UPSC Syllabus Topic: GS Paper 2 and paper 3 –Social Sector Initiatives & Labour Reforms.
Introduction
India has entered a new phase of labour governance with the enforcement of four modernised Labour Codes on November 21, 2025. These reforms come at a crucial time when India, with one of the world’s largest and youngest workforces, is moving towards Viksit Bharat and Aatmanirbhar Bharat. The new labour framework aims to provide universal protection, improve working conditions, enhance enterprise competitiveness, and align labour laws with current and emerging economic realities.
Current status of India’s labour force
- India has over 643 million workers, expected to contribute two-thirds of new global workforce entrants in the coming years.
- Between 2017–18 and 2023–24, 16.83 crore jobs were added, and unemployment declined from 6% to 3.2%. This reflects strong employment growth and improving market dynamics.
- 1.56 crore women entered the formal workforce during this period, indicating a gradual shift towards inclusion and structured employment.
- As per PLFS 2022–23, about 57.3% workers are self-employed, 20.9% are regular wage/salaried, and 21.8% are casual labourers.
- In 2022, youth formed 82.9% of total unemployed persons (India Employment Report 2024)
- 7.7 million gig and platform workers in 2020–21, projected to reach 23.5 million by 2029–30.
- India’s social protection coverage has doubled from 24.4% in 2021 to 48.8% in 2024 (ILO World Social Protection Report (WSPR) 2024-26)
Background of India’s comprehensive Labour Codes
- Evolution of fragmented laws: Over several decades, numerous labour legislations evolved independently. Many were from pre- and early post-Independence periods (1930s–1950s), operating across different contexts and often creating overlap and confusion.
2. Recommendation for consolidation: The Second National Commission on Labour suggested grouping existing laws into functional codes. Between 2015 and 2019, extensive consultations were held with industry, employers, trade unions, and State governments.
3. Timeline of enactment
- Code on Wages (2019) notified on August 8, 2019.
- Industrial Relations Code, Social Security Code, and the Occupational Safety, Health and Working Conditions (OSHWC) Code notified on September 29, 2020.
These represent one of the most comprehensive labour reforms since Independence.
Need for unified Labour Codes
- Multiplicity of laws and compliance burden: There was a need to reduce the confusion created by 29 labour laws in practice. Multiple registrations, licences and returns made compliance difficult for MSMEs.
- Fragmented enforcement system: Different laws meant different authorities and procedures. This led to uneven enforcement and gaps in implementation. A unified code structure was needed for simpler, coordinated monitoring and enforcement.
- Outdated laws and changing work patterns: Many labour laws were written in the 1930s–1950s. They did not match today’s economy, where gig workers, platform workers and digital jobs are rising. The Codes bring the law in line with current realities.
Benefits of comprehensive Labour Codes
- Universal wage protection: Workers are safeguarded through a universal minimum wage and a national floor wage. This prevents exploitation and ensures all workers receive fair compensation across States.
- Employment transparency: Mandatory appointment letters create clarity in employment terms. It builds trust between employers and workers and helps prevent disputes over job roles or entitlements.
- Timely and predictable income: The Codes mandate timely wage payment. This improves financial stability for employees and reduces stress, particularly among vulnerable worker groups.
- Regulated working hours and better health safety: The fixed 48-hour work week and free preventive health check-ups improve work–life balance and protect long-term worker health.
- Stronger workplace safety standards: Improved safety rules and the creation of safety committees reduce workplace risks and accidents, making working conditions more secure.
- Universal social security access:
- Employees’ State Insurance Corporation (ESIC) coverage is now available pan-India without location restrictions.
- Employees’ Provident Fund (EPF) procedures are simplified, and the National Social Security Fund extends protection to construction and informal workers.
- Inclusion of gig and platform workers: Recognition of gig and platform workers ensures they receive social security benefits. This is crucial as their numbers are projected to grow from 1 crore in 2024–25 to 2.35 crore by 2029–30.
- Gender equity and fair treatment of contractual workers: Gender-neutral policies, pay parity, and safe night-shift work for women promote equality. Fixed-term employees now receive benefits similar to permanent staff.
- Advancing formalisation and digital compliance: Digital compliance, including Aadhaar-linked Universal Account Number, facilitates portability of benefits across States. Inspector-cum-facilitator model encourages supportive compliance rather than fear-based inspections.
- Support for enterprise growth and global alignment: Decriminalisation of minor offences and streamlined procedures support enterprise competitiveness. These reforms promote Ease of Doing Business, aligning India with global labour standards.
Conclusion
The enforcement of four comprehensive Labour Codes marks a transformative shift towards a fair, simplified, and future-ready labour ecosystem. By strengthening worker protections, expanding social security, and reducing compliance burdens, the reforms support both employment generation and enterprise resilience. With sustained consultations and careful implementation, these reforms can ensure inclusive growth and help power India’s journey towards Viksit Bharat.
For detailed information on New Labour Codes read this article here
Question for practice:
Discuss how the Four Labour Codes help modernise India’s labour ecosystem.
Source: The Hindu
