The government’s initiative to consolidate 29 distinct labour laws into four comprehensive labour codes is one of the most ambitious reforms of India’s regulatory framework in recent decades. This reorganisation extends beyond mere administrative restructuring. It signifies a substantive recalibration of the social contract among the state, workers, and enterprises, undertaken at a critical juncture when the configuration of the nation’s labour market will influence the sustainability of its economic growth.
Throughout much of the post-Independence era, India’s labour regulations have resembled a disordered palimpsest, characterised by overlapping statutes drafted during various political periods, each driven by distinct concerns, and often in contradiction with one another. This complex compliance landscape has discouraged formalisation, weakened enforcement, and perpetuated the dualism between highly protected workers in the organised sector and the extensive informal workforce that operates beyond the reach of legal protections. Against this backdrop, simplification is not merely desirable; it is essential for any serious effort to modernise employment relations.
The integration of the Code on Wages, the Industrial Relations Code, the Code on Social Security, and the Occupational Safety, Health and Working Conditions Code represents a strategic shift from a rigid, adversarial regulatory model toward a more coherent, rights-based, and facilitative framework. Statutory minimum wages have been established across various sectors; gender parity in recruitment and remuneration is explicitly endorsed; and for the first time, social security provisions have been extended to gig and platform workers, whose growing significance in the contemporary labour market renders their previous exclusion increasingly untenable. Furthermore, the transition from a traditional inspector system to an “inspector-cum-facilitator” model indicates an institutional shift from enforcement to enabling compliance.
The timing of this development is noteworthy. According to provisional estimates released by the Ministry of Labour & Employment, which utilise multiple administrative datasets and the RBI’s KLEMS database, employment has reportedly increased from approximately 47.5 crore in 2017-18 to around 64.33 crore in 2023-24, indicating a net growth of about 16.8 crore jobs. Concurrently, the estimated unemployment rate has declined from approximately six per cent to about 3.2 per cent. As with all constructed labour market estimates, the methodology integrates survey data with administrative series, necessitating interpretive caution. Nonetheless, the overarching trend is evident: India’s labour market is experiencing a phase of significant transformation and opportunity.
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Flexible and fair labour market
A streamlined regulatory framework, executed with institutional rigour, has the potential to enhance the momentum of India’s labour market. For firms, particularly small and medium-sized enterprises that constitute the backbone of employment generation, the promise of “single registration, single licence, single return” alleviates long-standing frictions and reduces the cost of transitioning into the formal economy. For workers, increased clarity and portability of rights, enhanced safety provisions, and the extension of social protection to new forms of work collectively offer the potential for a more dignified and secure working life.
It is crucial to resist the alluring notion that legislative reform is inherently transformative. Labour regulation functions within a complex federal framework, wherein states hold significant responsibility for implementation, enforcement, and administrative capacity. Unless state-level digital systems, labour departments, and inspection mechanisms evolve in alignment with the Codes’ objectives, the sophistication of the legislation will have little impact on workers at the grassroots level. Provisions for the portability of migrant workers, social security mechanisms for gig workers, and the facilitative compliance model for employers will only be effective if the foundational administrative infrastructure operates efficiently.
It is important not to underestimate the cultural dimension. India’s labour markets have historically been characterised by informality, not merely as a legal category, but as norm governing workplace relations, power negotiations, and risk allocation. The imposition of formal rights and digital compliance mechanisms introduces new expectations for both employers and workers. This transition will require sustained awareness efforts, capacity building, and the gradual development of new institutional practices.
Nevertheless, the potential benefits are too significant to overlook. A labour market that is both flexible and fair is not an oxymoron; rather, it is the essential condition for the prosperity of contemporary economies. If India aims to leverage its demographic advantage, attract sustained investment, and progress within global value chains, it requires a regulatory framework that rewards productivity, promotes formalisation, and safeguards workers regardless of the contractual nature of their employment.
Viewed from this perspective, the four labour codes represent more than a mere reorganisation of legislative complexities. They signify an effort to harmonise economic efficiency with social protection, and to move beyond the simplistic dichotomy of pro-labour versus pro-business that has historically impeded discourse. Their success will depend not on their statutory consolidation alone but on the subsequent administrative, technological, and cultural integration.
India has undertaken a bold step in redefining the regulations that govern work. The challenge, now, is to ensure that this step becomes a stride.
Bidisha Bhattacharya is an Associate Fellow, Chintan Research Foundation. She tweets @Bidishabh. Views are personal.
(Edited by Theres Sudeep)