PM Modi would do well to heed his Economic Advisory Council’s advice and scrap contentious labour codes

EAC-PM has said that the four labour codes, made after amalgamation of 29 central labour laws, have only standardized and streamlined existing statures without addressing definitional inconsistencies

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Dr Gyan Pathak

Prime Minister Narendra Modi’s dilemma over labour reforms may have probably deepened after his own Economic Advisory Council (EAC) has said in a report that the four labour codes, which he himself had lauded on several occasions and which the Union Ministry of Labour and Employment is readying itself to implement across the country soon, did not take a comprehensive view of all labour laws.

The EAC-PM’s view is an indirect vindication of the Central Trade Unions’ allegation that the four labour codes of the Modi government are bad enough to be scrapped, just as the three agri-market laws have been withdrawn.

In place of the four labour codes, the EAC-PM has backed a unified labour law, much on the lines of the Bangladesh Labour Act of 2006. It said that the four labour codes, which were made after the amalgamation of 29 central labour laws, have only standardized and streamlined the existing statures without addressing definitional inconsistencies.

The four controversial codes which have been termed anti-labour and pro-corporate by the Central Trade Unions, which the Modi government wants to implement as soon as possible, probably in the next financial year commencing on April 1, 2022, are – the Codes on Wages 2019, the Code on Social Security, 2020, the Industrial Relations Code, 2020, and the Occupational Safety, Health and Working Conditions Code 2020.

The EAC-PM has not only batted against the four labour codes, but also called for a Unified Labour Law to be framed after taking a comprehensive view of all labour laws. It has emphasized on further simplification of the labour laws and called for other alternative policy efforts to boost employment generation and industrial growth.

What EAC-PM has said in a report on state-level labour reforms submitted to the Prime Minister indirectly admits that the four labour codes may not improve all sectors and jobs. The council said in the report, “A single unified law or reforms aimed at all sectors and nature of jobs would create a supportive business environment for the urban economy. This would allow the service sector and the new-age urban economy to truly take off.”

The EAC-PM also calls for enhanced focus on skill-building, public infrastructure investment, reducing policy barriers to trade and investment, and simplifying laws and procedures among several others.

The Council, chaired by Bibek Debroy, has also called for wider consultations with all the stakeholders for framing a Unified Labour Law in place of the four labour codes.


The opinion of the EAC-PM is just opposite to the views of the Prime Minister and the Union Ministry of Labour and Employment. They have been claiming that the four codes are the biggest labour reform in independent India, and were long overdue and much-awaited.

Modi had even said that they would ensure the well-being of our industrious workers and give a boost to the economy. The government had also claimed that the rules were simplified to ensure “Ease of Doing Business” by ending “Inspector Raj”.

During the winter session of the Parliament, the Union Minister of Labour had virtually rejected the demand for withdrawing the four labour codes and had informed that the majority of the states have already drafted their rules according to the four labour codes, and the Centre would also complete the process soon.

The Central Trade Unions have been opposing the codes on four major grounds. The Codes on Wages, 2019 is being opposed on the ground that it merely provides a threshold floor-level wage; the Code on Industrial Relations 2020 is being opposed because it allows firms engaging up to 300 employees to retrench workers without seeking state government’s approval; the Code on Occupational Safety 2020 is opposed because it exempts from its ambit labour contractors engaging up to 50 workers, and the Code on Social Security 2020 is being opposed because it does not clarify the Centre’s financial obligations.

Even BJP and RSS affiliated BMS wants modifications in the Code on Industrial Relations and the Code on Occupational Safety. There are numerous other objections, one of them being that the implementation of the four codes would lead to modern-day slavery.

The rules on the Code of Wages were finalized long back in 2019 but held back by the Modi government so that it can implement all the four codes across the country at one go. These codes were intended to be implemented from April 1, 2021, but by that time neither the employers ware ready nor the states. The process was also delayed due to the COVID-19 crisis.

Since labour is a subject on the concurrent list of the Constitution of India, states were required to frame their rules according to the provisions of the four codes, which the states could not do because of their preoccupation with handling the COVID-19 crisis.

A recent report has also quoted a senior official of the Union Ministry of Labour and Employment saying that the four labour codes are likely to be implemented in the next financial year 2022-23 as a large number of states have finalized the draft rules on these.

The Centre has also completed the process. Altogether 24 states/UTs have pre-published the draft notification on the Code on Wages, 20 on the Code on Industrial Relations, 18 on the Code on Social Security, and 13 on the Code on Occupational Safety, Health, and Working Conditions.

At a time when the Modi government is all set to implement the four controversial labour codes, the EAC-PM’s telling the Prime Minister that the four labour codes did not take a comprehensive view of the labour laws is significant. Should Modi go for a single Unified Labour Law as now recommended by his EAC, or go-ahead to implement his four controversial labour codes amidst stiff opposition by the workforce across the country? It is a question that may have put the PM in dilemma.

(IPA Service)

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