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'Liberalise labour laws to create jobs'

The Planning Commn says an economy characterised by rigidities can't create jobs, reports Sutirtho Patranobis.

india Updated: Nov 13, 2006 18:15 IST

The Government should focus on the organised sector and liberalise labour laws to generate more employment and investment, the Planning Commission said on Monday.

"Only 8 per cent of the total number of employed people in the country are in the organised sector. Of that 8 per cent, more than 2/3 are working in the public sector units (PSU)," Planning Commission deputy chairman Montek Singh Ahluwalia said in the inaugural address of the Employment Summit organised by the Confederation of Indian Industries (CII).

In what is likely to raise Left's ire, Ahluwalia suggested that India's labour laws should be made more flexible. He said that investments were likely to move more where labour laws were flexible.

Left parties and trade unions have been saying that post-liberalisation labour laws have become more liberal and do not protect the worker's rights.

Subsequently, they are working for more hours and getting less paid. The guarantee of employment has also been diluted, trade unions claim.

Ahluwalia, however, added that even though the Commission was advocating more flexible labour laws, neither the Commission nor the Government was in favour of a 'hire and fire' policy.

"We need to understand that hire and fire is not on the government's agenda but labour flexibility is needed to ensure employment. We do believe that we need more flexibility in labour laws," he said. He added that the country couldn't follow degrees of flexibility, which was not in vogue with the rest of the world.

Ahluwalia said that there was also a need to shift excess labour from the agriculture to the non-agriculture sector, besides increasing the share of labour in the organised sector.

Simultaneously, there is a need to focus on the quality, and not only on the quantity, of labour that is needed in the organised sector. If the 9 per cent GDP growth is to maintained in the 11th five-year plan, there's urgent need to improve labour skills through, say, vocational training centres.

The PMO in fact has directed the Planning Commission to initiate the 'Skill Development Mission' under which more than 500 technical training institutes across the country would be revamped under the 11th plan. Negotiations were on with the World Bank in this connection, Ahluwalia added.

Planning Commission member Bhalchandra Mungekar said that in an economy characterised by rigidities and uneven development it is not possible to generate employment.

Mungekar said the 11th Plan target was to ensure inclusive growth. He said economic growth and employment benefited those in the upper class rather than those who were poor and underprivileged.

Email sutirthopatranobis@hindustantimes.com