India needs Labour codes

Most of India’s labor laws were framed after independence and they were centered on the manufacturing sector. It was the socialistic philosophy of that time that led the government to enact more than 40 labour laws regarding the employer-employee relationship that focused on workers’ rights.

India’s current labor laws focus more on income generation and social security rather than boosting job creation. This can be seen from the legislation concerning the termination of workers, strikes and union formation. Due to India’s liberalization drive in 1990, IT and IT enabled services now contribute more than 7% of GDP and will create more than 3 million jobs by 2025. In the globalized world, workers have to adhere to global norms and this has to be supported by Indian legislation.

Covid 19 introduced new trends, such as working from home, the gig economy, and part-time employment. Multiple administrative procedures and compliances on the government’s part made it difficult for organizations to unlock the potential of skilled workers. As a result of the newly introduced labor code, our country will be able to recover quickly and proceed in a similar fashion to China, Bangladesh, and Vietnam. These countries have updated their labor codes.

IT and IT enabled industries witness increased activity during these times and there should be a provision to recognize contract workers in the proposed labor codes. India should focus on removing old practices like standing orders. Mostly it is done in the manufacturing sectors concerning working conditions and working hours. When Indian organizations have to compete with global peers in different time zones, the standing orders to be exempted.

Operational independence should be given to the organizations. Employees who spend more time on recreation are more happy and contribute more to the organization. An old system of restricting 8 hours of work per day should be abolished, and more flexibility should be given for 5 days per week. The proposed labor code provides a lot of flexibility in determining work hours, but states need to ensure that it does not lead to any exploitation.

Organizations must register with each state to conduct business under the shop and establishment act. The proposed code must offer unified registration across the entire country.

Government’s legacy is to push for a digital economy and its goal is to achieve a trillion dollar economy. It can be achieved by established labour codes which can stimulate growth and employment that will in turn lead to security and rise in income levels. The labour codes on wages, industrial relations, social security and occupational health and safety are expected to be implemented in the financial year 2023 and more than 13 states have completed the pre-publishing process.As labour legislations fall under the purview of concurrent subject, both centre and the state has to frame and notify the rules under their respective jurisdiction.

Faculty, DSCE-MBA


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