The Hindu Business Line : Laboured proposal

CLEARLY THERE IS an element of political expediency in the reported claim of the Commerce Minister, Mr Kamal Nath, that the Centre is considering empowering the States to frame their own labour laws for geographies within their domain. The Centre has for some time promised both domestic and overseas capital that it would usher in labour law reforms so that entrepreneurs have greater freedom to exit failed businesses or restructure them even at the cost of the employees. But New Delhi has not been able to muster the political courage to translate it into reality. Even the more modest goal of putting in place a regime of liberal labour laws to units in special export zones has proved to be elusive. In the circumstances the Centre must be hoping that the spirit of competition among States would prompt them to relax their views on dealing with workers and, eventually, the nation as a whole would have a laissez faire regime on labour relations.

While this sounds an elegant solution, the path to labour law reform is strewn with many practical difficulties. For one, even allowing States to have their own labour laws would require amendments to the Central legislation. Sans this, the Central law would prevail if regional laws are at variance with it. With the Left parties opposed to any dilution of the legal framework that they see as tipping the balance in favour of the management vis-à-vis the labour, it is doubtful if they would countenance any such move by the Centre. Indeed, it is doubtful if the United Progressive Alliance Government, given its sensitivity to the concerns of the Left, would even contemplate such a move. Nor can the Government count on the support of the BJP even if that party is on the same side of the ideological divide as the Congress on matters economic. But the BJP, which had had no difficulty diluting its core ideology of Hindutva in the interest of `coalition Dharma' — an euphemistic way describing the politics of pursuit of power — should find taking a line against labour law reforms quite easy as it promises some short-term dividends. Of course, Mr Kamal Nath has said that some States have written to the Centre asking for such an enabling legislative framework. While it is one thing to ask of the Centre an amended labour law regime, it is quite another to actually put in place a management-friendly law. So looked at from any angle the proposal is a non-starter.

Surely the business environment no longer sports the same benign face that it did in the pre-1990s era when control of labour costs did not assume an importance that it has in more recent times. But the answer to the new challenge does not lie in the closure of an industrial unit. As a matter of fact, it could well become a Pyrrhic victory for the management as the market would move on to secure supplies from somewhere else even as the industrial action between the labour and the management is being fought. The answer lies in engaging with the labour in innovative ways for solutions that build trust and goodwill between the two stakeholders.

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