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It is commonly claimed within India’s political establishment that labour laws in India are “rigid and strictly enforced” to the detriment of job creation. Instead, loosening restrictions will increase employment, while existing welfare schemes will take care of the destitution and poverty that plague the majority of the working population. This stance assumes that workers primarily need “benefits” rather than “rights”. Yet the reality for most casual, contract, daily wage, and migrant workers — that is, most of the Indian workforce — is that labour law enforcement is practically non-existent. In fact, one could even argue that Indian labour laws are designed in such a way as to make them irrelevant to the vast majority of workers.
Rajiv Kumar works at the Rosa Luxemburg Foundation’s South Asia Office in New Delhi.
Labour relations in India are characterised by a very high degree of informality. Over 90 percent of the workforce falls outside the formal, organized sector, which is protected by relatively stronger labour laws. The majority of the Indian workforce, by contrast, does not have formal written contracts and has almost no job security. A large proportion are characterized as “self-employed”.
Until the 1980s, labour relations in India were characterized by working-class struggles that ensured a degree of parity between employers and labour. The 1990s, however, with the adoption of neoliberalism by successive governments across the political spectrum, saw a break in the balance of bargaining power and decline in working-class organization, severely impacting the most vulnerable sections of the working poor.
This has reached its peak under the current National Democratic Alliance (NDA) government, where anti-worker policies combine with narrowing of space for any form of dissent and collective action. The lockdowns imposed by the NDA government during the Covid-19 pandemic exposed the plight of the unorganized, informal workers and poor migrants, elevating their struggles in the public eye. The vast majority of both informal employment and informal sector economic activity could not be performed remotely, and the government did very little to support such workers or enterprises. All of this increased precarity and insecurity in the informal sector.
Under the present government, two key dynamics have deepened this insecurity. The first is a series of policies that have placed the informal sector as a whole in a more disadvantaged position, starting with the currency devaluation in 2016 (which hit the cash-dependent informal sector very severely) and the imposition of the Goods and Services Tax in 2018 (which imposed a burden that many informal sector enterprises could not meet). Moreover, the government’s introduction of four new Labour Codes mostly allows greater flexibility of employment relations, with fixed-term contracts, a 12-hour work day, relaxing norms for regulating work intensity, and easing capital regulation in the formal sector. The policies pursued by the incumbent government emphasize capital and technology and GDP growth, while downplaying the significance of securing human welfare.
Regressive Reforms
Almost every labour law in India includes a numerical limit on the workplaces to which it applies. For instance, the 1971 Contract Labour (Regulation and Abolition) Act applies only to workplaces employing more than 20 workers at a time, and the 1996 Building and Other Construction Workers Act only applies to workplaces with more than ten workers. This automatically excludes the majority of workplaces and excludes some types of workers entirely.
Moreover, all labour laws in India contain clauses restricting who can file complaints. For instance, complaints under the Minimum Wages Act, the Payment of Wages Act, or the Contract Labour Act can only be filed by the labour inspector. The most “liberal” clause of this kind is in the Building Workers Act, which is generous enough to allow registered construction worker unions to file complaints as well. But under no labour law can a worker file a criminal case when their own rights are violated.
The result of the above factors is that workers face a near-insurmountable burden of proof if they wish to avail themselves of their rights. This happens even where the law says otherwise, such as in the Contract Labour Act, where the responsibility of maintaining records lies with the employer and the contractor. In such a situation, further “reforming” labour law essentially means reducing the small minority of organized, permanent workers, who at least enjoy some protection of their rights, to the level of the casual and contract workforce.
Awareness in India that informal workers should be covered under social security and labour laws is on the rise, and the issues of informal workers’ rights are being taken up. But ultimately, the challenge is that they must be organized to ensure their rights.
Over the last six years, the Indian government has enacted four Labour Codes (not yet brought into force) by merging 29 existing central labour laws into four broad categories: the 2019 Code on Wages, the 2020 Social Security Code, the 2020 Industrial Relations Code, and the 2020 Occupational Safety, Health and Working Conditions (OSHWC) Code. Once these codes are implemented, the existing 29 laws will cease to exist.
Apart from the minimum wages section of the Code on Wages, the other labour codes are irrelevant for the vast majority of workers in India. Further, the Code on Wages’ provisions on non-payment of wages — one of the few provisions that applies to all workers — dilute the existing law even further and put in place a labyrinthine process for workers to get wages they are owed. If one looks at the enactment of the Social Security Code, there are excellent provisions: for example, pensions, employees’ insurance, maternity leave, and workman’s compensation are all guaranteed — but for organized labour. When it comes to unorganized or informal labour, none of those important rights are available. Even informal workers in the formal economy — including gig and platform workers in the new emerging labour markets — are excluded from these provisions.
The government announced allocations for labour welfare and social security for gig workers in the 2025 national budget, and a pilot initiative is underway to register platform workers on India’s national database for unorganized workers, the e-Shram portal. The government has hailed the budgetary allocation as a transformative step, but the question arises as to whether this is truly transformative given the lack of guaranteed provisions. There is a pretense of social welfare for informal and precarious workers in the Social Security Code stating that there will be a scheme either by the Central Government or the State Government, but again no guaranteed provisions. In this sense, the new labour codes not only fail to remedy the problems in the older labour laws — they in fact make them worse.
Regional Response to a Global Problem
Around 90 percent of workers are informal and unorganized in India today, with similarly high rates in Bangladesh (84.9 percent), Pakistan (84.3 percent), Sri Lanka (67 percent), and Nepal (63 percent), making South Asia one of the regions with the highest average incidence of informal employment. The share of informal employment is 54.4 percent in China and 36.5 percent in Brazil. Globally, 2 billion people — more than 61 percent of all employed people — work in the informal economy. While not all informal workers are poor, the vast majority of them are poor, precarious, and unprotected, calling for urgent measures to tackle informality — a key marker of a region’s socio-economic development.
Workers moving out of agriculture in India tend to take up odd jobs in petty retail, street vending, or construction, leading to a higher prevalence of casual labour and self-employment due to insufficient employment creation by modern manufacturing and service industries. Self-employment (a term that often disguises what is effectively informal wage labour) ranks among the primary forms of employment in the country, constituting 55.8 percent of employment, followed by casual labour at 22.7 percent, with regular employment accounting for only 21.5 percent of workers. Most workers in India are in precarious jobs without access to benefits such as healthcare, insurance, unemployment benefits, pensions, etc. Paid subsistence-level wages, they face long and irregular hours, unsafe working conditions, and frequent accidents. The situation is worsened by the rise of seasonal migration as a major mode of labour deployment. Whole regions have emerged as suppliers of cheap labour to more developed parts of the country such as Gujarat, Tamil Nadu, or Kerala.
With informal employment in India close to 90 percent, sector-specific social security schemes offer a limited solution by providing some elements of social security to most informal workers covered by wage work, regardless of their employers or enterprise size. In this context, enacting sector-specific social security schemes represents a viable interim arrangement for the progressive coverage of informal sector workers under limited welfare measures. The law restricts Employees’ State Insurance (ESI) to enterprises with ten workers and Employees’ Provident Fund (EPF) to 20 workers. If the limit is expanded to cover enterprises with five or more workers for both ESI and EPF, the number of informal sector workers with ESI and EPF coverage will increase threefold.
The expansion of social security by progressively expanding coverage to all workers should be the first step toward universalizing social security. Social security in one sense becomes a marker to define the employer-employee relationship. Such measures can provide much-needed protections to informal labour in different segments of the informal economy, besides contributing to workers’ voice and collective bargaining. For instance, social security provisions allow for registration, which gives the worker a common identity and allows for unions to begin with shared demands for the welfare scheme to be implemented, which can later become the basis of collective bargaining, demands for a regulated work environment, and basic security.
Organizing Is the Key
Awareness in India that informal workers should be covered under social security and labour laws is on the rise, and the issues of informal workers’ rights are being taken up. But ultimately, the challenge is that they must be organized to ensure their rights. Organized labour can make a huge difference to informal sector workers. Indeed, the large proportion of unorganized workers in the workforce and their miserable work conditions pose one of the biggest challenges in India today.
Last year, India’s leading trade unions met with the Ministry of Labour, gave a detailed presentation on their demands, and called on the government to convene the Indian Labour Conference (ILC). The unions were told that their demands would be studied. But instead, the government has pressured state governments, that there will be no investments in states if labour codes are not implemented, all in the name of improving the ease of doing business. Several state governments have implemented various provisions of the labour codes, while unions have warned state governments against doing so.
It is vital to prepare the Indian working class to further consolidate its unity and prepare for larger, more sustained campaigns in the near future.
The Labour Ministry maintains that it is ready to hold further discussions with the trade unions, while the unions argue that the government is undermining the structures of organized labour’s institutional power. This argument is corroborated by the fact that the ILC — the apex level tripartite consultative committee comprising trade unions, employers’ organizations, national and state governments, and the concerned ministries — has not been convened for more than a decade. Moreover, the government also did not act on the demands of the unions’ 17-point demand charter, which included, among other things, the repeal of the four labour codes, a national minimum monthly wage of 26,000 rupees for all workers, and end to casualization of work in any form, and equal pay for equal work for all workers.
As a response to government inaction, India’s joint platform of leading trade unions and its allies convened the National Convention of Workers in New Delhi on 18 March 2025. This convention decided to carry out a campaign culminating in a nationwide general strike on 20 May. Due to the tense situation on the border with Pakistan, the strike date was shifted to 9 July. A massive campaign to reach workers in organized and informal sectors was undertaken by the unions, and the strike call was also supported by the Samyukta Kisan Morcha (SKM), an umbrella organization comprising farmers’ and agricultural workers’ organizations, numerous other workers’ organizations, civil society organizations, food security-related organizations, and oppressed castes and minorities’ organizations.
The strike saw significant mobilization across the country, particularly among informal sector workers, agricultural labourers, farmers, youth, and public sector workers. The call for the strike resulted in millions of toiling people across the country organizing actions and going on a massive countrywide protest and strike. Despite strong resistance from major trade unions, the labour codes had thus far failed to trigger widespread working-class resistance. Thus, the strike was at best a first salvo in what is going to be a long-drawn battle.
It is vital to prepare the Indian working class to further consolidate its unity and prepare for larger, more sustained campaigns in the near future. Organizing the vast masses of unorganized workers into the struggle for basic labour rights and universal social security remain the main priority for India’s trade unions, and the key to winning other democratic struggles in the country.