Why India’s New Labour Codes Could Deepen Insecurity for Unorganised Workers

As India moves to implement the labour codes enacted in 2019 and 2020, resistance from trade unions and workers’ organisations has only intensified. While much of the public debate has focused on implications for the organised sector, the deeper and more consequential fallout is for unorganised workers — who make up over 90% of India’s workforce and generate nearly two-thirds of its GDP. With Tamil Nadu now deliberating rules under the Social Security Code, the risks these laws pose to informal workers demand urgent scrutiny.

How the labour codes were pushed through

The four labour codes — on wages, industrial relations, social security, and occupational safety, health and working conditions — were passed without the customary tripartite consultation at the Indian Labour Conference, where workers, employers and governments traditionally deliberate on labour reforms. This procedural break itself marked a departure from India’s long-standing consultative labour tradition.

The Union government has described the codes as a consolidation of existing labour laws and a step towards universalising social security. But for unorganised workers, consolidation has often meant dilution or outright repeal of sector-specific protections rather than their integration into a stronger framework.

Consolidation that erases hard-won protections

Nowhere is this clearer than in the treatment of the “Building and Other Construction Workers Act”. The Act contained around 180 rules governing safety, welfare and working conditions at construction sites — one of India’s most hazardous sectors.

Under the new “Occupational Safety, Health and Working Conditions Code”, these detailed safeguards are largely absent from the central rules. This omission is alarming given the high incidence of workplace accidents and fatalities in construction. The replacement of physical inspections with web-based compliance mechanisms further weakens enforcement, particularly in informal worksites that are invisible to digital systems.

Conflict with international labour commitments

The shift to online inspections directly undermines India’s obligations under “International Labour Organization” Convention 81, which mandates effective labour inspection systems. Equally troubling is the absence of any serious engagement with occupational diseases that disproportionately affect informal workers.

Silicosis among construction workers, pesticide-linked cancers among agricultural labourers, and chronic ailments faced by salt workers remain unaddressed. This neglect violates ILO Convention 161, which requires states to develop national policies for occupational health services, including identification, treatment and rehabilitation of workers suffering from occupational diseases.

The social security mirage for informal workers

The “Social Security Code” presents perhaps the starkest contrast between organised and unorganised workers. While organised workers are promised defined benefits, informal workers are offered vaguely worded “welfare schemes”, without clarity on entitlements or funding.

Compounding this is the abolition of sector-specific cesses — such as those for beedi, mining and salt workers — following the introduction of the Goods and Services Tax. These cesses once formed the financial backbone of welfare boards. Their removal, without replacement funding from either employers or the Centre, leaves informal workers without guaranteed resources for social protection.

Welfare boards under threat

A particularly serious concern is the future of state-level welfare boards. The Social Security Code envisages a single, centralised welfare board for all unorganised workers, ignoring the diversity of sectors and risks they face. Construction and gig workers receive some recognition; others effectively disappear from the policy imagination.

In Tamil Nadu, this could mean the dissolution of 39 sector-specific welfare boards established under the “Tamil Nadu Manual Workers Act”. These boards currently provide old-age pensions, maternity benefits and educational assistance to workers’ children. There are no saving clauses in the Code to protect them.

Even more contentious is the integration of welfare registration into the centralised e-Shram portal, which opens the door for the Union government to exercise control over nearly ₹1 lakh crore in accumulated welfare funds, particularly those raised for construction workers.

Why Tamil Nadu’s hesitation matters

Unlike some States, such as Andhra Pradesh, which have already dismantled welfare boards following the Codes, Tamil Nadu has so far held back from notifying rules under the Social Security Code. With nearly three crore informal workers and around two crore registered beneficiaries, the stakes are exceptionally high.

Tamil Nadu’s labour welfare architecture, built through decades of union mobilisation and state legislation, represents one of the most robust systems of protection for informal workers in India. Diluting it without credible alternatives would amount to a profound rollback of social security.

What choices lie ahead for States

The unfolding debate is no longer just about labour reform, but about the future of rights-based welfare in India. The Codes replace enforceable, sector-specific protections with discretionary schemes and centralised control, weakening both federalism and worker agency.

States like Tamil Nadu now face a defining choice: whether to implement the Codes as they stand, or, like Kerala, resist them and push for saving clauses that protect existing welfare institutions. For millions of unorganised workers, the outcome will determine whether labour reform delivers security — or deepens precarity.