Syllabus: GS2/ Polity and Governance; GS3/ Economy
Context
- The Union Government has urged states and Union Territories (UTs) to align their existing labour laws with the spirit and provisions of new labour codes.
Background
- Between 2019 and 2020, Parliament passed four consolidated labour codes to replace 29 outdated central labour laws:
- Code on Wages, 2019: Regulates wages, bonus payments, and equal remuneration.
- Industrial Relations Code, 2020: Deals with trade unions, employment conditions, layoffs, and dispute resolution.
- Code on Social Security, 2020: Merges laws on provident funds, pensions, insurance, maternity benefits, and gratuity.
- Occupational Safety, Health and Working Conditions Code, 2020: Consolidates regulations on safety, working hours, health, and welfare.
- The reforms were intended to streamline regulation, improve working conditions, and support industry growth.
- The new Social Security Code contains provisions for extending benefits to gig and platform workers also.
Progress at the State Level
- Labour being on the Concurrent List, states must frame their own rules under the new codes.
- Many states have proactively begun amending their respective labour laws to reflect the intent and provisions of the new codes.
Key Amendments Undertaken by States and UTs
- At least 20 states and UTs have amended laws to increase the threshold for prior government approval for retrenchment, layoff, or closure from 100 to 300 workers.
- 19 states and UTs have doubled the worker threshold for the application of the Factories Act:
- From 10 to 20 workers (where power is used in manufacturing).
- From 20 to 40 workers (where power is not used).
- Contract Labour Act Applicability: 19 states and UTs have raised the threshold for application from 20 to 50 workers.
- Night Shifts for Women: 31 states and UTs have allowed women to work night shifts (subject to specific safety conditions such as transport, lighting, and security).
- All states and UTs have notified reforms requiring prior compliance notices before prosecution, a major component of the codes meant to reduce inspector raj.
Challenges in Implementation
- Delayed Notification by the Centre: Although the codes were passed between 2019 and 2020, they are yet to be formally notified for implementation at the central level.
- The absence of a clear central timeline has created uncertainty for states, industries, and workers alike.
- Need for Synchronised and Uniform Rollout: While many states have moved ahead with individual reforms, the lack of coordination between Centre and states can lead to:
- Legal ambiguities and overlaps in enforcement,
- Compliance difficulties for firms operating across multiple states,
- Uneven labour standards, undermining the concept of a national labour market.
- Opposition from Trade Unions: Multiple national trade unions have opposed the codes, alleging that;
- They dilute job security, especially with relaxed norms for retrenchment and fixed-term employment.
- The emphasis is more on employer flexibility than on worker welfare.
- Infrastructural Gaps: Many state labour departments lack the capacity—both in manpower and digital systems—to implement new compliance and inspection frameworks.
Way Forward
- The Centre must provide clarity on notification timelines to facilitate coordinated implementation.
- Capacity-building and awareness at the state level are essential for effective enforcement.
- A balanced approach is required to ensure both worker welfare and industrial competitiveness.
- There should be inclusive consultations with trade unions, industries, and civil society groups to address concerns.
Concluding remarks
- The proactive role of states in aligning with labour reforms underscores a shared objective of improving industrial investment and employment generation.
- However, the Centre must now move decisively to ensure nationwide implementation, especially in areas like social security for gig workers, to realise the full potential of these landmark reforms.
Source: BS
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