Incompatible labor laws lead India to rank poorly in labor-employer relation, reports Morgan Stanley.

In a recent report, Morgan Stanley has stated that India’s labor market regulations and inadequate physical infrastructure has led it to rank poorly in labor-employer relation. The report, ‘What’s holding back India’s labour market environment? Part II’, states that currently, India stands at the 61st position on the metric of cooperation in employee-employer relations. This is way behind countries such as Mexico (44), Thailand (37) and the Philippines (34), apart from being just behind China (60).

India labor-employer relation Morgan Stanley report

Despite large demographics trends, India’s track record of creating productive jobs has been very slow. Moreover, stringent labor laws in the country, that mandate prior approvals and consultations with the government, have a direct impact on the labor market efficiency.

At present, India ranks 99 among 148 countries in terms of labor market efficiency, which is much behind China, Brazil, and the Philippines, as per the report.

The country also needs to amend provisions that allow outsiders to be office bearers. Currently, one-third of the office bearers can be outsiders.

The Morgan Stanley report also stated that India needs to institute a strike ballot such that a strike can be called only if it is supported by a qualifying majority. In addition, free use of contract labor should be allowed, while ensuring the protection of the rights of the contract labor.


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