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March 2, 2001                                       Feedback  

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Budget to induce sea change in industrial relations: Experts

BS Political Bureau

Employers reacted positively but cautiously to the provisions announced in the 2001-02 Union Budget by predicting that though the proposed changes in labour laws will improve country's business climate and promote specialisation and ancillarisation in industry sector, industrial relations will see a deterioration in the short term.

Secretary general of the Employers' Federation of India Sharad Patil said that while it was encouraging that units, which employed up to 1000 people could be closed down instead of the previous limit of less than 100 workers, unprofitable units would find it difficult in implementing retrenchments and lay offs because the action was persistently blocked by the bureaucracy.

"The problem lies here. The labour commissioner's office never gives permission to lay off or retrench labours. Economic activity is decided by political parameters. Although, the Budget has not changed this, the signal that even if you are a bigger unit you can contemplate retrenchment will change the work environment," Patil said.

He also said that of late, labour commissioners were tending to be less rigid in giving permission for lay offs or retrenching labours.

He also cited the case of the Calcutta-based British Oxygen Limited, which had succeeded in getting the requisite permissions.

Rajen Mehrotra, a specialist on employers' activities with the India office of the International Labour Organisation (ILO), said while employers would be happy with the Budget, the government had opened a front for itself by bypassing the Second National Commission on Labour, which is addressing itself precisely to these issues.

He also said that the rights of labour against retrenchment would have been better protected if units employing less than 100 people alone were subjected to retrenchment and lay-off restrictions.

"In our experience, the larger the unit, the greater the organisation among workers. In small units, especially mini units, workers don't get a chance to organise themselves for collective bargaining. What has been added in this Budget is a further chance for employers to restructure their business," Mehrotra said.

Both Patil and Mehrotra said that provisions for outsourcing would promote ancillarisation and specialisation.

"Businesses can now look at core activity. Outsourcing will become the core activity for a whole lot of other units. For instance, the pharma industry is providing a huge addition of jobs because it is outsourcing. Obviously, you have to supervise quality. But business is booming because you're not doing everything yourself and so you have time to think of diversification and expansion," Patil said.

He also predicted that services like catering would now boom.

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