India's Labour Codes: A Significant Reform

In November 2025, India implemented its most substantial labour law reform since Independence by consolidating 29 central laws into four Labour Codes. These reforms aim to streamline compliance, establish universal minimum wages, expand social protection, and modernize workplace regulations. Policy debates frame these Codes as a balance between labour flexibility and worker protection.

Fragmented Labour Regime

Prior to these reforms, India's labour laws were fragmented across central and state laws, leading to uneven enforcement and inter-state variation. Protections mainly applied to the formal sector, excluding informal, contract, and casual workers, who constitute the majority of the workforce.

Demographic Context

In 2024, India's median age was under 30, indicating a significant proportion of the population is young. Despite this demographic advantage, India faces a youth employment crisis.

• Labour force participation among ages 15-29 was 46.5%, starkly lower than 76.4% for ages 30-59.
• Youth unemployment stood at 10.2%, compared to less than 1% for older adults.
• Gender disparities: Only 28.8% of young women participate in the labour force compared to 63.5% of young men, with urban unemployment for young women at 20.1%.
• Nearly 90% of young workers were informally employed in 2023-24.

Labour Conditions

• 60.5% of young regular workers lacked social security.
• 66.1% of young workers had no written contract, with only 16.5% having long-term contracts.
• Young workers are overrepresented in gig and platform-based work.

New Labour Codes Aims

The new Labour Codes aim to promote formalization and ease of business:

• A statutory national floor wage could benefit young workers in low-paid jobs.
• Parity in wages and benefits for fixed-term contracts with permanent workers.
• Appointment letters and guaranteed wage payments enhance employment security.
• Social Security Code extends welfare schemes to unorganised workers.
• Gig and platform workers gain recognition, with provisions for registration and social security boards.
• Mandatory vacancy reporting to career centres enhances labour market transparency.
• Industrial Relations Code reduces hiring frictions and extends benefits to fixed-term employees.

Challenges and Gaps

• Many provisions for unorganised and gig workers mirror outdated 2008 Act provisions.
• 42.7% of young workers lack written contracts, with gaps in coverage for those in larger enterprises.
• Discretionary language and weak definitions complicate coverage for gig workers.
• There is an urgent need for improved labour data systems and proactive worker registration.

The reform underscores the necessity of modernizing labour protections to match technological advancements and evolving work arrangements, as recommended by the Second National Commission on Labour in 2002. Strengthening policy design and protection for gig and platform workers is essential.