India’s key labour reform prompts trade union protests

NEW DELHI – Thousands of workers and trade union representatives took to the streets on Nov 26 in different parts of India, protesting against new laws that have widely been described as the country’s biggest labour reform in several decades.

The government says the new laws, which came into effect on Nov 21, promote ease of doing business while also safeguarding workers’ rights and welfare.

Several unions, however, have denounced them as “anti-worker” and “pro-employer”, claiming the codes will weaken job security, dilute workplace protections and whittle down the power of trade unions.

Protesting unions sent a memorandum to President Droupadi Murmu on Nov 26, demanding that the labour codes be repealed, among other demands. The government has yet to respond.

The four new codes – governing wages, industrial relations, social security and workplace safety – consolidate a complex web of 29 pre-existing labour laws and trim red tape by reducing more than 1,400 rules to just 351.

“Together, they establish a modern labour framework that is pro-worker and pro-growth, demonstrating that India is ready to meet the demands of a dynamic and rapidly evolving global economy,” wrote Indian Minister of Labour and Employment Mansukh Mandaviya in an opinion piece in the Hindustan Times newspaper on Nov 24.

Among the many significant changes is the statutory right to minimum wage payment for all workers and expanded social security coverage for gig and platform workers.

The new codes also remove imprisonment provisions for many routine workplace violations, reducing the burden of compliance on employers.

The number of working hours has been capped at 48 hours per week, with overtime pay of at least double the normal wage rate. Women have also been permitted to work night shifts in all types of work across all establishments, subject to their consent and required safety measures.

The government led by Prime Minister Narendra Modi has hastened economic reforms in recent months as it tries to boost domestic consumption and shield the economy from the impact of US tariffs. It simplified its goods and services tax in September from four rates to two, and the new labour reforms are part of this broader trend.

A note from Nomura issued on Nov 24 said the new laws were an important signal that the government is keen to ease the doing of business in India, attract more foreign direct investment and integrate Indian businesses into global value chains.

These new codes have, however, failed to please trade union representatives who protested in several Indian cities, including New Delhi, Kolkata and Chennai. They say the codes were cleared with inadequate consultation and make it harder for workers to legally conduct strikes.

Under the earlier labour regime, only workers in essential services such as water, electricity or healthcare had to give a 14-day prior notice ahead of any strike.

Workers outside these sectors could strike over issues such as a sudden wage dispute or a workplace accident without prior notice, but they too now must give 14 days’ notice.

Spontaneous strikes could, therefore, now be interpreted as a contravention of the Industrial Relations Code, which could then lead to a union being deregistered.

Professor Babu Mathew, spokesman of the All India Trade Union Congress (AITUC), said: “That’s a way of killing freedom of association. That kind of power has never existed in India.”

The AITUC is the country’s oldest trade union federation and is associated with the opposition Communist Party of India.

Even if workers from non-essential services strike after giving a 14-day notice, their strike can still be deemed illegal for other statutory reasons in the new regime, Prof Mathew added.

This undermines workers’ collective bargaining power that has, from time to time, helped determine and revise wages, he told The Straits Times.

Union representatives also fear the new codes make it easier to fire employees.

Earlier, an industrial entity employing 100 or more workers required prior permission from the appropriate government authority for layoffs, retrenchment or to close down. Now this threshold has been raised to 300. States are allowed to increase this limit even further.

Nomura, however, predicts this move should encourage firms to build larger-scale factories and boost manufacturing and employment.

The government’s promise of universal minimum-wage coverage under the codes is another hot-button issue, as exemptions risk leaving millions of workers outside the new laws’ reach.

The code on wages exempts small employers – those that employ five persons or fewer for agriculture or domestic purposes – from formal record-keeping and compliance on wages.

While they must prove that wages have been paid if demanded by an inspector, union representatives fear inadequate checks could allow for widespread abuse.

Workers on small-scale farms, which account for a significant proportion of farms in India given the country’s small average landholding size, risk being paid below the minimum wage, said Mr Gautam Mody, general secretary of the New Trade Union Initiative, an independent union.

“This also excludes domestic workers, which is sadly one of the very large sources of employment of female labour in our country even today,” he told ST.

While gig workers – a growing segment of India’s economy – have been promised enhanced social security coverage, they too are exempt from minimum wages.

“We found that the codes make for appealing language, but they are actually hollow,” Mr Mody added.

In their appeal to the President, the unions called for a national minimum wage of 26,000 rupees (S$380) along with social security benefits for all workers, including those from the unorganised sector.

Prof Mathew described the labour codes as a step backwards for labour rights in India.

He said such extensive reforms are normally discussed at the Indian Labour Conference, the country’s highest and only formal national-level tripartite consultative body on labour policy that brings together the government, employers and workers, but which was last held in 2015.

“They have gone ahead with the most far-reaching labour reforms in India, I dare say even from colonial times, without observing this tripartism,” he said. “It’s been a non-consultative, unilateral action to impose these codes.”