By Chandrajit Banerjee, DG, Confederation of Indian Industry (CII)
Land and labour are the twin pillars of India’s development—while land drives infrastructure and industrial expansion, labour fuels productivity and inclusion. In this context, India’s new Labour Codes mark a transformative step, consolidating 29 existing laws into a modern, unified framework that brings clarity, consistency, and fairness to the labour ecosystem.
For workers, these Codes promise stronger social security, safer workplaces, and broader access to formal benefits. For businesses, they offer simplified compliance, greater flexibility in workforce management, and a level playing field across sectors. While their ultimate impact will depend on the quality of implementation, the Codes represent a decisive move to align India’s labour market with the demands of a 21st-century economy.
From delivery services in Jaipur to technical roles in Sanand and construction work in Guwahati, India’s workforce aspires for three core assurances—secure working conditions, fair wages, and reliable, portable social protection. Whether employed in factories, fields, or platform-based services, every worker seeks income stability, predictable benefits, and dignity at work. The four Labour Codes aim to make this aspiration a reality by embedding equality and safety into the world of work.
At the heart of these reforms lies the expansion of social security coverage. Millions of unorganised, gig, and platform workers—who form a significant part of India’s workforce—will now gain formal recognition and become eligible for benefits. Provisions related to provident fund, health insurance, and maternity benefits will no longer be confined to the formal sector but extended to historically excluded categories. This transformation not only strengthens the safety net for vulnerable workers but also incentivises enterprises to formalise employment, expanding the overall social security base.
The Code on Social Security, 2020, formally recognises gig, platform, and unorganised workers, allowing both the Centre and States to establish dedicated social security funds for them. Aggregators may contribute 1–2% of their turnover (capped at 5% of payments) towards funding benefits for such workers—a practical and sustainable mechanism. Aadhaar-based registration has already been notified, and over 310 million workers have been enrolled on the e-Shram portal, each receiving a Universal Account Number (UAN) that enables portability of benefits such as health insurance, maternity support, and old-age pensions across workplaces. The e-Shram registry, in fact, constitutes India’s first national database of informal workers—a vital step towards inclusive growth and resilience.
The Occupational Safety, Health and Working Conditions (OSH) Code is equally transformative, integrating safety standards and, notably, allowing women to work night shifts with consent and appropriate safeguards. This progressive provision expands opportunities for women while ensuring their security. The Code also rationalises licensing and inspection systems, moving towards risk-based, technology-driven compliance—shifting from a punitive to a preventive culture.
Similarly, the Code on Wages universalises minimum wages and timely payment across all sectors and skill levels, ensuring fairness and income stability. The Industrial Relations Code strengthens the dispute resolution mechanism and promotes social dialogue by encouraging negotiation, conciliation, and mediation before conflicts escalate. Simplified provisions for trade union recognition and standing orders in larger establishments improve transparency and predictability in employer-employee relations.
For enterprises, especially Micro, Small, and Medium Enterprises (MSMEs), the Labour Codes bring simplified compliance—standardised definitions, fewer registers, digital filings, and minimal ambiguity. India’s foreign direct investment (FDI) inflows stood at USD 83.6 billion in FY 2021–22 and remain strong at USD 81 billion in FY 2024–25, reflecting investor confidence. During this period, the Government implemented several major reforms, including the codification of labour laws. Record allocations exceeding ₹13 lakh crore for capital expenditure in FY 2021–22, along with digital and institutional reforms, have enhanced ease of doing business and positioned India as an attractive global investment destination. Reforms in manufacturing, semiconductors, coal, energy, and minerals have further strengthened India’s global competitiveness.
However, passing the laws is only half the journey. Labour being a subject in the Concurrent List means both Centre and States must frame and notify the rules for implementation. While most States have drafted the rules, their final notification remains uneven. To realise the vision of “One Nation, One Labour Law Framework,” swift action from both Centre and States is crucial.
To ensure effective execution, three priorities emerge:
- Operationalising coverage for unorganised workers— Notifying aggregator contribution rates, ensuring transparent enrolment and benefit delivery, and establishing public dashboards for accountability. International models like Singapore’s Central Provident Fund (CPF) offer useful insights.
- Converting digital infrastructure into real benefits— Linking databases of e-Shram, EPFO, and ESIC to make benefits truly portable. Aadhaar should be used for inclusion and portability, not exclusion.
- Building awareness and capacity— MSMEs need help desks and simplified guides to understand the Codes, while workers require multilingual helplines and on-ground support. Joint efforts by government, industry bodies, and unions can ensure that rights on paper translate into benefits in practice.
At its core, these reforms rest on a simple belief: work should be safe, pay should be fair, social security should travel with the worker, and compliance should be simple enough for everyone to participate. The Government deserves recognition for creating this framework. If implemented with speed, transparency, and collaboration, these Codes could shape the next chapter of India’s growth—driving competitiveness for businesses, dignity for workers, and predictability for investors. (PIB)
