Topic: Inclusive growth and issues arising from it.
Q4. Employment protection laws should function as counter-cyclical stabilisers during periods of technological disruption. Discuss. (10 M)
Difficulty Level: Medium
Reference: IE
Why the question
AI-led automation can trigger sudden job losses and demand slowdown, making employment protection laws relevant not only as labour rights tools but also as macroeconomic stabilisers during disruption.
Key Demand of the question
The question asks you to explain how employment protection laws can act as counter-cyclical stabilisers during technological disruption, and also bring out the key limitations/challenges in using them for this purpose.
Structure of the Answer:
Introduction
Open with linking technological shocks with sudden layoffs, and frame employment protection as a stabiliser that buys time for adjustment, reskilling and demand protection.Body
- Explain the stabiliser role by showing how employment protection can reduce panic retrenchment, protect incomes, preserve industrial peace, and enable smoother transitions during AI disruption.
- Add challenges by showing issues like limited coverage in services/platform work, enforcement weakness, informality, insider–outsider inequality, and possible negative impact on formal job creation if rigidity is high.
Conclusion
Conclude with a solution-oriented line that India needs a balanced framework combining flexibility with temporary safeguards, faster dispute resolution, and strong reskilling/social security for AI transitions.
