Context

• On November 21, 2025, India marked a milestone in its long journey toward Viksit Bharat with the implementation of the Four Labour Codes.
• Together, these reforms represent one of the most ambitious attempts to modernise India’s labour governance framework.
• They aim to create a fair, future-ready system that supports both the protection of workers and the competitiveness of enterprises, reflecting India's broader aspirations of Aatmanirbhar Bharat and inclusive growth.

Evolution of India’s Labour Framework

• India’s labour laws have historically developed in a fragmented manner, shaped by varying economic contexts and social needs since Independence.
• The resulting framework, consisting of numerous separate legislations, created complexities for employers and often left gaps or inconsistencies for workers.
• Recognising these challenges, the Second National Commission on Labour recommended consolidating the many existing laws into broader functional codes.
• After extensive consultation with stakeholders, including employers, labour unions, and State governments, the Four Labour Codes were enacted between 2019 and 2020.

A Large and Dynamic Workforce

• India’s transformation is underpinned by its demographic strength: with over 643 million workers, it boasts one of the largest and youngest labour forces globally.
• Between 2017–18 and 2023–24, the country generated 16.83 crore new jobs, saw unemployment fall from 6% to 3.2%, and witnessed a rise in formal employment.
• Yet a large share of India’s workers remain in the informal sector, underscoring the urgent need for simplified laws and stronger protections.
• The new Codes aim to bridge these gaps. The Code on Social Security’s broader coverage, including for unorganised workers, signals a decisive move to extend the benefits of growth and security to those who have traditionally been excluded from formal protections.

The Core Objective of Labour Codes: Strengthening Worker Protections

• Universal minimum wages and a national floor wage establish a more consistent and equitable wage structure.
• Mandatory appointment letters and timely wage payments reinforce transparency and accountability.
• A clearer framework for working hours, including the standard 48-hour work week, helps ensure predictability and work–life balance.
• The OSH Code emphasises workplace safety through mandatory safety committees, free preventive health check-ups, and stronger norms for working conditions.
• The Social Security Code provides universal ESIC coverage, streamlined EPF processes, and creates a National Social Security Fund addressing the needs of various worker categories.
• These measures collectively advance worker welfare while supporting productivity and sustained economic growth.

Some Other Features of New Labour Codes

• Simplifying Compliance and Encouraging Formalisation
  • From the perspective of businesses, especially MSMEs, the Codes represent a significant shift toward simpler and more transparent compliance.
  • The introduction of single registration, single licence, and single return mechanisms, reduces administrative burdens and encourages participation in the formal economy.
  • A uniform definition of wages also reduces ambiguity and disputes, promoting predictability in wage calculations and legal compliance.
• Preparing for the Future of Work
  • The nature of employment in India is rapidly evolving, driven by digital platforms, flexible work arrangements, and the rise of gig and platform-based labour.
  • By including gig and platform workers under the Social Security Code, India has taken a forward-looking step.
  • As this workforce is projected to expand from one crore in 2024–25 to 2.35 crore by 2029–30, establishing social protection frameworks early is vital for ensuring sustainable livelihoods and equitable growth.
• Advancing Women’s Participation in the Workforce
  • Despite recent improvements, women’s labour force participation, at 32.8%, according to the ILO’s India Employment Report 2024, remains below potential.
  • The Labour Codes attempt to address key barriers by:
  • reinforcing equal remuneration,
  • strengthening maternity benefits,
  • extending social protection to women in unorganised and gig sectors, and
  • allowing women to work at night with their consent, supported by safety measures.
• Balancing Worker Protections and Enterprise Competitiveness
  • A modern labour framework must carefully balance the rights of workers with the needs of businesses.
  • The Labour Codes aim to strike this balance by simplifying industrial relations procedures, improving transparency, and ensuring faster resolution of disputes.
  • This stability is crucial for attracting investment, strengthening India’s integration into global value chains, and enabling industries to grow competitively.

Conclusion

• As the Codes come into force, State-level implementation will be critical. Uniformity and consistency across States, particularly in thresholds, rules, and enforcement, will determine the effectiveness of the reforms.
• Just as the Goods and Services Tax (GST) represented a major overhaul of indirect taxation, the Labour Codes constitute one of the most far-reaching reforms in labour regulation.
• Their success will depend on continued reform momentum, coordination with States, investment in digital systems, and sustained dialogue with stakeholders.
• If implemented effectively, these Codes have the potential to significantly boost job creation, expand social security, increase formalisation, and strengthen India’s long-term growth trajectory.