Employers often hesitated to expand beyond certain thresholds to avoid stricter regulations, resulting in jobless growth. By simplifying the legal framework and reducing ambiguity, the new labour codes promise greater clarity and flexibility for both employers and workers.

One of the key advantages highlighted is the potential to generate employment. The Industrial Relations Code allows larger firms greater flexibility in hiring and retrenchment, subject to conditions. Proponents believe this will encourage companies to scale up operations without fear of excessive regulatory burden. If businesses are more willing to expand, they argue, job creation will follow—especially in manufacturing, which India hopes to revive under its “Make in India” initiative.

Another positive aspect is the attempt to extend social security to the unorganised sector. For the first time, gig workers and platform workers—such as delivery personnel and ride-share drivers—are formally recognised under the Social Security Code. This recognition opens the door to benefits like insurance, maternity support, and old-age protection. In a country where nearly 90% of the workforce operates in the informal sector, this is a significant step toward inclusivity, at least in principle.

However, critics are not convinced. Trade unions and labour activists argue that the reforms tilt the balance too heavily in favour of employers. The relaxed thresholds for layoffs and factory closures, they say, dilute job security and weaken collective bargaining power. In a labour market where unemployment and underemployment are already pressing concerns, greater flexibility for employers could translate into greater insecurity for workers.

The dilution of inspection mechanisms has also raised eyebrows. While the government promotes “trust-based compliance,” critics fear this could lead to weaker enforcement of safety standards and wage protections, particularly for vulnerable workers. Without strong monitoring, laws meant to protect workers may exist only on paper.

Another concern lies in implementation. Labour is a concurrent subject, meaning both the Centre and the States must align their rules for the codes to become fully operational. Several states have introduced their own versions, leading to variations that may undermine the goal of uniformity. Until the codes are fully enforced and tested on the ground, their real impact remains uncertain.

There is also the question of timing. Introducing such sweeping reforms amid economic uncertainty has fuelled anxiety among workers. Many fear that flexibility may come at the cost of dignity and stability. In a country where social security systems are still developing, job loss can push families into poverty almost overnight.

Yet, it would be unfair to dismiss the reforms outright. India’s labour market desperately needs modernisation. Informality, low productivity, and rigid regulations have long stifled growth. The challenge lies in ensuring that flexibility does not become exploitation, and simplification does not result in erosion of rights.

Ultimately, India’s labour law shake-up is neither a clear boon nor an outright bane. Its success will depend on how the laws are implemented, enforced, and balanced. Strong grievance redressal mechanisms, transparent enforcement, and continuous dialogue with workers’ representatives will be crucial.

Reform, after all, is not just about making business easier—it is about making growth fair. If India can strike that balance, the labour law overhaul could become a foundation for inclusive and sustainable development.