What are the key objectives of India’s new Labour Codes introduced in 2025?

Objectives of Labour Codes: India’s Labour Codes, implemented in November 2025, represent the most comprehensive labour law reform since independence. Key objectives include: Consolidation of 29 central labour laws into four codes to simplify compliance and reduce regulatory fragmentation. Universalisation of minimum wages to ensure baseline income security for workers across sectors. Expansion of social protection mechanisms, covering health, maternity, disability, education, and skill development. Modernisation of workplace regulation to recognise gig and platform workers explicitly and to improve transparency in employment practices. Strategic Importance: The Codes aim to balance labour flexibility with worker protection, formalise informal employment, and enhance ease of doing business. They are particularly significant for young workers, who constitute a large portion of India’s workforce and are disproportionately concentrated in informal and gig employment. By mandating appointment letters, wage protections, and social security coverage, the Codes seek to provide a baseline of employment security that was previously absent for a majority of young and contract workers.

The Future of Work: Navigating India's Youth Employment Landscape

Q: Why are the new Labour Codes particularly important for addressing youth employment challenges in India?

Youth Employment Context: India faces a pronounced youth employment crisis despite a demographic advantage. As per PLFS 2023-24, labour force participation among those aged 15–29 stood at only 46.5%, compared to 76.4% among adults aged 30–59. Youth unemployment is 10.2%, and the situation is more acute for young women, especially in urban areas where unemployment reaches 20.1%. Importance of Labour Codes: The new Codes introduce mechanisms that directly impact youth employment. For example, statutory national floor wages can raise earnings for young workers in low-paid, entry-level jobs. Mandatory appointment letters, guaranteed wage payments, and parity in benefits between fixed-term and permanent employees enhance job security. Recognition of gig and platform workers through social security boards and registration from age 16 addresses the informalisation that disproportionately affects youth. Broader Implications: By improving transparency, reducing hiring frictions, and formalising contractual arrangements, the Labour Codes aim to make the labour market more inclusive and predictable for young entrants. These reforms can also help channel the demographic dividend into productive employment, mitigating long-term social and economic risks associated with high youth unemployment.

Q: How do the Labour Codes address the challenges faced by informal and gig economy workers?

Recognition and Coverage: One of the landmark aspects of the new Labour Codes is explicit recognition of gig and platform workers under national law. Prior frameworks, such as the Unorganised Workers Social Security Act (2008), had limited impact due to fragmented coverage and weak institutional mechanisms. Social Security Provisions: The Codes extend welfare schemes encompassing health, maternity, disability, education, and skill development to informal and gig workers. National and State Social Security Boards have been established to facilitate registration and delivery of benefits, thereby integrating previously marginalised workers into formal safety nets. Transparency and Monitoring: Mandatory vacancy reporting to career centres and clear definitions for contract and fixed-term employment improve labour market transparency. However, challenges remain, such as size-based exclusions for enterprises with fewer than 10 workers and weak statistical definitions of digital platform employment. These gaps highlight the need for stronger labour data systems and proactive worker registration to ensure comprehensive coverage.

Q: What factors have contributed to the high informality and contractual insecurity among young workers in India?

Labour Market Structure: Young workers are disproportionately concentrated in informal employment. PLFS 2023-24 data shows that nearly 90% of young workers are informally employed, and even among regular salaried jobs, 60.5% lack social security. Only 16.5% of young workers hold long-term contracts exceeding three years. Historical Fragmentation: Prior to the Labour Codes, India’s labour regime was fragmented across multiple central and state laws. This led to uneven enforcement and gaps in protections, especially in informal sectors and for contract or casual workers. Labour on the Concurrent List further complicated harmonisation between states. Sectoral Dynamics: Young workers are overrepresented in platform-based gig work, which is often characterised by multiple job-holding, flexible hours, and limited benefits. The lack of formal recognition, weak statistical tracking, and limited awareness of rights exacerbate contractual insecurity, leaving youth vulnerable to exploitation and income volatility.

Q: Critically evaluate the potential benefits and limitations of the Labour Codes for improving youth employment outcomes.

Potential Benefits: The Labour Codes simplify regulatory compliance, improve transparency, and formalise employment, which can significantly enhance youth employment prospects. National floor wages and parity for fixed-term contracts ensure fair remuneration. Mandatory appointment letters and guaranteed wage payments strengthen baseline job security. Recognition of gig and platform workers and extension of social security coverage integrate previously informal workers into formal systems, offering long-term financial and welfare protection. Limitations: Despite these reforms, gaps persist. Size-based exclusions for enterprises with fewer than 10 workers leave a significant segment uncovered. Discretionary provisions for gig workers and weak statistical definitions limit effective implementation. PLFS 2023-24 indicates that 42.7% of young workers still lack written contracts, highlighting incomplete coverage. Slow data system upgrades and inadequate worker registration pose additional challenges. Conclusion: While the Labour Codes mark a historic step toward modernising India’s labour market, achieving meaningful youth employment improvements requires proactive enforcement, statistical innovation, and policy follow-through. Bridging the gap between formal provisions and on-ground realities is essential to realise the Codes’ full potential.

Q: Can you provide examples of how the new Labour Codes could improve conditions for young gig economy workers?

Example 1 – Social Security Access: Under the Codes, a 22-year-old delivery rider working for multiple app-based platforms can now register under the National Social Security Board, gaining access to health, maternity, and skill development benefits previously unavailable. Example 2 – Contractual Protection: If the same worker signs a fixed-term contract with a larger enterprise, the Codes ensure parity in wages, leave, and social security contributions with permanent employees, enhancing income stability. Example 3 – Labour Market Transparency: Mandatory vacancy reporting to career centres allows gig workers to explore formal job opportunities without losing informal income, bridging the transition between informal and formal employment. Collectively, these examples illustrate how the Codes institutionalise protections and reduce vulnerabilities that young gig workers historically faced.

Q: As a policymaker, how would you address the gaps in coverage for informal and gig workers identified under the Labour Codes?

Step 1 – Strengthen Data Systems: Developing comprehensive labour market databases that specifically identify gig and platform workers is essential. Surveys should move beyond broad self-employment categories to capture multiple job-holding, working hours, and income levels. Step 2 – Expand Coverage Mechanisms: Provisions based on enterprise size should be revisited to include small firms employing 10–20 workers, which employ a significant number of young workers. Clear statutory definitions for digital platform employment would reduce ambiguity in coverage. Step 3 – Proactive Registration and Awareness: Implementing outreach programs and digital registration portals can bring unregistered gig and informal workers into formal systems. Educational campaigns on entitlements and rights would empower young workers. Step 4 – Institutional Oversight: Strengthening the National and State Social Security Boards to monitor compliance, facilitate grievance redressal, and coordinate with state governments ensures that statutory provisions translate into real benefits. Outcome: These measures would help close existing gaps, formalise employment relationships, and provide young workers with better security and growth opportunities while maintaining flexibility in the labour market.

Exploring the implications of India's new Labour Codes on youth employment and gender disparities in the workforce.

Dhinesh Balasubramanian

•January 28, 2026•6 mins read

New Labour Codes aim to secure youth and gig workers’ rights

Not Started

Labour Codes and Youth Employment: Reform Potential and Structural Limits

1. Context: Labour Codes as a Structural Governance Reform

India’s Labour Codes, enforced from November 2025, represent the most consequential restructuring of labour regulation since Independence. By consolidating 29 Central labour laws into four Codes, the reform aims to simplify compliance, modernise workplace regulation, and expand the coverage of labour protections.

Prior to consolidation, labour regulation was fragmented across multiple Central and State statutes covering wages, industrial relations, social security, and working conditions. With labour placed on the Concurrent List, this fragmentation resulted in uneven enforcement and regulatory uncertainty across States.

Most protections were historically limited to the formal sector, excluding informal, contract, and casual workers who constitute the majority of India’s workforce. This regulatory exclusion weakened social protection and constrained labour market mobility.

If left unreformed, the earlier regime would have perpetuated informality, discouraged enterprise growth, and diluted India’s demographic dividend.

Labour consolidation seeks to create a uniform governance framework; without it, informality and enforcement asymmetries would remain structurally entrenched.

2. Demographic Context and Youth Employment Imperative

India’s labour reforms must be viewed against its demographic profile. In 2024, India’s median age was under 30, compared to around 40 in China and 50 in Japan, highlighting a narrow window to capitalise on demographic advantage.

Despite this youth-heavy population, India faces a pronounced youth employment challenge. As per PLFS 2023–24, labour force participation among those aged 15–29 stood at 46.5%, far below the 76.4% recorded among those aged 30–59.

Youth unemployment at 10.2% contrasts sharply with less than 1% among older adults, indicating structural barriers to labour market entry rather than cyclical fluctuations.

If youth employment remains constrained, demographic potential risks transforming into long-term economic and social stress.

Demographic advantage yields dividends only when young workers are productively absorbed into the labour market.

3. Gender and Informality Dimensions of Youth Work

Gender disparities significantly deepen youth labour market challenges. Only 28.8% of young women participate in the labour force, compared to 63.5% of young men, reflecting structural and institutional constraints.

Urban labour markets show sharper stress, with unemployment among young women reaching 20.1%, despite higher educational attainment in many cases.

Informality dominates youth employment outcomes. In 2023–24, nearly 90% of young workers were informally employed. Even within regular salaried jobs, 60.5% of young workers lacked social security, compared to 50.5% among workers above 30.

Persistent informality weakens income stability, skill accumulation, and productivity growth.

Labour reforms that do not address informality and gender gaps risk limited developmental impact.

4. Contractual Insecurity and Youth Vulnerability

Youth workers experience higher contractual precarity. In 2023–24, 66.1% of young regular workers had no written contract, compared to 53.6% among older workers.

Only 16.5% of young workers had long-term contracts exceeding three years, against 35.4% for adults, constraining employment security at early career stages.

Youth are also disproportionately represented in platform-based gig work. NITI Aayog estimated 77 lakh gig workers in 2020–21, projected to rise to 2.35 crore by 2029–30.

Without adequate regulation, gig work risks institutionalising precarity rather than providing flexibility.

Contractual clarity is central to translating labour flexibility into sustainable employment.

5. Labour Codes: Provisions Relevant to Youth Employment

The Labour Codes aim to promote formalisation while improving ease of doing business. A statutory national floor wage seeks to raise earnings for young workers clustered in low-paid, entry-level jobs.

Recognition of fixed-term employment mandates parity in wages and benefits with permanent workers, reducing discriminatory employment practices.

Mandatory appointment letters and guaranteed wage payments, including during leave, strengthen baseline employment security.

Key youth-relevant reforms:

National floor wage
Wage and benefit parity for fixed-term workers
Mandatory appointment letters
Guaranteed wage payments

Formalisation measures are designed to improve job quality without undermining labour market flexibility.

6. Social Security Expansion and Institutional Design

The Code on Social Security extends welfare coverage to unorganised, gig, and platform workers, including health, maternity, disability, education, and skill development benefits.

Gig and platform workers are explicitly recognised, with provisions for registration from age 16 and the establishment of National and State Social Security Boards.

Unlike the Unorganised Workers’ Social Security Act, 2008, which lacked operational clarity, the new Code provides a clearer institutional architecture.

However, outcomes depend critically on registration, funding, and administrative capacity.

Legal recognition without implementation capacity risks symbolic rather than substantive protection.

7. Industrial Relations Code and Hiring Incentives

The Industrial Relations Code affects youth employment by reducing hiring frictions through a higher retrenchment threshold.

It provides legal clarity for contract labour and fixed-term employment categories dominated by young workers, while extending benefits such as leave, health cover, social security, and gratuity after one year of service.

Mandatory vacancy reporting to career centres improves labour market transparency and job matching.

If enforcement remains weak, regulatory clarity may not translate into net employment gains.

Predictable industrial relations encourage hiring only when compliance credibility is sustained.

8. Persisting Coverage Gaps and Data Limitations

Despite reforms, significant gaps remain. Many provisions for unorganised and gig workers mirror the 2008 Act, including a size-based definition covering enterprises with fewer than 10 workers.

According to PLFS 2023–24, 42.7% of young workers lack written contracts, and nearly one-fifth work in enterprises with more than 10 workers, leaving coverage gaps.

Discretionary language for gig workers and weak statistical definitions of platform employment complicate identification, particularly amid multiple job-holding.

“Labour laws must adapt to changing forms of employment and technology.” — Second National Commission on Labour (2002)

Weak data systems undermine both policy design and enforcement.

9. Way Forward: Labour Data and Worker Identification

The article highlights the need for stronger labour data systems and proactive worker registration. Identifying gig and platform workers explicitly in national surveys, rather than subsuming them under self-employment, would strengthen policy targeting.

Improved data would enhance social security delivery, regulatory oversight, and labour market forecasting.

Without statistical modernisation, labour governance risks lagging behind evolving employment structures.

Effective labour regulation begins with accurate measurement and identification.

Conclusion

India’s Labour Codes mark a decisive shift towards simplified regulation, expanded coverage, and labour market flexibility. For youth, they offer pathways to formalisation, contractual clarity, and social protection. However, uneven implementation, data gaps, and discretionary provisions constrain impact. Strengthening labour statistics, enforcement capacity, and worker registration will be essential to ensure that India’s demographic advantage translates into secure and productive employment.

Quick Q&A

Everything you need to know

Objectives of Labour Codes: India’s Labour Codes, implemented in November 2025, represent the most comprehensive labour law reform since independence. Key objectives include:

Consolidation of 29 central labour laws into four codes to simplify compliance and reduce regulatory fragmentation.
Universalisation of minimum wages to ensure baseline income security for workers across sectors.
Expansion of social protection mechanisms, covering health, maternity, disability, education, and skill development.
Modernisation of workplace regulation to recognise gig and platform workers explicitly and to improve transparency in employment practices.

Strategic Importance: The Codes aim to balance labour flexibility with worker protection, formalise informal employment, and enhance ease of doing business. They are particularly significant for young workers, who constitute a large portion of India’s workforce and are disproportionately concentrated in informal and gig employment. By mandating appointment letters, wage protections, and social security coverage, the Codes seek to provide a baseline of employment security that was previously absent for a majority of young and contract workers.

Youth Employment Context: India faces a pronounced youth employment crisis despite a demographic advantage. As per PLFS 2023-24, labour force participation among those aged 15–29 stood at only 46.5%, compared to 76.4% among adults aged 30–59. Youth unemployment is 10.2%, and the situation is more acute for young women, especially in urban areas where unemployment reaches 20.1%.

Importance of Labour Codes: The new Codes introduce mechanisms that directly impact youth employment. For example, statutory national floor wages can raise earnings for young workers in low-paid, entry-level jobs. Mandatory appointment letters, guaranteed wage payments, and parity in benefits between fixed-term and permanent employees enhance job security. Recognition of gig and platform workers through social security boards and registration from age 16 addresses the informalisation that disproportionately affects youth.

Broader Implications: By improving transparency, reducing hiring frictions, and formalising contractual arrangements, the Labour Codes aim to make the labour market more inclusive and predictable for young entrants. These reforms can also help channel the demographic dividend into productive employment, mitigating long-term social and economic risks associated with high youth unemployment.

Recognition and Coverage: One of the landmark aspects of the new Labour Codes is explicit recognition of gig and platform workers under national law. Prior frameworks, such as the Unorganised Workers Social Security Act (2008), had limited impact due to fragmented coverage and weak institutional mechanisms.

Social Security Provisions: The Codes extend welfare schemes encompassing health, maternity, disability, education, and skill development to informal and gig workers. National and State Social Security Boards have been established to facilitate registration and delivery of benefits, thereby integrating previously marginalised workers into formal safety nets.

Transparency and Monitoring: Mandatory vacancy reporting to career centres and clear definitions for contract and fixed-term employment improve labour market transparency. However, challenges remain, such as size-based exclusions for enterprises with fewer than 10 workers and weak statistical definitions of digital platform employment. These gaps highlight the need for stronger labour data systems and proactive worker registration to ensure comprehensive coverage.

Labour Market Structure: Young workers are disproportionately concentrated in informal employment. PLFS 2023-24 data shows that nearly 90% of young workers are informally employed, and even among regular salaried jobs, 60.5% lack social security. Only 16.5% of young workers hold long-term contracts exceeding three years.

Historical Fragmentation: Prior to the Labour Codes, India’s labour regime was fragmented across multiple central and state laws. This led to uneven enforcement and gaps in protections, especially in informal sectors and for contract or casual workers. Labour on the Concurrent List further complicated harmonisation between states.

Sectoral Dynamics: Young workers are overrepresented in platform-based gig work, which is often characterised by multiple job-holding, flexible hours, and limited benefits. The lack of formal recognition, weak statistical tracking, and limited awareness of rights exacerbate contractual insecurity, leaving youth vulnerable to exploitation and income volatility.

Potential Benefits: The Labour Codes simplify regulatory compliance, improve transparency, and formalise employment, which can significantly enhance youth employment prospects. National floor wages and parity for fixed-term contracts ensure fair remuneration. Mandatory appointment letters and guaranteed wage payments strengthen baseline job security. Recognition of gig and platform workers and extension of social security coverage integrate previously informal workers into formal systems, offering long-term financial and welfare protection.

Limitations: Despite these reforms, gaps persist. Size-based exclusions for enterprises with fewer than 10 workers leave a significant segment uncovered. Discretionary provisions for gig workers and weak statistical definitions limit effective implementation. PLFS 2023-24 indicates that 42.7% of young workers still lack written contracts, highlighting incomplete coverage. Slow data system upgrades and inadequate worker registration pose additional challenges.

Conclusion: While the Labour Codes mark a historic step toward modernising India’s labour market, achieving meaningful youth employment improvements requires proactive enforcement, statistical innovation, and policy follow-through. Bridging the gap between formal provisions and on-ground realities is essential to realise the Codes’ full potential.

Example 1 – Social Security Access: Under the Codes, a 22-year-old delivery rider working for multiple app-based platforms can now register under the National Social Security Board, gaining access to health, maternity, and skill development benefits previously unavailable.

Example 2 – Contractual Protection: If the same worker signs a fixed-term contract with a larger enterprise, the Codes ensure parity in wages, leave, and social security contributions with permanent employees, enhancing income stability.

Example 3 – Labour Market Transparency: Mandatory vacancy reporting to career centres allows gig workers to explore formal job opportunities without losing informal income, bridging the transition between informal and formal employment. Collectively, these examples illustrate how the Codes institutionalise protections and reduce vulnerabilities that young gig workers historically faced.

Step 1 – Strengthen Data Systems: Developing comprehensive labour market databases that specifically identify gig and platform workers is essential. Surveys should move beyond broad self-employment categories to capture multiple job-holding, working hours, and income levels.

Step 2 – Expand Coverage Mechanisms: Provisions based on enterprise size should be revisited to include small firms employing 10–20 workers, which employ a significant number of young workers. Clear statutory definitions for digital platform employment would reduce ambiguity in coverage.

Step 3 – Proactive Registration and Awareness: Implementing outreach programs and digital registration portals can bring unregistered gig and informal workers into formal systems. Educational campaigns on entitlements and rights would empower young workers.

Step 4 – Institutional Oversight: Strengthening the National and State Social Security Boards to monitor compliance, facilitate grievance redressal, and coordinate with state governments ensures that statutory provisions translate into real benefits.

Outcome: These measures would help close existing gaps, formalise employment relationships, and provide young workers with better security and growth opportunities while maintaining flexibility in the labour market.

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