The government's announcement on Wednesday that the new Model Shops and Establishments (Regulation of Employment and Conditions of Services) Act 2015 has been cleared by the cabinet has been termed as a win-win by customers and retailers. However, it has met with some skepticism in certain quarters over the feasibility, security and functional issues that implementing the new law would entail.
The model law allows malls, cinema halls, restaurants, banks, shops, and others to be open 24x7 throughout the year. The move, according to the government, is aimed at providing 1 crore jobs, a key focus area for prime minister Narendra Modi now after the criticism that the 7.6 percent GDP growth has failed to fuel employment generation.
Now it is the turn of States and Union Territories to modify their individual Acts, if they so desire, either by adopting the said Bill as it is, or after modifying its provisions as per their requirements.
One of the main concerns that the new law, when brought into practice, is security and this is in the ambit of law and enforcement agencies of the state. There are multiple regulators like excise, police, municipal authorities, etc and multiple timelines that they enforce that can become a handicap for the new model law to function smoothly.
This is a classic situation of duplicity of legislation in India, remarks Ajay Joseph, a lawyer. He says, amending an act would not help either. All that it would take for this new model law to boomerang would be for one unfortunate incident that may take place and which could be linked to malls, cinema houses and shops being open 24x7.
Traders too fear a rise in illegal activities. The Confederation of All India Traders (CAIT) said in a statement that in the event of government agencies sleeping at a time when commercial activities are taking place, illegal or counterfeit activities may take place since no agency will be there to monitor them.
However, not all take this view. As Kumar Rajagopalan, CEO, Retailers Association of India, points out, women have been working in the graveyard shifts in IT companies for some time now. “Unless women had been allowed to work odd hours along with men in IT industry and factories, the IT story that India is proud of would not have taken place,” says Rajagopalan, adding that he hopes states such as Karnataka and Delhi would adopt it soon and make retail an even more positive story in India.
The percentage of women working in the retail sector is hardly 23 percent, says Rajagopalan. This is much lower than most countries in the world where women comprise almost 50 percent of the workforce.
The new model law would put the onus on malls and retailers to arrange for the security of their employees. Some mall owners are not happy about this. The law and police are a state subject and it is the government's onus to provide safety for its citizens.
“We are providing security at malls and cinema houses, etc, wherever we function. But the state governments cannot wash their hands off this state subject,” pointed out a mall owner, adding whether to work late night shift or not is completely a women's choice. "No one will be forced to work odd hours,” he said.
Given the way the Indian retail story is panning out, it was expected to create 15 million jobs by 2022, says Bhaskar Kedia, director, national rollout at the Wadhwani Foundation, a philanthropic foundation that aims to accelerate economic development in India and other major economies. This move by the government through the new model law should quicken the pace of creating more jobs by 2017 or 2018, says Kedia.
Another factor that offline and online players should factor in is to check the kind of people they recruit for these jobs. “It is important to do thorough checks of resumes and see to it that in the rush to absorb more people in jobs, their credentials are checked,” pointed out Ajay Trehan, CEO, Authbridge, a background check company.
Mall owners say it is too soon to think of security or any other concerns because it depends on retailers in malls on whether to keep their outlets open 24x7. “It is at their discretion,” points out a spokesperson for Inorbit Mall, Malad. Adds Pushpa Bector, EVP and Head, DLF Mall of India, that since the new model law has been only passed on Thursday, it will take a little while before it can be implemented, since it is a state subject. “We have to see in how many malls we want to implement it as it will be based on footfalls. It is a supply and demand factor,” she pointed out.
One thing is for sure: The move is a break away from the past in many ways. The oft-cited complaints of brick and mortar outlets that they were reigned in by the Shop and Establishment Act unlike online players who can function 24x7 is no longer there with the introduction of the new model law. Around 93 percent of retail in India is unorganised and the new model law will bring about a parity between both these players, felt analysts.
Retail industry is expected to grow to US $1.3 trillion by 2020, registering a CAGR of 9.7 per cent between 2000-2020, according to Indian Brand Equity Foundation. If implemented properly, the move is likely to outpace the expected growth in the retail industry.
However, given all the practical difficulties involved in this radical step to bring India in step with other countries globally in the retail sector, it could have been prudent for the government to have brought about this reform in a phased manner. As CAIT suggests, "It is therefore urged that government should do a pilot of this proposal in any big market of any city of any state to have an impact assessment."