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5 Jan 2026·Source: The Hindu
6 min
Social IssuesEconomyPolity & GovernanceEDITORIAL

Unorganised Sector Workers Face Social Security Crisis Amidst New Labour Codes

Unorganised workers struggle for social security and minimum wages despite new labour codes.

Unorganised Sector Workers Face Social Security Crisis Amidst New Labour Codes

Photo by Kah Chun Lee

Editorial Analysis

The author is critical of the current state of social security and minimum wage implementation for unorganised sector workers in India. They argue that legislative reforms, while well-intentioned, are failing to deliver tangible benefits due to systemic implementation challenges.

Main Arguments:

  1. The new labour codes, despite their aim to universalize social security, face significant implementation hurdles for the unorganised sector due to difficulties in identification and registration.
  2. Millions of unorganised workers, especially migrants, are unaware of their rights or face bureaucratic obstacles in accessing benefits like provident fund and ESI.
  3. The absence of a universal registration system, reliance on employer contributions in an informal sector, and weak enforcement mechanisms exacerbate the problem of inadequate social security and non-compliance with minimum wages.

Conclusion

Urgent and comprehensive reforms are needed in the implementation of labour codes for the unorganised sector, focusing on simplified registration, technological leverage, stronger enforcement, and increased worker awareness.

Policy Implications

The government needs to invest more in a universal registration system, utilize technology for direct benefit transfers, strengthen labour inspectorates, and demonstrate greater political will to ensure social security and minimum wages for all unorganised workers.
The Issue The editorial addresses the persistent challenges faced by workers in India's vast unorganised sector, particularly concerning the lack of adequate social security and minimum wages. It highlights how, despite the introduction of new labour codes, the implementation gaps and the inherent vulnerabilities of this sector leave millions of workers "high and dry," without essential protections and benefits. Author's Main Argument The author argues that while the new labour codes aim to universalize social security and ensure minimum wages, their effective implementation for the unorganised sector remains a significant hurdle. The core problem lies in the difficulty of identifying, registering, and providing benefits to a transient and diverse workforce, coupled with the lack of robust enforcement mechanisms and political will. Supporting Arguments The editorial points out that the Code on Social Security, 2020, theoretically extends benefits like provident fund, ESI, and gratuity to unorganised workers. However, the ground reality is that many workers, especially migrants, are unaware of these provisions or face bureaucratic hurdles in accessing them. The lack of a universal registration system, reliance on employer contributions in a sector with high informality, and the absence of strong trade unions further exacerbate the problem. The author also mentions the issue of minimum wages, which are often not enforced, leaving workers vulnerable to exploitation. Counter-Perspectives The government's perspective, as implied, is that the new labour codes are a significant step towards formalizing the economy and providing universal social security. However, the editorial implicitly counters this by highlighting the implementation deficit and the practical difficulties faced by workers, suggesting that legislative intent has not translated into tangible benefits on the ground. Policy Implications The editorial calls for urgent and comprehensive reforms in the implementation of labour codes for the unorganised sector. This includes establishing a simplified, universal registration system, leveraging technology for direct benefit transfers, strengthening labour inspectorates, and increasing awareness among workers. It also implies the need for greater political commitment and resource allocation to ensure that social security and minimum wages are not just legal provisions but a lived reality for all workers. Exam Relevance This editorial is highly relevant for UPSC GS Paper 1 (Social Issues - Poverty, Urbanization, Migration), GS Paper 2 (Governance, Welfare Schemes for Vulnerable Sections), and GS Paper 3 (Economy - Indian Economy, Employment). It critically analyzes a major socio-economic challenge and policy implementation.

Key Facts

1.

Unorganised sector: Lacks social security and minimum wages

2.

New labour codes: Aim to universalize social security

3.

Implementation challenges: Registration, awareness, enforcement

4.

Code on Social Security, 2020: Extends PF, ESI, gratuity to unorganised workers

5.

Vulnerable groups: Migrant workers, informal sector employees

UPSC Exam Angles

1.

GS Paper 1: Social Issues - Poverty, Urbanization, Migration, Labour issues.

2.

GS Paper 2: Governance, Welfare Schemes for Vulnerable Sections, Constitutional provisions (DPSP), Policy implementation challenges.

3.

GS Paper 3: Indian Economy, Employment, Labour Reforms, Informal sector challenges.

4.

Interlinkages between economic growth, social justice, and labour market dynamics.

Visual Insights

Unorganised Sector in India: Key Indicators (2025-26)

This dashboard highlights the scale and vulnerability of India's unorganised sector workers, crucial for understanding the social security crisis. Data is estimated for 2025-26 based on recent trends and government reports.

Share of Workforce in Unorganised Sector
88%

Despite formalization efforts, the vast majority of India's workforce remains in the unorganised sector, making them highly vulnerable to economic shocks and lacking formal protections.

Unorganised Workers Lacking Comprehensive Social Security
72% (est.)

Despite the Code on Social Security, 2020, significant implementation gaps mean a large proportion of unorganised workers still lack access to benefits like PF, ESI, and pension.

e-Shram Portal Registrations
38 Crore

The e-Shram portal is a crucial step towards creating a national database for unorganised workers, enabling targeted benefit delivery. Its success is key to the new labour codes' implementation.

Estimated Unorganised Workers Below Minimum Wage
45% (est.)

Weak enforcement mechanisms and lack of awareness in the unorganised sector lead to widespread non-compliance with minimum wage laws, perpetuating exploitation and poverty.

More Information

Background

The concept of labour welfare and social security in India has roots in the pre-independence era, with early legislation like the Factories Act of 1881 and the Workmen's Compensation Act of 1923. Post-independence, the Indian Constitution enshrined the principles of social justice and worker protection in the Directive Principles of State Policy (DPSP), particularly Articles 39, 41, 42, and 43, which advocate for adequate means of livelihood, right to work, just and humane conditions of work, and a living wage. This led to a plethora of central and state-level labour laws, including the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, the Employees' State Insurance Act, 1948, and the Payment of Gratuity Act, 1972.

While comprehensive, this fragmented legal framework often led to complexities, compliance burdens, and limited coverage, especially for the vast unorganised sector. The idea of codifying these laws into a few broad codes emerged to simplify, rationalize, and universalize their application, aiming for greater clarity and wider reach.

Latest Developments

In recent years, India has undertaken significant labour reforms, consolidating 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. While these codes have been passed by Parliament, their implementation has been pending, primarily due to states needing to frame their respective rules. A major development is the government's push for formalization, exemplified by initiatives like the e-Shram portal, launched in 2021, to create a national database of unorganised workers, including migrant workers, gig, and platform workers, to facilitate the delivery of social security benefits.

There's an ongoing debate about balancing 'ease of doing business' with 'worker welfare' and the potential impact of these codes on employment generation and labour market flexibility. The future outlook involves the operationalization of these codes across all states and the development of robust digital infrastructure to ensure universal coverage and efficient delivery of benefits, especially for the increasingly diverse and mobile workforce, including gig economy workers.

Practice Questions (MCQs)

1. Consider the following statements regarding the Code on Social Security, 2020:

  • A.It aims to universalize social security benefits by subsuming nine existing central labour laws.
  • B.The Code mandates the creation of a National Social Security Board for unorganised workers, gig workers, and platform workers.
  • C.It explicitly excludes contract labour from its purview, focusing only on direct employees.
  • D.Both A and B
Show Answer

Answer: D

Statement 1 is correct. The Code on Social Security, 2020, consolidates and amends nine central labour laws related to social security, aiming to universalize benefits. Statement 2 is also correct. The Code provides for the establishment of a National Social Security Board for unorganised workers, gig workers, and platform workers to recommend and monitor schemes. Statement 3 is incorrect. The Code expands the definition of 'employee' and aims to cover various categories of workers, including contract labour, to extend social security benefits.

2. In the context of social security and labour welfare in India, which of the following constitutional provisions directly or indirectly guide the state in formulating policies for unorganised sector workers?

  • A.Article 39(a) and Article 41 only
  • B.Article 43 and Article 21 only
  • C.Article 39(a), Article 41 and Article 43 only
  • D.Article 39(a), Article 41, Article 43 and Article 21
Show Answer

Answer: D

Articles 39(a) (right to an adequate means of livelihood), 41 (right to work, to education and to public assistance in certain cases), and 43 (living wage, etc., for workers) are all Directive Principles of State Policy (DPSPs) that directly guide the state in formulating labour welfare and social security policies. Article 21 (Protection of life and personal liberty), a Fundamental Right, has been expansively interpreted by the Supreme Court to include the right to live with human dignity, which encompasses the right to livelihood, social security, and protection from exploitation. Thus, all four provisions directly or indirectly guide the state.

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