| [UPSC 2024] Discuss the merits and demerits of the four ‘Labour Codes’ in the context of labour market reforms in India. What has been the progress so far in this regard?
Linkage: This question directly falls under GS Paper III, Labour Reform, testing the ability to critically evaluate structural labour market reforms under liberalisation. The article on new labour codes provides concrete evidence on demerits which can be used to balance the “merits vs demerits” and assess reform progress. |
Introduction
India enacted four labour codes in 2019-20 to consolidate existing labour laws relating to wages, industrial relations, social security, and occupational safety. While projected as universalising worker welfare, the codes substantially marginalise unorganised workers, who constitute over 90% of India’s workforce and contribute nearly 65% of GDP. The article flags structural exclusions, regulatory dilution, and erosion of welfare institutions affecting informal labour across sectors.
Why in the News
The issue has gained prominence as States, including Tamil Nadu, deliberate on notifying rules under the Social Security Code. Unions and worker organisations have intensified opposition, citing first-time dismantling of long-standing welfare boards, dilution of inspection systems, and absence of funding guarantees. The transition marks a sharp departure from sector-specific, State-level welfare architectures built over decades.
What are the new labour codes and how were they enacted?
- Legislative Consolidation: Replaced 29 labour laws with four codes covering wages, industrial relations, social security, and occupational safety.
- Consultative Deficit: Enacted without tripartite consultation at the Indian Labour Conference, violating established labour law-making practice.
- Coverage Gap: Unorganised workers excluded from consideration in three codes, except limited mention in the Social Security Code.
How do the codes affect unorganised workers structurally?
- Workforce Magnitude: Unorganised workers constitute over 90% of India’s workforce and generate 65% of GDP.
- Policy Blindness: Codes assume uniform work conditions, ignoring sectoral diversity across agriculture, construction, salt pans, beedi, mining, and domestic work.
- Legal Erasure: Repeal of sector-specific laws removes tailored protections evolved over decades.
How does consolidation weaken occupational safety and health?
- Regulatory Dilution: Occupational Safety, Health and Working Conditions (OSHWC) Code replaces site-based inspections with process-based systems.
- Safety Deficit: Absence of nearly 180 safety rules earlier applicable to construction sites under BOCW Act.
- International Violation: Contravenes ILO Convention 81, ratified by India, mandating effective labour inspections.
Why are occupational diseases inadequately addressed?
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- Sectoral Health Risks:
- Construction: High prevalence of silicosis.
- Agriculture: Cancer linked to pesticide exposure.
- Salt Work: Chronic eye, skin, and kidney diseases.
- Institutional Gap: OSHWC Code ignores diagnosis, treatment, and rehabilitation obligations.
- Convention Breach: Violates ILO Convention 161, which mandates national occupational health services.
How does the Social Security Code undermine welfare boards?
- Institutional Replacement: Creates a single national welfare board with no sectoral differentiation.
- Board Dissolution Risk: Threatens dissolution of 39 State-level welfare boards in Tamil Nadu.
- Benefit Loss: Eliminates protections such as old-age pensions, maternity assistance, and education support for workers’ children.
What are the funding-related risks under the new framework?
- Cess Abolition: Removes sector-specific cesses (beedi, salt, mining) without replacement revenue.
- Funding Uncertainty: No guaranteed employer contribution for welfare funds.
- Unutilised Corpus: Centralised e-Shram registration may allow Centre to access nearly â‚ą11 lakh crore in unspent welfare funds, especially from construction sector.
How have States responded to these changes?
- Legislative Resistance: Andhra Pradesh shut down welfare boards post-codes.
- Institutional Strength: Tamil Nadu retains strong welfare architecture under the Tamil Nadu Manual Workers Act, 1982.
- Worker Coverage: Approximately 3 crore informal workers registered across welfare boards in Tamil Nadu.
What needs to be done?
- Institutional Protection: Preserve State-level welfare boards and sector-specific laws.
- Fiscal Safeguards: Retain saving clauses for welfare funds and statutory cesses.
- Legislative Resistance: Refuse notification of rules under the codes, as done by Kerala and Tamil Nadu.
- Welfare Continuity: Strengthen existing State welfare infrastructure instead of centralisation.
Conclusion
The four labour codes mark a significant shift in India’s labour market architecture by prioritising consolidation, flexibility, and ease of compliance. However, as highlighted in the article, this reform has simultaneously weakened occupational safety regimes, dismantled sector-specific welfare institutions, and left unorganised workers, who form the backbone of the economy, without assured social security or funding guarantees. Unless States retain and strengthen existing welfare boards, inspection mechanisms, and financing arrangements, labour market reforms risk deepening informality and inequality rather than enabling inclusive and sustainable growth.
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