Labour codes to play key role in employment; private investment needed

Effective implementation of Labour Codes will play a key role in boosting formal employment and enhancing security for women and gig workers, the Economic Survey for 2025-26 stated, while outlining the need for investment and coordination from private sector companies.The document, tabled in Parliament by Finance Minister Nirmala Sitharaman 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.

The Survey 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.“Implementing the Codes marks the first step towards the labour market transformation. The transition will require coordination and investment from the private sector,” it pointed out.The pre-Budget document suggested that the companies must enhance their systems, update policies, reevaluate workforce models, and improve their digital readiness to remain competitive. While the Codes offer a unified framework, it is up to the private sector to integrate this framework into daily operations, it further suggested.

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”, it stated.

Survey calls for targeted Skilling, Vocational pathways at school level: On the skills front, the Survey 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.

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.

Digitalisation, gig work drive structural shift in labour markets: 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 new codes now allow women workers to work from home after availing themselves of thematernity benefit.