Labour Codes to promote gender parity, workforce formalisation: Eco Survey

New Labour Codes are expected to boost women's workforce participation, narrow wage gaps and accelerate labour market formalisation, the Economic Survey 2025-26 said

The new Labour Codes will promote gender equality in workforce participation, and simplified compliance will enable formalisation of the economy, said the Economic Survey 2025–26.

 

Fewer restrictions correlate with higher participation of women in the workforce, more women in management roles, and a smaller wage gap compared to states with stricter restrictions on women’s labour, the survey said.

 

The survey highlighted that the new Labour Codes enable women to work across all establishments, including those with night shifts, with the necessary safety measures in place.

 

“The Labour Codes promote gender equality through equal wages, provision of crèches, flexibility through work-from-home provisions, and expansion of maternity benefits, thereby supporting higher participation in the workforce,” the survey noted.

 

 

According to Indian Staffing Federation estimates, the gender provisions, including consensual night work, could elevate the female labour force participation rate (FLFPR) to 33.7 per cent.

 

“The new labour codes are expected to accelerate the formalisation of the labour market and also provide much-needed recognition and protection to gig economy workers. The critical role to be played by women’s participation in the economy is called out, and a slew of policy and strategic measures such as access to STEM training, urban mobility, affordable housing for working women, and the care economy indicates the policy intent and may get reflected in the upcoming Budget,” Ashok Varma, partner at Grant Thornton Bharat, said.

 

Provision of equal benefits for fixed-term and contract workers, mandating issuance of appointment letters, and a single pan-India registration or licence will reduce redundancy and ease the compliance burden, the survey said.

 

“Recognising fixed-term employment as formal engagement could benefit MSMEs in particular by allowing them to hire workers for seasonal or project-based needs without committing to long-term employment and incurring overhead costs. It would promote direct hiring over contractual employment,” the survey noted.

 

Citing a study by SBI, the survey noted that the implementation of labour codes can increase formalisation in the economy from 60.4 per cent to 75.5 per cent.

 

Policy push for women’s jobs

 

The survey strongly focused on the need to increase FLFPR to aid sustainable economic growth. It called for increased access to STEM (science, technology, engineering and mathematics) jobs for women, which would help bridge skilling gaps and expand their access to employment opportunities, including white-collar services and modern manufacturing.

 

Women are also less likely to pursue STEM fields, accounting for 43 per cent of enrolment in 2021–22, according to the survey. Women aged 25 years and above with advanced degrees constitute only 2.9 per cent of the employed female workforce in rural and urban areas, according to the Periodic Labour Force Survey 2023–24.

 

The survey called for the removal of mobility-related barriers for women to help them take up urban employment. Policies must create safety infrastructure, and women-centric industrial clusters and manufacturing hubs can create targeted avenues for female employment, the survey said.

 

Addressing skilling gaps

 

The survey highlighted the need to expand the coverage of skill training programmes and bridge the existing gap between training and industry requirements.

 

“The central challenge in India’s skilling landscape is not the absence of training effort but the weak translation of training into durable labour-market value,” the survey said.

 

It suggested steps such as focusing policy on training outcomes and promoting retention, prioritising a link between skilling and employer demands, and providing professional services for the placement of trained workers.

 

“With the rapid changes happening in the industry, the industry-driven skilling approach recommended by the survey seems to be more apt than the traditional supply-driven approach,” Varma added.

 

Further, it raised the question of whether upgrading Industrial Training Institute (ITI) diplomas into bachelor-level degrees would help make vocational pathways more attractive and valued.

 

“As India moves ahead in its growth journey, advancing institutional convergence and fostering a whole-of-government approach would enable the skilling and employment initiatives to operate in a coherent manner,” the survey said.

 

It called for the development of a common information system that brings together data from e-Shram on unorganised workers, the National Career Service on job vacancies and required skills, and the Skill India Digital Hub on training opportunities.