SME DEVELOPMENT
Labour Laws and Business Environment of MSMEs in South Asia

Background

In June 2007, the International labour Organization (ILO) started a study with its constituents to develop a better understanding of the factors that can aid or inhibit the growth, the quality of jobs and the employment creation of micro and small enterprises (MSEs) in South Asia. It is currently engaged in a research and policy dialogue process supported by the Norwegian Agency for Development Corporation (NORAD) on how labour laws in the context of overall business environment affect the development of MSEs. Here, the "labour laws and business environment" include labour and labour related laws and regulations, other laws and regulation, and non-regulatory aspects of business environment. The study covers four countries in South Asia: Bangladesh, India, Nepal and Sri Lanka. This study is divided into three stages:

• Study 1: Review of the impact (direct and indirect) of labour laws in the context of the overall business environment on MSEs.
• Study 2: Survey of costs and benefits of doing business (business environment with focus on labour laws and other regulations) on MSEs.
• Study 3: Ways of enhancing coverage, enforcement of and compliance to labour laws and labour-related laws (through innovative approaches) by MSEs.

This work in South Asia is part of a large effort by the Small Enterprise Development Unit (SEED) in the Job Creation and Enterprise Development Department (EMP/ENT) at ILO Headquarters in Geneva to conduct research, engage in dialogue, develop best practice and generate tools for constituents.

Study Teams

Each country team is comprised of specialists in such areas as laws and regulations, statistics, MSEs and business management, among others. On top of the country teams, the Study involves three external experts (international regulatory expert, technical collaborator, and technical advisor for India and an in-house expert on survey.

Mr. Hideki Kagohashi, Enterprise Development Specialist, ILO's Subregional Office for South Asia (SRO-New Delhi), in consultation with the SEED unit at ILO Headquarter in Geneva, will coordinate the work.

Each country team will have a country report on the basis of the reports prepared under each of the Study 1, 2 and 3. There will be a synthesis subregional report of the Study at the end of all the activities. Final workshops are planned at national and /or subregional level.

About NORAD

The Norwegian Agency for Development Co-operation (Norad) is a directorate under the Ministry of Foreign Affairs. In 2004, the Norwegian development co-operation administration was re-organized, and the responsibility for long-term government-to-government co-operation with developing countries was transferred from Norad to the Ministry as from 1 April of that year. Norad continues to serve as a leading centre for the development and delivery of expertise, and helps ensure the efficient administration of development assistance, including evaluation and quality assurance. Norad offers know-how in the fight against poverty, and co-operates closely with other national and international experts. It provides expert advice on the implementation of the government's overall guidelines for combating poverty and the ongoing effort to achieve the Millennium Development Goals. The directorate is also responsible for developing and supplying independent expertise in selected areas.

Norad channels substantial funds through Norwegian non-governmental organizations, which are important partners in Norwegian development co-operation. It also co-operates closely with Norwegian companies, trade unions, research institutions and other civil society-organizations.

Norad is organized into a number of departments, each of which deals with a particular area of expertise: the Department for Private Sector Development and Environment, the Department of Rights, Agents of Change and Civil Society, the Department of Human Development and Service Delivery, the Department of Governance and Macroeconomics, and departments for Quality Assurance Evaluation, Information and Administration.