Reform in Practice: Janhavi Nilekani (Aastrika Foundation) on India’s Labor Compliance Burden

What is one area of regulation in India that should be deregulated?

I think the highest priority for deregulation needs to be labour. On the bright side, I think labour is a priority right now at the central level for deregulation because the sheer number of labour compliances to do anything in this country, whether it is staffing, onboarding, attrition, just managing the labour workforce, how high the minimum wages are, at least in Karnataka, the sheer amount of overheads and benefits and so forth is really perhaps the biggest factor in struggling to run business or to build organisations that there is such a degree of overhead on labour compliance.

What would a better alternative look like?

Tough to say what a better alternative labour regime could look like.

Definitely one which is a lot simpler. Even if you want to have XYZ regulations, simplifying the process of the regulation itself for a small business owner or for a small firm is important. If you take something like a POSH, the Prevention of Sexual Harassment, the number of hours in a year that we are supposed to be training our team on POSH.

I was like, they have not forgotten in the last six months. We have not got even one complaint. How can we dedicate another half day of the organisation's time for this? And I am really frustrated with Karnataka's brand new minted menstrual leave law where they have just said that you have to give all female employees in the relevant age range one day of menstrual leave per month.

That is 12 days a year. That is half a month of extra leave. 12 is a lot of days of the working days of maybe 24-26 in a month.

You are talking about half a month. That is a very big cost to employers. That is just bad policy.

It may help the occasional woman who has severe dysmenorrhea but arguably she could be using her casual and sick leaves. And it will reduce hiring of women because women are now costing you so much more than the male employee. It will reduce salaries for women because CTCs are now going to adjust.

The company will adjust to the fact that you are giving half a month more of leave to this lady. So it is just bad policy and it is not as though it goes through a long stakeholder consultation or so forth. Karnataka Labour Department has said now start doing this.

And not even like start next year. Start. So this kind of very knee-jerk policy making is a real problem.

For example, you have to comply with 10 or 15 different agencies. At least streamlining that to even if you keep a lot of the provisions that the sheer process of compliance simplifies is maybe something which is relatively low-hanging fruit. And generally I think certain things just need to be made less onerous.