Centre Agrees to Further Talks with Trade Unions on Labour Codes and Related Issues

Centre Agrees to Further Talks with Trade Unions on Labour Codes and Related Issues

Sub : Eco

Sec: Unemployment and Inflation

Why This is in the News:

Recent discussions between the union Labour minister and Central Trade Unions (CTUs) have brought key labour-related concerns to the forefront. The CTUs have expressed dissatisfaction with the Labour Codes and demanded significant policy changes. The Minister has agreed to further discussions, reflecting ongoing debates over labour policies and their impact on workers.

Key Points and Analysis:

Background of the Meeting:

Participants: Union Labour Minister Mansukh Mandaviya, Minister of State for Labour Shobha Karandlaje, and leaders from ten Central Trade Unions (CTUs).

Agenda: Primarily focused on Employment Linked Incentive (ELI) schemes announced in the Union Budget.

Trade Unions’ Concerns:

Labour Codes: The CTUs argue that the new Labour Codes favor large corporations over workers.

CTU demands and issues:

• Restoration of the non-contributory Old Pension Scheme.
• Convening of the Indian Labour Conference.
• Concerns related to new pension schemes
• Concerns related to National monetisation pipeline

Unions, including the Bharatiya Mazdoor Sangh (BMS), have requested clarification on the scheme’s focus on the formal sector and called for measures to support the informal sector.

Indian Labour Conference (ILC)

• It is the apex level tripartite consultative committee in the Ministry of Labour & Employment to advise the Government on the issues concerning working class of the country. All the 12 Central Trade Union Organisations, Central Organisations of employers, all State Governments and Union Territories and Central Ministries/Departments concerned with the agenda items, are the members of the ILC.
• The first meeting of the Indian Labour Conference (then called Tripartite National Labour Conference) was held in 1942 and so far a total of 47 Sessions have been held.

Union Budget 2024-25: Introduction of Employment Linked Incentive Schemes and Internship Program

The finance minister unveiled three ELI schemes and a five-year internship program in the Union Budget for 2024-25.

Objective: The schemes are designed to enhance employment in the manufacturing sector and the formal economy.

Total Allocation: ₹2 lakh crore has been earmarked for employment and skilling initiatives, including the three ELI schemes.

First-Time Employment Scheme:

Duration: 2 years for enrollment, 3 years for expenditure.

Benefits: Provides a direct benefit transfer equivalent to one month’s salary (up to ₹15,000), distributed in three installments. Expected to benefit around 210,000 individuals.

Eligibility: Applies to first-time EPF enrollees earning less than ₹1 lakh per month. A minimum employment period of 12 months is required; early termination requires subsidy refund by the employer.

Job Creation in Manufacturing Scheme:

Duration: 2 years for enrollment, 6 years for expenditure.

Benefits: Incentivizes manufacturers to hire new employees, with an estimated benefit for about 30 lakh individuals.

Eligibility: Employers must hire a minimum number of first-time employees based on past EPF coverage.

Support to Employers Scheme:

Duration: 2 years for enrolment, 6 years for expenditure.

Benefits: Supports additional employment across all sectors with salaries up to ₹1 lakh per month, aiming to incentivize the hiring of approximately 50 lakh persons.

Eligibility: Targets employers meeting specific hiring thresholds.

Internship Program:

Scope: Offers internships to 1 crore youth at 500 top companies over five years.

Stipend and Support: Interns will receive ₹5,000 per month and a one-time ₹6,000 assistance. Companies are required to cover training costs and 10% of internship costs from CSR funds.

FOUR LABOUR CODES

Code on Wages, 2019:

• Consolidates existing wage laws into a single framework.
• Establishes a National Minimum Wage applicable across sectors.
• Mandates timely payment of wages and transparency in wage calculation.
• Ensures equal pay for equal work, regardless of gender or other factors.

Code on Industrial Relations, 2020:

• Streamlines dispute resolution mechanisms for labor-related issues.
• Provides greater flexibility for employers in hiring, firing, and managing workforce.
• Regulates conditions for layoffs, retrenchment, and closures of establishments.
• Strengthens the process for registering and resolving industrial disputes.

Code on Social Security, 2020:

• Extends social security benefits, including health insurance and pensions, to informal sector workers.
• Mandates maternity benefits and other support for workers.
• Consolidates multiple social security schemes into a unified framework.
• Improves coverage and compliance for social security provisions.

Code on Occupational Safety, Health, and Working Conditions, 2020:

• Sets comprehensive safety and health standards for various industries and workplaces.
• Mandates regular safety inspections and compliance checks.
• Establishes mechanisms for reporting and addressing workplace hazards.
• Enhances worker protection through improved enforcement of safety regulations.

National Pension System (NPS):

Introduction: Replaced OPS on January 1, 2004.

Regulation: Administered by the Pension Fund Regulatory and Development Authority (PFRDA) under the PFRDA Act, 2013.

Funding: Employees and government make defined contributions; employees contribute 10% of basic pay and DA, with a matching 14% contribution from the government.

Opposition: Lower guaranteed returns compared to OPS, and mandatory employee contributions have led to calls for a return to OPS.

Fiscal Implications of UPS:

• Debt-to-GDP Ratio: UPS may strain government finances, contributing to a high debt-to-GDP ratio.
• Fiscal Burden: A Reserve Bank of India study indicates that if all states adopt OPS, the fiscal burden could be up to 4.5 times that of NPS, potentially reaching 0.9% of GDP annually by 2060.