Source: The Hindu Editorial, “Industrial Relations Code must balance job security in the AI era”, published on 10 February 2026. The article examines the implications of the Industrial Relations Code in the context of rapid AI-driven technological change and its impact on employment and labour protections.
UPSC Syllabus- GS Paper II: Governance; Social Justice; Labour Policies.
Context: The Union government has notified the rollout of the four Labour Codes, including the Industrial Relations Code (IRC), 2020, which will come into force from 21 November 2025 and be fully implemented by April 2026, bringing major changes to employment security norms for industrial workers.
Key Issues Highlighted
Source: The Hindu
- Higher Job-Security Threshold: The IRC raises the threshold for mandatory government approval for layoffs, retrenchment, and closure from 100 to 300 workers, institutionalising greater operational flexibility already adopted by several states.
- Dilution of Historical Safeguards: Employment-protection thresholds, introduced during the Emergency to prevent mass layoffs amid economic or technological shocks, are now being relaxed, raising concerns about worker vulnerability.
- AI-Driven Employment Risks: Automation and AI are increasingly displacing not only routine work but also skilled and supervisory roles, making reduced job-security norms a potential source of heightened precarity.
- Limited Worker Coverage: The IRC’s narrow definition of “worker” excludes managerial and higher-paid supervisory staff, leaving many formal-sector employees, especially in IT and services, outside job-security protections.
- Pro-Business Policy Tilt: The revised threshold reflects a shift towards a business-friendly labour framework, with some states expanding coverage selectively to maintain industrial stability.
- Re-Skilling Support Mechanism: The Code mandates a Worker Re-Skilling Fund, funded by employers, to aid retrenched workers in skill upgradation and re-employment in a technology-intensive economy.
- Unclear Employment Relationships: Lack of precise statutory criteria to define employer–employee relationships, coupled with varied judicial interpretations, creates uncertainty in extending labour protections in evolving work arrangements.
Challenges associated with job security in the AI era
- Erosion of Job Security: Higher thresholds and relaxed hiring–firing norms may weaken protections for workers in medium-sized enterprises, particularly during AI-led restructuring.
- Worker Displacement and Skill Mismatch: Automation may render many jobs obsolete, while existing laws offer limited support for reskilling, income security, and smooth transitions.
- Weakening of Collective Bargaining: New strike and dispute norms, combined with digital workplaces, risk reducing trade union influence in the AI era.
- Gig and Informal Employment: Despite partial recognition, job security and enforceable entitlements for gig and platform workers remain inadequate amid rapid technological change.
Way Forward
- Balance Flexibility with Security: Adopt a flexicurity approach, combining labour-market flexibility with strong social security and transition support.
- Reskilling and Lifelong Learning: Establish robust, government–industry-led frameworks for continuous upskilling and career transitions in AI-augmented roles.
- Inclusive Social Dialogue: Institutionalise tripartite consultations among government, employers, and workers to manage automation-related disruptions and sustain industrial harmony.
- Adaptive Legal Frameworks: Regularly update labour laws to address emerging challenges such as algorithmic management, AI-driven layoffs, and digital workplace governance.
Conclusion
The Industrial Relations Code marks a major shift in India’s labour regulatory framework. However, in an era defined by AI and automation, regulatory flexibility alone is insufficient. Ensuring job security, effective reskilling, and social protection alongside industrial competitiveness is essential. A balanced and forward-looking approach will help safeguard workers’ interests while enabling innovation, thereby promoting inclusive and sustainable economic growth.
Question: Does the Industrial Relations Code, 2020 adequately balance job security with labour-market flexibility in the AI era? Examine.
