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The need and challenges to amend the Labor Laws in India

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Shubhanshu Shrivastava
Shubhanshu Shrivastavahttp://literaryexpedition.in
Shubhanshu Shrivastava is a Corporate Professional, writer, poet, and avid book reader. He has been published on various platforms. He is right-leaning in his approach and has a deep interest in national, world politics, and current affairs. India First!

The recent recession that has hit the world has caused havoc in the lives of many Banks and Corporate companies operating all around the Globe, the U.S. being the major player providing employment to a big chunk of the population within its own boundaries and in India. Comparatively, India’s economy has taken on the brunt end of this global recession as opposed to the U.S.

Even though India is on a path to exponential growth, the impact that the recession had on the Tech and Consulting giants has caused massive layoffs within such firms. On the ground level, this trend of massive layoffs is distressing if nothing else. Since the employees who have been shown the door have been hard-working with mouths to feed in their homes, this ‘trend’ of cost-cutting by reducing the workforce becomes a very menacing trend.

Losing their livelihood is no doubt painful for an individual, the fact that there are no salary cuts in the CEO’s Multi-Million dollar income and their decisions based solely on the numbers give the impression that the workforce is nothing more than some digits in the eyes of the top level management is however even more alarming and hurtful.

But the need to have better labor laws in India is not just limited to the sentiments of the troubled employee. A person who has been sacked by a company often starts by searching for another job, which in the recession-hit market scenario is very hard to achieve. There are different alternatives that they start searching for. The reduction in the cash spending capability of an individual spells trouble for the economy.

Of course, there are labor laws that are established within the country which on paper spells being inclusive and following due process. But the point is that these are not enough in the present scenario when India is trying to become the favorite destination for global businesses. It becomes an easy task for the well-paid lawyers and HRs of the big organizations to circumvent these laws and refer the NDAs signed by the employees at the time of joining an organization if the termination is questioned.

These NDAs generally constitute the clause that the Company reserves the right to terminate the employment of the individual with/without any reason. Moreover, the reasons provided by the organizations for the termination are sometimes as bad as a schoolboy alleging he ‘forgot’ his notebook which had his homework.

And the most important point of all – In light of the recent massive layoffs in the United States and India alike where the companies cited reasons such as “recession”, “market downturn”, etc., while the top management kept paying themselves a huge amount of salary, proves the labor laws of India effete and ineffective.

Hence, the labor laws which allow these companies to make these decisions are in dire need of reforms. And this is where the problem starts.

The hiring and firing which is happening within such organizations are being reinforced by the U.S. corporate culture and weak labor laws within the country. The reason for this is in order to attract more foreign investment and, to invite the big conglomerates and companies to operate within India the government needs to project the perception of being ‘corporate friendly’ which means the companies need to feel safeguarded against any union and labor interventions.

This can only happen if India jumps up in the World Bank’s Ease of doing business rankings. Hence the companies can be attracted to start their operations within the country if the government projects the existence of an extensive labor force being a few inches away based on the decision they make. The one other country which has become a behemoth using this play is China, which made use of the cheap and readily available workforce which can be used to save costs for the company.

But given the communist regime in China and being a major adversary of the U.S. with having expansionist dreams to the surrounding areas with its CPEC initiative, China has lately become an eyesore for the States.

Another reason is a lack of better options available to the masses. The government jobs are limited in numbers and have a fierce competition where lacs and lacs of people are gunning for a single job. On top of that, there are caste politics in play in the form of caste reservations. The pay is not very good and the career progression is rather sluggish, irrespective of how well or how bad you might be performing.

Due to these factors, jobs in the private sector have been very attractive to the youngsters. The pay is well above that of a government job and can exponentially increase with respect to the performance of the employee in a very short amount of time. The MNCs pay a handsome salary to an individual. There is a lack of native options available to the masses since the value of $ (in which these MNCs do business) is much higher compared to the Indian Rupee, which means that two people doing the same job – one in an MNC and the other in an Indian Firm will have drastic differences in their pay.

The MNCs operating in the B2B model often bill their customers for Thousands of Dollars, while their employees who are doing the work are paid a minuscule fraction of it. That is the difference between the earning of an MNC and a native firm.

All the while people are discussing about EU where the big companies have not been able to do mass layoffs due to their strong labor laws. It matters not where a good thing comes from, India should adopt whatever makes it better. Still, the question remains whether India will be able to circumvent the above challenges.

Recently, a big IT firm within India that employs lacs of personnel has sacked approximately 3500 employees because citing the reason of implementing AI, which makes it prudent that India should do some modifications in its labor laws because believe it or not, the day when India will have to make a decision about it is soon approaching.

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Shubhanshu Shrivastava
Shubhanshu Shrivastavahttp://literaryexpedition.in
Shubhanshu Shrivastava is a Corporate Professional, writer, poet, and avid book reader. He has been published on various platforms. He is right-leaning in his approach and has a deep interest in national, world politics, and current affairs. India First!
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