New labour codes will boost economic growth in the long run
The recently implemented four new labour codes—the Code on Wages, 2019, Industrial Relations, 2020, Social Security, 2020, and Occupational Safety, Health and Working Conditions, 2020—will go a long way in improving the lives of workers. The fact that major business chambers have welcomed the new regime underscores the wide acceptability of the new labour regime. The Congress, not unexpectedly, denounced the codes with its prominent Dalit leader Udit Raj calling them “completely ineffective on the ground, anti-worker and solely corporate-friendly.” The allegation is clearly political, as there are several pro-worker features in the new codes. The old regime had no provision for mandatory appointment letters, whereas the new one makes appointment letters mandatory for all workers. Further, social security benefits have been extended to include all workers, including gig and platform workers benefits such as provident fund PF, Employees’ State Insurance Corporation (ESIC), and insurance. Meanwhile, minimum wages will now be applicable to all workers. In a good move to boost preventive healthcare, employers are mandated to provide a free annual health check-up to all workers above the age of 40 years. They are now also stipulated to provide timely wages. Hitherto, ESIC coverage was limited to specific areas and industries. Now, it has been made voluntary for establishments with fewer than 10 employees, but mandatory for establishments with even one employee engaged in hazardous processes. Another provision is aimed at gender parity. Restrictions on women’s employment in night shifts and certain occupations have been lifted. In a major relief to employers, especially those in the MSME sector, the compliance burden has been eased, as multiple registrations, licences, and returns across labour laws have been replaced with a single registration, single licence, and single return. Rarely do the powers that be realise the truth that there need not be a conflict between the interests of wealth creators and those assisting them—that is, employees. The goal any government should aspire to achieve is not the right balance between the interests of the two supposedly antagonistic groups, but the conditions to make the process of wealth creation easier. This is one of those rare occasions when the decision makers have acknowledged the convergence of interests of both employers and employees.
This is the reason why representatives of India Inc are happy. With the four Labour Codes now effective, FICCI appreciates this significant step in modernising the country’s labour ecosystem. FICCI president-elect Anant Goenka maintained that “The reforms offer clarity and predictability for employers, and bring major worker gains: equal pay, portability of social security, protections for gig/platform workers and expanded inclusion for women and youth across sectors.”
Similarly, Confederation of Indian Industry (CII) director general Chandrajit Banerjee said, “It’s a historic milestone for India’s labour landscape. Implementation of the four labour codes marks a transformative leap toward a modern, simplified and future-ready labour ecosystem.” Many in corporate India are eagerly waiting to see how the capital markets react to the new labour codes. Since the impact will be greater on labour-intensive sectors like chemicals and paints, oil, auto, auto ancillaries, and pharmaceuticals, stock market experts will watch the performance of major scrips in these industries. Whatever the response of the share market, it is indisputable that in the long run, the new labour codes will boost economic growth.
