{"id":68912,"date":"2026-03-13T20:42:45","date_gmt":"2026-03-13T15:12:45","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=68912"},"modified":"2026-03-13T20:44:06","modified_gmt":"2026-03-13T15:14:06","slug":"labour-codes-informality","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/13-03-2026\/labour-codes-informality","title":{"rendered":"Labour Codes and the Informality Challenge in India"},"content":{"rendered":"\n<p><strong>Syllabus: GS3\/ Economy<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The Economic Survey 2025-26 presents an optimistic assessment of India\u2019s labour reforms and highlights the potential of the new labour codes to increase formalisation, employment generation and economic growth.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>India\u2019s Labour Codes<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>India has consolidated <strong>29 labour laws<\/strong> into four comprehensive labour codes to simplify regulations and improve labour market efficiency.\n<ul class=\"wp-block-list\">\n<li><strong>The Code on Wages, 2019 <\/strong>aims to standardise wage regulation through the introduction of a National Floor Wage.<\/li>\n\n\n\n<li><strong>The Industrial Relations Code, 2020<\/strong> regulates trade unions, industrial disputes, layoffs and retrenchment.<\/li>\n\n\n\n<li><strong>The Occupational Safety, Health and Working Conditions Code, 2020<\/strong> seeks to unify workplace safety and health standards.<\/li>\n\n\n\n<li><strong>The Code on Social Security, 2020<\/strong> expands social security coverage to workers in both organised and unorganised sectors, including gig workers.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Key Projections in the Economic Survey<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The Economic Survey projects that labour market formalisation will increase from <strong>60.4% to 75.5%<\/strong> after the implementation of labour codes.<\/li>\n\n\n\n<li>The Survey estimates that the reforms could generate nearly <strong>77 lakh new jobs<\/strong> in the coming years.<\/li>\n\n\n\n<li>The Survey also estimates that these reforms could contribute around <strong>1.25% to India\u2019s GDP by 2029\u201330.<\/strong><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Concerns with&nbsp; the Labour Market and New Labour Code<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Informality in India\u2019s Labour Market: <\/strong>More than <strong>80%<\/strong> of India\u2019s workforce remains employed in the informal sector without job security or social protection.\n<ul class=\"wp-block-list\">\n<li>Informal workers <strong>lack written contracts, stable wages <\/strong>and access to labour grievance mechanisms.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Reliance on Contract Labour:<\/strong> The share of permanent workers in factories declined from about <strong>61%<\/strong> in 2011 to nearly <strong>47% in 2023.<\/strong>\n<ul class=\"wp-block-list\">\n<li><strong>Contract workers <\/strong>now constitute around <strong>42% of the factory workforce, <\/strong>reflecting a shift toward flexible employment arrangements.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Changes in Regulatory Thresholds: <\/strong>The Occupational Safety, Health and Working Conditions Code, 2020 raises the factory threshold from <strong>10 to 20 workers <\/strong>(with power) and from <strong>20 to 40 workers<\/strong> (without power).\n<ul class=\"wp-block-list\">\n<li>The Industrial Relations Code, 2020 increases the threshold for government approval for layoffs and retrenchment from <strong>100 to 300 workers.<\/strong><\/li>\n\n\n\n<li>These changes reduce regulatory compliance for firms but also <strong>limit the coverage of labour protections.<\/strong><\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Social Security for Gig Workers:<\/strong> The Code on Social Security, 2020 recognises gig and platform workers as part of the labour market.\n<ul class=\"wp-block-list\">\n<li>However, the details regarding benefit levels, coverage and implementation mechanisms remain unclear.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Law Enforcement:<\/strong> The labour codes redesignate labour inspectors as \u201cInspector-cum-Facilitators\u201d to encourage compliance through cooperation with employers. It is argued that this shift may weaken enforcement if inspection powers are diluted.\n<ul class=\"wp-block-list\">\n<li>The codes also allow certain labour violations to be settled through fines, which may <strong>reduce deterrence.<\/strong><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What are the Structural Drivers of Informality?<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Informal employment often <strong>allows firms to reduce labour costs<\/strong> and maintain operational flexibility.<\/li>\n\n\n\n<li><strong>Technological changes and automation<\/strong> are reducing demand for routine jobs.<\/li>\n\n\n\n<li>The growth of the platform economy has created new forms of work that <strong>bypass traditional employer\u2013employee relationships.<\/strong><\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Way Ahead<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The labour codes represent an important attempt to <strong>modernise India\u2019s labour regulatory framework<\/strong> and improve ease of doing business.\u00a0<\/li>\n\n\n\n<li>However, the optimistic projections presented in the Economic Survey rely on assumptions that may not fully reflect the realities of India\u2019s labour market.\u00a0<\/li>\n\n\n\n<li>The success of these reforms will depend on<strong> effective enforcement, expansion of social security coverage, <\/strong>and policies<strong> <\/strong>that <strong>address the structural causes<\/strong> of informality.<\/li>\n<\/ul>\n\n\n\n<p><strong>Source: <\/strong><a href=\"https:\/\/www.thehindu.com\/opinion\/op-ed\/economic-survey-promises-impact-of-new-labour-codes\/article70736145.ece\" target=\"_blank\" rel=\"noopener\"><strong>TH<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p><strong> Context <\/strong><\/p>\n<li class=\"ms-5\"> The Economic Survey 2025-26 presents an optimistic assessment of India\u2019s labour reforms and highlights the potential of the new labour codes to increase formalisation, employment generation and economic growth. <\/li>\n<p><\/p>\n<p><strong> India\u2019s Labour Codes <\/strong><\/p>\n<li class=\"ms-5\"> India has consolidated 29 labour laws into four comprehensive labour codes to simplify regulations and improve labour market efficiency. <\/li>\n<li class=\"ms-5\"> The Code on Wages, 2019 aims to standardise wage regulation through the introduction of a National Floor Wage. <\/li>\n<li class=\"ms-5\"> The Industrial Relations Code, 2020 regulates trade unions, industrial disputes, layoffs and retrenchment. <\/li>\n<p><a href=\" https:\/\/www.nextias.com\/ca\/current-affairs\/13-03-2026\/labour-codes-informality \" class=\"btn btn-primary btn-sm float-end\">Read More<\/a><\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-68912","post","type-post","status-publish","format-standard","hentry","category-current-affairs"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/68912","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=68912"}],"version-history":[{"count":4,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/68912\/revisions"}],"predecessor-version":[{"id":68924,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/68912\/revisions\/68924"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=68912"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=68912"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=68912"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}