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Need for reforming labour laws stressed
Learn lessons from the Chinese model, says Survey

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The Chinese path
The Chinese labour market is characterised by a highly mobile labour force and despite hardships, workers in China appeared to have benefited from wage growth, additional job creation and new opportunities in self-em ployment.

New Delhi , Feb. 27

The Economic Survey for 2005-06 tabled in Parliament today called for reforms in existing labour laws in order to increase competitiveness and productivity of domestic industry. It also suggested that there are lessons to be learnt from the Chinese experience.

Criticising the inflexibility in the labour market because of highly protective labour laws, the survey stated that "perhaps, there are lessons to be learnt from China in the area of labour reforms. China with a history of extreme employment security has drastically reformed its labour relations and created a new labour market."

It went on to say that labour reforms are necessary to accelerate investment, particularly in industry and export-oriented sectors, which remains an unfinished agenda for the country.

Pointing out that a high growth rate can actually solve the unemployment problem, the survey said that though there had been several layoffs and open unemployment in Chinese market, high rates of industrial growth has helped in redeployment.

The Chinese labour market is characterised by a highly mobile labour force and despite hardships, workers in China appeared to have benefited from wage growth, additional job creation and new opportunities in self-employment, the survey said.

"Indian labour laws are highly protective of labour, and labour markets are relatively inflexible. Consequently, these laws have restricted labour mobility," it pointed out.

The survey also pointed out that labour regulations were a major determinant of industrial performance and States, which have enacted more pro-worker regulations have lost out on industrial production.

With fairly stringent labour laws, the organised sector has provided job-security for too long, the survey said, and added that the unorganised sector provided too little to too many.


It also noted that despite a general decline in the number of strikes and lockouts, much more needs to be done.

"The number of strikes and lockouts went down 13.6 per cent from 552 in 2003 to 477 in 2004, with a sharper decline in strikes than in lockouts," it said.

It further pointed out that the number of strikes and lockouts during January-September 2005 period stood at 340, which came to more than one strike per day.

It also noted that West Bengal experienced maximum instances of industrial unrest, followed by Tamil Nadu and Gujarat and added that industrial disturbances were concentrated mainly in textiles, engineering, chemicals and food products industries.

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