Revamping India's Labour Regime for the Future

Q: What are the four Labour Codes , and how do they differ conceptually from the earlier framework of 29 labour laws?

The four Labour Codes—Code on Wages, Industrial Relations Code, Code on Social Security, and Occupational Safety, Health and Working Conditions Code—represent a structural shift in India’s labour governance framework. Conceptually, they aim to consolidate nearly 29 fragmented central labour laws into a simplified and more coherent system. The earlier regime evolved over decades in a piecemeal manner, often responding to sector-specific pressures, which resulted in regulatory complexity, overlapping provisions, and high compliance costs, particularly for small and medium enterprises.From a governance perspective, the Codes seek to move from a control-based approach to a facilitative framework. For instance, the Code on Wages introduces a uniform definition of wages and extends minimum wage coverage to all sectors, including unorganised workers. Similarly, the Code on Social Security attempts to broaden coverage for gig and platform workers—an acknowledgment of changing labour market realities driven by technology and services-led growth.However, the shift is not merely administrative. It reflects a deeper policy choice to balance ease of doing business with worker protection. Critics argue that consolidation increases executive discretion through rule-making, while proponents contend that simplification is essential for formalisation and job creation. For a UPSC interview, this debate highlights how institutional design in labour laws shapes productivity, competitiveness, and social justice outcomes.

India requires modernised labour Codes and trade unions to enhance productivity, while moving away from outdated laws that hinder growth.

pocketias team

•February 10, 2026•5 mins read

Trade unions protest India’s labour codes amid calls for reform, not repeal

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1. Context: Trade Union Strike and Opposition to Labour Codes

Ten central trade unions have jointly called for a one-day nationwide strike, demanding the repeal of the four Labour Codes and restoration of the earlier framework of 29 labour laws. This collective action signals organised labour’s resistance to recent labour reforms undertaken by the Union government.

The unions’ opposition, however, is broad-based and non-specific. Rather than identifying particular clauses or provisions for amendment, the demand is for complete repeal, limiting the scope for constructive dialogue or evidence-based policy correction.

This approach matters because labour reforms directly affect employment generation, industrial relations, and formalisation of the workforce. Blanket opposition without specificity weakens institutional consultation mechanisms and delays reform outcomes.

“Reform is not an event but a process.” — World Bank

2. Composition and Breadth of the Protest Platform

The Joint Platform of Central Trade Unions has extended its protest beyond labour Codes to include issues such as FDI in insurance, education policy, nuclear power legislation, pollution, and regional environmental concerns. Sectoral bodies like electricity employees’ associations have also joined.

Notably, except for the Bharatiya Mazdoor Sangh, most major unions—including INTUC and AICCTU—are part of the strike. Even the Samyukt Kisan Morcha has joined, despite labour laws largely excluding agriculture.

This breadth dilutes the core labour reform debate and blurs issue-specific accountability. When multiple unrelated grievances are combined, policy focus and reform sequencing become harder to achieve.

3. Core Criticism: Hiring and Retrenchment Thresholds

A major criticism relates to the increase in the threshold for requiring government permission for retrenchment, closure, or layoffs—from 100 workers to 300 workers. Critics argue this weakens worker protection.

The counter-argument is that such permissions distort employer–employee relationships by treating them as state-mediated contracts rather than workplace arrangements. Retaining less productive workers can disrupt production efficiency and harm overall outcomes.

Rather than adjusting numerical thresholds, an alternative approach is to remove permission requirements altogether and shift protection towards unemployment insurance.

“Labour is not a commodity.” — ILO Declaration of Philadelphia, 1944

4. Codification of 29 Laws into Four Codes: Power Concerns

Another criticism is that consolidating 29 labour laws into four Codes concentrates power in the executive, as rules framed under Codes are easier to amend than parliamentary statutes.

While it is true that rules shape implementation, they remain legally subordinate to the parent law and cannot override statutory intent. At the same time, administering 29 separate laws imposes high compliance costs and regulatory fragmentation.

Simplification is therefore unavoidable, though the current Codes themselves remain complex and require further rationalisation rather than repeal.

5. Industrial Relations and Union Recognition Provisions

The new Codes prioritise engagement with the largest recognised union instead of mandating negotiations with multiple unions. This aims to streamline collective bargaining and reduce coordination failures.

Multiple-union negotiations often delay dispute resolution, raise transaction costs, and increase the role of intermediaries. Single-union engagement improves accountability and decision-making efficiency.

Resistance arises because such provisions reduce the bargaining leverage of unions with limited representation.

6. Other Criticisms Raised Against Labour Codes

Beyond retrenchment and union recognition, critics point to concerns such as reduced strike flexibility, stricter union registration norms, and limited consultation during formulation.

However, unions have not demanded selective modification of these provisions, opting instead for wholesale rejection of the Codes. This all-or-nothing stance limits opportunities for incremental correction.

Frequently cited concerns include:

Reduced ability to call strikes
Greater government oversight in union affairs
Alleged non-alignment with certain ILO conventions

7. Labour Codes and Economic Transformation

The article situates labour reform within the context of technological disruption and changing work patterns. Automation, platform work, and flexible employment require adaptive regulatory frameworks.

Rigid labour laws can inhibit formal job creation and delay transitions from informal to formal employment. Flexible frameworks, combined with social security, can improve workforce resilience.

“The future of work is being shaped by technology, demography and globalisation.” — ILO

8. Role and Structure of Trade Unions

The article critiques the internal functioning of trade unions, noting leadership concentration among long-serving, often retired individuals. This raises concerns about representativeness and responsiveness to current worker needs.

Unions are portrayed as organisationally stagnant, focusing on preserving influence rather than adapting to evolving labour markets.

Such institutional inertia weakens unions’ capacity to negotiate reforms that balance worker welfare with economic competitiveness.

9. Way Forward: Reforming Labour Codes and Union Ecosystem

Rather than repealing the Codes, the article advocates further simplification through an empowered commission. This includes easing rules on overtime, work allocation, and workplace safety costs, especially for women.

Simultaneously, a comprehensive overhaul of trade union functioning is proposed, including internal democracy, leadership tenure limits, and potential public funding aligned with reform objectives.

Suggested reforms include:

Further simplification of the four Labour Codes
Introduction of unemployment insurance
Internal democracy and tenure limits in unions
Reorientation of unions towards skilling and formalisation

“In the long run, we are all dead.” — John Maynard Keynes

Conclusion

The debate over India’s Labour Codes reflects deeper tensions between economic reform and institutional adaptation. Repealing the Codes risks restoring regulatory fragmentation, while ignoring the need for union reform sustains outdated labour representation. A calibrated approach—simplifying labour laws further while modernising trade unions—is essential for improving productivity, accelerating formalisation, and supporting India’s long-term economic competitiveness.

Quick Q&A

Everything you need to know

The four Labour Codes—Code on Wages, Industrial Relations Code, Code on Social Security, and Occupational Safety, Health and Working Conditions Code—represent a structural shift in India’s labour governance framework. Conceptually, they aim to consolidate nearly 29 fragmented central labour laws into a simplified and more coherent system. The earlier regime evolved over decades in a piecemeal manner, often responding to sector-specific pressures, which resulted in regulatory complexity, overlapping provisions, and high compliance costs, particularly for small and medium enterprises.

From a governance perspective, the Codes seek to move from a control-based approach to a facilitative framework. For instance, the Code on Wages introduces a uniform definition of wages and extends minimum wage coverage to all sectors, including unorganised workers. Similarly, the Code on Social Security attempts to broaden coverage for gig and platform workers—an acknowledgment of changing labour market realities driven by technology and services-led growth.

However, the shift is not merely administrative. It reflects a deeper policy choice to balance ease of doing business with worker protection. Critics argue that consolidation increases executive discretion through rule-making, while proponents contend that simplification is essential for formalisation and job creation. For a UPSC interview, this debate highlights how institutional design in labour laws shapes productivity, competitiveness, and social justice outcomes.

Trade union opposition to the Labour Codes stems less from isolated provisions and more from a broader trust deficit regarding the intent and impact of reforms. Unions argue that by subsuming 29 laws into four Codes, the government has increased its discretionary power, as rules framed under the Codes can be modified more easily than parliamentary legislation. This raises concerns about dilution of worker protections without adequate legislative scrutiny.

Another major point of contention is the Industrial Relations Code, which raises the threshold for government permission for retrenchment, layoffs, and closure from 100 to 300 workers. Unions view this as weakening job security, particularly in a country with limited social safety nets. They also fear reduced collective bargaining power due to provisions that prioritise engagement with the largest union, potentially marginalising smaller unions.

At a deeper level, unions perceive the reforms as being driven primarily by capital-centric objectives—such as attracting investment and improving rankings—rather than worker welfare. The article argues that this resistance reflects an ideological lag, where unions continue to operate with a 20th-century mindset, even as workplaces face technological disruption and informalisation. For interview purposes, this highlights the political economy of labour reforms, where reform legitimacy depends not just on design, but on consultation, sequencing, and complementary welfare measures like unemployment insurance.

The provision increasing the retrenchment threshold to 300 workers aims to introduce labour market flexibility, which proponents argue is essential for productivity and competitiveness. In theory, firms are more likely to expand operations and hire workers if they are not constrained by rigid exit rules. India’s experience shows that excessively stringent labour regulations have historically incentivised firms to remain small or rely on informal labour, thereby limiting economies of scale.

From a productivity standpoint, the argument advanced in the article is that employers must have the ability to rationalise their workforce based on performance and technological change. Retaining persistently unproductive labour can disrupt production chains and reduce overall efficiency. In global manufacturing hubs such as Vietnam or Bangladesh, relatively flexible labour regimes have supported large-scale employment generation, especially in export-oriented sectors.

However, flexibility without security can deepen worker vulnerability. In the absence of robust unemployment insurance, retraining, and redeployment mechanisms, such provisions may exacerbate precarity. Therefore, the real policy challenge lies not in deciding the numerical threshold—100 or 300—but in redesigning labour protection away from job protection towards worker protection. This distinction is crucial for a UPSC interview, as it reflects global best practices recommended by institutions like the ILO and OECD.

The concern that Labour Codes strengthen executive power is rooted in the increased reliance on subordinate legislation. Rules framed under the Codes can indeed shape the practical impact of the law by tightening or relaxing compliance requirements. In a political system where parliamentary oversight of rules is limited, this raises legitimate questions about democratic accountability.

However, this critique must be balanced against administrative realities. Managing 29 separate laws with overlapping jurisdictions created regulatory uncertainty and enforcement gaps. Simplification through Codes can improve clarity and compliance, particularly for smaller firms. Moreover, rules cannot legally override the parent law, and judicial review remains a safeguard against executive overreach.

The more substantive issue is not executive power per se, but the absence of parallel reforms in social security, skilling, and institutional capacity. Without these, even well-intentioned flexibility may appear anti-worker. Thus, the debate should move beyond repeal versus retention, towards improving rule-making transparency, stakeholder consultation, and strengthening labour welfare institutions. This nuanced evaluation demonstrates analytical maturity expected in the UPSC personality test.

India’s informal sector, employing nearly 90% of the workforce, illustrates the limitations of a labour regime focused narrowly on organised manufacturing. Excessive compliance burdens and rigid laws have historically discouraged formal hiring, pushing workers into informal arrangements with little security. The Labour Codes attempt to address this by simplifying compliance and extending certain protections, such as minimum wages and social security, to unorganised and gig workers.

However, formalisation cannot be achieved by legal reform alone. Trade unions have a critical role to play in facilitating this transition by shifting focus from protecting existing jobs to enhancing worker capabilities. For example, unions in countries like Germany actively participate in skill development, productivity bargaining, and workplace innovation. Indian unions could similarly advocate for unemployment insurance, continuous skilling, and safer workplaces, particularly for women.

The article argues for an overhaul of the union ecosystem itself—introducing internal democracy, leadership renewal, and alignment with modern economic realities. Without such reform, labour institutions risk irrelevance in an era of automation and platform work. For a UPSC interview, this case study underscores that labour reform is as much about institutional evolution as it is about statutory change.