Labour codes to formalise employment, inspectors to be facilitator: Mansukh Mandaviya

India's labour market, historically characterized by a vast informal sector and a labyrinthine legal framework, has been undergoing a significant transformation with the introduction of new labour codes. The statement by Union Labour Minister Mansukh Mandaviya, emphasizing the formalization of employment and the facilitator role of inspectors, underscores a pivotal shift in the government's approach to industrial relations and worker welfare.

**Background Context and Historical Evolution:**

For decades, India's labour laws were a complex amalgamation of over 44 central statutes, many dating back to the colonial era or the immediate post-independence period. These laws, while well-intentioned in their time to protect workers and promote a socialist pattern of society, often led to rigidities, high compliance costs, and disincentivized formal employment. The Second National Commission on Labour (2002) highlighted the need for rationalization and simplification, recommending the consolidation of these laws. This fragmentation created difficulties for businesses, particularly Micro, Small, and Medium Enterprises (MSMEs), in understanding and adhering to regulations, thus inadvertently pushing employment into the informal sector to avoid stringent compliance. For workers, especially in the informal sector, this meant a lack of social security, job security, and basic rights.

**The Genesis of the New Labour Codes:**

The current government embarked on a mission to simplify and modernize these laws, consolidating them into four comprehensive 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 Code, 2020. These codes aim to strike a balance between promoting 'Ease of Doing Business' and ensuring 'Ease of Living' for workers. While the codes have been passed by Parliament, their implementation awaits states to frame their respective rules, as labour is a subject on the Concurrent List of the Seventh Schedule of the Indian Constitution (Article 246).

**Key Features and What Happened:**

The core objective, as stated by Minister Mandaviya, is the formalization of employment. This is achieved through several mechanisms. Firstly, the codes standardize definitions and compliance across sectors. Secondly, the role of labour inspectors is redefined from punitive 'obstructers' to supportive 'facilitators,' aiming to foster compliance through guidance rather than penalization. This paradigm shift seeks to build trust between employers and the regulatory body. Thirdly, the codes expand rights and safety provisions for women, specifically by allowing them to work night shifts with adequate safety measures, promoting gender equality in the workforce. Crucially, the Code on Social Security, 2020, extends social security benefits – such as Employees' Provident Fund (EPF), Employees' State Insurance (ESI), and gratuity – to a broader spectrum of workers, including the previously excluded 'gig workers' and 'platform workers,' a significant move recognizing the evolving nature of work. Furthermore, the codes mandate minimum wages for all workers and ensure timely payment, along with granting fixed-term employees equal benefits as permanent workers, thereby reducing contractual exploitation and promoting equity.

**Key Stakeholders Involved:**

* **Government (Ministry of Labour & Employment):** The primary architect and implementer, aiming to streamline laws, boost economic activity, and enhance worker welfare.

* **Employers/Industry Associations (CII, FICCI, ASSOCHAM):** Generally supportive of the reforms, anticipating reduced compliance burden, greater labour flexibility, and improved ease of doing business, which could attract domestic and foreign investment.

* **Workers and Trade Unions (INTUC, AITUC, CITU, BMS):** Have expressed mixed reactions. While appreciating the social security expansion, many unions have raised concerns about potential dilution of workers' rights, especially regarding retrenchment, industrial disputes, and the weakening of collective bargaining power. They fear that some provisions might make it easier for companies to 'hire and fire'.

* **Gig and Platform Workers:** A newly recognized and significant beneficiary group, whose inclusion under social security is a landmark step towards addressing the precarity of their employment.

**Significance for India and Constitutional Relevance:**

These reforms hold immense significance for India's economic and social fabric. Economically, a simplified and predictable labour regime is expected to improve India's ranking in the World Bank's 'Ease of Doing Business' index, encourage formal job creation, attract investment, and enhance manufacturing competitiveness, aligning with the 'Make in India' and 'Atmanirbhar Bharat' initiatives. Socially, the extension of social security to gig workers addresses a critical vulnerability in the rapidly growing digital economy. The emphasis on minimum wages and equal benefits for fixed-term employees aligns with the Directive Principles of State Policy (DPSP) in the Constitution, particularly **Article 39(d)** (equal pay for equal work), **Article 41** (right to work, to education and to public assistance in certain cases), **Article 42** (provision for just and humane conditions of work and maternity relief), and **Article 43** (living wage, etc., for workers). The formalization drive also seeks to bring a larger segment of the workforce into the tax net and improve labour market data.

**Future Implications and Challenges:**

The successful implementation of these codes hinges on several factors, including the proactive framing of rules by state governments and effective communication and training for both employers and workers. While the intent is to formalize employment, some critics argue that the increased flexibility might lead to more contractualization rather than permanent employment. The true impact on the informal sector, which still constitutes a significant portion of India's workforce, will depend on how effectively the benefits and compliance mechanisms are disseminated and enforced. The shift to a 'facilitator' role for inspectors, if implemented genuinely, could foster a more cooperative industrial environment. However, ensuring adequate resources and training for these facilitators will be crucial. These reforms are a bold step towards modernizing India's labour market, aiming to foster both economic growth and social justice in the 21st century. The long-term implications will be closely watched for their impact on job creation, worker welfare, and India's global economic standing.