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Subject: Labour Reform

  • With a Page Out of China’s Book, TN Maintains Lead in Share of Women Workers

    Why in the News:

    New data from the Ministry of Statistics and Programme Implementation (MoSPI) on India’s 46 most populous cities places Coimbatore and Madurai at the top of the female labour force participation rate (FLFPR) rankings, with Tamil Nadu holding nearly half the country’s women employed in electronics manufacturing. States with comparable industrial investment, such as Karnataka and Maharashtra, show far lower and declining shares, sharpening the question of what specifically converts factory investment into women’s employment.

    What does the MoSPI data show about Tamil Nadu’s lead in female employment?

    1. City rankings: Coimbatore records an FLFPR of 41.3% and Madurai 37%, both above the urban India average of 27.7%; Surat ranks between them at 40.6%.
      • Term: Labour Force Participation Rate (LFPR): The percentage of people either employed or actively looking for work.
    2. Electronics manufacturing share: Tamil Nadu’s share of women employed in computer, electronics and optical products manufacturing rose from 20% to 43% between 2013 to 2014 and 2023 to 2024, as per the Annual Survey of Industries.
    3. Divergent state trends: Gujarat’s women’s share in electronics manufacturing remained at 10% over the same decade; Maharashtra’s fell from 24% to 6%, and Karnataka’s from 11% to 8%.
    4. Overall factory employment: Tamil Nadu accounted for 14,814 of the 34,531 women directly employed nationally in electronics manufacturing in 2023 to 2024, and holds the largest state share of all women employed in factories at 40% in 2023 to 2024, down slightly from 43% in 2021 to 2022.

    Why has housing infrastructure become the deciding factor, not industrial investment alone?

    1. Housing as the binding constraint: Housing is cited as the single issue causing 80% of women to decline job offers, according to the Udaiti Foundation.
    2. Two hostel models: The Tamil Nadu Working Women’s Hostels Corporation runs large SIPCOT linked industrial dormitories alongside smaller Thozhi hostels of 100 to 150 beds. The 19 existing Thozhi hostels operate at 87% occupancy and are expected to expand to 46 within two years.
    3. Housing as economic infrastructure: The state treats women’s hostels as economic infrastructure rather than welfare spending, reducing employers’ need for separate mobility infrastructure and improving retention of migrant labour.
    4. Concentration in two states: Almost half of India’s working women’s hostels are located in Tamil Nadu and Kerala, according to a December 2024 ICRIER paper.

    Is the model being replicated elsewhere, and does hostel capacity alone explain the outcome?

    1. Kerala’s shortfall: Despite similar hostel infrastructure, Kerala’s share of women in electronics manufacturing declined from 8% to 6% between 2013 to 2014 and 2023 to 2024, showing that housing alone does not create an electronics manufacturing base.
    2. Karnataka’s reactive catch up: Foxconn’s Devanahalli plant hired around 30,000 workers, nearly 80% women, and began expanding dormitory facilities only after recruitment.
    3. China comparison unsubstantiated: The comparison with China’s women led electronics manufacturing model is presented as a framing device and is not supported by comparative evidence in the report.

    Does a rising employment share also mean better quality jobs?

    1. Wage gap: The average monthly wage for salaried women in Chennai was Rs 22,919 in 2025, below the average for million plus cities of Rs 23,707. Wages were lower in Coimbatore (Rs 19,149) and Madurai (Rs 18,247).
    2. Sectoral wage gap: The average annual wage per worker in Tamil Nadu’s electronics manufacturing was Rs 2.45 lakh in 2023 to 2024, slightly below the all India average of Rs 2.5 lakh and well below Telangana’s Rs 4.46 lakh.
    3. Fast growth from a low base: Tamil Nadu’s wages increased by 83% between 2013 to 2014 and 2023 to 2024, more than double the all India average growth of 36%, though behind Delhi, Puducherry, Madhya Pradesh, Goa, and Uttarakhand.
    4. Restrictive hostel norms: Hostels are reported to have restrictive rules, and factories have historically been reluctant to hire married women.
    5. Data undercount: The MoSPI dataset covers only cities with populations above 10 lakh as per Census 2011, excluding newer industrial hubs such as Hosur, Erode, and Oragadam.

    Conclusion:

    Tamil Nadu’s leadership is driven by a deliberate policy of treating women’s housing as economic infrastructure rather than welfare, enabling higher female participation in manufacturing. However, employment gains remain concentrated in relatively low wage, hostel based jobs with continuing social restrictions, while official statistics understate the model’s reach by excluding newer industrial centres. Whether this approach can expand beyond electronics manufacturing and improve job quality and wages remains an open question.

  • 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?

    The Central Government consolidated 29 existing central labour laws into four codes to simplify the legal framework, improve ease of doing business.

    4 Labour codes-

    Code on Wages

    Industrial Relations Code

    Code on Social Security

    Occupational Safety, Health and Working Conditions Code

    Merits

    Merging and Simplification of laws reduces complexity and overlaps.

    Uniform definitions & wage protections: Eg- code on Wages introduces a floor wage

    Flexibility in hiring/retention: IR Code raises the threshold for requiring government approval for layoffs/closures from 100 to 300 workers.

    Broader social security coverage: SS Code covers gig workers, platform workers, unorganised sector. (presently only 25%)

    Improved safety and working conditions: OSHWC mandates working hours, safety standards, migrant worker welfare.

    Promoting formalisation through clearer rules and digital compliance systems.

    Minimise exploitative practices – Eg: provision for overtime wages twice normal wages

    Easier resolution of industrial disputes – Eg: 14 days’ notice period before strikes & lockdowns

    Demerits

    Transition and Adaptation Challenges as India’s labour market is 90% informal, contributing nearly 50% of GDP

    Weakened collective bargaining: IR Code imposes stricter conditions on strikes (60 days’ notice).

    Job-security concerns: Increased flexibility may lead to precarious employment. Eg- fixed-term employment, easier layoffs

    Increased burden on SMEs: Eg- requirements such as documentation of wages, benefits, safety norms, etc..

    Inconsistent Application Across Sectors – agriculture (60% of informal workforce) and construction (~50 million workers) face seasonal work, casual labour, and absence of contracts

    Rising Costs for Businesses

    Gratuity obligations

    PF contributions

    Maternity benefits (26 weeks paid leave + crèche facilities)

    Progress So Far

    All four codes are legally enacted between 2019-20.

    34 States and UTs have notified draft rules but full implementation is pending.

    The Centre has initiated digital portals (e-Shram, unified labour compliance) to support implementation.

    Resistance from trade unions and worker groups continues. Eg- strikes by AITUC and CPI

    Labour is a concurrent subject – state-level variation persists.

    Enforcing labour codes can bring in transparency, simplification & digitization in compliance. This can help India to become a manufacturing hub as companies adopt the “China+1” strategy.