Researchers and writers are expected to analyse schemes critically. They should look at the positives and negatives. Once upon a time, SBI’s Economic Research Wing used to do this. Often, it used to be a wake-up call to policymakers and the Government because of its credibility. (Refer to my article dated, Nov 29, 2021).
Dr. Soumya Kanti Ghosh, Chief Economist, State Bank of India, wrote in The Economic Times on 21st January 2015, “Chastising public sector banks for every failure is a comedy of errors – public banks have paid back many times the investment to the Govt.” So it is not true that the Government is spending its money on the capitalisation of banks. In the last few years, the capital was provided to the banks only for writing off corporate loans. If the recovery mechanism is strengthened, there is no need for capital infusion, as last year all public banks have shown a net profit.
This was lauded by many. But today, independent journalism and research are not welcomed in the country. Probably due to pressure from the Ministry, the research reports have become songs in praise of the Government.
One such report is reproduced below in part.
ECOWRAP (SBI Economic Research Wing)
Issue No. 18, FY26
Date: 25 November 2025
IMPLEMENTATION OF NEW LABOUR CODES WILL BOOST THE SHARE OF FORMALISATION IN LABOUR FORCE BY AT LEAST 15%, SOCIAL SECTOR COVERAGE TO 85%, BOOST EMPLOYMENT BY 77 LAKHS & BOOST CONSUMPTION BY RS 75,000 CRORES OVER THE MEDIUM TERM
The implementation of new labour codes will empower both workers and enterprises, building a workforce that is protected, productive, and aligned with the evolving world of work, paving the way for a more resilient, competitive, and self-reliant nation.
There are primarily four tangible benefits that will accrue as the labour codes are implemented.
- In India, approximately 44 crore people are working in the unorganised sector, out of which around 31 crore unorganised workers are registered under the e-Shram portal. By assuming that 20% will shift from informal payroll to formal payroll, it will benefit around 10 crore beneficiaries. With this, we expect India’s social security coverage may reach 80–85% in the next 2–3 years.
- According to the PLFS dataset, the share of formal workers in India is estimated to be 60.4%. We estimate a 15.1% increase in the formalisation rate post the implementation of four labour codes, pushing labour market formalisation to 75.5%.
- India’s new Labour Codes, after a short transition phase, could reduce unemployment by up to 1.3% over the medium term, depending on reform implementation, firm-level adjustment costs, and complementary state-level rules. This would imply additional employment generation of 77 lakh people based on the current labour force participation rate (15 years +) at 60.1% and average working-age population at 70.7% across rural and urban workforce.
- With a saving rate of approximately 30%, the implementation will result in a consumption boost of Rs 66 per person per day post-implementation. This could lead to an approximate consumption boost of Rs 75,000 crore. Thus, the labour codes’ implementation is poised to give a major boost to consumption as well.
The figures are based on assumptions and are laudatory to the Government without looking at the past history of implementation of laws, and there is absolutely no critique.
The report quotes verbatim the press release of the Press Information Bureau. See below. Please read my comments too.
The People’s Commission on Public Sector and Public Services, consisting of eminent scholars, retired civil servants, journalists, trade union leaders, and eminent lawyers, in their public statement, have pointed out the flaws and demanded withdrawal of the codes and the start of discussions with trade unions and State Governments. (Excerpts)
The Government should take note of the fact that Article 39 enjoins upon the State as follows:
Article 39
“……
(d) that there is equal pay for equal work for both men and women;
(e) that the health and strength of workers, men and women, and the tender age of children are not abused and that citizens are not forced by economic necessity to enter avocations unsuited to their age or strength.”
The newly proposed Labour Codes fail to comply with the above.
The labour laws that are in force have been enacted by the Government from time to time to align State policy in tune with the intent underlying the Directive Principles. In a capitalist economy, the promoters and managers of businesses, whether organised or unorganised, aim to maximise their profits at the cost of the welfare of the workers, women workers in particular. Especially in the case of the unorganised sector, it is public knowledge that not only male workers’ rights are suppressed, but also women workers and children are subject to harassment, exploitation, and abuse. It is to safeguard the interests of all such workers that successive governments at the Centre and the States have introduced different labour laws. The newly proposed Labour Codes turn this idea upside down and modify the labour laws fundamentally to make it easy for the promoters and managers of businesses to maximise their profits without hindrance, at the cost of the workers.
India is a founder member of the ILO and has been a signatory to several ILO conventions that have stipulated norms relating to workers’ rights and welfare. The ILO has recognised the pitfalls of globalisation as an instrument of development and its likely adverse impact on workers’ individual and collective rights.
While the Government should align the labour laws with the ILO norms, the newly introduced Labour Codes deviate from the ILO norms in several respects, which we have discussed in the following paragraphs.
Before we do that, we wish to point out that, though India is a founder member of the ILO, it has not signed the ILO Conventions C87 (Freedom of Association and Protection of the Right to Organise), C98 (Right to Organise and Collective Bargaining Convention), and C190 (on violence and harassment of workers, especially women, in the world of work).
C190 has direct relevance for India. No doubt, the country has implemented some protective laws such as the POSH Act to prevent harassment of women and laws like the Child Labour (Prohibition and Regulation) Act. Ratification of C190 would require significant legal alignment.
In order to align the labour laws in line with the Directive Principles and also harmonise them with the ILO Conventions C87, C98, and C190, the Government should ratify these Conventions immediately and amend the laws accordingly.
Even in the case of those ILO Conventions which India has ratified, there are significant deviations from the norms set out in them vis-à-vis the new Labour Codes, as discussed below.
The Code on Wages
While the ILO has emphasised the importance of prior consultation with the workers in the matter of determining and periodically revising their wages so as to ensure that they remain fair and in line with living standards, the new code in India lacks a robust institutional arrangement for its realisation. The annual conventions, which were held every year with employee organisations, employers, and the government, have been discontinued since 2015.
In effect, the codes may result in a wage structure that fails to maintain decent living conditions for workers. While the ILO insists on a living wage and a decent wage, the codes talk about minimum wage only.
The Code on Social Security
The ILO standards mandate adherence to the principle of equity and proportionality in social protection. The latest Indian code, which gives the Central Government extensive autonomy in establishing and managing social security schemes, may not ensure this, as it does not provide for prior consultation either with the States or the workers in determining norms underlying the social security schemes. This violates predictability and consistency from the point of view of the States and the workers.
Code on Industrial Relations
The ILO’s Right to Organise and Collective Bargaining Convention guarantees that every worker has a say in determining terms and conditions of employment and promoting an equitable and democratic work environment, and it emphasises the importance of the right to strike as a cornerstone of the freedom of association.
The 8-hour workday attained through struggles and sacrifices has been diluted by providing 8–12 hours’ work flexibility.
The Wage Code and IR Code have surreptitiously brought in privatisation by including a clause which says that government shareholding in the public sector can be below 50%.
Those whose work is supervisory in nature are not covered by the codes. Those who earn a salary above Rs 18,000 per month are also excluded. The Supreme Court, in a judgment on a pilots’ strike, ruled that they are also workers even if they earn a lakh as salary, as they are not part of the management. This has been ignored in the new codes.
The latest Indian code makes it difficult for the workers to exercise the right to strike. In addition, it makes hiring and firing procedures simpler, which cuts at the root of the ILO standards that support stable employment conditions. The code jeopardises the job security of workers and deters workers from attempting to form a union.
Code on Occupational Safety, Health and Working Conditions
The ILO’s Occupational Safety and Health Convention mandates not only the stipulation of rigorous norms of occupational safety, health, and working conditions of workers, but also the putting in place of a strong regulatory institutional arrangement to enforce those norms.
The ghastly Bhopal gas tragedy remains a standing testimony to the inadequacy of norms that exist in India to ensure the safety of industrial workers and the communities that live in the vicinity of hazardous industrial units. Though the Centre has introduced several changes in the provisions of the Factories Act consequent to that accident, there has not been much improvement in the occupational safety of workers. The reason for this is the strong and unholy nexus that exists between political parties and private businesses. As elections are getting more and more expensive as a result of the deteriorating ethical standards of political parties, they turn to big businesses to fund them in exchange for political support to the latter in diluting the laws and regulations that exist to enforce environmental and safety norms for businesses. In addition, political parties, often more loyal to their corporate cohorts than the people who elect them, compromise the integrity of enforcement of laws and regulations by appointing business-friendly regulators.
As a result, the ILO-stipulated norms of occupational safety and health standards are rarely realised in India, and the latest code unilaterally imposed by the Centre further aggravates the situation.
As already stated, the whole exercise of “codifying and simplifying” the existing labour laws is aimed more at making it easy for private businesses to maximise their profits without having to allow workers to exercise their fundamental rights, without having to hold prior consultation with them on matters relating to their wages, their safety, their welfare, and, most importantly, allowing them the right to form unions and bargain collectively with the promoters of businesses, all in the name of ease of doing business.
The latest codes confer excessive authority on the Centre in determining the minimum wages for different classes of workers, the norms for their safety and welfare, etc., and thus run counter to the spirit of federalism that is a part of the basic structure of the Constitution.
The codes, in our view, will accentuate the existing inequities in society, and therefore run counter to the values that underlie the Directive Principles of the Constitution.
It is important to take note of the fact that the majority of workers in India belong to the informal sector, information on which, as it stands today, is thoroughly inadequate, even though they contribute significantly to the nation’s income. What is urgently called for is to take them into reckoning and adapt the existing labour laws so as to enhance their social security and welfare.
In view of the above, we demand that:
- The new Labour Codes be revoked forthwith.
- The existing labour laws be brought fully in alignment with the letter and spirit of the Directive Principles of the Constitution.
- The existing labour laws be brought fully in line with the ILO Conventions to which India is a signatory.
- India ratify C87 (Freedom of Association and Protection of the Right to Organise), C98 (Right to Organise and Collective Bargaining Convention), and C190 (on violence and harassment of workers, especially women, in the world of work).
- Before making any changes in the labour laws, the Centre hold meaningful discussions with the States and the workers. It is important that the idea of federalism is in no way diluted.
Mr. R. Elangovan, DREU, in a presentation made at a Kerala State discussion, has highlighted many issues. Some of them are given below:
The result is that the share of wages in the net value added in India has come down drastically and the share of profit has gone up exponentially. The following figures reveal this:
Exclusion of ‘workers’ of certain kinds from the application of the codes.
Exclusion of certain establishments from the definition of ‘industry’, which excludes them from the application of the IR Code in its entirety.
Systematic activity carried on by cooperation between employer and worker for the production, supply, or distribution of goods or services with a view to satisfy human wants and wishes which are merely spiritual or religious in nature is not industry. This will help corporate religious institutions against the interests of workers there. Once pujaris struck work; now they cannot strike work.
Institutions owned or managed by organisations wholly or substantially engaged in charitable, social, or philanthropic services are not industry. The Supreme Court judgment in the Bangalore Water Supply and Sewerage Board case is buried. As such, college teachers and hospital employees are excluded from the purview of the IR Code.
Departments of the Central Government dealing with defence research, atomic energy, and space are excluded from the IR Code. ISRO employees will be forfeited the right of trade union.
Exclusion of worker in the name of Supervisor:
A supervisor drawing a wage above Rs 18,000 is excluded from the definition of ‘worker’, and they are denied the rights to raise disputes or the provisions of standing orders, etc.
But there is no explanation as to who a supervisor is. In CMRL, the management claims that a ‘technician’ is considered a supervisor as he earns more than Rs 18,000. In some cases, a safaiwallah is named as sweeping manager and denied rights as a worker.
Increasing of thresholds
We all know how the threshold limit for various provisions has been increased so as not to cover 90% of factories. Factories with power (10) and without power (20) have been enhanced to 20 and 40, thus excluding a large number of factories from the application of provisions under the Factories Act. Standing Orders will apply only to factories with 300 and above workers, from the existing 100.
The existing threshold of 100 excluded 75% of factories from compliance with Standing Orders. After increasing to 300, 90% of factories will be excluded, as per ASI.
Exemptions
Even companies which fall within the above threshold are exempted from implementing Standing Orders by Section 39, which says that “the appropriate government may, by notification, exempt, conditionally or unconditionally, any industrial establishment or class of industrial establishments from all or any of the provisions of this chapter”.
Not satisfied with this, Section 96 of the IR Code provides to exempt any establishment or class of establishments from this Code if the appropriate government is satisfied, in the public interest, that adequate provisions exist to fulfil the objects of any provision of this Code by a notification. This can be done conditionally or unconditionally. Likewise, new industries can also be exempted from this Code for a specified period.
If any State Government, before notification of this Code, had exempted any such industry for a specified period under the ID Act, they will remain in force for the remaining period as if this Code has not come into force.
All this will mean that ‘trade union recognition provisions, Standing Order rights, definitions as industry or as worker’, nothing can apply to such industry even if they are above the threshold.
Social Security Code
EPF
Section 20(2) states that, if the Central Government is of the opinion that, having regard to the financial position of any class of establishment or other circumstances, it may exempt, whether retrospectively or prospectively, that class of establishment for such period as may be specified in the notification. The law does not limit the period, thus resulting in continuation permanently. This will forfeit the employee’s right of 12% contribution by the employer and enable the employer to escape the penalty for not remitting the contribution. Ease of doing business and reducing compliance, empowering the enterprise.
Section 143 states that the appropriate government can exempt any establishment or class of establishment, including factories owned by the Central or State Government or local authority, from any or all the provisions of the Social Security Code or the schemes framed thereunder.
Even maternity benefits will go. As far as ESI and EPF are concerned, the exemption can be made by getting permission from the EPFO and ESI Corporation. Which Board or Corporation under Modi will refuse permission?
Occupational Safety, Health and Working Conditions Code
This Code deals with working hours, safety at the workplace, contract labour, etc.
Section 127
According to this section, the appropriate government may, by a notification, for such period or periods, direct that all or any of the provisions of this Code or the rules or the regulations shall not apply to or in relation to any establishment or class of establishment. The law does not limit the periods. Even the rules will not apply. That means the limits of working hours in the Code — 8 hours per day, 48 hours per week, spread-over of 12 hours (which was 10.30) a day, overtime work of 125 hours a quarter (which was 50 hours), all need not be implemented in such factories.
The State Government may exempt any new factory or class of new factory in the public interest to create more economic activity and employment opportunity.
Using this provision, only the Tamil Nadu Government exempted new industries from the application of the Factories Act in respect of working hours. That means freedom to employers to extract hours of work to any limit. It is not only 12 hours. This move was stalled by trade unions under the leadership of CITU.
This section provides for a proviso. If any State Government, under the Factories Act, for the same purpose, had issued any notification of exemption before commencement of this Code, that will remain in force for the period notified.
Many State Governments ruled by NDA or Congress have amended the Factories Act or issued an ordinance enhancing the working hours to 12 hours a day. According to this section, they will remain in force.
Contract Labour
The threshold limit for application of this chapter has been increased to 50 from 20.
The more dangerous thing is the conversion of the perennial nature of work in the Contract Labour Regulation and Abolition Act to core work and non-core work.
Already, a Supreme Court Bench in the Uma Devi case has ruled that contract labour can be engaged in the perennial nature of work, but they should not be made permanent because it will be a backdoor entry. Because of this licence, in the Central sphere like LIC, banks, public sector railways, postal, defence, etc., there are 30 lakh contract workers. An estimate says that in all the establishments, 42% of workers are in contract. They have no social security or job security.
Section 57(1)
This Code prohibits contract labour in core activities, but it permits the employer to engage contract labour in core activities also.
If any normal duty is ordinarily performed through a contractor, even in core activities, contract labour can be engaged. In CMRL, Train Operators (i.e., Metro Train drivers) are engaged by a contractor. Even after this Code, they can continue on contract.
If any core work does not need full-time workers, contract labour can be resorted to.
If there is any sudden increase in the volume of work in the core activity which needs to be accomplished in a specified time, contract labour can be resorted to. There is no limit in the law for the specified time.
As per the Contract Labour Regulation and Abolition Act, if there is a sudden increase in work, permission from the Labour Department must be obtained. This has been done away with. The Bangalore workers’ strike in an industry arose due to not obtaining permission for sudden increase of work.
In Section 2(p), non-core activities have been listed, which covers almost all manual work and specialist works.
- Sanitation work, including sweeping and cleaning, dusting and collection of all kinds of waste management, are treated as non-core. (The regular work of downtrodden workers is completely allowed for contract.)
- Watch and ward, including security services.
- Canteen and catering services.
- Loading and unloading operations.
- Running of hospitals, educational and training institutions, guest houses, clubs, etc., which are in the nature of support services of an establishment.
- Courier services which are in the nature of support services of the establishment.
- Civil and other constructional works, including maintenance.
- Gardening and maintenance of lawns.
- Housekeeping and laundry services and other like activities where they are in the nature of support services of the establishment.
- Transport services, including ambulance services.
- Any activity of intermittent nature, even if that constitutes a core activity of an establishment.
- In railways, all departments will be opened for contract.
Section 57(2)(a)
Hitherto, there was a Contract Labour Advisory Board with representatives from trade unions to decide as to whether a work is of a permanent nature or can be outsourced for contract. This is abolished now.
The appropriate government may, by notification, appoint a designated authority to advise the government on the question whether any activity of an establishment is a core activity or otherwise. There is no mention of labour representatives.
Fixed Term Employment
The Code also permits fixed-term employment with similar working conditions of a regular worker. They tom-tom that gratuity is available even for one year of service. What will he or she get? Only 15 days’ wages. Then they will be discharged from service.
Employers wanted hire-and-fire rights. It is implemented by these contract freedoms.
The Parliamentary Standing Committee asked the Ministry of Labour and Employment whether any maximum number of times can be accepted for FTE so that they can be made permanent thereafter. MOLE did not accept.
This is the government which introduced Agniveer in the forces, four-year service, no DA, no gratuity or pension. 54 lakh unemployed applied for 40,000 posts. Such is the unemployment situation in the country.
Despite seven strikes, this government is adamant because they want the situation of abundance of labour market to be in favour of employers. It is only with this intention they are making the labour laws useless for millions of workers. The TeamLease report says that there are 6.3 crore MSMEs.
Only 10 lakh will be covered by the Labour Codes. 6.2 crore are out of coverage of the Codes.
Hence, reject the ECOWRAP report and stop issuing rules, and have meaningful discussions with Unions/Associations and State Governments, and hold the National-level Labour Conference, which has been stopped for many years. Implement all ILO Conventions in toto.
Thomas Franco is the former General Secretary of All India Bank Officers’ Confederation and a Steering Committee Member at the Global Labour University.
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