Late last week, the Central government had implemented four new labour codes — Code on Wages, Industrial Relations Code, Code on Social Security and the Occupational Safety, Health and Work Conditions Code. Passed by Parliament five years ago, these codes — they replace 29 existing labour laws — have not been notified yet but the Centre has decided to renotify the draft rules and sought feedback from bodies such as trade unions. So the finalisation of the rules cannot be expected before March, 2026. The sloth-like pace of finalisation must not deflect attention from some of the broader questions that are relevant to these developments. Primary among them is the potential of these labour codes to nudge reform. Many economists, especially votaries of a free market, have been of the opinion that India’s archaic labour laws have always been a hindrance to industrial employment creation in labour intensive sectors; they were also an obstacle to labour recruitment and retrenchment and the formalisation of the labour markets themselves. By reducing the burden of compliance, widening the ambit of social protection, offering flexibility to employers, among other benefits, the labour codes can claim to be a crucial moment when it comes to the reformatory aspects of India’s labour and economy.
This is not to suggest that the acceptance of these labour codes has been uniform. Bengal — it has had a long history of militant trade unionism — has opposed the codes for being ‘anti-labour’; Tamil Nadu has expressed reservations over the Code on Social Security; Kerala, which had drafted its rules for all four codes — labour being on the Concurrent List — is apparently having misgivings too. To dismiss these concerns on grounds of political motivation would be unwise. Labour representatives, for instance, are cut up about the Centre ignoring the suggestions of the Second National Commission of Labour; they allege that the Codes only contain pro-employer elements. The labour market is also in a flux given its vulnerability to shocks, such as impending automation, trade wars and climate change. These factors have heightened concerns that must be addressed. Something else needs to be pointed out too. Labour generation is not automatically contingent on such reforms. The enhancement of skills, heavy investments, rise in productivity and growth along with a balanced approach towards codified workers’ rights are of fundamental importance to generate India’s labour renaissance. In that sense, the new labour codes signify a beginning. There is work left to be done.