**Executive Summary**
This document is a response to an unstarred question in Lok Sabha (No. 2341) to be answered on December 15, 2025, concerning the SBI projections on the impact of the new Labour Codes. The response, given by the Minister of State for Labour and Employment, addresses various concerns regarding the codes' impact on consumption, formalization of the workforce, unemployment, compliance burden on MSMEs, and overall worker welfare. The Labour Codes came into force with effect from 21.11.2025.
**Key Points / Main Content**
* **Labour Law Reforms:**
* Labour law reforms are an ongoing process to update legislative and governance systems.
* The goal is to create effective, flexible laws aligned with the current economic and industrial climate.
* **Labour Codes Overview:**
* The four Labour Codes aim to reduce compliance burden and enable flexible work arrangements.
* They are designed to boost employment, skilling, and industrial growth.
* The Codes intend to strengthen worker protections, including statutory minimum wage, social security, and healthcare, even for unorganized workers.
* The Codes came into force with effect from 21.11.2025.
* **Fixed Term Employment (FTE):**
* The Industrial Relations Code 2020 introduces Fixed Term Employment (FTE).
* FTE workers are entitled to all benefits at par with permanent employees.
* FTE workers are eligible for gratuity after one year of service instead of five.
* **Minimum Wages:**
* The Code on Wages, 2019 provides for a statutory right to minimum wages for all employees.
* Minimum wage applicability extends to all employees across organized and unorganized sectors.
* **Occupational Safety and Health:**
* The Occupational Safety, Health and Working Conditions Code, 2020 addresses safety, health, and working conditions.
* It mandates employers to issue appointment letters to all employees to enhance formalization.
* **Social Security:**
* The Code on Social Security, 2020 aims to extend social security benefits to all workers in both organized and unorganized sectors.
* **National Career Service (NCS):**
* The National Career Service (NCS) portal ([www.ncs.gov.in](http://www.ncs.gov.in)) provides career-related services.
* A national database of unorganized workers on the e-Shram portal bridges the labor supply-demand gap.
* **Compliance and Enforcement:**
* Labour is in the Concurrent List, giving both the Centre and States separate enforcement machinery.
* This ensures compliance and effective implementation of labour laws.
* **Simplification and Streamlining:**
* The Labour Codes aim to simplify and streamline regulatory processes.
* This is achieved through rationalized thresholds, digitized forms, and decriminalization of offences.
**Impact Analysis**
**Stakeholder: Workers**
**Impact:**
* Strengthened protections regarding minimum wage, social security, and healthcare.
* Opportunity to benefit from fair wages, dignity, and social protection.
* Increased employment opportunities.
* Improved formalization of employment through mandatory appointment letters.
**Action Required:**
* Understand the new provisions related to FTE, minimum wages, social security, and occupational safety.
* Register on the e-Shram portal to access social security benefits.
**Stakeholder: Employers (including MSMEs)**
**Impact:**
* Reduced compliance burden through simplified processes and digitized forms.
* Flexibility in work arrangements through FTE.
* Balanced environment for enterprises to create employment opportunities.
* Clarity on social security contributions and occupational safety requirements.
**Action Required:**
* Implement FTE provisions as per the Industrial Relations Code 2020.
* Ensure compliance with minimum wage requirements as per the Code on Wages, 2019.
* Issue appointment letters to all employees as mandated by the Occupational Safety, Health and Working Conditions Code, 2020.
* Ensure compliance with social security provisions as per the Code on Social Security, 2020.
**Stakeholder: Government (Centre and States)**
**Impact:**
* Streamlined regulatory processes and enhanced transparency.
* Improved labor law enforcement through separate machinery.
* Increased formalization of the workforce.
* Support to workers.
**Action Required:**
* Oversee compliance and effective implementation of labour laws.
* Monitor the impact of the Labour Codes on employment, wages, and working conditions.
* Update legislative and governance systems as needed.
Key Entities Referenced
Labour Codes: A set of four codes that aim to reform labour laws in India to simplify regulatory processes and improve employment opportunities.
Ministry of Labour and Employment: The Indian government ministry responsible for labour and employment policies, including the Labour Codes.
Industrial Relations Code 2020: A labour code which introduces the provision of Fixed Term Employment (FTE), enabling workers to be engaged for a specified duration with benefits at par with permanent employees.
Code on Wages, 2019: A labour code which provides for a statutory right for payment of minimum wages to all employees in all sectors.
National Career Service (NCS): A national portal for career related services, designed to bridge the labour supply-demand gap.
GOVERNMENT OF INDIA
MINISTRY OF LABOUR AND EMPLOYMENT
LOK SABHA
UNSTARRED QUESTION NO. 2341
TO BE ANSWERED ON 15.12.2025
SBI PROJECTIONS ON IMPACT OF LABOUR CODES
2341. SHRI VIJAYAKUMAR ALIAS VIJAY VASANTH:
SHRI SURESH KUMAR SHETKAR:
Will the Minister of LABOUR AND EMPLOYMENT be pleased to
state:
(a) whether the Government accepts that SBI’s estimate of a Rs.
75,000-crore consumption boost from the new labour codes is
purely theoretical and if so, whether any independent impact
study has been conducted by the Government;
(b) if so, the details thereof;
(c) whether the Government has credible evidence to support the
assumption that 20 per cent of informal workers are likely to shift
to formal employment, despite the persistent failure of past
formalisation efforts and if so, the details thereof;
(d) whether the Government admits that unemployment cannot fall
by 1.3 per cent when several States have yet to fully notify labour
code rules and if so, the details thereof along with the corrective
steps are planned by the Government;
(e) whether safeguards exist to prevent employers from evading
compliance through contractualisation, outsourcing or pushing
workers back into informal arrangements and if so, the details
thereof; and
(f) whether the Government has assessed the compliance burden
on Micro, Small and Medium Enterprises (MSMEs) and small
establishments and if so, the measures proposed by the
Government to ensure that the labour codes do not escalate
costs or trigger job losses?
ANSWER
MINISTER OF STATE FOR LABOUR AND EMPLOYMENT
(SUSHRI SHOBHA KARANDLAJE)
(a) & (b): Reforms in labour laws are an on-going process to update
the legislative as well as governance system to address the need of
the hour so as to make them more effective, flexible and in sync with
Contd..2/-:: 2 ::
emerging economic and industrial scenario. The four Labour Codes
have provisions for reducing compliance burden and enabling
flexible, modern work arrangements thereby facilitating employment,
skilling and industrial growth; reaffirming the Government’s
commitment to a pro-worker, pro-women, pro-youth and pro-
employment labour ecosystem.
(c) to (e): The four Labour Codes came into force with effect from
21.11.2025. The Codes provide for reducing compliance burden and
enabling flexible, modern work arrangements thereby boosting
employment, skilling and industry growth, reaffirming the
Government’s commitment to a pro-worker, pro-women, pro-youth
and pro-employment labour ecosystem.
The Labour Codes strengthen the protection available to
workers, including unorganized workers in terms of statutory
minimum wage, social security and healthcare of workers. The
provision of Fixed Term Employment (FTE) has been introduced in the
Industrial Relations Code 2020, allowing engagement of workers for
a specified duration. Such workers are entitled to all benefits, at par
with permanent employees performing similar work. This provision is
expected to reduce contractualization, increase employability and
meet workers’ aspirations. They are eligible for gratuity after just one
year, instead of five years.
The Code on Wages, 2019 provides for a statutory right for
payment of minimum wages for all employees and extends
applicability of minimum wages to all employees in all sectors
covering both organised and unorganised.
The Occupational Safety, Health and Working Conditions
Code, 2020 provides for provisions related to safety, health and
working conditions of these workers. The Code also mandates every
employer to issue appointment letters to all employees which will
further enhance formalisation.
Further, the Code on Social Security, 2020 aims to extend
social security benefits to all workers both in the organised and
unorganized sectors.
Besides, the National Career Service (NCS) and a national
database of unorganised workers on e-Shram portal of Ministry of
Labour and Employment are in place to bridge the supply-demand in
labour market through convergence of various stakeholders
employers, job-seekers, skilling services and registration
respectively.
Contd..3/-:: 3 ::
The NCS Portal is a one-stop solution for providing career
related services including jobs from private and government sectors
through a digital platform [www.ncs.gov.in].
Labour is in the Concurrent List of the Constitution of
India, therefore, the Centre and the States have separate
enforcement machinery to oversee compliance and ensure effective
implementation of labour laws in their respective sphere.
(f): One of the central aims of the Labour Codes is to simplify
and streamline regulatory processes through rationalised thresholds
leveraging technology thorough digitised forms, registers & returns,
transparency in enhancement and decriminalisation of offences etc.
The Codes create a balanced environment for enterprises to create
employment opportunities for workers to benefit from fair wages,
dignity, and social protection.
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