Notably, the labour codes received approval from both Houses of Parliament as well as the President’s assent, and the draft central rules on all four labour codes have been pre-published by the Union government. Four years later, however, the anticipated benefits have yet to materialise owing to delays in implementation. In this regard, the Ministry of Labour and Employment reportedly plans to conduct training workshops for state government officials and familiarise them with the labour codes. The initiative must be welcomed, given that the codes have the potential to foster ease of doing business and encourage formal job creation. The codes will introduce significant changes, including an increase in the threshold for layoffs and retrenchment in industrial establishments from 100 workers to 300 workers. This increased flexibility to employers is likely to attract more investment because firms can now scale their workforce in accordance with business needs without facing stringent regulatory hurdles. Changes have also been introduced relating to workers’ right to strike. Further, the coverage of social-security benefits has been extended to a broader section of the workforce, including gig and platform workers. While this may result in higher operational costs, it will ensure a more secure and motivated workforce, which will enhance productivity and reduce turnover rates.
Labour is a concurrent subject that enables both Parliament and Assemblies to make laws. Implementation has been delayed because some states have yet to finalise their rules under the codes. A recent study by the V V Giri National Labour Institute suggests that a total of 24 states/Union Territories have made rules under all four codes so far. West Bengal, Meghalaya, Nagaland, Lakshadweep, and Dadra & Nagar Haveli are yet to formulate rules under any of the codes. Clearly, the Centre wants to implement the codes only when all states are on board to avoid legal issues after implementation. Additionally, in some states where draft rules have been formulated, the state codes differ from the central laws, which will make implementation difficult. The Centre has done well to start sensitising state government officials about the labour codes. It would need to build on this and address differences, if any. India needs modern labour laws to improve the ease of doing business, significantly increase its manufacturing base, and improve external competitiveness. This will help create much-needed jobs and improve long-term growth prospects of the Indian economy.
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