Mandating appointment of apprentices is antithetical to reforms

The direction of the Union government whereby companies are being asked to hire apprentices’ smacks of a statist streak that remains entrenched not just in the state apparatus but also in the entire political class. It is a well-known fact that socialism was the bane of India Inc in the pre-liberalisation era. One would have thought that over three decades of economic reforms would have buried such streaks, once and for all. Alas, that is not to be. Statist impulses keep resurrecting as evidenced by the notices sent by the Skill Development and Entrepreneurship ministry to around 1.8 lakh companies mandating them to comply with the provisions of the Apprenticeship Act 1961. It is ironic that this compulsion pertains to an obsolete law that was made 62 years ago. This is seen as the Narendra Modi government’s response to the Congress’ decision to offer the guarantee of a first job through a “right to apprenticeship law” in its election manifesto.

Rahul Gandhi had recently announced that every under-25 diploma and degree holder will have the right to apprenticeships in private or government companies. During the one-year apprenticeship, the youngsters will get Rs. one lakh. This commitment is to be backed by law. It is unfortunate that those who ushered in economic reforms should come up with such a proposal that militates against the good work it did in 1991. While it is true that youth are suffering because of a dearth of jobs, the remedy it is proposing is worse than the malady itself. For jobs are not created by executive fiats or legislative actions; they get generated when there is brisk economic growth. And there is a mountain of evidence to suggest that government intervention—both executive as well as legislative—ends up hurting the prospects of growth and development. What the government should be doing is enhancing the ease of doing business (EoDB) and not augmenting the burden of rules, regulations and compliances, which is quite onerous. As per the legal provision that the Centre is swearing by, in every financial year an enterprise must engage apprentices in the range of 2.5-15 per cent of the total workforce, including contractual employees. Of this, five per cent of apprentices must be freshers and skill certificate holders.

The shortfall is a punishable offence, though the penalties, thankfully, are only in monetary terms. One must not forget that failure to comply with 40 per cent provisions for doing business can land an entrepreneur in jail. This was the finding of a research report prepared jointly by TeamLease RegTech and the Observer Research Foundation. There are 69,233 unique compliances that regulate business in India, of which 26,134 clauses have imprisonment clauses, the report said. An average manufacturing MSME with more than 150 employees deals with 500-900 compliances a year, costing them Rs. 12-18 lakh annually. Given their nature, politicians invariably come up with policies which horrify industry. For instance, some time ago the Haryana government came up with a scheme that mandated a certain percentage of workers from the state, which thankfully was invalidated by the Supreme Court. And now the apprentice issue, with its populist undertones, will haunt businesses. It is unfortunate that politicians persist with the belief that bad economics is good politics.