India is on the cusp of a transformative economic journey, poised to become the world’s third-largest economy. But this ambitious goal hinges not just on capital investment, technological advancement, or global trade. One of the most significant drivers of this transformation is labour—specifically, how effectively India’s vast and diverse workforce is integrated into the economic narrative. Labour is the backbone of every economy, and India's growth potential is inextricably linked to how it addresses the challenges its workers face. In light of these challenges, labour policies must go beyond minimum wages; they must be comprehensive and future-oriented.

As of 2023, India’s labour participation rate stood at 40%, significantly below global averages. The vast majority of India’s workforce is still employed in the informal sector, where workers have no security, no benefits, and no formal representation. This is a glaring gap in a country that aspires to global economic power.

According to the Centre for Monitoring Indian Economy (CMIE), millions of workers are trapped in informal, unregulated jobs—without the benefits of social security, access to healthcare, or retirement pensions. Additionally, many of these workers earn meagre wages that fail to provide even basic living standards. Economists estimate that transitioning just a portion of this workforce into formal, well-protected employment could lead to substantial economic growth. The International Labour Organisation (ILO) argues that increasing formal employment by just 1% could add as much as 0.5% to GDP annually.

India has several key sectors, including construction, textiles, logistics, and manufacturing, which employ millions of workers. These sectors are prime candidates for becoming global leaders if only they were supported by a better-trained and more protected workforce. Therefore, labour empowerment is not a welfare issue—it is an economic necessity.

The need for comprehensive labour reform

India has made substantial progress in labour policy reform. The consolidation of 29 central labour laws into four broad labour codes—wages, industrial relations, social security, and occupational safety—is a significant step forward. However, while the codes are designed to simplify compliance and protect workers’ rights, their implementation has been inconsistent across states, and enforcement mechanisms remain under-resourced.

To achieve true progress, labour policies must move beyond compliance with minimum wage laws. There is an urgent need for policies that focus on:

1. Universal Access to Social Security:
   
   

   • The recent push towards expanding social security coverage is a positive step. Extending schemes such as the Employees' Provident Fund Organisation (EPFO), Employees' State Insurance Corporation (ESIC), and other insurance schemes to gig workers, informal labourers, and workers in the unorganised sector is crucial. By providing these workers with the same social security benefits as formal employees, India can help ensure that they are not left vulnerable to economic shocks.
     
     

2. Rationalisation of Minimum Wages:
   
   

   • The concept of minimum wage needs a substantial overhaul. The current minimum wage laws often fail to reflect the reality of inflation or the regional disparity in living costs. A new, dynamic system must be implemented that ensures a living wage—indexed to inflation and adjusted for regional cost-of-living differences. Only then can workers truly feel the benefits of the wage laws.
     
     

3. Portable Benefits for Migrant Workers:
   
   

   • India’s vast migrant labour force, which often moves across state lines, faces a range of challenges, from the loss of benefits to lack of job security. Policies must be designed to offer portability of entitlements such as health insurance, public distribution system (PDS) benefits, and pensions. This would ensure that migrant workers are not left behind when they move for work.
     
     

4. Real-Time Grievance Redressal:
   
   

   • Technology can play a pivotal role in addressing worker grievances. Digital platforms can be used for faster and more transparent complaint resolution, as well as conflict management. E-governance solutions, like the e-Shram portal, have already begun registering workers from the unorganised sector, but the next step is to ensure these workers can access immediate help, whether for wage disputes or unsafe working conditions.
     
     

These reforms go beyond merely meeting the minimum wage standards—they focus on empowering the workforce with benefits, protection, and opportunities for personal and professional growth.

Digital inclusion in the workforce

The Fourth Industrial Revolution is reshaping the way work is performed. While automation, artificial intelligence (AI), and digital platforms are displacing some traditional jobs, they are also creating new opportunities.

However, to ensure that these opportunities reach all sections of the workforce, digital inclusion must become a priority. Many blue-collar workers, particularly in rural India, are still excluded from the digital revolution. Bridging this gap is vital if India wants to develop a workforce that is prepared for the future of work.

Government and industry initiatives must focus on:

1. Digital Literacy Programmes:
   
   

   • These programmes should focus on upskilling workers in digital tools and software that are becoming essential in all industries. Initiatives that target blue-collar workers in particular—who may not be comfortable with digital platforms—will help ensure that India’s workforce can keep pace with technological changes.
     
     

2. Accessible Upskilling Platforms:
   
   

   • There needs to be a focus on creating mobile-friendly, vernacular-based platforms that make upskilling accessible to a wider population. For example, upskilling in data management, e-commerce logistics, and AI could open new job opportunities for millions of workers who may not have had access to such training otherwise.
     
     

3. Government and Industry Collaboration:
   
   

   • Public-private partnerships will be crucial in establishing apprenticeship models and creating new skill development programmes in fields that are becoming critical to the future economy. Collaboration between government bodies, educational institutions, and businesses is necessary to equip the workforce with future-proof skills.
     
     

HR can lead the charge in this transformation by designing training programmes, fostering partnerships with tech companies, and ensuring that the workforce stays ahead of the curve when it comes to digital capabilities. HR’s role in reshaping India’s labour market through education and digital skills development is more crucial than ever.

On the other hand, India’s workforce participation rate for women is a glaring issue. As of 2023, only 24% of India’s women are part of the workforce—a far cry from the global average. Factors such as cultural norms, the lack of childcare facilities, concerns over workplace safety, and gender wage gaps continue to hamper women’s access to economic opportunities.

Studies have shown that increasing women’s labour force participation could add $700 billion to India’s GDP by 2025. However, achieving this potential requires targeted efforts to bridge the gender divide in the workforce.

Key policies to promote gender equality in the workforce include:

1. Mandatory Crèche Facilities: Workplaces should be required to provide on-site crèche facilities or childcare support for working mothers. This will enable more women to participate in the workforce without sacrificing their responsibilities as caregivers.
   
   

2. Gender-Sensitive Safety Standards: India must enforce stronger workplace safety standards that specifically address the needs of women. This includes ensuring that workplaces are free from harassment and that there are adequate mechanisms for reporting and addressing grievances.
   
   

3. Equal Pay Enforcement: Gender pay gaps continue to persist across various industries in India. Policies aimed at enforcing equal pay for equal work are crucial for achieving gender parity in the labour market.
   
   

4. Flexible Work Models: To accommodate women with family care responsibilities, flexible work models—such as remote work options and flexible hours—must be embraced by businesses. HR can play a key role in making these models more mainstream.
   
   

Migrant labour: India’s invisible workforce

Migrant labour in India represents another area of concern. Migrant workers often face exploitation, poor working conditions, and a lack of access to basic rights and benefits. The COVID-19 pandemic shed light on the plight of migrant workers, many of whom were stranded without wages, food, or transport.

To address these issues, labour policies must ensure the protection and dignity of migrant workers. Policies must include:

1. Portability of Entitlements: Migrant workers should be able to retain their benefits as they move across state lines. This includes health cards, public distribution system (PDS) entitlements, and insurance.
   
   

2. Affordable Urban Housing: Many migrant workers live in substandard conditions due to the lack of affordable housing in urban areas. Policies that facilitate affordable housing options and address rental disparities will improve their quality of life.
   
   

3. Skill Mapping and Job Portals: Creating platforms for skill mapping and matching workers to available jobs across regions will ensure that migrant workers can find work that matches their skill set, reducing exploitation and improving their employment prospects.
   
   

What happens when labour is prioritised

Several states and businesses in India have already taken steps towards prioritising the welfare of labour.

1. Kerala’s Worker Welfare Fund: This initiative offers health insurance, education assistance, and pension benefits to unorganised workers. Over 9 million workers benefit from this scheme.
   
   

2. Odisha’s Migrant Labour Tracking System: Odisha has implemented a system to track and provide support for seasonal migrant workers, ensuring that they have access to necessary services and benefits, regardless of their location.
   
   

3. Tata Steel’s Inclusion Programmes: Tata Steel has implemented inclusive welfare schemes that integrate contract workers into the company’s social security and benefit plans. This has set a benchmark for industries across India.
   
   

The role of HR in labour reform

HR professionals must play an integral role in reshaping India’s labour policies. HR can drive labour reform by ensuring that:

1. Employee Well-being Is Prioritised: Beyond wages, HR should focus on holistic employee well-being, which includes mental health support, career development, and work-life balance.
   
   

2. Skills Development: As the world of work evolves, HR must champion continuous learning and development, ensuring that employees are equipped with the skills needed for emerging industries.
   
   

3. Diversity and Inclusion: HR should foster diverse workforces by promoting gender equality, supporting migrant labour, and creating policies that enhance inclusivity.
   
   

By embracing these strategies, HR professionals can be at the forefront of labour reform in India, helping to create a more equitable and sustainable labour market.

India’s labour policies must evolve beyond the focus on minimum wages and consider the broader spectrum of worker rights, well-being, and future-proofing the workforce. As the country moves towards its next phase of economic growth, the role of HR is critical in leading this transformation. By adopting inclusive policies, prioritising employee well-being, embracing technology, and addressing gender and migrant labour disparities, India can build a more equitable, sustainable, and productive workforce ready for the challenges of the future.