India’s labour reforms


    In News 

    • One of the most significant economic fallout of the pandemic has been the declining labour market conditions. 
    • And in this background Labour Codes were reformed in 2019-20.

    Past Labour Reforms

    •  The government has worked to create employment opportunities in the formal and the informal sectors.Schemes such as MUDRA Yojana, Svanidhi Yojana, Garib Kalyan Rozgar Abhiyaan and MGNREGA are aimed at harnessing the potential of the working population in the formal and the informal sectors. 
    • Apart from the Center,  State Governments have also undertaken substantive legislative and administrative reforms in their respective labour and industrial relations arena. 

    Outcomes of Reform

    • The V.V. Giri National Labour Institute’s interim report provides insights into the impacts of the reforms of the Industrial Disputes Act so far. 
    • The report spans the period 2004-05 to 2018-19
    • Key findings are:
      • The share of employment in plants employing more than 300 people increased from 51.1% to 55.3% between 2010-11 to 2014-15 , and then increased less, from 55.3% to 56.3%, in 2017-18, when some States made the bolder reforms favourable for employers. 
      • The report says, employment in formal enterprises is becoming more informal. 
      • The reforms did not make the labour laws more employer friendly. 

    Major Issues 

    • Socio-economic problem
      • India’s gravest socio-economic problem is the difficulty a vast majority of citizens have in earning good livelihoods. 
      • They suffered not only  due to employment but also the poor quality of employment: insufficient and uncertain incomes, and poor working conditions, wherever they are employed 
    • Government’s failure 
    • The Government has failed to provide legal visibility to millions of unorganised and migrant workers.
    • India’s labour regulatory framework has been rigid and hindered the growth of output, investment and employment expansion.
    • Pandemic Impacts
    • COVID-19 intensified informality, led to the withdrawal of workers from the labour market, reduced earnings, increased unemployment and widened inequality
      • They struggled to find shelter, food, and even drinking water for their families.
    • Other Issues 
      • Political liberties and freedoms of speech are being curbed in India. 
      • Social equality amongst castes has not been achieved. 
      • Lower caste citizens continue to live in great indignity
      • Lower caste poor women live in abject poverty in India’s villages.


    • Fundamental reforms are required in the theory of economic growth: more GDP does not automatically produce more incomes at the bottom. And the paradigm driving employment and labour policies must also change to enable the generation of better-quality livelihoods for Indian citizens, now and in the future.
      • To achieve this, fundamental reform is required in the ways policies are made.
    • The primary purpose of labour laws is to protect the rights of workers, not promote the interests of investors. Surely, the benefits of reforms should be assessed from workers’ perspectives too. 
    •  Along with the right to be heard and dignity at work, these are the minimal “essentials” all employers must provide to all those who work for them, whether in small enterprises or domestic help.
    • large and formal enterprises create good jobs, therefore labour laws must be ‘flexible” to attract investments. 

    Additional Information 

    • Constitutional Mandate 
      • Labour falls under the Concurrent List of the Constitution.  
      • Therefore, both Parliament and state legislatures can make laws regulating labour.  
      • it encouraged States to implement changes.

    Recent Reforms 

    • Four Codes: The Ministry of Labour and Employment had successfully undertaken the task of simplifying, rationalising and amalgamating the existing 29 labour laws into four Codes — the Code on Wages, 2019; the Code on Industrial Relations, 2020; the Code on Occupational Safety, Health and Working Conditions, 2020 and the Code on Social Security, 2020 .
    • In 2022, the Prime Minister of India directed recruitment of 10 lakh people in ‘mission mode’ over the next one-and-a-half years across various government departments and ministries to generate employment and achieve Atma Nirbhar Bharat.