dray
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There is no doubt that India needs to do a lot of ground work if it wants to become a manufacturing powerhouse a la China. That said, if one were to do a comparison among various Indian states, some of them have done quite well on this front, while others have significantly lagged behind. Why the difference? The answer lies in labour laws. Indeed, it is quite well known that India labour laws have been quite rigid. This is because employers do not have the flexibility to fire workers unless various conditions are met. Moreover, they have the wrath of the labour unions to contend with. Thus, it comes as no surprise that a report by Goldman Sachs and published in Firstbiz has highlighted that those states that are pro-employers have reported good manufacturing growth. This is as against those states that are pro-workers.
According to the report, Gujarat tops the list with an average employment of a little more than 350 per 1,000 people employed in manufacturing. This is between financial year 2004-05 and financial year 2011-2012 (April-May). In other words, states with flexible labour laws have reported higher increase in total factor productivity. Moreover, the younger set of workers prefers flexible job markets. This allows them to change jobs even if it means there is the likelihood of them being fired. Thus, it will be interesting to see how the new government will view this report and whether finally we will see some action in terms of reforming India's labour laws.
Gujarat Has Created Most Manufacturing Jobs - Chart Of The Day 29 March 2014 - Equitymaster