Govt study on new labour codes has some surprise findings, conclusions

Although the four new labour codes are yet to come into force — the rules are yet to be finalised and published — an “initial perception” study by the VV Giri National Labour Institute, a body under the Ministry of Labour and Employment, finds the codes to be “credible and directionally sound reform”, having the “potential to improve labour market functioning over time”.

Also read: Why new labour codes may dent India’s dream of Viksit Bharat 2047

Titled “The Implementation of Labour Codes: A Perception-based Analysis”, the study released on Monday (February 9) also finds “a notable degree of convergence between workers’ and employers’ perceptions across several thematic areas”.

Methodology and findings

The study is based on a survey of 5,720 workers/employees and 715 employers. For the workers’ perspective, it relied on one-to-one interviews and group discussions. For employers, it reached out to leading chambers of commerce, employer federations, and industry associations across large, medium and small enterprises. It used both a survey (questionnaire) and “focused group discussions” to arrive at its conclusions.

The findings have been showcased by the ministry as a “widespread endorsement” of the codes by both workers and employers, with Union Labour and Employment Minister Mansukh Mandaviya commenting that these findings “underscore the Labour Codes’ objective of promoting social security for all, decent work, formalisation, and inclusive and sustainable growth in India’s diverse labour market”.

Also read: Why are trade unions up in arms against new labour codes?

But beyond the headline numbers, the finer details reveal a mixed picture with misgivings about some of the aspects.

First, the positive findings.

Workers’ confidence and employers’ support

The headline numbers say workers expect positive outcomes on several counts:

a) 64 per cent foresee improved “income security” through “wage transparency and timely payments”.

b) 68 per cent welcome e-Shram (registration) and welfare boards (yet to be set up) for easier access to social security, while 63 per cent see greater portability of social security for contract, migrant and gig workers.

c) 60 per cent think working conditions will improve, with 63 per cent expecting better regulation of working hours and 60 per cent, enhanced rest periods and leave practices.

d) 66 per cent believe safety, transport, and monitoring requirements will improve protection for women, while 63 per cent see mandatory safety equipment and protective measures to strengthen workplace conditions.

As for employers, the key points are:

a) Employers prioritise workforce flexibility with 76 per cent viewing it as vital for sustainability.

b) 64 per cent consider fixed-term employment (FTE) suitable for their business.

c) Strongly back digital tools (71 per cent) and uniform state implementation (73 per cent).

d) 75 per cent favour phased rollout, while 74 per cent support a facilitative enforcement model.

e) 73 per cent predict long-term compliance simplification.

f) 62 per cent agree that social security coverage for workers will expand.

g) 73 per cent believe the labour codes will simplify compliance requirements.

Workers on fine print

When it comes to things that matter, workers seem somewhat circumspect.

On the question of “improvement in payslips and wage records”, 40 per cent foresee positive change (‘strongly agree’ and ‘agree’), but the majority (60 per cent) don’t (‘can’t say’, ‘disagree’ and ‘strongly disagree’). On “expansion in social security coverage”, 56 per cent are hopeful, the rest are not.

Also read: New labour codes: From gratuity after 1 year to equal pay, all you need to know

Similarly, 64 per cent expect “improvement in income security”, 49 per cent expect “improvement in overtime compensation”, 54 per cent expect “improvement in overall working conditions”, while 60 per cent each expect an “improvement in job security”, and a “reduction in occupational health risks”, respectively.

Puzzling conclusions

The surprise factor is the study’s conclusion that “the highest levels of perceived realisation” are seen in occupational safety and health. This is when the threshold for mandatory health and safety norms has been raised from 10 (in establishments without power) and 20 (in establishments with power) to 20 and 40, respectively.

Equally puzzling is workers' endorsement of job security despite the threshold for hire-and-fire being raised from establishments with 100 workers to 300 workers and the addition of a new category of workers in the “Standing Order” called FTE, which is temporary contractual work with no job security (it could be for a week or a few months).

Also read: Shram Shakti Niti 2025 : Draft labour policy steps back to Manusmiriti

The study also shows workers endorsing social security cover, while millions of migrants, gig/platform, self-employed and home-based workers are excluded from the minimum wage coverage and social security provisions are unspecified, subject to the formation of welfare boards and schemes.

Employers' perspective

For employers, a greater faith is put in the “federalism, governance, implementation and digitalisation” theme of the codes — that is, the regulatory aspects. In fact, the highest weighted score goes to “uniform” interstate implementation and preference for “facilitative enforcement”.

The study says, “These findings indicate that employers associate the effectiveness of the Labour Codes primarily with institutional design and implementation mechanisms.”

Also read: Govt ushers in major reforms, notifies 4 labour Codes; mandates social security for gig workers

Weighted scores provide an aggregate indication of the extent to which employers perceive the provisions of the Labour Codes as being realised or operationally relevant across different domains.

It may be noted that the new Industrial Dispute Code makes it virtually impossible for workers to go on strike as the last resort to press for unfulfilled demands, and “collective bargaining” is not specifically facilitated, although interference in it by the employer is listed as “unfair practice”.

The second key finding missing from the headline numbers is employers’ priority for “workforce flexibility” and “suitability of fixed-term employment”. These are some of the known tools for arbitrary hiring and firing, which end up weakening workers’ rights.

The fine print notes employers associate “benefits of reform primarily with the manner of execution rather than statutory design alone” on the “ease of business” and “cautious recognition of the direction of policy” on the “social security and non-standard workers”.

Such responses point to “evolving” views on the operational aspects of the codes.

A clearer picture will emerge when the rules are notified and the codes come into effect.