Introduction of Labour Codes
The Union government has introduced four major labour codes to modernize India's labour-market regulation. The Codes are:
- Code on Wages (2019)
- Industrial Relations Code (2020)
- Code on Social Security (2020)
- Occupational Safety, Health and Working Conditions Code (2020)
The implementation of these Codes is considered a major reform to address outdated labour laws that hinder sustained growth, especially in manufacturing.
Benefits for Companies
- Reduction in compliance costs.
- Increased flexibility in hiring with thresholds for layoffs, retrenchment, closure raised from 100 to 300 workers.
- Provision for states to increase the limit further.
Formalization of Labour Market
- Mandatory issuance of appointment letters to workers.
- Written contracts to enhance transparency.
- Minimum wage rights for all workers under the Code on Wages, 2019.
- Timely wage payments required from enterprises.
Social Security and Benefits
- Legal recognition of gig and platform workers under the Social Security Code.
- Aadhaar-linked universal account numbers for workers, facilitating portable benefits across states.
State Government Initiatives
State governments have implemented significant reforms to complement the Codes:
- 16 state governments executed 38 reforms this year, with 37% related to labour.
- Reforms include allowing women to work night shifts, expanding daily work limits, and reducing documentation for small establishments.
Challenges and Costs
- MSMEs may face increased costs due to extended social-security coverage.
- Delivery platforms might incur higher costs despite operating at a loss.
Policy Level Goals
The national labour and employment policy, Shram Shakti Niti, shares the objectives of social security, formalization, and inclusive growth. Continuous refinement of the system is necessary to adapt to changes in work nature, requiring engagement from both state and central governments with businesses and the labour market.
