On labor law reforms in India

Article Highlights

  • Analysts and policymakers have long been pushing the cause of flexible labor markets in India.

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  • After almost six decades of impasse on labor reforms, it is time to find a workable approach that could be acceptable to all parties.

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  • Marginal progress is better than a stalemate.

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This report, originally published by the Takshashila Institution, proposes how we could think about a workable approach to labor market reform, different from the polarized debates we have seen so far. It recommends that such an approach could be started by making small tweaks to the social security administration, increasing federal freedom and competition, and engaging meaningfully with trade unions. One of the primary messages is to move the reform narrative to the informal sector.

Analysts and policymakers have long been pushing the cause of flexible labor markets in India. On the other hand, such proposals have been met with staunch resistance from those whose interests are vested in an inflexible labor market, including employees, trade unions, and the labor ministry. After almost six decades of impasse on this issue, it is time to find a workable approach that could be acceptable to both parties – as marginal progress is better than a stalemate. This report shows how this is within the realm of the possible.

Download the research report in PDF format.

Hemal Shah is a scholar at the Takshashila Institution and a research assistant at the American Enterprise Institute. 

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