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Labour regulations are a bigger constraint for labour-intensive firms than any other issue, says an Enterprise Survey of manufacturing firms jointly undertaken by NITI Aayog and IDFC Institute, a Mumbai-based think-tank.
The survey reveals that labour-intensive sectors, which create proportionately more jobs per unit of capital investment, feel more constrained by such regulations.
The Ease of Doing Business report based on the Enterprise Survey will be launched on August 28. The survey of 3,500 manufacturing firms was done in 2016.
Citing examples, the survey says that compared with other enterprises, 19 per cent of those in labour-intensive sectors are more likely to report that finding skilled workers is a major or very severe obstacle, 33 per cent are more likely to report hiring contract labour as a major or very severe obstacle.
Tough environmentIt further states that labour-intensive enterprises lose a greater number of days due to strikes and lockouts, report higher average time for environmental approvals, and face longer power shortages.
Besides, the experience of firms with fewer employees is different from that of larger firms, it notes, adding that in some cases, large firms face more regulatory barriers than smaller firms.
“Firms with more than 100 employees took significantly longer to get the necessary approvals than smaller firms with less than 10 employees,” the Survey states.
Large firms are also more likely to report that regulatory obstacles were a major impediment to doing business and that they incurred higher costs for getting approvals, it adds.
It also notes that enterprises in high-growth States are significantly less likely to report major or very severe obstacles in land/construction related approvals, environmental approvals and water and sanitation availability relative to enterprises in low-growth States.
The Survey observes: “Newer and younger firms report a more favourable business environment, in that they take less time in obtaining approvals than older firms, suggesting an improvement in the business environment.”
Newer firms include start-ups established after 2014.
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