sectors augurs well for India
like all progressive movements, the trade/labour unions in India too had noble intentions and were arguably the need of the hour in a newly industrializing post-colonial socio-economic environment where manufacturing comprised the main component of the economy apart from traditional agriculture. The traditional 'Sethji', caricatured as rapacious and unscrupulous, was the dominant image of the employer and industry was in the hands of a social elite. The services sector, hi-tech manufacturing, finance and Information Technology/IT-enabled industries were not even a speck in the eye of even the most farsighted economic thinkers at the time. Job security and employment for life were the norm and trades union were both structured and ideologically committed to ensure through agitprop and/or lobbying on the basis of a captive vote-bank of its members that this state of affairs continued. Today, however, trades union have in the main become an alibi for a lack of accountability, and symbols for a sense of collective entitlement. Most importantly, labour law reform to suit a radically different ground reality ecology has become one of the most pressing issues for the sustained growth of the Indian economy.
All regimes regardless of political hue have over the past three decades paid lip-service to labour reform but not delivered. That, however, seems to be changing with the Narendra Modi-led Central Government now having reportedly decided to allow fixed-term or contractual employment in all sectors, a provision that till now applied only to apparel manufacturing. It is a move pregnant with possibility for the Indian economy and the generation of employment in a globalized and diverse scenario wherein competitiveness is the key.
The move, once implemented, could effectively mean a hire-and-fire policy would be in place as it would do away with existing retrenchment regulations which are applicable to factory workers and which have a 1950s provenance. Pseudo socialists of all descriptions from the Red to the Pink have for long demonized hire-and-fire as a harbinger of evil andreflective of a callous industry attitude towards workers' rights. That is the most self-serving argument in circulation. For one, hire-and-fire does not mean, and the Government has not said it means, that there will no safeguards for workers or whimsical decisions to separate from an employee will not be put to the test of law or indeed malafide decisions by employers based on extraneous reasons will not be justiciable.
aWhat the move will do is allow businesses to be nimble, enable industry to recalibrate business strategies according to industry-specific business cycles and inculcate a sense of employer-employee dependence based on mutual trust, competence and financial feasibility without third party interference. The dilution of the power of collective bargaining, which has crippled many MSMEs in particular, which this move will bring about is also to be welcomed. The cardinal rule of a market economy is that if employers make money, the wealth gets spread. And employment is generated as a result though not the sinecures of old. lastly, no tears need be shed for the union leaders who have made political careers out of misguiding workers.