Unionism versus productivity

The government’s decision to operationalise the new labour codes has sparked an unusually fierce backlash, with ten major trade unions condemning the move as a betrayal of India’s workers. Their joint statement, issued in advance of a nationwide protest, reflects the unease running through large segments of the workforce. While many of these unions are politically aligned with parties opposed to the ruling establishment, their criticism cannot be dismissed as mere partisan theatre. The concerns they raise echo longstanding anxieties within India’s labour ecosystem. The labour codes represent the most ambitious restructuring of employment laws in decades. Supporters argue that merging a patchwork of statutes into four comprehensive codes is a rational step toward modernising an outdated regulatory framework. They highlight goals such as improving compliance, enhancing transparency, and boosting India’s manufacturing competitiveness -an area where performance has lagged despite the economy’s rapid expansion. Yet the details of the reform explain why reactions remain so divided. The revised definition of “wages” offers clarity long sought by employers and greater transparency for workers. However, this clarity comes at a cost- higher liabilities for provident fund and gratuity contributions. Smaller firms, already operating on thin margins, are likely to feel the burden most acutely. Equally contentious is the easing of rules on hiring and retrenchment. Industry leaders welcome this as a signal of reduced bureaucratic friction and a spur to investment in labour intensive sectors. For unions, however, the same provision raises red flags. Easier exit options for employers, they argue, will erode job security and weaken collective bargaining power, leaving workers more vulnerable in an already precarious labour market. The extension of social security to gig workers, platform workers, and the unorganised sector has been widely hailed as progressive. It acknowledges the realities of a rapidly evolving labour market and attempts to bring new categories of workers under the protective umbrella of formal policy. Yet this expansion also imposes fresh compliance burdens. For small and midsize enterprises, already constrained by limited financial buffers, the additional costs could prove onerous. Similarly, the unified framework for workplace safety promises higher standards and clearer accountability. In the long run, this could improve worker welfare. But in the short term, the infrastructure, training, and monitoring required will weigh heavily on smaller establishments. Industry bodies have begun voicing their own reservations. The Association of Indian Entrepreneurs has cautioned that the combined weight of expanded social security obligations and stricter safety requirements could significantly raise operating expenses. It has urged a phased transition, supported by government assistance, to prevent disruption in labour intensive sectors. This is not ideological opposition but a reflection of genuine operational challenges. Labour organisations themselves are far from unanimous. The Bharatiya Mazdoor Sangh, aligned with the ruling party, has endorsed the broader intent of the codes while pressing for further consultation to address procedural gaps. This divergence within the labour movement underscores the complexity of reforming a system long burdened by rigidity and inefficiency. Ultimately, the success of the new labour regime will hinge on how effectively states frame and implement their rules, and how responsive the Centre remains to the concerns of both workers and businesses. The reform holds transformative potential, but only if its rollout is calibrated with sensitivity to India’s diverse labour realities. For now, delays at the notification stage mean that state specific laws continue to prevail, leaving the promise of the new codes suspended between aspiration and execution.