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June 18, 2007 16:56 IST
Making a case for India to relax labour laws, World Bank has said such a move can generate more than eight lakh regular jobs in the manufacturing sector.
"We estimate...lifting Chapter V(b) (Industrial Disputes Act) could add about 8,80,000 registered manufacturing jobs," the Bank's policy research paper on 'assessing the effects of job security, labour dispute and contract labour laws in India' says.
The paper says that Chapter V(b) of the ID Act, which prohibits firms that employ minimum number of workers to retrench without the state's permission, resulted in reduction of about 1,44,000 manufacturing jobs in Maharashtra after the state lowered the bar from 300 to 100 workers.
Similar amendments in West Bengal, the study points out, destroyed about 1,04,000 jobs in the CPI-M ruled state in the 1980s.
Although the industry managed to bypass about 45 labour laws by opting for contract labour, "yet, such a solution is no panacea," the study says, adding that it has segmented the labour force by generating first and second class workers within the manufacturing sector.
The paper written by World Bank Economists Ahmad Ahsan and Carmen Pages (currently with the Inter-American Development Bank [Get Quote]) further says that large-scale use of contract labour is likely to create additional jobs and increased output and investment, but will not bring back the jobs that were lost due to faulty labour laws.
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