New Labor Codes: A big change is knocking in the job market of India. If you are looking for a job or work in a manufacturing unit, then this news is directly related to you. Amidst the discussion about the implementation of new Labor Codes, experts believe that this is going to open new doors of jobs. In fact, with these new rules, companies will get the 'freedom' to run their business, which they had been waiting for for a long time. This step of the government can act as a lifeline not only for big factories but also for small and medium industries (MSMEs).
The biggest change under the new Industrial Relations Code has been made in the scope of rules. Till now, companies which had more than 100 employees had to take approval from the government before doing layoffs or closing their business. This rule was a big headache for the companies.
Now according to the new rules, this limit has been increased to 300 employees. This means that institutions which have less than 300 workers can increase or decrease their workforce without government approval. Experts say that by getting this flexibility, companies will be able to hire people without any fear, because now they will not have the fear of getting entangled in complex government processes.
Labour-intensive sectors, i.e. those sectors where more laborers or employees are required, will benefit the most from this change. Bumper recruitments can be seen in sectors like textile (clothing industry), auto components, food processing and construction.
Former Labor and Employment Secretary Sumita Davra said that this increased scope will prove to be very beneficial for MSMEs and medium companies. Now these companies will be able to manage their staff according to market demand and season. Electronics, IT startups, logistics and hospitality sectors will also benefit directly from this, who will now be able to decide their labor force as per the need.
Experts believe that earlier companies were afraid of crossing the 100 mark, because after that government interference would increase. Sonu Iyer of EY India says that this change will increase the confidence of employers. When they know that they can take decisions according to market fluctuations, they will not hesitate to expand their operations.
This is also expected to speed up the recruitment of contract workers. Atul Gupta, partner of law firm Trilegal, says that in the new codes, state governments have also been given the freedom to further increase this limit of 300. If states do this, the possibility of bigger plants and more investment coming there will increase.
However, every picture has two sides. While on one hand there is hope of increase in recruitments, on the other hand some experts have also advised to exercise caution. Professor Arup Mitra of South Asian University has warned that increasing freedom of 'hiring and firing' may lead to instability in the labor market.
They say that this may reduce job security and increase employee turnover. If companies start hiring people for very short periods of time, it may affect the income and future security of workers.
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