Labour codes must adjust society's moral compass
India, June 30 -- After decades of contentious debates and false starts, labour-law reforms have finally entered the decisive implementation phase. The four codes - on Wages, Social Security, Industrial Relation, and Occupational Safety, Health, and Working Conditions - were rolled out in November 2025, and the Centre notified final rules in May 2026. However, since labour is a Concurrent List subject and many states continue to dither, universal implementation will take time because state-level rule-making and building of compliance architecture remain at different stages of preparedness. At the same time, trade unions' opposition has been visible though not effective in stalling implementation. Among big corporates, the transition is already visible, in the cost-provisioning being made in the account books. But the real test will be whether universal labour rights is delivered beyond large public sector units and big corporates.
The new labour codes are taking effect at a moment when newer forms of quasi-employment contracts are increasingly substituting, or uneasily coexisting with, older structures of the more sharply defined formal and informal work. As the codes consolidate old labour laws and modernise the compliance architecture, the question is: Whom do the labour laws in India protect, and at whose cost?
For decades, the labour laws' structure remained rooted in mid-20th-century statutes even as the economy moved from State-led industrialisation to liberalisation, globalisation, services dominance, platform work and, now, AI-mediated labour. What changed most, for long stretches, was the way courts, governments and industry worked around the basic legal constructs. Till now, substantial reform has come only through interpretation, partial amendment, under-enforcement, administrative workaround, and labour-market practices.
This is why the usual debate between "job security" and "job creation" that accompanies any discussion on the effectiveness of labour laws remains merely academic. The argument often assumes that India's labour laws meaningfully cover most workers and that reform must choose which side benefits more, though the overwhelming informality of the labour market is not a secret. An ILOSTAT estimate places informal employment at 87.2% in 2025. Even among regular wage earners outside agriculture, more than half lack formal social-security coverage and about 60% do not have a written job contract. There has been a positive change in the condition of workers over the last half a century, but the question remains whether this alone is satisfactory for a democratic and modern country.
In the 1960s and 1970s, the higher judiciary looked at intermediary arrangements (contractual labour) with suspicion and was more willing to ask who was the real employer. In the post-liberalisation climate, it became more restrained; judgements often refused to presume that abolition of contract labour automatically meant absorption into the principal employer's workforce. This gave a strong legal and managerial opening to outsourcing and contractualisation, now the default mode of employment even in the formal sector.
India's labour law problem is not that the law has been too protective or regressive. It is that protections have been distributed too unevenly. Therefore, minimalism in promises - though certainly not in moral ambition - with accompanied saturation in delivery seems a better approach. Data from the directorate general of factory advice service and labour institutes show that, in 2023, India had only 630 working factory inspectors against 974 sanctioned posts; even after adding the 11 medical inspectors, the public inspection strength rises only to 641. Against nearly two crore factory workers and 3.54 lakh registered factories, this actually means one government inspector for over 31,000 workers. And less than one-fifth of registered factories were inspected that year.
A plausible, universally implementable baseline should include at least five items: enforceable minimum wages, safe and non-hazardous workplaces, eight-hour day with credible overtime payment, maternity and related care protections, and insurance based social-security, including for gig and platform workers. The case for this is both ethical as well as practical. The government already uses risk-based inspection systems, and international standards certification provide a readily available model for auditable occupational-safety management systems. A graded certification system linked to labour law compliance can complement inspection capacity and the evolution of a staircase system - where high-compliance firms face lighter routine monitoring even as enforcement concentrates on the riskiest sectors and establishments.
The labour codes address many of these issues. Yet, implementation caveats remain. To illustrate, if industry starts using fixed-term hiring for replacing regular workers while continuing to rely on contractualisation elsewhere, the reform will not solve the older contract-labour problem. Therefore, the reform implementation frame has to be both morally serious and administratively plausible. A focused implementation architecture to enforce the core five promises will help in seamless communication with all the stakeholders and shift the labour law debate from being one of ideological or legal jargons to being part of everyday vocabulary.
Unemployment, insecure work and non-decent working conditions should not merely be treated as macroeconomic inefficiencies. Beyond the law and enforcement, the wider society must also adjust its moral compass. Business schools and engineering colleges should teach labour questions not merely as ideological baggage or economics issue but as foundational questions of management and citizenship. Entrepreneurs, founders, and managers must be invited to think beyond the quarterly financial statement and recognise that every decision on outsourcing, algorithmic control, working time or contractor dependence has a social consequence. For long-term economic progress, the labour laws must protect meaningful work and fair pay, safe work environment, and some measure of job security to all labour-market participants....
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