75th Founding Day Lecture Meeting on “India@2030” Know More

March 2010

Another law, more trouble

By Raman Jokhakar
Tarunkumar G. Singhal
Chartered Accountants
Reading Time 1 mins
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59 Another law, more trouble


When governments say they want to protect wages, they often
end up killing employment. They, of course, deny that, but that is what minimum
wages and legalized job security imply. The Union Labour Ministry plans to amend
the Contract Labour (Regulation and Abolition) Act, 1970. This amendment will
allow Labour Commissioners and other officials to fix minimum wages for seasonal
workers. You may say that a law that prescribes minimum wages will only make
people get their due. Instead, it leads to incentives that are detrimental to
the workers.

It will permit appointed officials to harass employers.
Worse, it will permit collusion between firms and officials. If you take the law
and the officials out of the equation, then wages are set by the market. A firm
requiring labourers will have to pay market wages if it wants to get workers.
But with officials in the picture, as the new amendment will ensure, chances are
that they will pay much less. Official collusion and loopholes will ensure that.


(Source:
Mint Newspaper
dated 19.01.2010)

 

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