ISSUES OF UNEMPLOYMENT: A LEGAL PERSPECTIVE

BY

ANTARA PARAL

2ND YEAR, BBA LLB

IFIM LAW SCHOOL, BANGALORE

Email – [email protected]

www.probono-india.in

1
 ABSTRACT
India is the largest Democratic and a Developing country in the World. Also, today India is
among the fastest developing economies in the globe. Sixty-five percent of population of
India are in the working age group i.e. (15-64) and it is projected to increase in the coming
years. But the problem in India is cannot utilize this big labour-force properly thus
unemployment has become a major problem from a very long time. There are at least more
than 6-crore unemployed youths who are well-educated and this is going to be a major
challenge for the economy too. What India facing is because the major challenge is youth
unemployment which too for the market policy of labour even in opposition to the backdrop
of our country’s increased rate of demographic dividend and literacy. The informal sector
provides for ninety-three percent of the available work as a result of which an outsized
number of highly-educated youth face underemployment, unemployment or are looking for
employment or are in between jobs or are trying to adjust with the uncertain work
arrangements. In India, there is a requirement of cooperation, both national also as
international, among different trade unions, vocational education organizations, and
committees at the national level so as to supply an environment filled with opportunities for
economic process. Youth of India, within the non-existence of any type of authorized Social
Security, is facing with the challenges of limited growth scope and survival. India has
launched various types of employment initiating schemes, including those are under
MNERGA. Similar policy initiatives are taken for skilled workers. Nevertheless, these
measures have had restricted impact. This problem is a broad phenomenon where an
international body like International Labour Organization (ILO) predicts the unemployment
rate in India in the following years. On the other side, Indian labour law is seen to be highly
protective of workers’ interests by international standards, particularly within the area of
dismissal regulation. While undertaking an econometric time-series analysis to evaluate the
impact of the backing up of labour laws on the industrial output and unemployment within
the formal-sector of economy. There is no evidence that proworker labour legislation results
in unemployment or industrial stagnation. Relatively, pro-worker labour laws are related to
low unemployment, with the direction of output to labour regulation and causality running
from unemployment. This paper analyzes the issues of youth unemployment, present scenario
in India with the impact of labour legislations.

KEYWORDS: Youth, Unemployment, labour law, legislation, India,

2
 INTRODUCTION

Unemployment or youth unemployment has been an endless matter for years, exceptionally
in India. One among the first causes of unemployment is lack of suitable jobs for people;
specifically, full time jobs. Full time job opportunities are decreasing day by day and thanks
to part time and casual work. Negative development of economic activities, substitution of
labour by capital, and increasing workforce supply are identified as causes of unemployment
in India1. Youth unemployment and underemployment is prevalent around the world because
young people lack skills, work experience, job search abilities and the financial resources to
find employment2. India is facing a significant problem of unemployment day by day. In
developing countries, approximately 3.6 million unemployed increased between 2016 and
20173. Unemployment may be a situation of joblessness which occurs when people are
without jobs. Unemployment may be a measure of the frequency of unemployment and
formula for calculating the percentage is that the number of unemployed people divided by
the entire number of individuals within the civilian labor pool 4. Nearly 75 million young
people are unemployed across the world, which represents an increase of more than 4 million
since 20075. And It is impossible to manage the growth of economy in such huge rate of
unemployment circumstances. Demand and provide of labour force are that the part of labour
market which is suffering from increasing and decreasing of employment. ‘According to
2010 population figures, one in five young people in the world is an Indian’ 6. In this context,
much is often said about a ‘demographic dividend’; that is, the share of the working-age
population increases resulting in a fall in the dependency ratio (the number of children and
elderly being supported by workers). This has been a feature of the development success
stories of countries such as those in East Asia that grew rapidly in the latter half of the 20th
century. However, failing to provide opportunities for this bulge of young people as they
1
Khem Chand, Rajest Tiwari and Manish Phuyal, ‘Economic Growth and Unemployment Rate: An Empirical
Study of Indian Economy’
https://www.researchgate.net/publication/
324184334_Economic_Growthnd_Unemployment_Rate_An_Empirical_Study_of_Indian_Economy accessed
January 2018 (last visited May 13, 2020).
2
ILO, 2006; United Nations, 2003; Matsumoto et al., 2012.
3
Times of India (India, 13 January 2017).
4
International Labour Organization, 2009.
5
Youth, ILO’s Global Trends Report, 2012.
6
Union Nations New York, ‘Population Division of the Department of Economic and Social Affairs of the
United Nations Secretariat, World Population Prospects: The 2010 Revision’
https://www.un.org/en/development/desa/population/publications/pdf/trends/WPP2010/WPP2010_Volume-
I_Comprehensive-Tables.pdf (last visited May 15, 2020).

(last visited May 15, 2020).

3
enter the labour market risks a ‘demographic disaster’ 7. Existing of demographic conditions
and movement of a rustic significantly influence the balance of labour force market regarding
the availability of labour force. Consistent with the ‘Wage Fund Theory’, wages of the labour
force are fixed beforehand but due to the shortage of capital, the manufactures appoint only a
little number of labour force which ends up in unemployment. Some economists have
mentioned the unemployment as an explanation for imbalance between demand and provide.
Overproduction also increases the unemployment; it reduces the costs of commodities which
necessitates reducing the workers, which increase unemployment. Manufactures within the
case of low demand of product in market, drop the price; windup the companies or factories,
stop the wage and labour force are shifted from the employed to the unemployed. Social
factors contribute in increasing the unemployment like de-grading social station,
geographical immobility, increase within the population, and defective education system.
There is another factor like lack of experience, vocational unfitness, and illness and disability.
Unemployment is explanation for less demand of product in market. Geographically
immobility is one more reason of unemployment. One place shows surplus labour as
compared to a different place (insufficient labour) and labour force rejects to move from one
location to the other.

Unemployment in India remains a topic of concern since it had been first recognized in
1950s. During that period; the Government of India had only few initiatives of employment
generation until the primary Five-Year Plan was drafted within the year 1950-1951. This plan
laid the foundation for overall and sectorial development during a medium term prospective
for achieving the goal of employment growth and increasing the labour force 8. On February
2012, in the occasion of the 44th Indian Labour Conference, Manmohan Singh claimed,
“Youth employment is a high-priority agenda item for our government. This can happen only
if we equip our young people with skills that are required to meet the demands of our rapidly
growing economy”.Therefore, unemployment has become a great importance within the
development program of India after Independence.

Various strategies and proposals are implemented to get employment. Various types of
employment policies and programs are launched and undertaken to enhance unemployed to
7
‘Youth Unemployment and unemployment: An Indian Perspective’,
https://www.ilo.org/wcmsp5/groups/public/---asia/---ro-bangkok/---sro-new_delhi/documents/publication/
wcms_211552.pdf accessed March 2013 (last visited May 14, 2020).
8
Sushmita Biswas, ‘Unemployment in India’ https://nationalconference.org.in/up_proc/pdf/24-145465296625-
27.pdf accessed January 2016 (last visited May 13, 2020).

4
get engaged in public sectors and boost self-employment. It is believed that India’s economic
growth are often accelerated if human resources are purposefully and efficiently allocated.

HISTORY

Labour law arose due to the demands of workers for better conditions, the right to organize,
and the simultaneous demands of employers to restrict the powers of workers in many
organizations and to keep labour costs low. Employers' costs can increase due to workers
organizing to win higher wages, or by laws imposing costly requirements, such as health and
safety or equal opportunities conditions. Workers' organizations, such as trade unions, can
also transcend purely industrial disputes, and gain political power ‐ which some employers
may oppose. The state of labour law at any one time is therefore both the product of, and a
component of, struggles between different interests in society 9. And ILO (International
Labour Organization became the first organization to deal with the labour related issues.

For the very first time, in 1870, the conference was held by U.K., France, Berlin with the
German Emperor where discussion was started about the various type of labour issues to
understand the situation of the employment system and labour related issues. After that in
1905, a non-governmental organization was formed, which was dealing with the legal rights
of the labours or workers i.e. the International Association for Legal Rights of Worker. After
the World War I end, during the Peace Conference, in 1919, ILO (International Labour
Organization) was created by Part III of the Versailles Peace Treaty which was associated
with the League of Nations. Finally, after the World War II, the organization survived as a
specialized agency.

The ILO's principal function was to establish international labor and social standards through
the drafting and adoption of international labor conventions. Prior to the existence of the ILO,
only two international labor conventions had been adopted: one, designed to protect the
health of workers in match factories, prohibited the use of white phosphorus, a poison, in the
manufacture of matches; the other prescribed modest restrictions on night work by women.
Neither of these was widely ratified. By contrast, more than 182 international labor
conventions and 190 recommendations have been adopted by the ILO since 1919.
International labor standards are used as a benchmark by which the rights and conditions of

9
S.I.A. Muhammed Yasir, ‘Labour Legislation in India – A Historical Study’
https://www.worldwidejournals.com/indian-journal-of-applied-research-(IJAR)/special_issues_pdf/
April_2016_1461058838__11.pdf accessed April 2016 (last visited May 15, 2020).

5
human beings have been measured10. Later India retied four conventions out of eight core
conventions of ILO which are as follows:

(a) Forced Labour Convention, 1930 (No. 21) – This very fundamental convention prevents
or prohibit all kinds of forced labour system or compulsory labour. India ratified few rules
from this convention.

(b) Equal Remuneration Convention, 1951 (No. 100) – Art. 39(d) of the Equal Remuneration
Act, 1976 has been implemented to make a procedure for equal remuneration.

(c) Abolition of Forced Labour Convention, 1957 (No. 105) – Under this fundamental
convention, India banned Labour System (Abolition) Act, 1976.

(d) Discrimination (Employment and Occupation) Convention, 1958 (No. 111) – This
convention protects from any kind of exclusion, distinction or preference on the basis of sex,
race, caste, colour, religion, social origin or national extraction.

The idea that improvement of working conditions at the national level required international
cooperation goes back to the 19 th century (Labour Law, International). The process of
industrialization had brought about miserable living conditions for the working class, such as
child labour, excessively long hours of work, and unhealthy working conditions. This need
for regulation led to a movement towards the enactment of labour laws, an idea in particular
advanced by Robert Owen in England and Daniel Legrand in France. In 1890, the German
Emperor, following proposals by the Swiss Government, convened a conference in Berlin in
order to have international agreements on working conditions discussed; it was feared that the
improvement of working conditions could result in disadvantages in international competition
compared to States retaining a low level of workers’ protection. In 1900, the International
Association for the Legal Protection of Workers was founded as a private organization with
an office in Basle by a group of scholars and administrators to compile and assess national
labour legislations. The Association prepared international conferences convened by the
Swiss government in Berne in 1905 and 1906, the outcomes of which were the first
international conventions on workers’ rights: The Convention respecting the Prohibition of
Night Work for Women in Industrial Employment and the Prohibition of the Use of White
(Yellow) Phosphorus in the Manufacture of Matches. The outbreak of World War I cut short

10
The International Labour Organization (ILO) – Creation, https://www.nationsencyclopedia.com/United-
Nations-Related-Agencies/The-International-Labour-Organization-ILO-CREATION.html#ixzz6MPdtHuOD
(last visited May 14, 2020).

6
the Association’s work and thereby foreclosed the adoption of other draft conventions. It was
intended to reflect the contribution of the working masses to the war effort in the peace
settlement; thus, following demands by a number of trade union conferences, the Allied
Powers decided that the emerging peace treaties (Peace Treaties after World War I) should
make arrangements for the protection of workers’ rights and labour unions and for the
establishment of an international body to promote future cooperation in this regard. The Paris
Peace Conference appointed an Advisory Commission to draft proposals. Three concepts of
an international body were discussed: a) an international parliament enacting labour laws,
which the Member States would have to implement unconditionally, b) or would have to
implement unless their national parliaments decided otherwise within a year, and c) an
international body making recommendations, the enforcement of which would be left up to
the Member States. The latter proposal prevailed, and the Report of the Commission on
International Labour Legislation suggesting the establishment of a permanent international
organization in the field of labour was adopted by the Peace Conference. Later, the respective
provisions became Part XIII of the Treaty of Peace between the Allied and Associated
Powers and Germany. This was the birth of the International Labour Organization (ILO) as
an independent organization within the framework of the League of Nations. The preamble
highlights the interrelation of peace between States and peace in the labour markets, and it
solemnly declares that universal and lasting peace can be established only if based upon
social justice, and that the failure of any nation to adopt humane conditions of labour was an
obstacle for other nations which desired to improve conditions in their own countries. In
1934, the founding document became independent from the Versailles Peace Treaty and was
henceforth called ‘ILO Constitution’. The first annual conference of the ILO was convened in
Washington in October 1919; Albert Thomas of France was appointed its first Director. The
Conference adopted the first six international labour conventions, and in 1920, the ILO’s
headquarters were established in Geneva. In the successive years, many conventions and
recommendations were adopted in the field of labour law. During World War II, a reduced
staff having moved to Montreal shaped the ILO’s future agenda. In 1944, the ILO Conference
meeting in Philadelphia adopted the important Declaration concerning the Aims and Purposes
of the International Labour Organization (‘Declaration of Philadelphia’) reshaping the aims
and the future role of the ILO in the post-war period. The Declaration of Philadelphia which
was subsequently incorporated into the ILO Constitution affirmed that ‘all human beings,
irrespective of race, creed or sex, have the right to pursue both their material well-being and
their spiritual development in conditions of freedom and dignity, of economic security and
7
equal opportunity’. The post-war period was shaped by a large increase of membership
consequent upon the attainment of independence by former colonial territories. In 1969, the
ILO was awarded the Nobel Peace Prize11.

Due to the fast-changing age distribution of population, India has come to enjoy a definite
advantage within the labour market compared to developed and fewer developed countries.
After a period of 4 decades since Independence, when the increase rate was maintained
between 2.1 and 2.2% once a year, it's come down below 2% during the nineties. As a
consequence, the share of population within the age group 15-59 years is perhaps getting to
travel up within subsequent three to four decades. Further, worker population ratio has been
rising in recent years, more particularly for girls. The vision of the country is maintaining its
growth performance.

WHAT IS UNEMPLOYMENT?

Rudolf Gyan Mellow has defined unemployment: "a condition in which an individual is not
in a state of remunerative occupation despite his desire to do so” 12.Harris and Levenly defined
unemployment "as a condition of one who is able to work but unable to find it'' 13. "An
unemployed person may be defined as a man or woman or juvenile of working age between
the school leaving age and the pensionable age who is technically and physically fit for a job,
willing to work, but unable to find work” 14.The term ‘Unemployment’ has been defined as
follows: “(a) workers available for employment whose contract of employment has
terminated or been temporarily suspended and who are without a job and seeking paid
employment; (b) persons never previously employed whose most recent status was other than
that of employee (i.e. former employers, etc.), together with persons who had been in
retirement, who were available for work during the specified period (except for reasons of
nonmalignant illness) and were seeking paid employment; (c) persons without a job and
currently available for work who have made arrangements to start a new job at a date

11
Max Planck Encyclopedia of Public International Law [MPEPIL], ‘International Labour Organization’
file:///C:/Users/Antara%20Paral/Downloads/Sauer-ILO-14%20(3).pdf accessed August 2014 (last visited May
14, 2020).
12
Rudolf G. Mellow, Seminar No. 2, Delhi, August 1969.
13
Harris, W.H. and Lcvcnly J.S., The New Columbia Encyclopaedia, New York: Columbia University Press,
1975.
14
Study Group, Royal Institute of International affairs, Unemployment: An International Problem, London:
Oxford University Press, 1935.

8
subsequent to the specified period; and (d) persons temporarily or indefinitely laid off
without pay”15.

THE VARIOUS TYPES OF UNEMPLOYMENT

CYCLICAL UNEMPLOYMENT

It is due to the trade cycle and may be exemplified by the increase in unemployment system
due to the economic recessions Recessions cause less demand which ends up in businesses
shedding workers resulting in cyclical unemployment.

FRICTIONAL UNEMPLOYMENT

It is characteristic of a persistent low unemployment level caused by the presence of natural

frictions within the market. Frictional unemployment, a normal and natural part of an
efficient market, is there even during economic booms when overall unemployment is
extremely low.

STRUCTURAL UNEMPLOYMENT

Structural unemployment develops from the mismatch of available job vacancies and worker
skills resulting from the economy not being the same before and after the recession.

REASONS FOR UNEMPLOYMENT

1. SHORTAGE OF JOBS

According to various estimates, productivity during the period from 2004 to 2010 grew 34
per cent. Thus, productivity accounted for the growth of the Indian economy more than
employment. Due to the limited creation of additional jobs, workers found themselves
without jobs. This situation compelled them to either go for unskilled or casual work in the
informal sector or to go for further studies. Self-employment and that too with extremely low
returns was chosen by those who could not go for further education. The large number of
self-employed or casual workers is an example of self-exploitation since such workers are
without any effective protection.

15
Eight International Conference of Employment Statisticians, 1954.

9
2. EMPLOYABILITY

It is absolutely necessary for India to convert its labor force into an asset to be able to take
full advantage of the demographic dividend. Only 5 per cent of the workforce has undergone
some kind of vocational training, but even many of those are not employable, since the skills
acquired have limited market application. Furthermore, the generalist nature of India’s
education system is not connected to the labor market. NASSCOM says that almost 40 per
cent of the skilled workforce is not employable because the acquired education and training
are of substandard quality.

3. SKILLS MISMATCH

India is generally seen as a labor surplus economy with a majority of workers having limited
or negligible marketable skills. Furthermore, India has a lopsided skills stock. On one side, a
large section of the workforce is not able to get even minimum wages, which is mandatory as
per the government; on the other side, there are a few people with marketable skills who are
able to demand higher rewards. Recently, the acquisition of skills has increased. While an
imbalance in the Indian labor market has created a surplus in some skills and it has also
created shortages in others.

4. WOMEN – SECURITY AND SOCIAL RESTRICTIONS

The expansion of the Indian economy has created increased employment opportunities for
female workers, particularly in IT, retail, travel and tourism. Their full engagement still
remains restricted due to problems of personal security, biased attitudes of co-workers and
social customs. Due to ineffective protection, young female workers either select jobs for
security considerations or prolong their education. Marriage is a major factor as to why
women workers withdraw from the labor market. Security system also gets in the way of
securing effective enforcement of labor laws and rights, including trade unions16.

CURRENT SCENARIO OF UNEMPLOYMENT IN INDIA

The unemployment rate in India rose to 7.8 percent in February 2020, the highest since last
October, from 7.2 percent in the previous month. In rural areas, the rate increased to 7.4
16
Ashok Panigrahi, ‘Combating Unemployment: An Indian Perspective’
https://www.researchgate.net/publication/323393906_Combating_Unemployment_An_Indian_Perspective
accessed January 2014 (last visited May 15, 2020).

10
percent from 6.0 percent in January, while in urban areas, it fell to 8.7 percent from 9.7
percent. The highest jobless rates were recorded in Tripura (28.4 percent), Haryana (25.8
percent) and Jammu & Kashmir (22.2 percent), while the lowest were recorded in Puducherry
(1.8 percent), Tamil Nadu (2.1 percent) and Goa (2.8 percent).

Unemployment Rate in India is expected to be 10.00 percent by the end of this quarter,
according to Trading Economics global macro models and analysts’ expectations. Looking
forward, we estimate Unemployment Rate in India to stand at 11.70 in 12 months’ time. In
the long-term, the India Unemployment Rate is projected to trend around 9.80 percent in
2021 and 8.50 percent in 2022, according to our econometric models17.

In the era of global pandemic, recently, on March 27 2020, The Coronavirus Aid, Relief, and
Economic Security Act, CARES Act has been passed by the U.S. House of the
Representatives and signed into law by the U.S. President Donald Trump to expand the scope
of people who are entitled for the unemployment benefits, including those workers are in
“furloughed” condition or otherwise unemployed as an immediate results of COVID-19,
including independent contractors, self-employed individuals, gig employees and those
workers who have already exhausted existing federal and state unemployment benefits.
Although state is solely liable for determining the eligibility criteria and the required amount
of unemployment benefits for the employees. All employers need to understand how its
employees are financially stabled during layoffs and furloughs. Moreover, understanding

17
India Unemployment, Rate 2018-2020 Data| https://tradingeconomics.com/india/unemployment-rate (last
visited May 14, 2020).

11
potential unemployment benefits may better inform how and when an employer implements
such strategies.

Under the above-mentioned CARES Act, unemployment benefit programs are joint federal-
state programs. Each state determines eligibility criteria and amounts to be benefited by
following the federal guidelines. For a state to supply increased unemployment benefits to
affected individuals, the CARES Act requires that the state must enter into such type of
specific agreements with the federal government in the present state of the pandemic.

The CARES Act only covers four groups of people who may receive enhanced
unemployment benefits, without reference to the number of employees an employer may
have. With reference to each group, the CARES Act provisions expire New Year's Eve, 2020.

GOVERNMENT INITIATIVES AND POLICY MEASURES

Government of India has taken several policy measures to fight the problem of
Unemployment. Some of the measures are as follows: -

Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) was

enacted by the Central Government in 2005, aimed at improving living standards of the rural
poor and providing social security to them by giving the adult members of every household at
least one hundred days of guaranteed wage employment of unskilled manual work in a
financial year. The Act succeeded in generating employment in more than 300 districts since
it was launched. In April 2011, the Central and the State Level revised the policy and
concluded that the budget of Rs.40, 000 crore could have been utilized more efficiently with
effective planning for curbing unemployment. With proper implementation of this policy, the
rate of employment generation could have been higher as compared to the four-fold increase
in the budget for this scheme since 2005.

Regional Rural Banks (RRBs) were established in 1975 with a view to develop the rural
economy and to create a supplementary channel to the 'Cooperative Credit Structure' in order
to enlarge institutional credit for the rural and agriculture sector. The RRBs mobilize deposits
primarily from rural/semi-urban areas and provide loans and advances mostly to the rural
inhabitants. RRBs encourage entrepreneurship by giving credits in concessional rates. RRBs
also spruce the rural economy. However, some issues were observed in the implementation of

12
this scheme. There are many restrictions in the credit policies which seemingly discourage
the rural population to deal with these banks.

Ministry of Micro, small and medium enterprises (MSME) is regarded as the engine of
economic growth and development. In India it has played a key role in generating job
opportunities and promoting self-employment. MSME Act 2006 facilitates the development
of both manufacturing and service sector and also enhances their competitiveness. They are
spreaded across the country and boost the manufacturing of many products thus promoting
entrepreneurship and also provide services to meet the local market needs. It is found that
since they have limited financial resources, they are unable to hire skilled and specialized
workforce.

National Skill Development Mission was initiated after the Twelfth Five Year Plan
emphasized on bridging the skill deficit needed for jobs. This program aims to skill 500
million people by the year 2022. The Prime Minister’s National Council of Skill
Development was set up as an apex organization to frame policies, give directions and
provide vocational training in schools. To promote skill development in rural areas,
Apprenticeship Training Scheme (ATP), Vocational Training Providers (VTP) and many
other programmes were undertaken National Multi-Skill programme called Skill India has
been launched which focuses mainly on entrepreneurial skill development. The skill
challenge becomes acute for India considering that the country has a large portion of its
population below 25 years of age. Currently a major proportion of this population is not
productively engaged in economic activities due to a ‘skills versus jobs requirement’
mismatch which leads to economically inactive working age group people affecting the
economy and increasing unemployment.

Swarna Jayanti Shahari Rozgar Yojana (SJSRY) was launched in 1997 for urban poverty
alleviation. The target population is the urban poor living below the poverty line. The key
objective of the Scheme is to provide gainful employment to the urban unemployed through
the setting up of self-employment ventures or provision of wage employment. But it is
evident that this policy has been unable to generate the required level of employment due to
several drawbacks18.

18
Sushmita Biswas, ‘Unemployment in India’ https://nationalconference.org.in/up_proc/pdf/23-145352902225-
27.pdf accessed January 2016 (last visited May 15, 2020).

13
Except these above-mentioned policies, government has taken many more policies to reduce
unemployment such as: Sampoorna Grameen Rozgar Yojna, Prime Minister’s Employment
Generation Programme, Mahatma Gandhi National Rural Employment Guarantee
Scheme(NREGS), and Prime Minister’s Integrated Urban Poverty Eradication Program
(PMIUPEP), The Swaraan Jayanti Rozgar Yojana, Jawahar Gram Samridhi Yojana and many
more. Not only these schemes, also government has passed many bills to curb this
unemployment issue and help the jobless people in our country recently. Such bills are as
follows:

· Nete's Unemployment Allowance Bill, 2019 – This bill seeks to promote the
unemployed people with allowances.
· Unemployed Post-Graduates Bill, 2019 – It provides allowance to the unemployed
students or candidates but restrict to get the allowances to those who are unemployed
post-graduates.
· Patil's Unemployed Youth (Allowance and Employment Opportunities) Bill, 2019 – It
seeks to promote the gainful opportunities of getting an employment and also provide
unemployment allowances to the unemployed candidates.
· Su Thirunavukkarasar's Unemployment Allowance Bill – Its purpose is to provide
allowances to the youth candidates who are jobless or in search for a job till they are
getting a beneficial employment.

CONSTITUTIONAL PROVISIONS WITH REGARD TO LABOUR

LAWS

The relevance of the dignity of human labour and the need for protecting and safeguarding
the interest of labour as human beings has been enshrined in Chapter‐III (Articles 16, 19, 23
& 24) and 7 Chapter IV (Articles 39, 41, 42, 43, 43A & 54) of the Constitution of India
keeping in line with Fundamental Rights and Directive Principles of State Policy.

Labour is a concurrent subject in the Constitution of India implying that both the Union and
the state governments are competent to legislate on labour matters and administer the same.
The bulk of important legislative acts have been enacted by the Parliament.

Constitutional status Union List Concurrent List19

19
The Institute of Company Secretaries of India, Labour Laws and Practice,
https://www.icsi.edu/media/webmodules/Labour_Laws&_Practice.pdf (Module 3, Elective Paper 9.6).

14
Union List Concurrent List

(Central Government) (Central as well as State Government)

Entry No. 55 Entry No. 22
Regulation of labour and safety in mines and Trade unions, industrial and labour disputes
oil fields
Entry No. 61 Entry No. 23
Industrial disputes concerning Union Social security and insurance, employment
employees and unemployment
Entry No. 65 Entry No. 24
Union agencies and institutions for “... Welfare of labour including conditions of
vocational ... training ...” work, provident funds, employers’ invalidity
and old-age pension and maternity benefits

LABOUR POLICY OF INDIA

The Constitution of India provides detailed provisions for the rights of the citizens and also
lays down the Directive Principles of State Policy which set an aim to which the activities of
the state are to be guided. These Directive Principles provide:

a. for securing the health and strength of employees, men and women;

b. that the tender age of children is not abused;

c. that citizens are not forced by economic necessity to enter avocations unsuited to their age
or strength;

d. just and humane conditions of work and maternity relief are provided; and

e. that the Government shall take steps, by suitable legislation or in any other way, to secure
the participation of employee in the management of undertakings, establishments or other
organisations engaged in any industry20.

In India, Labour policy has been expanding in reaction to certain needs of the on-going
situation to suit necessity of designed social justice system and economic development

20
K.T. Narayanan , ‘Safety, Health and Environment Handbook’ in National Policy on Safety, Heath and
Environment at Workplace (2015).

15
structure and it has two-fold purposes, that is to promote the welfare of labour and maintain
industrial peace.

Labour Policy Highlights:

· Creative measures to attract public and private investment.

· Creating new jobs.
· New Social security schemes for workers in the unorganized sector.
· Social security cards for workers.
· Unified and beneficial management of funds of Welfare Boards.
· Reprioritization of allocation of funds to benefit vulnerable workers.
· Model employee‐employer relationships.
· Long term settlements based on productivity.
· Vital industries and establishments declared as `public utilities`.
· Special conciliation mechanism for projects with investments of Rs.150 crores or
more.
· Industrial Relations committees in more sectors.
· Labour Law reforms in tune with the times. Empowered body of experts to suggest
required changes.
· Statutory amendments for expediting and streamlining the mechanism of Labour
Judiciary.
· Amendments to Industrial Disputes Act in tune with the times.
· Efficient functioning of Labour Department. ¾ More labour sectors under Minimum
Wages Act.
· Child labour act to be aggressively enforced.
· Modern medical facilities for workers.
· Rehabilitation packages for displaced workers.
· Restructuring in functioning of employment exchanges. Computerization and
updating of data base.
· Revamping of curriculum and course content in industrial training.
· Joint cell of labour department and industries department to study changes in laws
and rules21.

LABOUR LAWS IN INDIA

21
L.V. Subramaniam, ‘Indianlabour.org’ http://indianlabour.org/index.php/labour-laws-institutes/labour-policies/
(last visited May 15, 2020).

16
Labour law also known as employment law is the body of laws, administrative rulings, and
precedents which address the legal rights of, and restrictions on, working people and their
organizations. As such, it mediates many aspects of the relationship between trade unions,
employers and employees. In other words, Labour law defines the rights and obligations as
workers, union members and employers in the workplace. Generally, labour law covers:

• Industrial relations – certification of unions, labour‐management relations, collective

bargaining and unfair labour practices;

• Workplace health and safety;

• Employment standards, including general holidays, annual leave, working hours, unfair
dismissals, minimum wage, layoff procedures and severance pay.

There are two broad categories of labour law. First, collective labour law relates to the
tripartite relationship between employee, employer and union. Second, individual labour law
concerns employees' rights at work and through the contract for work. The labour movement
has been instrumental in the enacting of laws protecting labour rights in the 19th and 20th
centuries. Labour rights have been integral to the social and economic development since the
industrial revolution22.

The term ‘labour’ means productive work especially physical work done for wages. Labour
law also known as employment law is the body of laws, administrative rulings, and
precedents which address the legal rights of, and restrictions on, working people and their
organizations. There are two broad categories of labour law. First, collective labour law
relates to the tripartite relationship between employee, employer and union. Second,
individual labour law concerns employees' rights at work and through the contract for work.
The law relating to labour and employment in India is primarily known under the broad
category of "Industrial Law". The prevailing social and economic conditions have been
largely influential in shaping the Indian labour legislation, which regulate various aspects of
work such as the number of hours of work, wages, social security and facilities provided.

The labour laws of independent India derive their origin, inspiration and strength partly from
the views expressed by important nationalist leaders during the days of national freedom
struggle, partly from the debates of the Constituent Assembly and partly from the provisions

22
Hello Counsel, The Indian Full Circle Law Helpline, ‘Labour and Industrial Relation Law’
http://www.hellocounsel.com/labour-industrial-relation-law/ (last visited May 15, 2020).

17
of the Constitution and the International Conventions and Recommendations. The relevance
of the dignity of human labour and the need for protecting and safeguarding the interest of
labour as human beings has been enshrined in Chapter‐III (Articles 16, 19, 23 & 24) and
Chapter IV (Articles 39, 41, 42, 43, 43A & 54) of the Constitution of India keeping in line
with Fundamental Rights and Directive Principles of State Policy. The Labour Laws were
also influenced by important human rights and the conventions and standards that have
emerged from the United Nations. These include right to work of one’s choice, right against
discrimination, prohibition of child labour, just and humane conditions of work, social
security, protection of wages, redress of grievances, right to organize and form trade unions,
collective bargaining and participation in management. The Labour laws have also been
significantly influenced by the deliberations of the various Sessions of the Indian Labour
Conference and the International Labour Conference. Labour legislations have also been
shaped and influenced by the recommendations of the various National Committees and
Commissions such as First National Commission on Labour (1969) under the Chairmanship
of Justice Gajendragadkar, National Commission on Rural Labour (1991), Second National
Commission on Labour (2002) under the Chairmanship of Shri Ravindra Varma etc. and
judicial pronouncements on labour related matters specifically pertaining to minimum wages,
bonded labour, child labour, contract labour etc.

Under the Constitution of India, Labour is a subject in the concurrent list where both the
Central and State Governments are competent to enact legislations. As a result , a large
number of labour laws have been enacted catering to different aspects of labour namely,
occupational health, safety, employment, training of apprentices, fixation, review and
revision of minimum wages, mode of payment of wages, payment of compensation to
workmen who suffer injuries as a result of accidents or causing death or disablement, bonded
labour, contract labour, women labour and child labour, resolution and adjudication of
industrial disputes, provision of social security such as provident fund, employees’ state
insurance, gratuity, provision for payment of bonus, regulating the working conditions of
certain specific categories of workmen such as plantation labour, beedi workers etc.23

Some important labour legislation which has been passed by the Government to reduce the
unemployment is:

(a) The Trade Union Act, 1956 and the Trade Union Amendment Act, 2011.

23
Labour laws in India, https://ncib.in/pdf/ncib_pdf/Labour%20Act.pdf (last visited May 15. 2020).

18
(b) The Industrial Disputes Act, 1947.

© The Industrial Employment (Standing Orders) Act, 1946.

ARGUMENTS IN FAVOUR OF UNEMPLOYMENT SCHEMES

· Unemployment Schemes gives various options to the youth.

· It would encourage youngsters to start their own business start-up as an entrepreneur.
· It will uplift the living standards of all the country-men.
· Unemployment schemes will decrease the poverty-level in India and also will provide
foods and clothing to all the families.
· It will enhance the country’s economy as a whole.
· It helps a poor candidate to get qualified with the allowances of the unemployment
scheme, which would further lead to increase in literacy rate in India.
· It gives various types of opportunity for underprivileged candidates too, like
handicaps and ethnic minorities.
· It enhances an individual’s flexibility in the job markets.
· It helps an unemployed person to do basic income.
· It leads a person to enjoy his social life.
· A person will be free from financial stress and debts.
· It will create an opportunity to enroll for pre-recruitment trainings.
· Most importantly, it will make a strong labour-force in our country.

ARGUMENTS IN AGAINST

· The problem of unemployment among the youth would more likely to affect the
economy of our country.
· Unemployment may give rise to the poverty problem in one’s family.
· Unemployed people are more likely to be attracted by the anti-social elements.
· In most of the cases, unemployed candidates end up their life by getting addicted to
alcohol and drugs which lead to the loss of human resources or labour force of our
country.

19
 · Youngsters after not getting any employment for long time, tries to get involved in
wrongful and illegal activities which would further lead to increase in crimes.
· Due to the long-tern unemployment of a person, he gets attracted to black money
when he is in poor financial condition.
· It will create discrimination among the unemployed and employed candidates.
· It will leada person to fall in financial crisis, debts and loans.
· Unemployment may make an unemployed person isolated from the society.
· An employed candidate is more likely to be affected by psychological distress or new
illness.

CONCLUSION

Even though our Government has taken lot of measures to control the unemployment, our
country remains a nation experiencing serious unemployment issues. Government should
invest more in human capital development to extend the employability in our country. It
should also emphasis more on imparting quality education to the people. Education should be
imparted in such how that it should empower the youth with the required skills which may
make them employable. It has been observed that unemployment is particularly concentrated
in certain regions; hence to beat this geographical disparity, the govt. could incentivize firms
to line up operations in these areas by giving certain amount of tax breaks. Alternatively,
financial assistance is often provided to unemployed workers who moved to established areas
which have high-level of employment. Government should emphasis in inculcating vocation
courses within the primary level and makes it a compulsory part of the curriculum in order
that students become proficient itself in their early stage of life. Career Counseling also must
be provided to the students within the school-time and should reach all the scholars.

On the other hand, the idea of a time-series analysis, there is an identification of a long-run
negatively correlated relationship between the unemployment and the labour law, with the
path of causal link which is running from the former to the latter. Poor unemployment results
in the adoption of pro-worker labour laws. It is concluded that labour laws are endogenous to
the economic and political environment. A benign economic climate, as indicated by low
unemployment, creates the proper conditions for the enactment of pro-worker labour laws.

20
Such type of laws can have efficiency for strengthening effects for a short term, but over time
their effect is absorbed and therefore the economy continues on its equilibrium path.

Nevertheless, the Indian case may be a significant one, not just because of the dimensions of
the Indian economy, its recent rapid climb, and its growing importance within the global
financial system, but also because India is usually delayed as an example of the negative
impact of labour
Regulation, particularly in emerging markets.

If Indian labour laws had no inefficiency effects just because they weren't enforced, there
would not be a robust case for retaining them in their current form. A case for the reform of
labour laws in India are often made on numerous grounds, including their limited application
to those workers who are outside the ‘centre’ of the formal economy system, and the
challenges faced by both the employers and the workers in ad missing the court procedural
system and deficiency of flexibility in the administration system.

To tackle the challenges of quality of job and service and participation of the youth of India,
policy-making interventions should promote a far better-quality education, on-the-job
training, skill formation on the one hand and productive job creation on the opposite. For
those workers who are involved in self-employment, marketing assistance and credit
assistance are often of enormous help.

REFERENCES

1. Khem Chand, Rajest Tiwari and Manish Phuyal, ‘Economic Growth and
Unemployment Rate: An Empirical Study of Indian Economy’
https://www.researchgate.net/publication/
324184334_Economic_Growthnd_Unemployment_Rate_An_Empirical_Study_of_In
dian_Economy accessed January 2018 (last visited May 13, 2020).
2. ILO, 2006; United Nations, 2003; Matsumoto et al., 2012.
3. Times of India (India, 13 January 2017).
4. International Labour Organization, 2009.
5. Youth, ILO’s Global Trends Report, 2012.

21
6. Union Nations New York, ‘Population Division of the Department of Economic and
Social Affairs of the United Nations Secretariat, World Population Prospects: The
2010 Revision’
https://www.un.org/en/development/desa/population/publications/pdf/trends/
WPP2010/WPP2010_Volume-I_Comprehensive-Tables.pdf (last visited May 15,
2020).
7. ‘Youth Unemployment and unemployment: An Indian Perspective’,
https://www.ilo.org/wcmsp5/groups/public/---asia/---ro-bangkok/---sro-new_delhi/
documents/publication/wcms_211552.pdf accessed March 2013 (last visited May 14,
2020).
8. Sushmita Biswas, ‘Unemployment in India’
https://nationalconference.org.in/up_proc/pdf/24-145465296625-27.pdf accessed
January 2016 (last visited May 13, 2020).
9. S.I.A. Muhammed Yasir, ‘Labour Legislation in India – A Historical Study’
https://www.worldwidejournals.com/indian-journal-of-applied-research-(IJAR)/
special_issues_pdf/April_2016_1461058838__11.pdf accessed April 2016 (last
visited May 15, 2020).
10. The International Labour Organization (ILO) – Creation,
https://www.nationsencyclopedia.com/United-Nations-Related-Agencies/The-
International-Labour-Organization-ILO-CREATION.html#ixzz6MPdtHuOD (last
visited May 14, 2020).
11. Max Planck Encyclopedia of Public International Law [MPEPIL], ‘International
Labour Organization’ file:///C:/Users/Antara%20Paral/Downloads/Sauer-ILO-
14%20(3).pdfaccessed August 2014 (last visited May 14, 2020).
12. Rudolf G. Mellow, Seminar No. 2, Delhi, August 1969.
13. Harris, W.H. and Lcvcnly J.S., The New Columbia Encyclopedia, New York:
Columbia University Press, 1975.
14. Study Group, Royal Institute of International affairs, Unemployment: An
International Problem, London: Oxford University Press, 1935.
15. Eight International Conference of Employment Statisticians, 1954.
16. Ashok Panigrahi, ‘Combating Unemployment: An Indian Perspective’
https://www.researchgate.net/publication/323393906_Combating_Unemployment_An
_Indian_Perspective accessed January 2014 (last visited May 15, 2020).

22
 17. India Unemployment, Rate 2018-2020 Data|
https://tradingeconomics.com/india/unemployment-rate (last visited May 14, 2020).
18. Sushmita Biswas, ‘Unemployment in India’
https://nationalconference.org.in/up_proc/pdf/23-145352902225-27.pdf accessed
January 2016 (last visited May 15, 2020).
19. The Institute of Company Secretaries of India, Labour Laws and Practice,
https://www.icsi.edu/media/webmodules/Labour_Laws&_Practice.pdf (Module 3,
Elective Paper 9.6).
20. K.T. Narayanan, ‘Safety, Health and Environment Handbook’ in National Policy on
Safety, Health and Environment at Workplace (2015).
21. L.V. Subramaniam, ‘Indianlabour.org’ http://indianlabour.org/index.php/labour-laws-
institutes/labour-policies/ (last visited May 15, 2020).
22. Hello Counsel, The Indian Full Circle Law Helpline, ‘Labour and Industrial Relation
Law’ http://www.hellocounsel.com/labour-industrial-relation-law/ (last visited May
15, 2020).
23. Labour laws in India, https://ncib.in/pdf/ncib_pdf/Labour%20Act.pdf (last visited
May 15. 2020).

BRIEF ABOUT AUTHOR

Antara Paral is pursuing BBA LLB from IFIM Law School, Bangalore. Her key area of
interest is Criminal law, cyber law, family law, contract law and also, in the field of litigation.
She has completed a diploma course on contract drafting. She is very keen in legal research
and drafting, and looks forward to developing them better in future. She has interned in
Calcutta High Court and Karnataka High court under the practicing lawyers with a keen eye
for excellence.

23
24