New Labour Codes and the Quiet Precarisation of Informal Work

The Hindu

I. Central Theme and Context

The article examines India’s new labour codes through the lens of informal workers, who constitute the overwhelming majority of the country’s workforce. While the codes are officially projected as instruments of simplification, consolidation, and ease of compliance, the article argues that they reconfigure labour protection in ways that systematically weaken the position of informal and unorganised workers, particularly in construction, manufacturing, and services.

The broader context is India’s post-reform labour governance shift, driven by economic competitiveness, investment attraction, and regulatory rationalisation.

II. Key Arguments Presented

1. Consolidation Masks Dilution of Worker Protections
The article contends that merging multiple labour laws into four broad codes has reduced sector-specific safeguards, especially those tailored to hazardous and informal occupations.

2. Occupational Safety and Health Risks for Informal Workers
It highlights how replacing earlier inspection-heavy regimes with facilitative and self-certification mechanisms under the OSHWC Code undermines enforcement in high-risk sectors like construction and mining.

3. Weakening of Social Security Guarantees
The Social Security Code is criticised for converting statutory entitlements into contingent welfare schemes, dependent on registration, contributions, and administrative discretion rather than enforceable rights.

4. Exclusion Through Registration and Documentation
The article stresses that digital registration requirements, portability conditions, and fragmented employer responsibilities risk excluding the most vulnerable informal workers, particularly migrants.

5. Centralisation and Erosion of State-Level Protections
State-specific welfare boards and sectoral protections risk being diluted or overridden, reducing local responsiveness and weakening labour federalism.

III. Author’s Stance

The author adopts a worker-centric and rights-based stance, foregrounding labour protection, safety, and social security over flexibility and ease of doing business. Informal workers are treated not as residual participants in the economy, but as its structural foundation.

IV. Biases and Editorial Slant

1. Normative Bias Towards Rights-Based Labour Regulation
The article prioritises worker protection and assumes that deregulation inherently disadvantages labour.

2. Skepticism of Market-Driven Reforms
Employer flexibility and compliance simplification are viewed largely through a critical lens, with limited acknowledgment of employer constraints.

3. Limited Engagement with Enforcement Capacity Issues
The possibility that older labour laws also suffered from weak enforcement is not examined in equal depth.

V. Strengths of the Argument

1. Focus on Informality
The article correctly centres informal workers, often marginalised in policy debates despite their numerical dominance.

2. Attention to Occupational Safety
By emphasising construction and hazardous sectors, it draws attention to an often-neglected dimension of labour reform.

3. Federalism Perspective
The discussion on dilution of state-level welfare boards adds institutional depth to the critique.

VI. Limitations and Gaps

1. Absence of Empirical Impact Assessment
The article relies more on legal and normative reasoning than on post-implementation data.

2. Limited Consideration of Compliance Burdens
Small enterprises’ challenges under the earlier fragmented regime are not fully explored.

3. Alternative Reform Pathways Underdeveloped
While critical of the codes, the article offers limited constructive guidance on balancing protection with flexibility.

VII. Policy Implications

Labour Regulation
• Risk of informalisation within formal enterprises
• Declining deterrence against unsafe work practices

Social Security Architecture
• Shift from universal protections to scheme-based welfare
• Increased exclusion risks for migrant and casual workers

Federal Governance
• Weakening of state-specific labour welfare institutions
• Greater central control over labour policy design

Economic Outcomes
• Potential short-term gains in investment confidence
• Long-term risks to workforce health, productivity, and stability

VIII. Real-World Impact

For Workers
• Greater job insecurity
• Reduced access to health, accident, and welfare benefits
• Increased vulnerability in hazardous occupations

For Employers
• Simplified compliance on paper
• Ambiguity in obligations toward informal and contract labour

For the State
• Administrative efficiency gains
• Increased responsibility for welfare financing without clear funding guarantees

IX. UPSC GS Paper Alignment

GS Paper I – Indian Society
• Informal sector and labour vulnerability
• Migration and occupational risks

GS Paper II – Polity & Governance
• Labour reforms and regulatory governance
• Federalism and Centre–State relations

GS Paper III – Economy
• Employment generation
• Labour market reforms
• Ease of doing business versus worker welfare

X. Balanced Conclusion

The article presents a compelling critique of the new labour codes as instruments that risk normalising precarity under the language of reform. Its core concern—that informal workers may lose more protections than they gain—deserves serious policy attention.

However, the challenge is not between reform and protection, but between poorly designed reform and inclusive reform. Labour laws must adapt to changing economic realities without abandoning their protective purpose.

XI. Future Perspectives

• Strengthening inspection and enforcement mechanisms alongside simplification
• Making social security genuinely universal rather than registration-contingent
• Preserving and modernising state-level welfare boards
• Building labour reforms around worker dignity, safety, and portability