By Santosh Mehrotra & Harshil Sharma
The government of India has finally implemented its long-pending labour reforms by notifying the four labour codes on November 21. Passed between 2019 and 2020, they replace 29 existing central labour laws, consolidating them into four codes covering wages, social security (SS), industrial relations, and occupational safety and health (OSH). In principle, these codes are aimed at simplifying regulations and extending benefits to more workers. But in the last five years, they saw widespread resistance from both labour specialists and trade unions.
The government portrays the codes as “worker-centric”, guaranteeing floor wages and social security across the board, and as a major step towards formalising the workforce. For instance, official releases emphasise universal minimum wages, provident fund/employees’ state insurance for all, and compulsory appointment letters. A national floor wage has been set, but it is extremely low (Rs 178 per day) and less than in many states. Also, there is no automatic formula or timeline for revising wages—the codes leave fixing wages to government discretion. The promised “one nation, one wage” is meaningful only if it is effectively enforced across lakhs of employers, a tall order in the absence of strong inspection and enforcement regimes.
The SS code remains focused on the organised rather than the unorganised sector which employs 85% of Indian workers. Even here, this code barely devotes two clauses from over 100 on the unorganised sector.
Unpacking the formalisation claims
Similarly, the claim of formalisation and SS measures for 40 crore workers is far from true. While the government now has a database of 40 crore unorganised workers through the e-Shram portal, it does not offer any social security benefits. Workers are nudged to apply to 12 social security schemes, but they do not get integration or direct benefits. A notable positive is the legal recognition of gig and platform workers as part of the labour ecosystem, a long-standing demand from trade and labour experts. Requiring appointment letters and single online registrations could help track employment, but only if implemented.
Different boards like those of building and construction workers, gig workers, and unorganised workers still leave the workforce segmented. They create separate bureaucracies for different types of workers. What is common to them is that they are all informal and lack social security (post-retirement pension, work related death and disability insurance, and maternity benefits). The code depends on state-level enforcement and digital infrastructure, which varies widely; and large informal employers may still evade compliance.
On safety and health
On safety and health, the codes are said to unify fragmented rules. The OSH code expressly excludes very small establishments—now factories employing less than 20 workers are excluded (as opposed to 10 earlier). In effect, 80% of India’s labour force (the home-based, micro-enterprise, and informal workers) would still fall outside mandatory safety and welfare coverage. Is it assumed that they don’t deserve safety or health?
The code on industrial relations includes reforms like increasing the strike advance notice period from 14 to 60 days. The layoff/retrenchment permission now applies to units with 300 workers (as opposed to 100 earlier). This change allows firms with up to 299 workers to lay off staff without prior government approval, potentially weakening job security. These would effectively curtail the bargaining power of trade unions and workers. In any case, firms are bypassing these provisions by counting any workers above a legal threshold as contract or casual workers.
Under the Constitution, labour is a concurrent subject. So, the new codes require each state to notify its own rules. The roll-out has been uneven. Some Bharatiya Janata Party (BJP)-ruled states (like Haryana, Gujarat, and Uttar Pradesh) had already liberalised labour rules and were quick to welcome the reforms, but others were not. Recent government records show that four states—West Bengal, Tamil Nadu, Kerala, and Karnataka—are yet to pre-publish draft rules under one of the four codes. None of the four states are under BJP rule.
Opposition-ruled governments have been wary of fully endorsing reforms that trade unions vehemently oppose. The Centre itself acted “quietly” to avoid a farm laws-style revolt, hoping to “demonstrate political conviction by communicating the importance of this reform” to stakeholders and get states on board. But in practice, many non-BJP states simply delayed finalising rules. It remains unclear how labour disputes will be resolved in states where old laws are repealed but new rules have not yet been notified. Moreover, a new ground for a Centre vs states situation now exists.
Trade unions have been vocal in opposing labour codes. A joint statement by 10 central unions (all major federations except the Rashtriya Swayamsevak Sangh-affiliated Bharatiya Mazdoor Sangh or BMS) condemned the codes as “anti-worker, pro-employer” and “a deceptive fraud against the working people”. Trade unions accuse the reforms of diluting worker rights, potentially leading to further exploitation by employers.
Unions have signalled they will resume their agitation. Even before formal implementation, 10 central unions (including the Indian National Trade Union Congress and the All India Trade Union Congress) submitted a pre-budget memorandum demanding, among other points, a repeal of the labour codes. After the notification, they have called nationwide protests on Wednesday. In many cities, rallies and marches were held on Saturday, with union activists burning copies of the codes.
Despite this, the mood is mixed. Notably, the BMS did not join the agitation and even applauded the codes. Two smaller federations (National Front of Indian Trade Unions and a Telangana gig workers’ union) likewise backed the reforms. International bodies like the International Social Security Organisation also hailed the codes for extending coverage, underscoring that some global experts see potential gains in the laws. Domestically, however, opposition politicians and unions have warned of a repeat of the farmers’ agitation. Just as the farm laws had to be rolled back after sustained protests, any hint of lock-step implementation could provoke a similar mass movement. For now, unions are mobilising across states, as employers and officials wait nervously to see whether November’s rallies grow into a broader “labour movement” challenge. Whether these codes lead to genuine reforms or provoke sustained civil resistance will depend on implementation, engagement with stakeholders including states, and the government’s ability to respond to growing worker discontent.
Santosh Mehrotra & Harshil Sharma are respectively Research Fellow, IZA Institute of Labour Economics, Brussels, & Labour Economist and Director, Indus Action
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