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Indian PM urges loosening of labour laws
Agence France Presse - November 23, 2010
New Delhi – India's Prime Minister Manmohan Singh argued for more flexible labour laws on Tuesday, saying that rigid regulation hurt the growth of employment in the fast-developing country.
Speaking at the Indian Labour Conference in Delhi, Singh stressed the need for a regulatory framework which generated employment and increased productivity while protecting workers.
"We need to consider the possible role of some of our labour laws in contributing to rigidities in the labour market, which hurt the growth of employment on a large scale," Singh said.
"We stand committed to economic reform with a human face... but our ability to devote more resources for social welfare activities depends crucially on our ability to accelerate the pace of economic growth."
A report published in July by investment bank Goldman Sachs warned that India needed "a massive overhaul of its archaic labour laws and a heavy investment in education and skills training" to achieve high growth.
Firms employing over 100 workers cannot make lay-offs without government permission, which reduces incentives to invest in skill development and discourages economies of scale, the report said.
In his address, Singh urged industry and unions to work together to remove barriers to faster economic growth.
He also assured delegates that the government was making a serious effort to control inflation, which stood at 8.58 percent as of October, amid a sharp slowdown in industrial growth.
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