Discuss the merits and demerits of the four 'Labour Codes' in the context of labour market reforms in India. What has been the…

India consolidated 29 archaic central labour laws into four comprehensive codes: the Code on Wages (2019), Industrial Relations (IR) Code (2020), Code on Social Security (2020), and Occupational Safety, Health and Working Conditions (OSH) Code (2020). This rationalisation seeks to balance employer flexibility with employee protection.

Merits of the Labour Codes The codes significantly enhance ease of doing business by rationalising definitions, single-window registrations, and digitised compliance. The Code on Wages introduces a universal statutory national floor wage, extending minimum wage protection across all sectors. The IR Code formalises Fixed-Term Employment (FTE), ensuring equal service conditions alongside contractual flexibility. Crucially, the Code on Social Security recognises gig and platform workers for the first time, enabling social security funds through aggregator contributions.

Demerits and Concerns The reforms face criticism for tilting the balance toward capital at the cost of labour security. Raising the threshold for mandatory government approval for layoffs, retrenchments, and closures from 100 to 300 workers in the IR Code increases job insecurity. Stricter conditions on strikes—such as mandatory 14-day notice periods—weaken collective bargaining and trade union rights. Moreover, large segments of the unorganised sector lack universal protections, while replacing labour inspectors with 'inspectors-cum-facilitators' risks diluting regulatory oversight.

Progress So Far Because labour falls under the Concurrent List, implementation requires harmonised rules. The Union Government brought all four codes into force nationwide on 21 November 2025. However, state-level rule-making remains uneven. Many states had pre-published or notified rules under all four codes, while others are still finalising theirs amid political sensitivities and federal coordination challenges.

For meaningful reform, the government must build tripartite consensus with trade unions and industry, ensuring the transition achieves genuine "flexibility with security" rather than informalisation of the formal sector.