Subject: Economy

The recent consolidation of 29 central labour laws into four Labour Codes marks a significant milestone in India's labour market reforms, aiming to balance worker welfare with ease of doing business.

Merits

• Simplification & certainty: 29 central laws compressed into four, cutting ~1,200 sections to 480 and easing compliance for 63 million enterprises.
• Ease of doing business: Single registration, single annual return, five-year licence and algorithm-based inspections curb “inspector-raj.”
• Universal wage floor prevents any state from setting minimum wages below a centrally fixed level, aiding informal and farm workers.
• Wider social security: Gig and platform workers to receive provident-fund, health and accident cover via a central fund.
• Flexibility with safeguards: Lay-off threshold raised from 100 to 300 employees while mandating a reskilling fund for retrenched staff.
• Gender & safety focus: Crèches for establishments with ≥50 workers, night-shift safeguards for women, and mandatory safety gear for contract labour.

Demerits

• Job security dilution from higher lay-off threshold and easier fixed-term contracts.
• Strikes harder: 14-day notice, 60-day cooling-off and, in some cases, 75% support required.
• Vague gig-worker coverage: Contribution rates and benefit design left to future rules.
• Broad delegated legislation risks divergent state standards.
• Inspector-facilitator dual role may soften enforcement.
• Unpaid care work excluded, overlooking a large share of women’s labour.

Progress So Far

1. Rule-making: Centre finalised rules, but still all states yet to notified theirs, causing uneven readiness.
2. Digital infrastructure: Shram Suvidha 2.0 for unified registration piloted; National Database for Unorganised Workers tops 290 million entries.
3. Timeline: Phased enforcement now eyed for Q4 FY 2025-26, beginning with the Wage Code.
4. Industry preparedness: Large firms have adjusted pay structures for the new “wage” definition; MSMEs seek clarity on overtime and penalties.
5. Stakeholder pushback: Ten central trade unions plan a convention and possible strike; some states explore independent gig-worker boards.

The success of four codes hinges on uniform rule notification, effective tripartite oversight and swift activation of gig-worker funds and digital inspection systems; until then, the reforms remain legislated but not lived.