Economic Survey nudges states to speed up implementation of labour codes

Further, the survey highlighted that there exist other regulatory hurdles to employment generation such as higher overtime wage premiums and barriers to job opportunities for women.

The Economic Survey has nudged states to expedite the enactment of labour codes, saying rules needed to implement them have not been framed or notified.

Finance Minister Nirmala Sitharaman tabled the survey, often described as the economic report card of the government, in Parliament on July 22, a day ahead of the Budget.

The Industrial Relations Code, Code on Social Security, and Occupational Safety, Health and Working Conditions Code were passed by Parliament in 2020. In the Monsoon Session of 2019, the Code on Wages was passed but the rules necessary for their implementation have not been formulated and notified since then.

“Labour” is in the Concurrent List of the Constitution and the power to make rules is entrusted with the Centre and states.

There is also a need for pre-publication of rules by states in their respective official gazette for public consultation.Follow our live blog for the latest on the Economic Survey 2024

The survey said 32 states and union territories (UTs) pre-published their draft rules under the Code on Wages, 2019, 30 the Industrial Relations Code, 2020, 31 the Code on Social Security, 2020 and the 31 did it for Occupational Safety, Health and Working Conditions Code.

The survey also pointed to other regulatory hurdles such as higher overtime wage premiums and barriers to job opportunities for women in way of employment generation.

“A comparison with other countries reveals that India’s stricter overtime wage regulations are potentially hindering the growth of the manufacturing sector by driving production to nations with lower overtime costs,” the survey said.

“The 10 most populous states collectively impose 139 prohibitions on women from participating in factory processes such as electroplating, petroleum generation, manufacturing of products such as pesticides, glass, rechargeable batteries etc,” it added.

The survey said India prescribes higher floor space per worker on a factory floor compared to other countries. An Indian factory with 1,000 square metres (sqm) of usable floor space can employ up to 82 more workers if India were to adopt Malaysia’s standard.

Increases in space requirements can discourage the expansion of factories, it added.