At long last, the Union government has notified the four labour codes. In 2019 and 2020, it repealed as many as 29 labour laws and replaced them with four amalgamated codes—on wages, industrial relations, social security, and occupational safety and working conditions. Though these were passed by parliament five years ago, the absence of the rules required for enforcement had kept them in abeyance. The government’s stated rationale is that multiple overlapping laws made compliance and enforcement difficult, and that many colonial-era provisions were outdated. Though unstated, the move is also aimed at making India more attractive for foreign investment.
Opposition trade unions have broadly condemned the new codes as an ‘anti-labour’ move designed to usher in a ‘hire-and-fire’ regime. The old threshold—companies employing 100 or more workers requiring government permission for closure or lay-offs—has been raised to 300, giving firms more flexibility to shut down or rationalise departments and manning levels. Similarly, the 8-hour working day—considered a hard-won right secured by trade unions over decades—has been altered by the stroke of a pen.
For industry, the codes promise less red tape. The number of returns will come down from 39 to just one electronic return, and licences will be offered through single-window clearances. But the Association of Indian Entrepreneurs reckons the codes will raise operating costs for smaller enterprises. For millions of unorganised workers, the focus will now shift to defining and enforcing minimum wages. Among the categories listed for minimum wages, work predominantly performed by women has often been slotted under the unskilled category; livestock care, for instance, is assumed to be done by men.
A flexible hire-and-fire regime, while workable in a robust economy with plentiful jobs, can be detrimental in Indian conditions. Regular jobs are scarce and unemployment is rampant. Yet much of the job-protection framework has been dismantled. Today, barely 6.3 percent of the workforce is unionised, and labour disputes have dropped dramatically—from 354 in 2014 to just 76 between 2015 and 2023. Generating and protecting jobs must, therefore, be a priority for governments. The new labour codes may be a start, but the need for course correction will be felt more urgently down the line.