South Indian State of Karnataka Liberalizes Labor Law After Lobbying by Apple, Foxconn

Posted by Written by Melissa Cyrill Reading Time: 4 minutes

Flexibility has been introduced to how production shifts can be managed in Karnataka, where work hours limits have been raised, subject to conditions. In February, the Karnataka legislature passed amendments to change the scope of how the Factories Act, 1948 applies to the state. Now, working hours can be extended to 12 hours in a day – capped at the 48-hour work week – and women can work night shifts, from 7pm to 6am. The maximum amount of overtime hours over a three-month period has also been extended.

The Karnataka state government says that these labor reforms will bring it closer to competitive manufacturing destinations like China, Vietnam, and Taiwan.

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In a landmark move, industries in the southern state of Karnataka can now extend the working hours for labor by up to 12 hours a day but must cap the maximum weekly work hours to 48. Further, rules are being eased to allow night-time work for women.

These changes come after the state legislature passed the Factories (Karnataka Amendment) Bill, 2023 to liberalize how the Factories Act, 1948 applies to industries in Karnataka. It makes Karnataka’s working regime among the most flexible in India – hugely significant as it is a major manufacturing base in the country.

The amendments to Karnataka’s labor law are among a wish list of reforms sought by industry lobby groups and international firms like Apple and Foxconn. Foxconn, a major component supplier for Apple products, operates assembly plants in the neighboring state of Tamil Nadu and was recently in discussions to set up a new 300-acre factory in Karnataka.

What are the changes to Karnataka work hours?

India is in competition with places all around the world to attract investments. Only when you have flexible labour laws, investments can be attracted. China is a manufacturing base today and is part of the global supply chain along with South Korea, Indonesia, Vietnam, Cambodia, and Japan. – Dr C N Ashwath Narayan, IT/BT Minister

Under the new rule, the maximum work hours for workers in Karnataka industries will be 12 hours in a day but capped at the same 48-hour work week.

This means workers can put in 4-day or 5-day work weeks while more flexibility is available for the management of daily production lines.

Karnataka has also raised the overtime hours limit from 75 hours to 145 hours during a three-month period. Finally. women will now be allowed to work night shifts – from 7pm to 6am.

The Karnataka government has backed these changes to the labor rules as necessary for the state to be more competitive when seeking foreign manufacturing investments.

For Karnataka industries to be able to integrate into global supply chains, flexible labor rules will play a role in matching the incentives available to production firms in Southeast Asian markets, China, Japan, and Taiwan, says Koushan Das, Business Intelligence consultant at Dezan Shira & Associates.

New Room for Flexibility in Karnataka’s Labor Regulation: Key Points

Labor law provision

Scope for labor law flexibility by the Karnataka state government

Work hours in a day

The amended law allows the Karnataka government to raise the number of work hours from the current 9-hour day to 12 hours, inclusive of rest intervals, on any day. This will remain subject to the maximum of 48 work hours in a week.

Total work hours without an interval

To facilitate the increase in maximum daily work hours, the Karnataka government can now extend the total number of hours a worker can work without an interval to six hours – for any group or class or description of factories.

Wage rate for overtime

The state government can prescribe the work hours in any day or week above which wages at the rate of twice the ordinary overtime wage rate is payable to the worker. Making such an allowance would enable factories to employ workers on overtime for an increased time period in a quarter to manage “exceptional press of work”.

Employment of women on overtime work

The Karnataka government is now empowered to allow women to work round-the-clock shifts and facilitate equal opportunities to work and earn. Such an arrangement will be subject to provision of safety and secure working conditions and upon obtaining the written consent from the women workers interested in working night-time shifts.

Opposition to the amended law

The Factories (Karnataka Amendment) Bill, 2023 was passed in the Karnataka Legislative Assembly without debate and was opposed by members of the Congress and JDS political parties as well as a member of the governing party, the BJP. The amendment bill was subsequently passed in the upper house of state, the Legislative Council, amid a walkout by opposition parties.

Labor union representatives are apprehensive of the amendment provisions setting an unhealthy precedent in the state, overstretching worker capacity to the detriment of their health and well-being, and not hiring more employees to cut costs.

To address these apprehensions, the Karnataka Law Minister J. C. Madhu Swamy said that the amended law did not impose 12-hour workdays or make it compulsory for industries in the state and is, in effect, meant to ‘facilitate agreements between industry and labor’.

Moreover, the Karnataka government also cited its enhanced capacity to extend working opportunities for women in the state. India’s female labor force participation rate is abysmal; in contrast, women workers are well represented in production lines in China and Vietnam.

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