India’s labour Codes – Can Reform Be Both Pro – Growth and Pro – Worker?

The fashion of introduction of the labour codes seems politically and administratively contested, prompting a critical question, “Can India reform its labour regime without breaking its workers?”

India, roughly, accounts for 2.8% of the global manufacturing output, according to the Economic Survey 2024-25. The government iterates its commitment to expand India’s position in global manufacturing, prompting the inevitable labour code reforms, which for years have been nestled amidst legal and procedural technicalities at the peril of the workforce. The recently announced consolidated labour codes are being hyped as “truly transformative”, though the aftermath, characteristic of protests, begs to question the government’s hardcore advocacy for these  labour codes. This fashion of introduction of the labour codes seems politically and administratively contested, prompting a critical question, “Can India reform its labour regime without breaking its workers?”

From the colonial economic state to the post-independence years, Indian labour laws have been for far too long, implemented through several regulatory complexities. Multiple labour laws catering various labour forces, wage definitions, protecting state-wise disparities between informal employment, the laws that served to protect the workforce have fallen short of evolving with the changing economy of the country resulting in a predominantly informal, inconsistently regulated workforce, whose employment remains low.

From the 1990 liberalisation, followed by globalisation, and now the government’s strategy to place privatisation in an overdrive, the labour force has been a significant part of India’s growth narrative, yet, politically, systemically, and structurally continues to be undervalued and unheard of many a time. Hence, reform of the labour laws was inevitable. However, the timing, and what the new labour codes constitute, clearly radiate a colour of strategy that is not dominantly labour leaning.

The recently announced labour codes constitute the consolidated codes – the Code on Wages, Industrial Relations Code, Code on social security, the occupational safety, health, and working conditions code. The objectives were to standardize definitions, universalize minimum wages, expand social security (including for gig and platform workers), streamline registrations, and improve safety standards nationwide. Mandatory appointment letters, timely wage payments, and expanded protections for women and informal workers are some of the key features of the new labour law.

What the new Labor Codes fail to acknowledge is that simplification/consolidation isn’t the justification the labour market needed. The codes purport ease of business and market flexibility at the heart of this reform, though flexibility is inherently not anti-workers, but the strategic articulation of the same raises legitimate concerns. These consolidated codes emphasize FTE (fixed-term employment), or short-term employment to promote increased hiring and reduction of contractualisation, suggesting that workers will receive benefits of regular jobs (full-time) such as gratuity payable post one year, leaves, equal wages, medical/social benefits. The sheer irony of the same is, FTE itself is short-term and contractual, easing hiring and firing at employers’ discretion.

The ambiguity, further, continues devaluing ‘minimum-wage’. The new labor codes promise a fixed floor wage to promote a decent standard of living, though failing to acknowledge that the proposed floor wage of Rs. 168 per/day is still lower than the minimum wage across several states. The codes have significant lapses, that raise questions regarding its authenticity, failing to acknowledge the formula for minimum wage, whilst ensuring a floor-wage isn’t a mistake, lapse in comprehension, or mere policy implementation challenge, but a strategy guided shut behind politics, one that isn’t for the workers.

The new codes, also, extend to legitimisation of the oppressive working conditions, which are currently being protested against, such as the 12-hour workdays. A frustrating element of the new labor codes, especially to the labor unions, is that the codes prohibit the laborers from protesting, which is a blatant suppression of fundamental rights.

The erupting protests across the country, from labor unions to gig workers, is a precedent against this ‘One size fits for all’ policy. Labor, has been, and continues to be one of India’s primary factors influencing the country’s economy, jeopardizing their rights without accountability, protection, growth, and placing them vulnerably in the hands of employers, or rather private power mongers reduces worker protection and labor reforms to a mere symbolic gesture.

While the overarching challenge of labor reforms still looms, a balanced reforms agenda must be implemented, one that isn’t politically contested, but necessitated as administrative ‘duty’ that is democratically demanded by citizens, and in today’s Indian political climate, more so by the labor workers than anybody.

The agenda must extend beyond strategic legislative consolidation of laws, independent of political undertones, to an institutional and systemic strengthening, such as credible inspection systems, transparency, deterring violations without harassment, appropriate grievance redressals, and procedural integrity of implementing laws, acknowledging despite state-wise variations in rules, instead of ‘one size fits for all’ rules.

Equally vital is the abolishment of the power distance between employers and workers/worker unions. The current articulation of social security in the consolidated labor laws blatantly revokes the right of workers and worker unions to protest, an issue deeply cutting into India’s fabric of democracy. Follow through of current articulated social security, accompanied with sustained dialogue between the government worker unions is a must, because the informal labor market, today stands at the, unfortunate, crossroads of legal and political precarity, which is why these reforms can’t just be legislative acts, but a dynamic iterative process that is responsive to the country’’ changing economic needs, unlike several policies and laws that stand obscure, and cushion the top 5%. Negotiations, and re-articulation of the new labor laws must be the first order of business for long-term sustainability of laborers and the legitimacy of their jobs.

Authors: Sai Abhijeet RV Ratnaparke, Undergraduate Student; FLAME University; Prof. Moitrayee Das, Faculty of Psychology, FLAME University; and Prof. Shrirang Ramdas Chaudhari, Faculty, Dr. Vishwanath Karad’s School of Business (SOB), MIT-WPU.