India implements sweeping labour reforms despite union opposition

Four long-delayed labor codes, which the government claims will modernize outdated regulations and give millions of workers stronger protections, will be implemented in India, according to the government’s announcement.

On Friday, Prime Minister Narendra Modi stated on X that the overhaul would “provide a strong foundation for universal social security, minimum and timely payment of wages, safe workplaces, and remuneration opportunities.”

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He claimed that the adjustments would increase productivity and promote job creation.

With expanded social security and portable rights that apply to everyone, the labor ministry said the reforms place “workers, especially women, youth, unorganised, gig and migrant workers, firmly at the center of labour governance.”

The government claims that combining 29 fragmented laws with four unified codes for wages, employment, and social security will make compliance easier and increase investment-friendly India.

Businesses have long criticized many of India’s existing labor laws because they are complicated, inconsistent, and prevent companies from scaling up manufacturing, which still accounts for less than 20% of the country’s nearly $4 trillion gross domestic product (GDP).

The new regulations codify reforms that were approved by the legislature in 2020 but which have been delayed for years due to political opposition and union pressure.

Significant shifts in factory management are made as a result of the reforms. Women now have the right to work night shifts, longer working hours can be extended, and a new 100-to-300 worker threshold has been raised for companies that require prior layoff approval.

Opposition in the union

Officials claim that this flexibility will entice businesses to expand without a need for lengthy bureaucratic delays.

The codes provide legal recognition and expanded social protection to a rapidly expanding labor force for the first time, and they also define gig and platform work.

By 2030, according to government projections, the gig economy will have attracted a significant increase from the gig economy’s 10 million workers in 2024/25.

Small and informal businesses may initially be put under pressure by the changes, according to economists, but they may eventually lead to higher household incomes.

According to Devendra Kumar Pant of India Ratings &amp, Research, speaking to the Reuters news agency, “they may hurt small, unorganized firms in the short term, but in the long run, it could be good for both working conditions and consumption” .