Workers’ Protests: Test of Labour Reforms & Beyond 

Why in News?

In April 2026, a massive strike erupted in Noida, Uttar Pradesh, drawing the participation of an estimated 40,000-60,000 factory workers, bringing the industrial zone to a standstill. Workers demanded a minimum wage of ₹20,000 per month, protesting brutal 12-hour shifts and stagnant wages. 

The UP state government notified revised minimum wages for workers in scheduled employments as an emergency measure to restore industrial peace. The industrial unrest has exposed the fault lines in India’s ambitious labour reform agenda.

State of India’s Labour Market: 

India’s workforce (~500 million) is characterised by stark informality, wage stagnation, and persistent vulnerabilities. 

• Periodic Labour Force Survey (PLFS) 2024:
  • The overall unemployment rate marginally rose from 3.1% to 3.2%.
  • National Worker Population Ratio (WPR) declined slightly from 58.0% to 57.7%.
  • Urban female WPR improved from 23.2% to 23.7%, but rural female employment contracted.
• ILO India Employment Report 2024: Real wages of regular workers either remained stagnant or declined during 2012-2022, even as casual labour wages grew only modestly. However, India’s social security coverage expanded dramatically, from ~19% of the workforce in 2015 to over 64% in 2025.
• Economic Survey 2025-26: Gig sector workforce grew from 7.7 million in FY2021 to 12 million in FY2025. Yet 40% of gig workers report earnings below ₹15,000 per month, and income volatility continues to limit financial inclusion. 

Key Issues in India’s Labour Sector: 

1. Wage Stagnation and the Cost-of-Living Crisis: 

• Workers’ nominal wages have not kept pace with inflation and urban living costs.
• The central government’s minimum wage for unskilled workers in the informal sector, revised to ₹783 per day (effective October 2024), translates to roughly ₹20,358 per month, assuming 26 working days. Yet enforcement remains uneven across states and sectors.

2. Contractualisation and the 12-Hour Shift Problem: 

• India’s industrial sector has widespread deployment of contract workers under exploitative arrangements, including 12-hour shifts, unpaid overtime, and denial of PF/ESIC benefits. 
• The Industrial Relations Code’s provision allowing 12-hour shifts (within a 4-day workweek framework) is being misread by some employers as a blanket sanction for 12-hour daily shifts, creating a compliance grey zone.

3. Gig and Platform Worker Exploitation: 

• A survey of platform workers across 10 cities found that ~25% gig workers work over 70 hours per week, 62% face near-miss accidents, and 27% in actual accidents. 
• The algorithmic control exercised by platforms (controlling work allocation, performance monitoring, and supply-demand matching) raises serious concerns of burnout and opaque wage-setting.

4. Informalisation and Social Security Gaps: 

• A significant fraction of India’s workforce remains in informal employment, outside the ambit of formal social protection. 
• The operationalisation deadline of the Social Security Fund (April 2026) has met with implementation delays. Draft rules propose a 90-day eligibility threshold for gig workers to qualify for benefits, a condition that may exclude large segments of intermittent platform workers. 

The Government of India has notified the four Labour Codes by consolidating 29 existing labour laws into a single streamlined framework, effective from November 2025.

Reforms Introduced: The Four Labour Codes

1. Code on Wages, 2019: 

• Establishes a universal minimum wage framework applicable to all workers across sectors, ending the fragmented wage schedule system. 
• Mandates the timely payment of wages and establishes a national wage floor. For informal sector workers: unskilled workers earn ₹783/day, semi-skilled ₹868/day, and highly skilled ₹1,035/day.

2. Industrial Relations Code, 2020: 

This code subsumes the Industrial Disputes Act 1947, Trade Unions Act 1926, and Industrial Employment Act 1946. Key changes include:

• Raising the threshold for government approval for layoffs, retrenchments, and closures from establishments with 100 workers to 300 workers.
• Fixed-Term Employment (FTE): Fixed-term employees now receive equal pay, benefits, and gratuity after just one year (reduced from five years), reducing contractual hiring.
• A Reskilling Fund requiring employers to contribute 15 days’ wages for every retrenched worker.
• Raising the threshold for recognition of a trade union from 15% to 51% of workers, which critics argue concentrates bargaining power and marginalises smaller unions.

3. Code on Social Security, 2020: 

Extends formal social security to gig and platform workers for the first time. Key provisions:

• Aggregator companies must contribute 1-2% of annual turnover to a Social Security Fund for gig workers.
• Workers registered on the e-Shram portal with Aadhaar-linked, portable benefits.
• Extension of ESIC and EPFO coverage to smaller establishments and new sectors.
• Employers to provide free annual health checkups for all workers above 40 years of age.
• Gratuity entitlement after one year of service (down from five years for fixed-term employees). 

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

• Creates a single National Occupational Safety and Health Advisory Board. It permits women to work night shifts and in all types of work, subject to consent and safety measures. 

The Union Budget 2025 introduced identity cards and healthcare benefits for gig workers under Ayushman Bharat.

Challenges in Implementing Labour Reforms: 

1. Centre-State Coordination Deficit: 

• As Labour is placed in the Concurrent List, the four codes require both Central and State rules to be notified for full implementation. 
• While a majority of states (over 30) have pre-published draft rules, a few states/UTs (E.g., West Bengal, Delhi) have lagged in publishing drafts for all codes. This risks a patchwork implementation of codes, where workers in some states receive protections that workers in others do not. 

2. “Hire and Fire” and Job Security Paradox: 

• The IR Code’s expansion of the layoff threshold to 300 workers is perhaps the most contested reform. It effectively frees over 90% of industrial units from requiring government approval before retrenchment of labour. 
• While the government argues this encourages hiring by reducing exit barriers, trade unions counter that it destabilises job security for millions of semi-skilled workers.

3. Implementation Gap in Gig Worker Protections: 

• The Social Security Fund remains unoperationalised pending resolution of the 90-day eligibility threshold dispute, the contribution computation methodology, and the unresolved question of worker classification — whether gig workers are “employees” or “independent contractors.” 

4. Minimum Wage Fragmentation: 

• India continues to have over 1,000 different minimum wage schedules across states and sectors. The Code on Wages proposes a national floor wage but leaves actual fixation to states, perpetuating the wage fragmentation that fuels inter-state inequality. 

5. Enforcement Machinery Weakness: 

• The Labour Inspector system has historically suffered from inadequate staffing, corruption, and limited jurisdiction. 
• The new codes propose a web-based inspection scheme to bring transparency, but ground-level enforcement (especially for contract workers and migrant labour) remains weak. 

6. Algorithmic Accountability Vacuum: 

• The existing legal framework has no provisions for algorithmic transparency or mandatory disclosure of how gig worker earnings are computed.

Way Forward:

Universal Living Wage Framework:

• India needs to establish a National Living Wage Framework that accounts for housing, food, healthcare, education, and a modest surplus — differentiated by urban and rural cost structures. 

Strengthening Gig Worker Protections: 

• Operationalise the Social Security Fund for gig workers with clear aggregator contribution timelines, resolving the 90-day eligibility ambiguity.
• Mandate algorithmic transparency: Platforms must disclose the basis for wage computation, order allocation, and performance evaluation. Incorporate provisions from the EU Platform Work Directive (2024). 
• Portable social security (e-Shram-linked), inter-state portability of PF/ESIC benefits, and dedicated migrant worker welfare boards in major industrial destinations.

Fix the Hire-and-Fire Paradox: 

• The 300-worker retrenchment threshold needs to be accompanied by robust severance, reskilling, and unemployment insurance mechanisms. 
• A Social Insurance Fund akin to the unemployment insurance systems in Germany or Singapore (funded by employer and employee contributions) would provide genuine income security during job transitions.

Genuine Tripartite Consultation: 

• India must institutionalise a permanent tripartite Labour Policy Council at the national level, with regular consultation between government, industry, and central trade unions, before any further amendments to the Labour Codes.

Digitise and Strengthen Enforcement: 

• The e-Shram portal, with over 300 million registrations, must be integrated with EPFO, ESIC, and state welfare board systems to enable real-time tracking of compliance. 
• The web-based inspection scheme must be genuinely implemented, with risk-based inspections in high-violation sectors (garments, construction, gig platforms).

The Directive Principles of State Policy (Articles 39(a), 41, 42, and 43) direct the state to ensure that the right to an adequate means of livelihood, just and humane conditions of work, and a living wage are not merely legislative promises but lived realities. 

India’s vision of becoming a global manufacturing hub and a $10 trillion economy can only be realised by inclusive growth.

UPSC Mains PYQ 2024:

Q. 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? 

UPSC PYQ 2022

Q. In India, which one of the following compiles information on industrial disputes, closures, retrenchments and lay-offs in factories employing workers?

(a) Central Statistics Office

(b) Department for Promotion of Industry and Internal Trade

(c) Labour Bureau

(d) National Technical Manpower Information System

Answer: (c) 

UPSC PYQ 2015

Q. Which of the following brings out the ‘Consumer Price Index Number for Industrial Workers’?

(a) The Reserve Bank of India

(b) The Department of Economic Affairs

(c) The Labour Bureau

(d) The Department of Personnel and Training

Answer: (c)