By Dr. Gyan Pathak
India is rapidly advancing towards the next phase of labor reforms. Digital frameworks are being established, which may ultimately facilitate a smoother transition to the new labor code regime expected to be announced soon. However, many see this transition as fraught with challenges for both workers and employers. While the central government, along with most states and union territories, has prepared the necessary laws for implementation, both stakeholders are not fully ready to adapt.
Recent actions by the government indicate progress in this direction. The eShram portal for migrant and informal workers has been launched, along with directives to ministries and departments to ensure the delivery of subsidies and incentives to welfare scheme beneficiaries through the Aadhaar Payment Bridge.
Under this bridge, the central government has mandated that all ministries and departments achieve 100% biometric Aadhaar authentication. The Employment Provident Fund Organisation (EPFO) is now tasked to ensure that employers complete the first phase of Universal Account Number (UAN) activation through Aadhaar-based OTPs by November 30, 2024, beginning with newly joined employees in the current financial year 2024-25. The subsequent phase will introduce biometric authentication using face-recognition technology for UAN activation.
Once initiated, employers must finalize this process for their entire workforce. This initiative is part of the EPFO reforms aimed at maximizing employer and employee access to the Employment Linked Incentive (ELI) Scheme outlined in the Union Budget 2024-25.
In light of this, the Ministry of Labour & Employment has instructed the EPFO to engage in a proactive campaign with employers to ensure the activation of employees’ UANs. The EPFO will leverage its zonal and regional offices for effective outreach.
The Union Ministry of Labour & Employment has emphasized that using Aadhaar as an identification method streamlines government processes, enhances transparency and efficiency, and ensures that beneficiaries receive their rightful entitlements without complications related to multiple identity documents.
Three initiatives—A, B, and C—were introduced in the Union Budget 2024-25, allocating Rs 10,000 crore in subsidies to employers under the ELI scheme via the EPFO for each new membership. Authorities claim this will create 8 million jobs in addition to providing skills training for 10 million youth over the next five years.
On the occasion of its foundation day, the EPFO highlighted that “India’s economy is currently experiencing a transformative shift toward formalization, redefining job structures, employment security, and social benefits for millions. This transition is significant, as it expands social security coverage for more individuals, resulting in enhanced economic stability and a more secure future.”
The establishment of a digital foundation for both informal and formal workforces is expected to ease the transition from the existing labor laws to the new labor code regime. Prime Minister Narendra Modi has described the new labor codes as the most significant reform in India’s labor landscape since independence, suggesting they will provide improved conditions for workers and make business operations easier for employers.
However, this transition may encounter resistance due to the potential challenges the new codes could present for both employees and employers. A coalition of ten Central Trade Unions (CTUs) has been protesting against the four labor codes enacted during PM Modi’s administration: the Code of Wages (2019) and the Industrial Relations Code, Code on Social Security, and the Code on Occupational Safety, Health, and Working Conditions (2020). Even the government-aligned Bharatiya Mazdoor Sangh (BMS) expresses concerns over specific provisions that they believe require further discussion before implementation.
For employers, moving from the old labor laws to the new codes will also present difficulties, despite the consolidation of 29 out of 44 labor laws to simplify the process. Smaller and mid-sized companies, in particular, may struggle with the complexities of compliance under the new laws and the financial implications of these changes.
Issues have already been observed with the implementation of the EPFO, ESI, and eShram platforms under the new government directives. States and UTs must also ensure they have sufficient skilled manpower, technological infrastructure, and effective operational machinery in place.
Nevertheless, the rapidly evolving employment landscape requires all stakeholders to adapt to new realities, especially those driven by technology and artificial intelligence. Given that the four labor codes have existed for nearly five years amid significant shifts in the work environment, timely updates to the codes will be necessary. Rigid enforcement of these codes without addressing the current challenges could have dire consequences in the post-COVID-19 work environment.
The CTUs continue to threaten significant protest actions against the implementation of the labor codes, including a nationwide strike. Employers may find themselves caught between government pressures to enforce the new laws and the demands of protesting workers. (IPA Service)
