Monday, May 4, 2015

Labour Market Reforms

The Government has donned the mantle of reforming labour laws, with this being one of several measures to ease the doing of business in India. Recent news reports indicate concrete proposals for reform in various labour legislation (here and here).

On the academic front, a new paper “How Should India Reform Its Labour Laws?” by Simon Deakin and Antara Haldar explores the issue from a law and economics perspective. The abstract of the paper is as follows:

We examine the current policy debate around the reform of labour laws in India, which has been stimulated in part by the success of the Gujarat model of economic development. Gujarat’s deregulatory reforms have included changes to the legal regime governing employment terminations, which could form a basis for a change in national-level labour laws. Evidence linking labour law deregulation to growth, however, is weak, whether the focus is on India or the experience of other countries. Building labour market institutions is a long-term process which requires investment in state capacity for the management of risks associated with the transition to a formal economy.

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