November 21, 2025 will go down as a milestone in India’s journey of Viksit Bharat — a day when the much awaited Four Labour Codes were made effective by the Government of India. India has taken a giant leap in labour rights with the implementation of four modernised Labour Codes (the Code on Wages, 2019, the Industrial Relations Code, 2020, the Code on Social Security, 2020 and the Occupational Safety, Health and Working Conditions (OSH) Code, 2020). These reforms create a fair, modern and future-ready labour ecosystem — one that empowers workers, enhances enterprise competitiveness and strengthens India’s path towards a Viksit Bharat and Aatmanirbhar Bharat.
India’s labour framework has evolved gradually over several decades, leading to the creation of multiple pieces of legislation operating across different time periods and economic contexts. While these laws have played an important role in shaping employment relations, the growing size and diversity of India’s workforce brought to the fore the need for simplification and consolidation. The Second National Commission on Labour recommended grouping existing laws into broader functional codes. Extensive consultations with industry, employers, trade unions and State governments between 2015 and 2019 led to these four comprehensive Labour Codes being enacted.
A workforce that is both large and young
India today has one of the world’s largest and youngest workforces, with more than 643 million workers, and is expected to contribute nearly two-thirds of new global workforce entrants in the coming years, as in the World Economic Forum. Recent labour market trends point to a positive momentum: between 2017-18 and 2023-24, India created 16.83 crore jobs, the unemployment rate declined from 6% to 3.2%, and formal employment expanded significantly.
Given that a large share of India’s workforce still remains in the informal sector, the need for a simplified and coherent labour framework has been particularly important to help extend protections and improve productivity of the unorganised sector. The coverage under the Code for Social Security has been extended to the unorganised sector also. These developments reflect the growing dynamism of the economy and emphasise the need for a modern labour regulatory system that supports this trajectory.
For workers, the Labour Codes provide a stronger and more consistent set of protections. Universal minimum wages, a national floor wage, mandatory appointment letters, timely payment of wages, and clear rules on working hours —including the 48-hour work week — reinforce fairness and security. The OSH Code’s emphasis on safety committees, free preventive health check-ups and improved workplace standards strengthens the focus on well-being and productivity.
The Code on Social Security, 2020 provides for universal Employees’ State Insurance Corporation (ESIC) coverage with no geographic restrictions, streamlined Employees’ Provident Fund (EPF) procedures for quicker resolutions, and support for the construction sector through simplified cess payments. It also establishes a National Social Security Fund for various worker categories.
Another major reform under these codes is the simplification of compliance requirements. The shift to single registration, single licence and single return significantly reduces administrative burdens, particularly for micro, small and medium enterprises (MSME). A uniform definition of wages introduces clarity across multiple laws, helping reduce disputes and improving predictability in wage-related calculations. Decriminalisation of minor offences and the introduction of digital processes such as algorithm-based inspections encourage transparency and trust-based compliance.
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Preparing for the future of work
India’s workforce is diversifying, with the rapid growth of gig and platform-based employment, flexible working models and digital-enabled livelihoods. In this context, the Social Security Code’s inclusion of gig and platform workers is timely. With the size of this workforce expected to grow from one crore in 2024-25 to 2.35 crore by 2029-30, establishing a framework for social protection is a forward-looking measure that aligns with the changing nature of work.
The Codes also emphasise formalisation, which remains vital for long-term economic progress. Clearer rules, standardised definitions and transparent processes encourage more enterprises to enter the formal economy and help extend protections to a larger share of the workforce.
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A boost for women in the workforce
Women’s participation in the workforce has improved yet remains below its potential. According to the International Labour Organization’s India Employment Report 2024, India’s female labour force participation rate stands at 32.8%. The Labour Codes help strengthen the enabling environment by reinforcing equal remuneration, enhancing maternity benefits and expanding social protection to unorganised, gig and platform workers. The OSH Code also allows women to work at night with their consent and has adequate safety arrangements, thereby widening opportunities across several sectors. Together, these provisions support greater access and continuity of employment for women as the economy evolves. A modern labour framework must balance the need for worker protection with the requirements of a competitive business environment. The Labour Codes aim to provide this balance by offering clearer industrial relations norms and faster dispute resolution, while ensuring that workers have access to essential rights, safety and social security. This balanced approach supports investment, promotes stability and helps strengthen India’s position in global value chains.
The next few days will be crucial as the implementation process for these Codes moves forward. It will be important for States to align with the minimum thresholds and guiding principles laid out in the Codes to ensure uniformity and clarity across the country. After the Goods and Services Tax (GST) reforms, this represents one of the most significant structural reforms. This reform momentum should continue, supporting greater investments, and thereby contributing to higher employment generation in the country.
Harsha Vardhan Agarwal is President, Federation of Indian Chambers of Commerce and Industry (FICCI)
Published – November 28, 2025 12:48 am IST
