Labour codes implementation to play key role in supporting formal employment: Economic Survey

Effective implementation of the new Labour Codes would play a key role in supporting formal employment and improving security for women and gig workers, the Economic Survey for 2025-26 stated.

The document, tabled in Parliament on Thursday, noted that four codes were notified on November 21, 2025, and rules are expected to be in place in the next few months.

It suggested that as definitions of work continue to evolve, dynamic labour policy and flexible regulatory frameworks would ensure employment expansion, worker security, and well-being.

The draft rules under the four codes—Code on Wages, 2019, Industrial Relations Code, 2020, Code on Social Security, 2020, and the Occupational Safety, Health and Working Conditions Code, 2020—were pre-published on December 31, 2025, for stakeholder comments.

India has recorded significant employment growth in recent years, supported by structural reforms, tax rationalisation, and a sustained focus on skill development, it noted.

The employment and skilling ecosystem is being reshaped by demographic shifts, technological change, and evolving industry needs, including the expansion of gig and platform work, it pointed out.

Amid these developments, “the effective implementation of Labour Codes would play a key role in supporting formal employment and improving security for women and gig workers”.

On the skills front, it stated that the flexible vocational pathways starting at the school level will be required going forward.

Targeted skilling for women and youth in high productivity sectors will be critical for inclusive outcomes, it suggested.

As India moves ahead in its growth journey, advancing institutional convergence and fostering a whole-of-government approach would enable the skilling and employment initiatives to operate coherently, it suggested.

The development of an information system that brings together data from e-Shram on unorganised workers, NCS (National Career Service portal) on job vacancies and required skills, and SIDH on training opportunities can lay the foundation for an integrated digital public infrastructure, it suggested.

This could set the stage for a sharper emphasis on industry-driven skilling, which remains central to building job-ready talent and strengthening skill-industry linkage, it pointed out.

It noted that India’s workforce of over 56 crore holds tremendous potential for its economic growth.

Labour market indicators point to a steady job market, with improving labour force participation, declining unemployment, and robust job creation in both the organised and unorganised sectors, it noted.

To fully harness the demographic dividend, creating quality jobs with sustainable livelihoods is essential, it suggested.

Structural barriers to female participation are being addressed through the provision of safe, affordable accommodation and flexible and hybrid work arrangements, it noted.

There is a growing focus on expanding social security, income protection, and grievance redressal mechanisms for gig and platform workers to safeguard their well-being, it noted.

While addressing the quantity of labour, it is equally important to improve its quality, as economic growth relies on both the size and capabilities of its labour force, it suggested.

To achieve this, opportunities for vocational education at all levels are vital for strengthening the skill ecosystem and realising the Viksit Bharat’s vision, it suggested.

The labour markets in India are undergoing significant structural transformations driven by digitalisation, green energy transition, and emerging forms of employment such as gig and platform work, it noted.

In the post-pandemic growth phase, the emphasis has shifted from the quantity of jobs to the quality of work, reflecting a more inclusive and sustainable vision of the labour market.

It suggested that policies should promote flexible work, hybrid models, and gender-responsive standards, including maternity benefits, equal pay, and protections against harassment.

The newly enacted Labour Codes now allow women workers to work from home (Section 59(5), Code on Social Security 2020) after availing themselves of the maternity benefit (Section 60, Code on Social Security 2020).

Recent policy initiatives have prioritised identifying unorganised workers and enhancing their integration with the formal economy through the welfare and skill development systems.

The Code on Social Security, 2020 (CSS) defines unorganised workers as home-based, self-employed or wage workers in the unorganised sector and includes a worker in the organised sector who is not covered by the Industrial Disputes Act, 1947.

The e-Shram portal is steadily bridging the gap between informal and formal employment, serving as a key institutional mechanism for extending social protection to unorganised workers, it noted.

The portal serves as a National Database of Unorganised Workers, which includes data on construction workers, migrant workers, gig and platform workers, street vendors, domestic workers, and agriculture workers.

As of January 2026, the portal has successfully registered over 31 crore unorganised workers.

It noted that women account for 54% of total registrants, substantially strengthening the reach of gender-focused welfare schemes.

Each registrant is assigned a Universal Account Number (UAN), which is linked to their Aadhaar and mobile number, ensuring the portability of scheme benefits when workers move across platforms, locations, or employment arrangements.

The four Labour Codes have consolidated 29 central laws to streamline regulations and extend protections to workers.

Complementing the roll-out of the Centre’s Labour Codes, 32 states/UTs have published draft rules under the Codes, it noted.

The Labour Codes have formally recognised gig and platform workers, expanding social security, welfare funds, and benefit portability.

Going forward, ensuring algorithmic transparency and promoting worker-friendly practices will be crucial, it suggested.

As India’s gig workforce is projected to expand to 23.5 million by 2030, according to NITI Aayog, pressure is mounting on the Centre to move beyond just years of policy announcements and finally deliver tangible welfare measures, particularly at a time when platforms themselves seem ready to comply.

The new labour codes have formally recognised gig workers, promising social security, healthcare coverage, and identity registration. But, on-ground implementation remains patchy, at best. Meanwhile, platforms are still awaiting clarity on final rules and operational guidelines. 

This year’s Budget comes at a moment when gig work has firmly entered mainstream economic and political discourse, driven by the rapid growth of quick commerce, rising worker unrest, and unionisation.

However, unions and labour experts broadly agree on one thing: Budget 2026 is likely to prioritise incremental welfare measures, such as insurance and access to credit, over much-needed implementation around social security, fair pay, labour rights, and platform accountability.

(With inputs from PTI)