Gaining competitive advantage in the globalizing marketplace and delivering value to the shareholder and other stakeholders are undoubtedly the top most challenges that organizations are grappling with, especially in the current time of uncertainity. Employers point out that one of the major impediments of attaining competitiveness by Indian business organizations is labor reform. However, the issue is much broader than reforming labor market; its about balancing efficiency needed by Indian business organizations intending to compete globally with equity required by the workers in any civilized society encompassing social justice.

Economic reforms in India since 1991 were characterized by the policies for macroeconomic stabilization as well as structural adjustment. While stabilization policies are meant to reduce imbalances like balance of payment deficits, budgetary deficits and inflationary gap. Structural adjustment measures are formulated around the principles of Liberalization, Privatization and Globalization (LPG), to accelerate the pace of economic growth.

With increasing pressures on domestic companies to compete in the global context, the demand from employers to bring about meaningful reform in the labor market has assumed critical dimension. The Government of India has set up a National Labor Commission in 2002 to look into aspects connected with labor reform vis-à-vis globalization and suggested for bringing about certain flexibility in labor market coupled with changes in archaic labor laws. However, the recommendations of the National Labor Commission have received lukewarm response especially from the national federation of trade unions. These trade unions in their own right have rejected the concept of globalization and labor reform in its present form. They have been advocating more stringent labor laws to protect and uphold the rights of the working population otherwise there would be mass casualization of terms and conditions of employment of working population even in the organized sector of the industry. Given these differences in opinion and perception, the matter of labor reform remains in standstill state.

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