State Governments can strike out on their own and undertake implementation of whichever components of the four labour codes they may want, V Anantha Nageswaran, Chief Economic Advisor, said on Wednesday.
“They don’t have to necessarily wait for entire set of the four labour codes to be ratified by all States and become legislative reality to act on them”, Nageswaran said at a plenary session at the 51st National Management Convention of All India Management Association in the capital.
Nageswaran said that States are free to implement these four Codes in partial fashion picking out components where it’s possible.
He said that two labour codes out of four (enacted into law and received Presidential assent in 2020) are notified already. Other two are in different stages of being ratified by States, Nageswaran said.
The Chief Economic Advisor was replying to a question from the audience on the delay in implementation of the four labour codes in entirety and how it may come in the way of boosting economic growth.
In his plenary session titled ‘Role of Capital and Labour in New Growth’, Nageswaran also made it clear that there was no one to one causality between labour market regulations and job creation.
“Hiring is a function of private sector investments in new businesses and new capacities, function of skill level, function of technology, function of competition and labour market regulations. Labour is just one factor”, he added.
“It is not that labour laws are the only binding constraint. I don’t see Labour as a one shot magic wand. There are multiple action points that are needed by stakeholders concerned”.
Capital and Labour choice
Nageswaran said that the choice between capital and labour deployment cannot be regulated as it will create unintended consequences. “I don’t see need for a regulatory framework. I would rather prefer it to be a consensus building voluntary process for a compact between industry, government and public. I don’t see regulation as first cut resort to the problem”, he added.
On deglobalisation, Nageswaran said that though there has been a degloabalisation of trade in goods and services, capital is still welcome to move freely across borders. He argued that if other countries want access to Indian markets, India must seek access to their labour and services markets.
On the paradox of formalisation of business entities with informalisation of jobs, the CEA said that greater formalisation of the economy has been achieved through GST and registration of MSMEs on portals. However simultaneously there has been an informalisation of jobs in the formalized enterprises, which is a cause for concern, he noted.
Nageswaran also did not see any merit in introducing any universal basic income (UBI). “It has to be targeted and cannot be universal. It has to come with reciprocal obligations. There are fiscal constraints, behavioural constraints and law of unintended consequences. There is no space for the ‘U’ in this”, Nageswaran said.