New Delhi: The Planning Commission on June 2 asked states to undertake labour law reforms for employment generation, while cautioning that even eight per cent annual economic growth would be insufficient to absorb the jobless populace.

The call comes in the wake of the Tenth Plan target being set to generate 50 million employment opportunities by 2007.

"Many state-level labour laws have outlived their utility and their continuation should be reconsidered. Their rationalisation will encourage employers to formally hire more labour," Deputy chairman Planning Commission K C Pant said.

Addressing a conference of the state planning secretaries on the employment strategies in the Tenth Plan, he said even with economy growing at eight per cent per annum, demand for labour generated by the growth process would not be enough to productively absorb new entrants to the labour force.

He said it would be therefore necessary to alter the structure of growth in favour of labour intensive sectors and to create conditions for higher labour absorption in each sector, without affecting the overall growth target.

He lamented that rigidities and procedural complexities in the application of labour laws has become a source of harassment of employers by the enforcing agencies.

"Such practices only discourage an entrepreneur from either hiring labour or from formally acknowledging hiring of workers, an outcome which is opposite to the purpose that labour laws were supposed to serve – protecting the interest of workers," he said.

Planning Commission member S P Gupta said in measuring employment, no headcount, but gainful employment by counting hours of work should be done.

PTI