Discuss the merits and demerits of the four ‘Labour Codes’ in the context of labour market reforms in India. What has been the progress so far in this regard? (2024, 15 Marks)

Paper	GS Paper 3
Word Limit	250 words
Syllabus Topic	Indian Economy – Employment; Labour Market Reforms

Model Answer

India merged 29 central labour laws into four Labour Codes: the Code on Wages (2019), the Industrial Relations Code, the Code on Social Security and the Occupational Safety, Health and Working Conditions Code (all 2020). The aim is simpler rules and wider protection.

Merits

• Simplicity: Single registration, licence and return reduce compliance.
• Wages for all: Minimum wages cover all workers, with a national floor wage.
• Gig workers: Gig and platform workers are recognised for social security for the first time.
• Flexibility: Fixed-term employment with equal benefits helps firms hire.
• Women: Night shifts allowed with consent and safety measures.
• Inspector-cum-facilitator: Shift from penalty to guidance.

Demerits

• Job security: Prior permission for lay-off or closure is now needed only above 300 workers (earlier 100).
• Right to strike: Notice rules now apply to all industrial establishments.
• Coverage gaps: Higher thresholds may leave small units outside safety rules.
• Informal sector: Most workers are informal; benefits depend on future schemes.
• Trade union concerns: Unions say codes favour employers.

Progress So Far

• Parliament passed all four codes by 2020.
• Labour is in the Concurrent List, so states had to frame their own rules; this delayed roll-out.
• The Centre brought all four codes into force on 21 November 2025.
• The e-Shram portal is building a national database of unorganised workers.

Conclusion

The codes can boost jobs and formalisation if balanced with worker protection. Tripartite dialogue and strong state rules will decide their success towards decent work (SDG 8).

Related PYQs

• “Success of ‘Make in India’ programme depends on the success of ‘Skill India’ programme and radical labour reforms.” Discuss with logical arguments. (2015)
• Most of the unemployment in India is structural in nature. Examine the methodology adopted to compute unemployment in the country and suggest improvements. (2023)
• Faster economic growth requires increased share of the manufacturing sector in GDP, particularly of MSMEs. Comment on the present policies of the government in this regard. (2023)