India's New Labour Codes: A Looming Threat to Informal Workers and Women
New labour codes risk excluding informal workers, especially women, from social security and formal protections.
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Quick Revision
Four new labour codes were enacted in India.
These codes replace 29 existing labour laws.
Concerns about the definition of 'worker' and 'establishment'.
Informal workers, especially women, are disproportionately affected.
Key Numbers
Visual Insights
India's Labour Landscape: Key Statistics (Dec 2025)
This dashboard highlights the scale of India's informal workforce and female labour participation, providing critical context to the concerns raised about the new labour codes' impact.
- Informal Sector Share in Workforce
- ~85%Stable
- Female Labour Force Participation Rate (LFPR)
- ~25.5%+1.5% (since 2022-23)
- States Finalized Labour Code Rules
- ~50%+20% (since early 2024)
A vast majority of India's workforce operates in the informal sector, making them highly vulnerable to changes in labour laws that might reduce social security or increase precarity. This figure underscores the potential reach of the 'looming threat'.
Despite a recent slight uptick, India's female LFPR remains low globally. Women are disproportionately concentrated in the informal sector, making them particularly susceptible to adverse impacts of labour code changes, as highlighted in the news.
As of December 2025, roughly half of Indian states have finalized rules for the new labour codes, indicating a staggered and ongoing implementation. This piecemeal approach can lead to varying impacts and regulatory complexities across the country.
Key Changes in Labour Codes: Impact on Informal Workers & Women
This table compares critical aspects of India's pre-2019 labour laws with the new Labour Codes, highlighting provisions that raise concerns for informal workers and women, as discussed in the news.
| Aspect | Pre-2019 Labour Laws | New Labour Codes (2019-2020) | Potential Impact (as per criticism) |
|---|---|---|---|
| Number of Laws | 29 Central Labour Laws | 4 Codes (Wages, IR, SS, OSHWC) | Aims for simplification, but critics fear dilution of specific protections. |
| Definition of 'Worker' | Often specific to certain acts/sectors, some broader definitions existed. | Narrower definition in some codes (e.g., OSHWC for 10+ workers, IR for 300+ threshold), excludes 'contractors' and many gig workers. | Excludes a vast majority of informal workers, including many gig/platform workers and those in small enterprises, from benefits and protections. |
| Definition of 'Establishment' | Varied thresholds across different laws (e.g., 10, 20, 50 workers). | OSHWC Code applies to establishments with 10 or more workers; IR Code raises threshold for prior govt. permission for layoffs/closures from 100 to 300 workers. | Many small informal enterprises fall outside the purview, reducing coverage for workers, especially women in micro-enterprises. |
| Social Security Coverage | Fragmented, primarily for organised sector (EPF, ESI). Limited for unorganised (Unorganised Workers' Social Security Act, 2008). | Aims for universalization, includes provisions for gig and platform workers under Code on Social Security, 2020. | While aiming for universalization, implementation challenges, contribution mechanisms, and the narrow 'worker' definition could still exclude many informal workers, particularly women who often have sporadic work. |
| Fixed-Term Employment | Primarily in specific sectors or through contracts. | Introduced across all sectors, allowing employers to hire workers for a specific period. | Could increase precarity and reduce job security for informal workers, as employers might prefer fixed-term contracts over permanent employment, making it harder for women to secure stable jobs. |
| Bargaining Power | Trade unions had specific rights and thresholds. | Industrial Relations Code raises threshold for requiring prior government permission for layoffs/closures from 100 to 300 workers, potentially weakening trade union power. | Reduced bargaining power for workers, especially women who often lack collective representation in the informal sector, making them more vulnerable to exploitation. |
Editorial Analysis
The author is highly critical of the new labour codes, arguing that they are regressive and detrimental to informal workers, especially women. They believe the codes will exacerbate precarity and reduce social security coverage rather than enhance it.
Main Arguments:
- The new labour codes, despite their stated goal of universal social security, contain definitions of 'worker' and 'establishment' that are too narrow, potentially excluding a vast majority of informal workers.
- Women in the informal sector are particularly vulnerable, as their work often falls outside the formal definitions, leaving them without social security and protection.
- The codes fail to adequately address the unique challenges of platform workers and those in small, unorganized enterprises, pushing them further into precarity.
- The consolidation of 29 laws into four codes, while aiming for simplification, risks diluting existing protections and making it harder for informal workers to access justice.
Conclusion
Policy Implications
Exam Angles
Impact of policy reforms on vulnerable groups (informal workers, women)
Constitutional provisions related to labour welfare and social justice (DPSP)
Challenges of formalizing the informal economy and extending social security
Role of definitions in legislation and their practical implications
Balancing ease of doing business with worker protection
View Detailed Summary
Summary
This editorial raises serious concerns about India's new labour codes, arguing they pose a significant threat to the rights and social security of informal workers, particularly women. The author highlights how the codes' narrow definition of 'worker' and 'establishment' could exclude a vast majority of informal sector employees, including platform workers and those in small enterprises, from crucial benefits.
It points out that women, who constitute a large portion of the informal workforce, are disproportionately affected due to their precarious employment conditions and lack of bargaining power. The editorial criticizes the codes for potentially increasing precarity, reducing social security coverage, and failing to address the unique challenges faced by informal workers, thereby undermining their economic security and welfare.
Background
India's labour laws have historically been complex and fragmented, leading to calls for reform. The government consolidated 29 central labour laws into four broad 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 simplify regulations, promote ease of doing business, and extend social security coverage. However, their implementation has been deferred amidst various concerns.
Latest Developments
Practice Questions (MCQs)
1. Consider the following statements regarding India's new Labour Codes: 1. They consolidate and replace all existing central labour laws, including those related to trade unions and industrial disputes. 2. The Code on Social Security, 2020, aims to extend social security benefits to all workers, including gig and platform workers, through a universal registration system. 3. A major criticism of the codes is their potential to exclude a large segment of informal workers due to narrow definitions of 'worker' and 'establishment'. Which of the statements given above is/are correct?
- A.1 and 2 only
- B.2 and 3 only
- C.3 only
- D.1, 2 and 3
Show Answer
Answer: B
Statement 1 is incorrect. The new labour codes consolidate 29 central labour laws into four codes, but they do not replace *all* existing central labour laws. For example, some specific acts like the Employees' Compensation Act, 1923, and the Maternity Benefit Act, 1961, are subsumed into the Code on Social Security, but the consolidation is not exhaustive of *all* labour laws. Statement 2 is correct. The Code on Social Security, 2020, explicitly includes provisions for gig workers and platform workers and aims for universal social security coverage through registration. Statement 3 is correct. As highlighted in the editorial and by various labour rights organizations, a key criticism is that the definitions of 'worker' and 'establishment' in the codes might be too narrow, potentially excluding a vast number of informal workers from their intended benefits.
2. In the context of India's informal economy and social security, which of the following statements is/are correct? 1. Article 41 of the Directive Principles of State Policy (DPSP) mandates the state to make effective provision for securing the right to work, to education, and to public assistance in cases of unemployment, old age, sickness, and disablement. 2. The unorganised sector in India is primarily characterized by a lack of regular employment, absence of social security benefits, and often low wages. 3. The Employees' Provident Funds and Miscellaneous Provisions Act, 1952, primarily covers workers in the unorganised sector, ensuring their retirement benefits. Select the correct answer using the code given below:
- A.1 and 2 only
- B.2 and 3 only
- C.1 and 3 only
- D.1, 2 and 3
Show Answer
Answer: A
Statement 1 is correct. Article 41 of the DPSP indeed directs the State to make effective provision for securing these rights, forming a foundational principle for social security legislation in India. Statement 2 is correct. These are the defining characteristics of the unorganised or informal sector in India, where workers often lack formal contracts, job security, and access to benefits like health insurance, provident fund, or gratuity. Statement 3 is incorrect. The Employees' Provident Funds and Miscellaneous Provisions Act, 1952, primarily covers workers in the *organised* sector, mandating provident fund contributions from employers and employees in specified establishments. While there have been efforts to extend social security to the unorganised sector, this specific Act is not its primary coverage.