Labour Law Reforms

amitabh.kant@nic.in

Dear Amitabh ,

You may like my following blog that I just posted on a few web sites

regards,

hemen

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Hire ,  when   you   need  :   Fire ,  when   you  don't  !

What is the amount of investment required to create 1 Million jobs per month ? ( = No of jobseekers joining India's labour market each month )

That would depend upon the " Industry " for investment

There are some , " Capital Intensive " industries which would require a huge investment , whereas , there are some " Labour Intensive " industries , where a much smaller investment can generate 1 Million jobs

For example , to generate 1 Million jobs would need :

*  Industrial Instruments ( Labour Intensive )................... Rs  10,000  Cr

*  Boilers / Steam Generating Plants ( Capital Intensive )... Rs 500,000 Cr

{ Source : DIPP , Investment and Job Creation from Aug 1991-Mar 2014

   as reported in Times of India / 17 March , 2015  }

Of course , we don't have to create all of those 1 Million jobs per month , in just one or two industries

If we take an " Average Investment " required across ALL the industries , then , may be , we need :

Rs 200,000 Cr to generate 1 Million jobs every month

ie :   Rs 2 Lakh*Crores   per month

ie :   Rs 24 Lakh*Crores  every year

Now , who has got that kind of money to invest , even if we assume that

>  there is a " Ready Market " for all of those products , here and now ?

>  this market will not shrink in the foreseeable future  ?

Obviously , the Governments ( Central + States ) , don't  !

If we include FDI , may be Private Sector can raise that kind of money

But will it invest in " Capital Intensive " industries or in " Labour Intensive " industries ?

Given the current labour laws , it is clear that the investors will choose to invest in Capital Intensive industries

Even if that means , creation of only 1 Lakh jobs instead of 10 Lakh jobs !

At this point , it is worth researching whether USA succeeds in creating some 150,000 / 200,000  new jobs every month , due to its policy of  :

"  Hire when you need : Fire when you don't  "

Before hiring , do USA industrialists ask of themselves :

"  If things go wrong and I am forced to trim my work-force , will this recruit

   become a permanent burden ? "

Question that the Labour Laws must answer :

" What comes first ?  Creation of new jobs , or , retention of existing jobs ? "

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hemen  parekh

June 30 , 2015

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