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India Taking forward the biggest changes, four new labor codes were implemented on Friday. worker‘Law in decades as Prime Minister Narendra ModiThe government says it wants to simplify rules, improve worker protections and liberalize conditions for investment.
Labor rules, some dating back to British colonial rule, have long been seen by businesses as a drag on India’s manufacturing sector, which contributes less than a fifth of the country’s roughly $4 trillion economy.
However, unions are strongly opposed to the changes, which formally became law on Friday, five years after they were passed by Parliament.
ease of rental and fire; Gig workers get new protections
Along with social security and minimum wage benefits, the new rules also allow for longer factory shifts and night work for women and increase the pre-approval limit for layoffs for companies from 100 to 300, giving companies more flexibility in workforce management.
The codes define gig and platform work for the first time, extending legal and social protections to workers outside traditional employment structures.
The gig workforce has surged since the pandemic, with the sector expected to employ more than 23.5 million people by 2030, up from about 10 million in 2024/25, according to government think tank NITI Aayog.
Despite parliamentary approval in 2020, Modi’s Bharatiya Janata Party has so far been unable to implement the laws uniformly across the country due to political resistance and opposition from some unions.
Strengthening the manufacturing sector is important to create jobs in the world’s most populous country.
The Labor Ministry said the code – covering wages, industrial relations, social security and occupational safety – “will ensure better wages, safety, social security and welfare for the country’s workforce”.
These codes will replace 29 existing laws.
Economist expects short-term losses but long-term gains
Economists say the reforms may hit smaller companies initially but will strengthen protections and earnings over time.
Devendra Kumar Pant, chief economist at India Ratings & Research, said, “In the short term, they may hurt small, unorganized firms, but in the long term… with lower minimum wages and enhanced social security, it could be positive for both working conditions and consumption.”
Trade unions remain deeply critical of the reforms.
Amarjeet Kaur, national general secretary of the All India Trade Union Congress, said, “The labor code has been implemented despite strong opposition from trade unions and will take away workers’ rights, including fixed-term jobs and rights available under earlier labor laws.”
Modi defended the overhaul, saying on Twitter that the codes would serve as “a strong foundation for universal social security, minimum and timely wage payments, safe workplaces and gainful opportunities”, adding that the reforms would boost job creation and productivity.
The ministry said: “With extended social security, stronger protections and nationwide portability of rights, the codes place workers, especially women, youth, unorganized, gig and migrant workers, firmly at the center of labor governance.”
Ten major Indian trade unions on Friday condemned the government’s imposition of new labor codes, calling it a “misleading fraud” against workers.
Unions affiliated with parties opposing Modi demanded in a statement late Friday that the laws be withdrawn ahead of nationwide protests on Wednesday.
The Labor Ministry did not immediately respond to a Reuters request for comment on the union’s demands on Saturday. An interior ministry document on labor codes shows the government has held more than a dozen consultations with unions since June 2024.
However, the right-wing Bharatiya Mazdoor Sangh, linked to Modi’s party, called on states to implement some of the codes after consultation.
Indian states are expected to frame rules in line with the new federal code covering wages, industrial relations, social security and occupational safety.