00:00Could you talk about how the new labor codes could impact investment in India and the manufacturing sector?
00:08So thanks for that very important question.
00:10The labor codes, as you know, are a very simplified, unified, transparent and digitized kind of a framework that the new codes have brought.
00:20And 29 labor codes have been now consolidated into four.
00:24And along with the consolidation, a lot of other changes with two objectives to enhance the welfare of the workers as well as to reduce the compliances for the businesses have been brought in.
00:37There is a huge amount of reduction in terms of compliances that happens through the codes.
00:43The registration, the licenses, returns have all become a single registration, single license and a single return from what earlier was eight registrations,
00:53four licenses and 31 returns.
00:56These compliances would all be technology driven and have to be filed through digital mechanisms.
01:03Wherever approvals and licenses are to be given, they would go through a system of deemed approval as well as having strict timelines for by when these licenses have to be given.
01:14So that's one part of the codes.
01:17The second part is a whole lot of flexibility that it will offer in the labor market, either through flexible fixed term employment,
01:26which is specifically tailored towards the project based work or seasonal work.
01:33It is not seen as a replacement for regular employment.
01:36It is to fill up these kind of requirements which businesses have and to provide them flexibility to take on employees and workers for a fixed term for a specific kind of a job.
01:50There are again flexibilities in terms of the increases in thresholds for the closure, layoff and retrenchment of workers increasing from 100 to 300.
02:04And this also has been done with the aim of ensuring that apart from the flexibility industries have, it also increases formalization because earlier number of industries would remain small in terms of the actual workers,
02:22but hire other workers through contractors.
02:24By expanding this limit to 300, more and more workers can directly be employed with the industry.
02:31There are flexibilities in terms of working hours, wherein again there are strict norms of total hours of work in a week, 48 hours.
02:40But within that flexibility in fixing the daily hours of work, which again meets the business and industry requirement for increasing the hours in case of a need.
02:51So all these kind of reforms which balance the worker interest as well as the flexibility that industry requires along with the use of technology would help the businesses and manufacturing to grow.
03:07They would actually specifically benefit MSMEs who find huge compliances very burdensome.
03:13So simpler compliances, simpler filings, simpler processes, digitized processes would specifically help industries and manufacturing as a whole and MSMEs in particular.
03:26So one of the sectors that you're focusing on is the gig economy and the platform sector.
03:33And do you think that formalizing the gig economy in this way, will it increase the cost of business for the platforms?
03:42See, in terms of the gig and platform economy, since it's a new form of work, what the courts have done is that they have for the very first time given a definition to what a gig and platform worker is,
03:56made provisions for their social security, social security fund to be set up, a board to be set up, adhaar link payments to be made, coverage for life, disability covered, accident insurance, long term, old age protection to pension, etc.
04:10In terms of the contribution from the aggregators, the code states that 1 to 2% of their turnover subject to a maximum of 5% of the payout to the gig and platform workers would need to come into this fund.
04:27Our discussions with aggregators in the past, we've not heard of any objection to this.
04:35In fact, aggregators were keen that there is a national kind of a code and a national law because they work across the states.
04:43Gig workers also are mobile and they work across states.
04:46So, instead of different states having different laws and having different governance mechanism, different kind of contributions to the fund,
04:55they were preferring a national framework and a national law so that there can be uniformity.
05:01For the gig and platform worker also, because they're mobile, their social security benefits would also be mobile when they move from one state to the other.
05:08So, which is why I think a national framework, law and governance system is something that would equally benefit the workers,
05:17the gig and platform workers as well as the aggregators.
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