Implementation of labour reforms through four broad codes that subsume 29 existing Central labour and industrial laws appears unlikely any time soon. As the Centre continues to chase states to frame the draft rules, some states may be going slow on the matter, concerned about how the codes will affect their prospects during the upcoming assembly elections.
As of mid-December 2021, more than 28 months after the Code on Wages was approved by parliament and almost a year after other codes on social security, industrial relations and occupational safety and health were passed, all states and Union Territories are yet to notify their draft rules.
While 24 states and UTs had framed draft rules for the wage code by December 15, only 13 had framed draft rules for the occupational safety code. For the industrial relations code, 20 states/UTs had drawn up the draft rules and for the code on social security, 18 states and UTs had prepared the draft rules, as per information with the labour ministry.
The central ministry typically notifies the rules of a bill that is passed by parliament and becomes law. However, the states also have a role in implementing the codes because labour is a concurrent subject.
“For rolling out the labour codes across India, the states should be on the same page as the Union government,” said a government official who declined to be identified. “There has been progress. The Union labour ministry has notified draft rules of all the codes, but the final rules are being vetted.”
The labour codes are important reforms but some teething issues need to be tackled before they are implemented, said a second government official.
“Also, the message should not go out that the government is anti-worker. Key state elections are also coming, so the authorities have to take everything into consideration,” said the second government official.
The Central government and some states/UTs have “pre-published rules under the four labour codes. The Central government is pursuing with the remaining state governments to frame the rules under all four codes,” the government informed parliament on December 16.
The second official said some poll-bound states have notified the draft rules but whether they are eager to implement it ahead of the state elections is not clear. Besides, the mandatory minimum wage under the wage code is yet to be finalised.
The labour codes are expected to introduce far-reaching changes with implications for employers and workers. They will offer greater flexibility in rolling out short-term work contracts, make hiring and firing flexible, and make industrial strikes harder.
There will be a new national wage floor that will benefit workers, while informal and gig workers will get a social security net. A change in the definition of wages may impact the take-home amount but will increase retirement savings – something that some entrepreneurs and employers oppose because it could increase their employee cost in the short term.
With trade unions opposed to the labour codes, there is concern that implementing them in states like Uttar Pradesh and Punjab ahead of elections slated for early 2022 will create a negative perception and may have a cascading impact.
The information and broadcasting ministry, with support from the labour ministry, had prepared a 30-page document to promote the four labour codes and address the concerns of the working class, which is said to have elicited a lukewarm response.
“The labour codes are important reform initiatives of the government to improve the ease of doing business. They will be rolled out. But when? It’s a subjective issue,” one of the officials said.
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