Draft policy recasts labour ministry role from regulator to job facilitator

The Centre's draft labour and employment policy reflects new economic realities. But, concerns remain over its enforcement in a labour landscape marked by a massive informal sector

Shram Niti, Labour — The labour codes that fuse 29 central laws into four codes were passed by Parliament between 2019 and 2020, but are yet to be notified.

7 min read Last Updated : Oct 29 2025 | 10:26 PM IST

Earlier this month, the Union labour ministry released the draft Shram Shakti Niti 2025, the first attempt at a national policy on labour and employment. It seeks to make a paradigm shift in the policies, laws, and institutions that regulate the relationship between employers and workers.

The policy envisages a technology-driven, worker-centric framework — anchored in universal social security, artificial intelligence (AI)-based job matching, and digital compliance.

It reimagines the role of the labour ministry as an “employment facilitator” instead of the regulatory role it has traditionally played, as India’s labour markets experience structural shifts driven by digitalisation, green transition and new employment models such as gig and platform work.

“The vision of Shram Shakti Niti 2025 is to create an inclusive, fair, and resilient labour ecosystem that upholds dignity, fosters productivity, and ensures access to decent work for every worker,” an official told Business Standard. “It seeks to make India’s workforce future-ready by enabling continuous skilling and integrating sustainability and digital transformation into the core of employment generation. Hence, it aligns with the larger national goal of achieving a Viksit Bharat by 2047, where growth is people-centric.”

What it entails

The draft policy looks to integrate social protection, skilling, occupational safety, and technology-led governance with the National Career Service (NCS) portal, which has emerged as India’s digital public infrastructure for jobs, including job-matching, credential verification, and skill alignment.

It envisions a labour ecosystem, which, by 2047, will ensure “millions of green and decent jobs”, near-zero workplace fatalities, universal worker registration and social security portability, and increased female labour-force participation, among other goals.

“By integrating key national databases such as EPFO, ESIC, e-Shram, and NCS into a unified Labour Stack, the policy envisions an inclusive and interoperable digital ecosystem that supports lifelong learning, social protection, and income security,” the labour ministry said in a statement.

It said, “By fostering a culture of prevention and accountability, the policy aims to reduce accidents [at workplace], enhance morale, and raise productivity.”

Sumit Kumar, chief strategy officer, TeamLease Services, a recruitment firm, said the draft policy recognises the changed realities of the job market and the thrust on being a facilitator rather than being a regulator is important as industries are looking for ease in doing business.

“The use of digital tools will enable compliance norms to be easily adhered to by the industry. Similarly, the focus on formalisation will ensure that workers are able to earn a decent living, which in turn will catalyse growth,” he said.

Implementation

The new policy is planned to be implemented in three phases, with a monitoring mechanism to track progress on goals and timelines set for each.

Phase 1 (2025-2027) will focus on institutional set-up and social security integration, while Phase II (2027-2030) will work towards nationwide rollout of a universal social security account, skill-credit systems, and district-level employment facilitation cells. Phase III (2030-2047) will undertake the consolidation of all related initiatives.

For implementation, there will be an inter-ministerial body at the Centre — the National Labour and Employment Policy Implementation Council, to be chaired by the Union labour minister — along with state labour missions and district labour resource centres.

Will it work?

Tapan Sen, general secretary, Centre of Indian Trade Unions (CITU), said the aim to transform the labour ministry into a facilitator ignores the ministry’s mandate of ensuring compliance with the labour statutes as a custodian of labour laws and enforcement.

“The draft fails not only to address the brazen acts of non-compliance by the employers, but is actually designed to promote further the ongoing non-compliance regime. The first national labour commission, headed by Justice Gajendragadkar, gave concrete recommendations of legislative measures to be taken to implement the Directive Principles of State policy in 1969 itself. But the policy statement has taken a direction totally contrary to it,” he said.

A senior official told Business Standard on the condition of anonymity that the government has made multiple efforts to formulate a national labour policy in the past, but they failed in the absence of a concrete plan to achieve the goals.

“For example, in earlier drafts, a provision to provide unemployment benefits to youth was proposed. However, it could not take off as there was no clarity on how it would be funded. The other issue has been about building consensus with the states, as labour is a concurrent subject. Hence, the policy had been sent to the union cabinet for approval multiple times, yet it couldn’t see the light of day. So, it remains to be seen whether this exercise yields fruit,” the official said.

Labour economist K R Shyam Sundar of Management Development Institute, Gurugram, noted that though the move to formulate a national labour policy is welcome, especially in the aftermath of the economic reforms of the 1990s, it should set out a comprehensive plan by building consensus on how it will achieve these “lofty” ideals.

“For example, the policy talks of reducing workplace fatalities to zero, yet there is not even a proper official count of the workplace fatalities as a large part of the economy remains outside the purview of the current laws that regulate workplace conditions. India has not even ratified many international conventions that deal with industrial accidents. A comprehensive plan is required,” Sundar said.

The latest government data provided in Parliament last year shows that India reported only 2,714 non-fatal and 1,017 fatal injuries in the year 2022 in the organised industrial sector. However, according to official figures released by NITI Aayog on Tuesday, nearly 550 million, or 87 per cent of India’s 634 million workers, are in the informal sector.

“The government should convene the Indian Labour Conference (ILC) immediately to discuss and evolve a comprehensive labour policy consensually to ensure democratic governance based on constitutional values,” added Sen. The ILC, a meeting of labour unions, government and employers, was last held in 2015.

Silent on codes

The more critical issue is the lack of clarity on the fate of four labour codes — on wages, social security, occupational safety, health and working conditions, and the industrial relations - given that many of the draft policy’s objectives overlap with them.

Santosh Mehrotra, visiting professor, University of Bath, UK, said the labour market in India is in crisis as it is not creating jobs

for the youth, especially the educated unemployed. He said farm jobs are increasing at a rapid pace, as jobs in the non-farm sector have slowed.

“The policy is silent on these issues — as to how it will generate or map employment opportunities across the country. Similarly, it doesn’t tell us anything about the labour codes. Are they going to remain, are they going to go? Had the labour codes been implemented by now, there would have been a roadmap and legislative backing to achieve these objectives,” he added.

The labour codes that fuse 29 central laws into four codes were passed by Parliament between 2019 and 2020, but are yet to be notified. In the absence of notification, the 29 laws are still in force.

Given the lack of a timeline for notifying the codes, the Centre this year asked the states and union territories to amend their own labour laws in order to align them with the new codes. This is a step that many states have taken in recent months. Last month, Odisha amended its laws to permit an increase in daily work hours from 9 to 10 hours and enhance overtime benefits for workers in shops and factories.

Experts said a robust labour policy in the runup to 2047 should bring the unorganised sector under its ambit, along with a detailed roadmap and clarity around the fate of the labour codes.