Budget 2018: Hopefully Arun Jaitley will go beyond reforms to policy initiatives

This will be the last full Budget of the NDA government. What will Finance Minister Arun Jaitley give to  India Inc from human resource standpoint? Here are a few expectations:

Proposed amendments

Labour Codes: The government has been working on the implementation of the four labour codes on (i) wages; (ii) industrial relations; (iii) social security and welfare and (iv) safety and working conditions for a while. For simplification, various labour laws have been amalgamated into these four codes.

Out of these, the Code on Wages Bill 2017 found some traction and was introduced in the Lok Sabha on 10 August 2017. The code provides for universal coverage to all employees, promotes digitisation by allowing payment through cheque or digital/electronic mode and consolidates compliance requirements for maintaining registers. Further, the code introduces a national minimum wage whereby the central Government is empowered to fix the national minimum wage for different geographical areas. It ensures that the State Governments cannot fix minimum wages below this wage rate.

The code on industrial relations which aims to simplify the country's archaic labour laws relating to the registration of trade unions, conditions of employment, investigation and settlement of disputes and related matters is still in draft form.

The code on social security and welfare which aims to simplify laws relating to social security of workers and aims at gender balance is also in draft form.

The code on safety and working conditions which aims to ensure safe and healthy working conditions at workplace is yet to be published and hasn’t seen the light of day.

Representational image.

Representational image.

Payment of Gratuity (Amendment) Bill 2017: The bill revises the previous ceiling of Rs. 10 lakhs which was fixed in the year 2010, to Rs. 20 lakhs. It empowers the central Government to notify the ceiling proposed, instead of amending the said Act, so that the limit can be revised from time to time keeping in view the increase in wage and inflation, and future Pay Commissions. Also, the period of 12 weeks of maternity leave for calculating continuous service under Section 2A of the Act is going to change as fixed by the central Government from time to time which may be in line with other maternity benefits related legislations.

The Contract Labour (Regulation and Abolition) Amendment Bill 2017: The bill provides for registration of labour contractors with states as well as central governments. At present, the contractors have to seek permission of centre and states for every contract to provide workers. This will help centre and state governments to monitor these contractors and would be able to blacklist defaulters and offenders.

Issues to be addressed

While the proposal to consolidate several labour laws into four codes and to amend various labour laws has been a welcome move, the challenge before the Government is to consider comments from key stakeholders and address the issues in relation to the amendments that are being made/that have been made in such labour laws. Some of the issues that must be addressed in this year’s Budget are:

(i) Crèche facility: The Government has introduced some key changes under the Maternity Benefit (Amendment) Act 2017 including a requirement of maintenance of crèche facility in establishments having more than 50 employees. However, there are no guidelines/rules that have been formulated regarding the location of such crèche, the age limit of the child up to which the female employee will be entitled to use the crèche facilities and the other mandatory requirements mentioned therein.

(ii) National minimum wage under the code of wages:  The minimum wages for different categories of workers are set to be increased considerably. However, it is noteworthy that there is a vast disparity in the level of minimum wages at the central and state level. Industries located in states which have lower industrial output would be under more pressure to pay the increased wages to workers as compared to the industries located in states with higher industrial output.

(iii) Skill development and training: The Government should tackle the issue of job creation and should consider generating productive employment. The focus should be on imparting vocational training and skill development to the youth. There should be a greater outreach of employment exchanges and training centers across India to ensure the aforesaid.

The last three Budgets focused more on long-term projects and programmes such as Startup India, Swachh Bharat, Make in India, Digital India. However, with the general elections fast approaching, it is expected that the 2018 union Budget would be oriented towards social reforms in small scale firms and employment, with the main emphasis being on job creation and employment. With the Niti Aayog highlighting unemployment as the main problem faced by India, the Government may announce the National Employment Policy concerning job creation.

It will provide: (i) incentives to employers to create more jobs; (ii) reforms to attract enterprises and (iii) help for medium and small scale industries.

Conclusion: Considering the fast approaching general elections, the 2018 Budget may be used as a platform by the Government to fulfill its earlier promises. This year’s Budget may focus on issues related to employment and job creation. Priorities are expected to shift from reforms to specified policy initiatives aimed at improving job opportunities and growth numbers. Though, we have seen that the announcements made in the Budget have not always been implemented immediately, time is ripe to bring in labour reforms in the country.

Click here for full coverage of Budget 2018 

(The writer is Partner, Khaitan & Co)



Updated Date: Feb 01, 2018 10:38 AM

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