Article

‘Make in India’ Campaign: Management and Labour Studies

43(1&2) 1–12
Labour Law Reform Strategy © 2018 XLRI Jamshedpur, School of
Business Management
and Its Impact on Job Creation & Human Resources
SAGE Publications
Opportunities in India sagepub.in/home.nav
DOI: 10.1177/0258042X17753177
http://mls.sagepub.com

Anushree Karani1
Rasananda Panda2

Abstract
The need of employment generation has never been more pressing than now when youth is occupying
larger share in the pie of demographic profile of the country. There are several employment challenges
such as adequate skill requirement and large-scale employment generation, flexibility of employer to
cope up with turbulent global manufacturing environment and social security programme to cater to the
need of employees. Development of manufacturing sector is always at the centre irrespective of NDA
(National Democratic Alliance) led government or UPA (United Progressive Alliance) led government.
To create jobs for the manufacturing sector is always a challenging task. This article throws some light
on the manufacturing employment scenario in the pre-reform and post-reform era. This article also
tries to explore the impact of recent proposed labour law reforms on the job creation opportunities.
It follows exploratory—secondary data—research design. The scope of this research is limited to two
major laws, namely, Factories Act, 1948 and Apprenticeship Act, 1961, and other law reforms in the
country. With the support of the recent 26th Quarterly Employment Survey by labour ministry and the
analysis of the labour law reforms, this article leads to the conclusion that these reforms have not had
any significant impact on the job creation opportunities.

Keywords
Labour law reforms, Job creation, ‘Make in India’, Exploratory study

1
Assistant Professor, Shri Jairambhai Patel Institute of Business Management & Computer Applications, National Institute of
Cooperative Management Group of Institutions, Gandhinagar, Gujarat.
2
Professor of Economics, General Management Area, MICA—The School of Ideas, Shela, Ahmedabad, Gujarat, India.

Corresponding author:
Anushree Karani, Assistant Professor, Shri Jairambhai Patel Institute of Business Management & Computer Applications, National
Institute of Cooperative Management Group of Institutions, Nr. Indroda Circle, Gandhinagar, Gujarat.
E-mail: anushreekarani@gmail.com
2 Management and Labour Studies 43(1&2)

Introduction
The Indian manufacturing sector is the backbone of country’s economic growth. The manufacturing
sector helps in meeting demand and it reduces import dependence. This sector provides employment to
millions of people in the country, which has a multiple effect in the growth of the economy in terms of
reduction in poverty, starvation and better standard of living.
Recent Ernst & Young’s survey in 2015 has ranked India as the most attractive market that year. It has
also mentioned that India was ranked number one in foreign direct investment (FDI) in the first half of
2015. This survey also reconfirms the earlier findings of the Financial Times, London which said that
India was ahead of China for Greenfield FDIs in 2015 (Ernst & Young, 2015). India is ranked number
one among the world’s top destinations by Foreign Policy magazine of the USA (Mehra, 2015).
The latest data on Index of Industrial Production (IIP) for the month of August 2015 shows a healthy
growth of 6.4 per cent after growing at a more than 4 per cent in June and July. Particularly, manufactur-
ing sector grew around 6.9 per cent in the month of August 2015 (ET Bureau, 2015). The manufacturing
sector of India is small in comparison with BRICS (Brazil, Russia, India, China and South Africa)
nations. Rising share of manufacturing in GDP shows that this sector has enormous potential in terms of
generating higher inclusive growth with vast opportunities to the workforce. Without manufacturing,
growing at a faster rate, job absorption would continue to be low.
India is one of the youngest nations in the world with more than two third of the total population
below 35 years of age making it suitable for building a manufacturing hub. India has a treasure of youth,
but dark side of this advantage is these youths are unemployed because of not having required skill
set for employment. Less than 5 per cent of India’s potential workforce gets formal skill training to be,
and stay, employable. A skilled workforce is the backbone of the manufacturing sector and overall develop-
ment of the economy. The government has also taken initiatives such as ‘Skill India’ and ‘Pradhan
Mantri Kaushal Vikas Yojna’ (Malik, 2015).

Genesis of ‘Make in India’

The Indian manufacturing sector has contributed approximately 17 per cent to the country’s GDP in
2015. India’s share in the world manufacturing output was 2 per cent in the year 2013–2014. To boost
the manufacturing sector the government has set the two goals: one is to increase the share of manufac-
turing in the GDP to 25 per cent and second is to create 100 million jobs by 2022. To achieve these goals
the government introduced the ‘Make in India’ programme on 25 September 2014 to facilitate invest-
ments, foster innovation and build excellent manufacturing infrastructure (KPMG, 2014).
A strong political mandate and push for reforms, Reserve Bank of India (RBI) commencing its rate
easing cycle, benign global commodity prices along with gradually improving global growth have
created a favourable setting for India’s manufacturing sector. The envisaged creation of smart cities and
investment corridors, allowing higher FDI in sectors such as defence and railways, actions to foster
project execution including faster approvals and clearances, appeasing investor sentiment, correcting
inverted duty structures among others, have been some of the encouraging efforts that the government
has undertaken. However, these efforts need to be supplemented with proper implementation here on
along with overhauling some of the fundamental factors such as labour laws, poor infrastructure and tax
policies that have held back India’s manufacturing potential.
With the launch of ‘Make in India’ campaign the major policy instruments through which this was
sought to be achieved is by changing the labour laws. The government stressed that there are too many
labour laws regulating work and they need to be changed.
Karani and Panda 3

Objective and Methodology of the Study

The ultimate objective of the study is to explore the impact of recent proposed labour law reforms on the
job creation opportunities.
This article follows exploratory—secondary data—research design. The primary objective of explor-
atory research is to provide insights into and an understanding of, the problem confronting the researcher
(Malhotra & Dash, 2009). Secondary databases used for the study are online Internet, census data, news-
papers and other government publications, which fall under the category of the computerized database
and published secondary data.

Labour Laws in India

Indian labour laws came into existence to regulate labours in the country. Indian labour laws at central
and state levels are formed to ensure the protection of labours but when in actual practice the legislative
rights only protect minority of workers. India follows federal system and labour matters are in the
jurisdiction of both central and state levels. Indian labour laws and independence movement are closely
connected. When British Raj was dominating in India there were several issues prevailing such as trade
unions, labour rights and freedom of association. Workers’ demand for better conditions and trade
union’s strikes for rights and other issues were viciously suppressed. India became independent in the
year 1947 and in the year 1950 Constitution of India embedded the series of fundamental labour rights
in the Constitution. The rights were to join the union, equality at work, minimum wages and better work-
ing conditions, under the fundamental rights (Wikipedia, 2015).
After that, several labour laws came into existence from time to time. Among all Workman’s
Compensation Act, 1923 is the oldest, and then to protect workers on the shop floor the Trade Union Act,
1926 came into existence. The Payment of Wages, 1948; the Factories Act, 1948; the State Insurance
Act, 1948; the Employees’ Provident Fund (EPF) and Miscellaneous Provisions Act, 1952; the Payment
of Bonus Act, 1965; Payment of Gratuity Act, 1972 and The Labour Laws Act, 1988 came and amended
to respond the need to time and labour market.

Need for Labour Law Reforms

The restrictive labour regulations in India were the roadblock in the development of business and trade.
The regulations and restrictions were hampering the flexibility of firms and many checks and approvals
from the government was again a time-consuming process. The laws applied only to the large-scale
organizations were discouraging the organization to grow and restrict it to remain small. To respond the
need of the economy, relaxation in the labour laws and reforms were necessary. The research proves that
restricted labour laws actually slower down the growth of labour intensive industries and restricted their
firm size. This also gave birth to more medium size firms and discouraged large-scale firms and its
operations. For instance, employment in apparel industry in India is concentrated in firms employing
less than nine workers each; and if one look at China then its employment in apparel industry is concen-
trated in employing more than 2,000 workers (Mitra, 2015).
Labour law reform has come on political agenda in India. Indian labour laws are decades old
and some of them are suffering from rigidity which is holding back the economic development of the
4 Management and Labour Studies 43(1&2)

country. India’s inflexible labour market was the roadblock in the growth of manufacturing sector and
productive employment generation. Reforms in the labour market accelerate the growth in manufactur-
ing sector and large-scale employment generation in the country (Ahmed & Devarajan, 2007; Basu,
2005). Majority literature focuses on Chapter VB of the Industrial Dispute Act, which says that it is
mandatory for the firm having more than 100 workers that it must take approval of the state government
in case of retrenchment. Besley and Burgess (2004) constructed the index, which summarizes the state-
level amendments of Industrial Dispute Act between 1949 and 1962. They found out that there is a
negative impact of pro-worker regulation on employment, productivity and investment and output
among the registered manufacturing firms. Other researchers point out that there are so many labour
laws and many of them covering same subject which is sometimes difficult to comply. For instance, the
Factories Act prescribes the use of earthen pots for drinking water (water coolers are not sufficient) and
the use of red painted buckets with sand (instead of fire extinguishers) (Debroy, 2005).

Employment in Manufacturing Sector

Employment in manufacturing sector is the debate over the last few years. During the 1970s, employ-
ment growth in manufacturing sector was 4.6 per cent per annum. During the 1980s, growth in employ-
ment lost its momentum but the manufacturing output was impressive in this decade. Employment in
organized sector was almost stagnant during this time. Some economists highlighted that the main
reason was policy-induced labour market rigidity (Fallon & Lucas, 1991), Ahluwaliya (1992) and World
Bank (1989) argued that stagnation in employment was due to increase in real wage rate. Another argu-
ment by Nagaraj (1994), Papola (1994) and Bhalotra (1998) for stagnant employment was increase in
man-days worked per worker increase the labour hours worked. The series of economic reforms were
also introduced in the 1990s to stimulate the employment in manufacturing sector.
After liberalization, it was expected that the foreign trade and investment would create job opportuni-
ties in organized manufacturing sector, majorly due to the alteration of production structure in favour of
low skilled labour intensive industries. There was growth in organized manufacturing employment,
during the year 1990–1998, it grew at the annual rate of 2.91 per cent but this was not consistent, and it
grew at the negative annual growth rate of 1.85 per cent during the year 1998–2004 (Table 1). This
negative annual growth rate was boon and due to that the quantitative restrictions on imports were
removed. During the year 2004–2012 the manufacturing employment has shown impressive annual
growth rate of approximately 7 per cent (Table 1).
Manufacturing industry can be further bifurcated in import oriented, export oriented and other
industries. The growth of employment in export-oriented industries post reforms was 3.3 per cent.

Table 1. Growth Rate of Employment in Organized Manufacturing

Sector

Time Period Average Annual Growth Rate

1973–1997 to 1979–1980 4.61
1979–1980 to 1989–1990 –0.07
1989–1990 to 1997–1998 2.91
1997–1998 to 2003–2004 –1.85
2003–2004 to 2011–2012 6.83
Source: Calculated from Annual Survey of Industry.
Karani and Panda 5

Table 2. Post-reform Growth Rate of Employment by Type of Industries

Growth Rate Share in Total Employment

of Employment 1989–1990 1997–1998 2011–2012
Export Oriented 3.13 26.45 26.59 27.86
Import Competing 1.31 30.95 30.29 27.69
Other industries 2.47 42.60 43.12 44.45
Total 2.31 100 100 100
Source: Calculated from Annual Survey of Industry.

The increased growth in employment majorly due to liberalization and removal of quantitative restric-
tions on import goods. During the first phase of liberalization, that is, from 1991–1992 to 1997–1998,
despite massive tariff reduction, the composition of manufacturing employment remained almost
unchanged (Table 2).
According to Goldar (2002), there was an increase in employment elasticity for aggregate manufac-
turing from 0.26 in the pre-reform period (1973–1974 to 1989–1990) to 0.33 in the post-reform period
(1990–1991 to 1997–1998). According to his study there was a significant increase in the employment
elasticity in the export-oriented group but there was a decline in import-oriented industries from 0.425
in the pre-reform era to 0.264 in the post-reform era. Goldar (2002) has also studied the trend in wages.
In the pre-reform period (1973–1974 to 1989–1990), it was 3.29 per cent and in the post-reform period
(1990–1991 to 1997–1998), it was 1.16 per cent. In India, till date the government intervention plays key
role in the organized sector.

Reforms in Labour Laws as an Indicator for Job Creation Opportunities

The reform of the Indian labour laws has been a constant demand of capital, business and sections of the
academia for quite sometimes now. To boost the economy and manufacturing sector of the country
the labour law reforms are inevitable. There are several changes proposed in labour laws. According to
the proposed reforms, 44 labour laws are to be replaced by five codes in the areas of wages, industrial
relations, social security and welfare, safety and working conditions and employment training and
miscellaneous (Ministry of Labour and Employment, 2014–2015).
To analyse whether labour law reforms will really generate the job creation opportunities; which is
one of the objectives behind the recent labour law reforms, following labour laws, namely, Factories Act,
1948; Apprenticeship Act, 1961 and Labour Laws Act, 1988 are analysed.

The Factories Act, 1948

The Factories Act came into force on 1 April 1949 to consolidate and amend the law regulating labour in
factories and it extends to the whole of India.
Proposed Amendments
There are major amendments proposed in the Factories Act, 1948. The amendments were majorly in the
areas of paid leave, penalties and safety measures, overtime limit, working hours and night shift for
6 Management and Labour Studies 43(1&2)

women. The eligibility of the paid leave for the workers has been reduced from 290 to 90 days. The
establishment is now liable to provide 75 restrooms instead of 150 restrooms. The proposed amendments
have also enhanced the safety measures, and penalties for certain offences have also increased. Major
amendment in the Bill is to allow women in the night shift with proper safety measures and regulations
from 7:00 p.m. to 6:00 a.m. The working hours have increased from 10 to 12 hours. Limit of overtime
work for shift workers rose from 50 to 100 hours per quarter. Factories employing 200 or more workers
would have to provide canteen facilities instead of the present provision of 250 workers. The same has
been raised for typical workers from 75 to 115 hours per quarter and up to 125 hours per quarter for
public utilities. The state government role is enhanced in setting norms and standards in factories
(Roychowdhury, 2015).
The Labour Laws Act, 1988 in its original form exempted ‘very small establishments’ (employing up
to nine workers) and ‘small establishments’ (employing 10–19 workers) from maintaining registers and
filing returns individually/separately for nine labour laws (about meeting the prescribed norms/
standards), if these establishments provided a consolidated account for the same.
The government has also draft a Bill which create a single labour law for small factories where num-
ber of workers are less than 40 which was 19 earlier. The proposed draft would eliminate the 14 existing
Acts, which are applicable to this sector. The main reason behind The Small Factories (Regulation of
Employment and Condition of Service) Bill, 2014 is to attract investors within and outside country.
As per the draft the definition of a small factory is, ‘as any premise wherein a manufacturing process is
carried on and which employs less than 40 workers’ and seeks to exempt employers from complying with
14 Acts. The Bill also allows employers to register and even close down their factories by electronically
notifying the concerned authorities within 15 days of closing the factory (Roychowdhury, 2015).
Impact on Job Creation
Job creation opportunity is one of the objectives of labour reforms. Some of the reforms would attract
the employees and create an opportunity for employment. The amendment allows night shift for women
with special measures would really attract women employees and open way for them to work in an estab-
lishment with proper safety and security. Total working hours have increased but with the increment in
spread-over time of 30 minutes. This will benefit the employees to take nap in between the working
hours. The benefits are also to the employers as paid leave for the workers have been reduced and
number of rest rooms has reduced.
Majority of the workers are breadwinners for their families so, increase in the limit of overtime work
also motivate them to work and provide more earning capacity. The major benefit to the employees is
that the safety measures are increased. This will provide the safe work environment to the employees and
attract educated employees more in the factory set-ups. Some of these measures of increase in safety
standards, more spread-over times, increase in penalty would help the manufacturing set-up to fill the
dearth of skilled people in the industry.
Some of the measures are not in favour of employer such as increased penalty, more safety standards
and safety measures for women working in the night shift. This will cause more cost to the employer,
which actually has a negative effect on job creation opportunity.
The amendment in the increase in number of workers would actually cover the entire micro, small and
medium enterprises (MSME). The administrative compliance will reduce but this will not affect the job
creation opportunities at the front. The MSME sector provides employment to a large section of popula-
tion and contributes about 45 per cent in country’s export and about 40 per cent in the manufacturing
sector (DNA, 2015). More investors would come and invest in the MSME sector, more business will be
Karani and Panda 7

generated, and this generates more employment in the sector. The MSME sector is also free from the
burden of multiple forms and inspections.
The MSME is also a growing sector in India and it needs more talented people to work in. Job crea-
tion opportunity in this sector is completely based on not only government regulations but also on the
other economic factors and conditions favourable to the Indian business sector.

The Apprentices Act, 1961

The Apprentices Act is introduced to provide for the regulation and control of training of apprentices and
matters concerned with it. The Act was introduced in the form of a bill on 19 August 1961.
Proposed Amendments
The definition of workers in the Apprentices Act, 1961 has been amended in the draft and changed
definition includes workers employed through contactor (contractual employees). Another amendment
was made in the eligibility of qualification for undergoing apprenticeship training. The criterion has been
broadening that non-engineering background students are also included and qualified for the training.
Amendment was also made in the area of deploying apprenticeship that new categories of economic
activity (to be solely decided by employers under the name of ‘optional trade’) have been allowed to use
apprentices. Further, till now daily (and weekly) hours of work an apprentice has to put in an enterprise
was decided according to the norms prescribed by the Central Apprenticeship Council. In recent amend-
ment, employers have been given the power to decide unilaterally on the daily (and weekly) working
hours of an apprentice. Under the existing rules, there is no obligation on employers to offer job to the
apprentice after completing the apprenticeship successfully. There is an option that, if any apprentice has
signed agreement that he/she would get job after successful training period, then employer bound
to offer the employment after apprenticeship tenure. This has changed, now employers are given full
freedom to formulate their own policies of recruitment of apprentice.
The important change made in the section of penalty meted out to firms failing to comply with the
provisions of the Act. Earlier the penalties either for not employing minimum number of apprentice
prescribed in the Act or not complying the terms and conditions mentioned in the Act were liable to pay
monetary penalty or jailed. The current amendment in the Act says that any employer contravening the
Act is only liable to pay monetary penalty and cannot be put behind the bar under any circumstances.
The Apprentices Act had prescribed the minimum age for being engaged as an apprentice as 14 years.
The Apprenticeship Amending Act has now prescribed the minimum age for apprenticeship in desig-
nated trades related to hazardous industries at 18 years. The Apprenticeship Amendment Act removes the
requirement for adviser’s approval for apprenticeship training programme. The Apprenticeship Amendment
Act now limits the requirement of approval of the syllabus and equipment for practical training by the
Central government only in case of hazardous industries (Roychowdhury, 2015).
Impact on Job Creation
Employability in the youth can be increased through imparting proper set of skills and this is possible
through on-the-job training or off-the-job training. On-the-job training will definitely help the industry
to acquire proper skill set which proper fit in the need of the industry. On the basis of the argument that
the vast magnitude of open involuntary youth unemployment and under-employment in India is primar-
ily due to skill mismatch and the Apprentice Training Scheme (ATS) is not performing satisfactorily
8 Management and Labour Studies 43(1&2)

which means around 30 per cent of sanctioned apprentice seats remain vacant, these forces the amend-
ment in the Apprentices Act.
Earlier the organization could only appoint restricted number of apprentice, and must maintain the fix
ratio of worker-to-apprentice as prescribed by the government. Now the definition has broadened so
workers other than engineers also can be apprentice. Allowing the employer to decide on wages, working
hours are not in favour of job creation. In addition, organizations can device their policy for hiring or
recruiting apprentice is again not in the favour of job creation. With the current amendment, any employer
contravening the Act is only liable to pay monetary penalty and cannot be put behind the bar under any
circumstances. All these changes are unambiguously in favour of employers and here the job creation
perspective is not at all fulfilled.

Other Reforms

Self-certification and Inspection—Shram Suvidha Portal and Labour Inspection Scheme

In October 2014, the Government of India has launched series of reforms. The main objective behind the
scheme was to increase productivity and ease of doing business. The employers are allowed to submit
self-certified single compliance report for 16 central labour laws under this portal. The portal simplifies
the business processes and operations. The Central government has also launched Labour Inspection
Scheme (LIS) to simplify the business regulations and to bring transparency and accountability. Central
Analysis and Intelligence Unit (CAIU) has been set up to analyse and collect field data under this scheme.
After that, the inspection will be carried out and there are different guidelines for each unit for the inspec-
tion. There are certain guidelines for inspectors as well to maintain registers and inspection must be
carried out in working hours, etc. Under this scheme, the inspection is done on random basis for units,
which eliminate the discretion, and concerned officer must upload the report of inspection within
72 hours of inspection. Apart from this, the scheme has developed to ensure transparency regarding
serious matters covered under the mandatory inspection list and there must be an emergency list for
inspection of serious cases in specific circumstances like industrial accidents (Globalhrlaw.com, 2015).
Universal Account Number
Transfer of provident fund under the Employer’s Provident Funds and Miscellaneous Provisions Act,
1952 was very time consuming and led to multiple account numbers for those who change their employ-
ment. To avoid these issues the Employees’ Provident Fund Organization (EPFO) introduced Universal
Account Number (UAN). The UAN provides online registration and it enables employee to track all the
current and past accumulations under the EPF Act. After the verification of data provided for UAN, one
can access the account for downloading the passbook, contact details, UAN card and all the accumula-
tions of the provident fund (Globalhrlaw.com, 2015).
Changes in the EPF Act—Statutory Limit Increased
The EPFO has increased the minimum salary limit to `15,000 from earlier limit of `6,500. Previously,
in India the limit on the contribution to be paid to EPFO was calculated at Monthly salary of `6,500 but
now this would be calculated on increased ceiling of `15,000 (Globalhrlaw.com, 2015).
Changes in Child Labour Regime
To improve labour laws and to prevent children from being employed, the Central government has
banned employment of child and adolescent between 14 and 18 years in the factories. This regime has
Karani and Panda 9

considered the mines, explosive and hazardous occupations covered under the Factories Act, 1948.
Violations of this regime impose penalty and imprisonment as well (Globalhrlaw.com, 2015).
Changes in Minimum Wage Act, 1948
The government has increased the minimum wage across the country from `137 per day to `160 per day.
This limit has been raised after two years based on average increase in the consumer price index for
industrial workers during this period. This increased limit translates `4,800 as minimum monthly salary
for unskilled labour. The government raised minimum wages in the country by 25 per cent binding all
the states. This was aimed to give boost in the rural economy of the country. Apart from common
uniform wage structure across the occupations, the amendments also make it compulsory for payment to
be done through the banking channels. This would ensure that salaries are paid through the banking
channels such as NEFT and RTGS. This would ensure that middleman or contractors do not cut the wage
and the employees get the full amount (The Indian Express, 2015).
Changes in the Contact Labour (Regulation & Abolition) Act, 1970
The proposed changes in the Contact Labour (Regulation & Abolition) Act, 1970 make it compulsory
for companies to absorb contact workers as regular/permanent workers whenever there is a vacancy or
need for permanent workers. Wages of the contractual workers should be at least minimum wages as
prescribed by the government. The amendment also suggests that contractual worker should also get
increment annually. There should be major hike in their salary after every five years but the condition is
that they should acquire some amount of skills (Sharma, 2015).
Impact on Job Creation
The above reforms are not directly related to job creation but somewhere these reforms help in ease of
doing business. These reforms may give motivation to employers as well as the industry to hire more
employees and encourage FDI, which is the need of the Indian economy in today’s era. The increase in
provident fund limit has extended the comfort and social security to certain category of employees who
deserve and desire protection. The increase in wage ceiling of `15,000 will include 5 million more
employees under this Act. This one may be motivation for the employees for employment. The incre-
ment in daily wage may motivate the unskilled labours and also provide job security to them. All these
changes in the labour laws are at preliminary stage and this is the responsibility of government and
employer to explain the benefits of the changes to the lower level employees and attract them for employ-
ment. The proposed changes in the Contract Labour Act will regularize the appointment of contractual
workers. The companies are hiring contractual employees according to the changing environment, so
this is not attractive for companies but the employees this may seem as an opportunity to enrol them-
selves as a contractual employee and get permanent job in that company. The benefit for employees is
that now employer cannot hire and fire contact workers based on seasonality of business. This will also
give opportunity to improve their skills. These changes are proposed and not still institutionalized and
still there is a drop in the employment of contractual labours in the past one year.

Conclusion
With rapid globalization and cutthroat competition in the manufacturing processes, the global manufac-
turing scenario has become immensely competitive. Indian manufacturing sector is booming, and industry
must deploy necessary manpower as per its needs. Recently, labour ministry has come out with the
10 Management and Labour Studies 43(1&2)

Figure 1. The 26th Quarterly Employment Survey

Source: Labour Ministry.

26th Quarterly Employment Survey April–June 2015 (Figure 1). This survey clearly says that job crea-
tion in manufacturing and export-oriented sectors in the first quarter of the year, which is April–June
2015 has fell badly. The number of jobs in the textiles, automobiles, leather, metals, gems and jewellery,
transport, information technology (IT)/business process outsourcing (BPO) and handloom/powerloom
sectors fell by a net 43,000 from the previous quarter. If the complete financial year is analysed, then
there is a drop in job creation in every quarter. In the first quarter of June 2014, 182,000 jobs were
created and in the last quarter of the financial year which was March 2015 only 64,000 jobs were added.
In April–June 2015 each sector registered the decline in job creation. Textile sector jobs decline by
17,000, automobile sector jobs decline by 18,000, IT/BPO sector jobs also declined by 5,000, handloom
jobs by 6,000, gems and jewellery by 3,000 and transport sector jobs decline by 2,000. One the most
unanticipated reality was that textile and IT/BPO sectors were always counted for more job creation have
slumped in the first quarter of 2015 (Figure 1). The decline was mainly due to the fall in temporary work-
ers in the employment. In the direct category of employees, the employment has increased by 30,000 and
in the contractual jobs; the decline was 73,000 during the quarter end June 2015 over March 2015. Some
private sector surveys have come up with the positive picture and according to Employment Outlook
Report by Naukri.com of October 2015 said that there is a growth in hiring from 26 per cent from
October 2014 to October 2015 (Nanda, 2015).
All the above changes are proposed and not yet implemented. Contract labour has become very
important part of today’s manufacturing sector. All uncertainties about regulation may be removed by
Karani and Panda 11

renaming the Act as the Contract Labour (Regulation) Act instead of the Contract Labour (Abolition and
Regulation) Act. The use of contract labour would enhance employment as this allows the engagement
of a vast number of labours, which would not have been possible otherwise. From the above analysis, it
is clear that though job creation is one of the objectives behind labour law reforms but the proposed
reforms are not promising to fulfil this objective.

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