UPSC Relevance

GS3, Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment.

GS2, Welfare Schemes for Vulnerable Sections of the population by the Centre and States and the Performance of these Schemes

PYQ

2024 – GS3- 15 Marks

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 these regards?

The Brutal Reality of Modern Slavery

• Widespread Forced Labour: The article opens with a firsthand account of desperate women in the seafood industry on India’s eastern coast, forced to work long hours for meagre wages without protective gear.
• Benefit Stripping: These workers were promised and then reclassified from having mandatory benefits like Employees’ State Insurance (ESI) and Provident Fund (PF) to being “daily wagers,” losing both despite a minor wage hike.
• Scale of the Crisis: This exploitation is set against the backdrop of 11 million people enduring modern slavery in India, the world’s highest number.
• Informal Workforce: The author’s investigations across various industries (steel, quarries, seafood, textiles) show thousands hired via middlemen on daily wages, without contracts or legal benefits, representing the 90% informally employed workforce in India (per a 2024 ILO report).
• Legal Flouting: This system flouts basic labour laws, enables wage theft, erodes dignity, and defies constitutional protections (Articles 14, 16, 23).

The Draft Shram Shakti Niti 2025

• “Future-Ready” Policy: The government unveiled the draft policy, claimed to be “future-ready” and cloaked in “ancient Indian ethos” (e.g., Manusmriti).
• Critique of Intent: The author dismisses the policy as a “cynical rebrand” that prioritizes “employer ease” and cultural nostalgia over justice for workers.
• Universal Social Security: The policy introduces a portable Universal Social Security Account, merging various existing schemes (EPFO, ESIC, PM-JAY, e-SHRAM, etc.) for health, pension, maternity, and other lifelong benefits.
• Occupational Safety: It pledges strict enforcement of the 2020 Occupational Safety, Health and Working Conditions Code, with the “fanciful” goal of “near-zero fatalities” by 2047.
• Employment Facilitation: The Ministry of Labour and Employment (MOLE) is hinted to become an employment facilitator using the AI-driven National Career Service (NCS) for job matching and skill alignment.
• Gender Participation: It targets 35% female labour participation by 2030 through affordable childcare, flexible gigs, equal pay, and apprenticeships.
• Green-Tech Transition: The policy promotes AI-enhanced safety and reskilling for coal workers, aligning with climate goals (SDG 13).

Major Concerns and Gaps in the Policy

• Funding and Enforcement: The Universal Social Security Account “dodges funding mandates” (from gig employers or the state), risking paltry payouts.
• Digital Exclusion: The reliance on Digital IDs (e.g., e-SHRAM) and digital tools, given only a 38% household literacy rate, is a significant concern for the exclusion of women, senior citizens, and low-literates, violating Article 15. The policy needs to enforce offline access.
• Lack of Union Safeguards: The policy’s framework generally weakens union audits and bargaining power, undermining Article 19 freedoms.
• Weak Penalties: The “near-zero fatalities” goal lacks credibility without specific penalties and given the reality of inspector shortages.
• AI Bias Risk: Using AI for job matching and skill alignment absent Al bias safeguards risks reinforcing caste- and gender-based discrimination (Article 15 violations).
• Ignoring Gig Workers: It ignores the Wages Code minima for 12 million gig workers where “flexibility” is a cover for abuse. Tech-driven inequality needs to be curbed with union-vetted algorithms.
• Inadequate Gender Measures: Achieving the female labour participation target is doubted without quotas, penalties, or sufficient maternity support for informal workers.
• Unsubstantiated “Just Transitions”: Green-tech reskilling lacks substance without income support or union involvement for coal workers and risks marginalising 400 million informal workers.
• Surveillance Risk: Weak enforcement of the Digital Personal Data Protection Act risks enabling surveillance under the planned evaluation dashboards (LEPEI), undermining freedoms.

The True Measure of Success

• The policy’s success will ultimately be measured not by its digital dashboards, but by its power to restore dignity, rights, and justice to India’s working poor.
• The author calls for urgent pilots, rights audits for accountability, tripartite enforcement, offline access for the digitally excluded, and transparent grievance redressal.

The Labour Codes

• The consolidation of 29 central labour laws into four comprehensive Labour Codes is a major reform in India aimed at modernizing the labour market.

1. The Code on Wages, 2019

• Objective: To guarantee a minimum floor wage and timely payment of wages to all workers across all sectors, formal and informal.
• Key Features:
  • Universal Minimum Wage: Introduces the concept of a National Floor Wage set by the Central Government. State governments cannot fix their minimum wages below this floor.
  • Uniform Definition of ‘Wages’: Provides a single, uniform definition of ‘wages’ for all laws, reducing confusion and litigation.
  • Gender Equality: Prohibits gender discrimination in wage payments and recruitment for the same work or work of a similar nature.
  • Timely Payment: Mandates timely payment of wages (monthly, weekly, or daily) and a maximum time limit for full and final settlement after separation.

2. The Industrial Relations Code, 2020

• Objective: To streamline and simplify labour dispute resolution and provide greater flexibility to employers for hiring and firing, while protecting workers’ rights.
• Key Features:
  • Flexibility in Layoffs: The threshold for requiring government permission for layoffs, retrenchment, or closure is raised from establishments employing 100 workers to 300 workers (subject to state notification).
  • Fixed-Term Employment: Formally introduces and regulates fixed-term employment, ensuring such workers receive the same benefits as permanent employees.
  • Stricter Strike Rules: Requires a 60-day notice for strikes and lockouts in all industrial establishments (not just public utility services).
  • Grievance Redressal: Mandates the setting up of Grievance Redressal Committees (GRC) in establishments with 20 or more workers for internal dispute resolution.

3. The Code on Social Security, 2020

• Objective: To provide social security benefits (like PF, ESI, Gratuity, and Maternity benefits) to all workers, including those previously excluded.
• Key Features:
  • Inclusion of Gig and Platform Workers: Officially defines and brings gig workers (e.g., freelancers) and platform workers (e.g., app-based delivery riders) under the social security framework for the first time.
  • Centralised Fund: Provides for the creation of a Social Security Fund to administer schemes for unorganised, gig, and platform workers.
  • Gratuity for Fixed-Term Workers: Entitles fixed-term workers to gratuity even if their service is less than five years.
  • Maternity Benefits: Continues to provide 26 weeks of paid maternity leave for women.

4. The Occupational Safety, Health and Working Conditions Code (OSH Code), 2020

• Objective: To ensure a safe and healthy working environment for all workers by unifying standards across all industries.
• Key Features:
  • Appointment Letter: Mandates that every employee in an establishment must be issued a letter of appointment.
  • Mandatory Health Check-ups: Requires employers to provide free annual health check-ups for certain categories of workers.
  • Working Hours & Leave: Standardises working hours and retains the right of workers to earned leave based on the number of days worked (reduced minimum from 240 days to 180 days in some cases).
  • Women in All Establishments: Permits women to work in all establishments, including night shifts, provided adequate safety and consent measures are in place.

Performance and Status of Implementation

• All four Labour Codes were passed by the Parliament between 2019 and 2020. However, their substantive provisions are yet to be fully enforced nationwide.
• The primary hurdle to implementation is that ‘Labour’ is a Concurrent Subject in the Indian Constitution. This means both the Central and State Governments must frame and notify their respective rules for the Codes to take effect in a state.

• The full impact—positive or negative—of the Labour Codes will only be seen once they are uniformly implemented across the country.

The Indian Labour Sector