“In India, 101 Employees Pose Big Problems”

In the January 17-January 23, 2011 issue of Bloomberg Businessweek, an article called “In India, 101 Employees Pose Big Problems” describes how government involvement in business is actually hurting the country’s economy and limiting its potential. The article states that there are over two hundred laws restricting employers in India, but the main law discussed is the one that prohibits employers of over one hundred workers to fire an employee without government permission. This causes employers to have to choose between limiting the amount of workers, and thus output, they can have, or risking having inefficient workers. Employees would not have much of an incentive to work hard if they knew that they could not be fired. In November 2010, even the Prime Minister voiced his concern that these laws might be “hurting the very workers they are meant to protect.” In 2001, some exceptions were made to the laws in order to encourage growth in IT companies, such as Tata Consultancy Services, so it can be wondered why the government does not amend these laws for all industries if leaders believe they are preventing the economy from growing. As the laws stand, employers are finding loop holes that allow them to have more workers without having to settle for inefficiency. Since it is easier to fire contracted labor, employers are hiring workers on daily wage contracts or three year contracts. This probably causes workers to constantly fear for their jobs and assume that they are going to be unemployed at the end of their contracts. A factory worker, Nazia Begum, is in the top 20 percent of wage earners, and she only makes $3.80 for each of her ten hour work days. These laws are ultimately hurting workers and preventing India from a surge of industrial growth similar to what China has experienced.

The United States has laws regarding business to ensure that employees are treated fairly and have a safe environment in which to work. However, when companies need permission before doing things such as firing employees, it slows production. The company must wait for permission to fire an employee that they know much more about than the government, all the while dealing with that inefficient employee in the workplace. There should be laws protecting workers from being fired unfairly, but managers also need to be able to run their businesses. This law has even prevented foreign investors from showing interest in Indian companies. Businesspeople looking to expand into India might be hesitant upon realizing all of the laws restricting business that may inhibit them from being successful. Managers should always know the political systems of the countries they want to expand into and the laws that might make it more difficult for their businesses to grow and be efficient.

Elena Rudzinski

Works Cited:

Srivastava, Mehul. “In India, 101 Employees Pose Big Problems.” Bloomberg Businessweek. 17-23

January 2011.