Syllabus: GS3/Economy
Context
- The implementation framework for labour reforms has been completed with the notification of the rules under the four Labour Codes. However, trade unions and labour scholars have raised concerns regarding several provisions and the absence of adequate worker safeguards.
About the Four Labour Codes
- The government consolidated 29 central labour laws into four Labour Codes to simplify India’s complex labour law regime:
- Code on Wages, 2019: Ensures universal wage protection, minimum wages, and timely payment of wages.
- Industrial Relations Code, 2020: Regulates trade unions, industrial disputes, layoffs, retrenchment, and fixed-term employment.
- Code on Social Security, 2020: Extends social security benefits to organised, unorganised, gig, and platform workers.
- Occupational Safety, Health and Working Conditions (OSHWC) Code, 2020: Consolidates laws relating to workplace safety, health, welfare, and working conditions.
- The reforms were presented as part of India’s effort to improve the ease of doing business while ensuring labour welfare.
What Are the Key Promises of the Labour Codes?
- Simplification of Labour Laws: The codes replace 29 fragmented labour legislations with a unified legal framework, reducing compliance burdens and legal complexity.
- Universal Wage Protection: The Code on Wages extends minimum wage provisions and timely payment of wages to all employees across sectors.
- Formalisation of Employment: The Industrial Relations Code seeks to provide flexibility to employers while ensuring statutory benefits for workers by legally recognising Fixed-Term Employment (FTE).
- Expansion of Social Security: The Social Security Code promises inclusion of gig workers, platform workers, unorganised workers, and migrant labourers under social protection mechanisms.
- Improved Occupational Safety: The OSHWC Code aims to establish common standards relating to health and safety, welfare facilities, working conditions, and occupational hazard prevention.
- Promotion of Industrial Harmony: The Industrial Relations Code seeks to streamline dispute resolution and strengthen collective bargaining mechanisms.
Core Issues and Concerns Associated with the Labour Codes
- Concerns over Fixed-Term Employment (FTE): No minimum tenure has been prescribed; no limit exists on the number of contract renewals; employers may repeatedly renew contracts instead of creating permanent jobs; and regular positions could gradually be converted into fixed-term positions.
- It may increase employment insecurity and weaken long-term labour protections.
- Ambiguity in Wage Determination: Lack of clear distinction between floor wage and minimum wage, no detailed consultation framework with States, and absence of transparent criteria for wage fixation.
- Problems with Hourly Wage Calculation: Workers may not find employment for the remaining hours of the day, hourly work and gig work differ fundamentally from full-day employment, and international labour standards often determine hourly wages independently.
- It becomes increasingly important with the growth of domestic work, platform work, and gig economy employment.
- Inadequate Protection for Gig and Platform Workers: Gig workers continue to be treated as self-employed, employment relationships remain undefined, and social security obligations of platform companies remain unclear.
- As a result, workers engaged with digital platforms remain vulnerable despite their growing contribution to the economy.
- Absence of Clarity on Gratuity Insurance: The Rules do not specify implementation mechanisms, employer obligations, and insurance modalities.
- It weakens an important safeguard against non-payment of gratuity.
- Weakening of Trade Union Recognition: Smaller unions may struggle to secure recognition, new unions may find it difficult to represent workers, and collective bargaining power could decline further.
- It may undermine labour representation, particularly in large establishments.
- Contract Labour and Informalisation: The OSHWC Rules fail to clearly define core activities, non-core activities, and sectors where contract labour can be employed.
- It leads to expansion of contract labour in permanent operations, increased informalization of the workforce, and greater scope for misuse and legal ambiguity.
- Missing Occupation-Specific Welfare Measures: Certain welfare provisions available under earlier laws are absent.
- Examples: Housing facilities for plantation workers, and dedicated medical facilities for plantation labour.
- It raises concerns regarding dilution of worker welfare standards.
Way Forward: Measures for Strengthening Labour in India
- Regulate Fixed-Term Employment: Prescribe a minimum contract duration, cap the number of renewals, and prevent replacement of permanent jobs with perpetual fixed-term contracts.
- Ensure Transparent Wage Fixation: Clearly define floor wage and minimum wage, adopt evidence-based wage determination methods, and remove gender-biased consumption norms.
- Strengthen Gig Worker Protection: Define employer–employee responsibilities in platform work, ensure social security contributions from aggregators, and provide health, accident, and retirement benefits.
- Clarify Contract Labour Regulations: Clearly distinguish core and non-core activities, and restrict contract labour in permanent production functions.
- Enhance Trade Union Participation: Review recognition thresholds, and encourage collective bargaining and social dialogue.
- Operationalise Gratuity Insurance: Establish mandatory insurance mechanisms, and create effective grievance redress systems.
- Preserve Welfare Standards: Reinstate occupation-specific protections for vulnerable workers, and strengthen enforcement and labour inspection systems.
| Daily Mains Practice Question [Q] Examine the key features of the Four Labour Codes and discuss the major concerns raised by trade unions and labour experts regarding their impact on workers’ rights and welfare. |
