29 Industrial Relations in a Changing Scenario: Liberalisation, Globalisation, Contractualisation, the Gig Economy, the Four Labour Codes and the Future of Work
29.1 A Field Under Transformation
The industrial-relations system that grew out of the post-war Indian economy was designed for a particular world — large public-sector and organised-sector employers, stable jobs, well-organised central unions, and a state that played a strong protective and conciliatory role. Since 1991, every one of those parameters has changed. Capital is mobile; competition is global; technology re-shapes jobs every few years; new forms of work (platform, gig, remote) have appeared; central unions have lost ground to enterprise-level bodies. This chapter surveys the changes and the policy response — the four Labour Codes of 2019 and 2020.
29.2 1 · Drivers of Change
| Driver | What it does to IR |
|---|---|
| Liberalisation (1991) | Reduced state ownership; opened markets; raised competition |
| Globalisation | Cross-border capital, trade and labour flows; international labour standards become reference points |
| Technology and digitisation | Automation, AI, platform work; jobs change content rapidly |
| Demographics | Youthful workforce, urbanisation, female labour-force participation |
| Skill mismatch | Education-to-job gap |
| Pandemic and remote work (2020 onward) | Hybrid work, accelerated digitisation, new welfare expectations |
29.3 2 · Liberalisation 1991 — A Watershed for Indian IR
The 1991 economic reforms — devaluation, dismantling of industrial licensing, liberalised foreign investment, gradual disinvestment — reshaped Indian IR in five recognisable ways.
| Effect | Description |
|---|---|
| Decline of organised-sector employment share | New growth was largely in the unorganised and informal sectors |
| Decline of central-union influence | Enterprise-level and independent unions gained ground |
| Rise of contract labour | Cost flexibility through Contract Labour (R&A) Act 1970 arrangements |
| Shift in bargaining focus | From confrontational to productivity-linked, concessionary or job-security bargaining |
| Voluntary retirement schemes (VRS) | Massive use in PSUs as a softer alternative to retrenchment |
29.4 3 · Contractualisation and the Informal Sector
29.4.1 Concept
Contractualisation is the shift from direct, permanent employment to indirect, contract-based employment through intermediaries. The legal route is the Contract Labour (Regulation and Abolition) Act 1970.
| Drivers | Forms |
|---|---|
| Cost flexibility | Fixed-term contracts |
| Avoid retrenchment costs | Outsourced services |
| Skill-on-demand | Manpower agencies |
| Project-based work | Daily-wage hire |
| Reluctance to expand permanent rolls | Casual / temporary categories |
29.4.2 The Informal-Sector Reality
The National Commission for Enterprises in the Unorganised Sector (NCEUS, 2009) — Arjun Sengupta’s commission — estimated that over 90 % of India’s workforce is in the unorganised sector. The figure remains the textbook benchmark for grasping the IR challenge.
29.5 4 · The Gig and Platform Economy
29.5.1 Concept
A gig worker performs work or participates in a work arrangement and earns from such activities outside a traditional employer-employee relationship. A platform worker does this through an online platform (Uber, Ola, Swiggy, Zomato, Urban Company).
29.5.2 Statutory Recognition
The Code on Social Security 2020 — for the first time in Indian law — defined “gig worker” (Section 2(35)) and “platform worker” (Section 2(61)). The Code empowers government to frame social-security schemes for them and provides for a National Social Security Board for unorganised, gig and platform workers.
29.5.3 Why Gig Work Stretches IR Concepts
- The worker is technically a partner / independent contractor, not an employee.
- No fixed workplace, hours or supervisor.
- No collective bargaining counter-party in the traditional sense.
- Algorithmic management replaces human supervisor.
- Trade-union organisation is harder where workers are dispersed and atomised.
29.6 5 · Declining Union Density
- Indian organised-sector union density peaked in the 1980s.
- Central-union membership claims now far exceed verified, registered numbers.
- New growth in independent enterprise-level unions in IT, services and the new private sector.
- Verification of trade-union membership — a long-standing issue — moves toward secret-ballot under the IR Code 2020.
- Multiplicity of unions remains a recurring complaint.
29.6.1 Central Trade Union Organisations (CTUOs) — India
| Union | Founded | Affiliation |
|---|---|---|
| AITUC | 1920 | Left, CPI |
| INTUC | 1947 | INC |
| HMS | 1948 | Socialist tradition |
| BMS | 1955 | Sangh Parivar |
| CITU | 1970 | CPI(M) |
| AIUTUC | 1958 | SUCI(C) |
| UTUC | 1949 | RSP / Forward Bloc |
| TUCC | 1970 | Trinamool / regional |
| LPF | 1970 | DMK |
| SEWA | 1972 | Independent — women in the unorganised sector |
| AICCTU | 1989 | CPI (ML) Liberation |
29.7 6 · The Four Labour Codes (2019–2020)
The most consequential Indian IR reform since Independence consolidated 29 central labour laws into four Codes.
| Code | Year | Laws subsumed (illustrative) | Core scope |
|---|---|---|---|
| Code on Wages | 2019 | Payment of Wages 1936, Minimum Wages 1948, Payment of Bonus 1965, Equal Remuneration 1976 | Wages, minimum wage, bonus, equal pay |
| Industrial Relations Code | 2020 | Trade Unions 1926, Industrial Employment (Standing Orders) 1946, Industrial Disputes 1947 | Unions, bargaining, dispute settlement, retrenchment |
| Code on Social Security | 2020 | EPF 1952, ESI 1948, Maternity 1961, Gratuity 1972, Building & Other Construction Workers 1996, Unorganised Workers 2008 + 5 others | Social-security framework including gig and platform workers |
| Occupational Safety, Health and Working Conditions Code | 2020 | Factories 1948, Mines 1952, Contract Labour 1970, Inter-State Migrant Workmen 1979 + 9 others | Safety, working hours, leave, welfare |
Wages → Industrial Relations → Social Security → Occupational Safety, Health & Working Conditions.
29.7.1 Key Innovations in the IR Code 2020
| Provision | Detail |
|---|---|
| Negotiating union / council | Sole negotiating union at 51% membership; otherwise negotiating council with unions having 20% or more |
| Standing orders | Now applicable in establishments with 300+ workers (raised from 100) |
| Lay-off, retrenchment, closure approval | Threshold raised to 300+ workers for prior government permission |
| Strike notice | Universal 14 days’ notice for all establishments (earlier only public utilities) |
| Grievance Redressal Committee | Continued — establishments with 20+ workers; equal employer-worker, women representation, decision within set time |
| Worker re-skilling fund | Funded by employer contribution for retrenched workers |
| Fixed-term employment | Recognised statutorily with proportionate benefits |
29.7.2 Key Innovations in the Code on Wages 2019
- Universal minimum wage applicable to all employees (not only scheduled employment).
- Floor wage to be fixed by the central government — below which states cannot set their minimum wage.
- Single definition of “wages” across the Codes (with limits on allowances).
- Time-bound payment of wages.
- Bonus eligibility salary cap raised; equal remuneration provisions.
29.7.4 Key Innovations in the OSH&WC Code 2020
- Threshold for factory definition raised — 20 workers with power, 40 without.
- Single registration, single licence, single return for many establishments.
- Annual paid leave with one earned-leave day per 20 days of work.
- No employment of women in hazardous processes only on health-and-safety grounds; women may work night shifts with consent.
- Inter-state migrant workers statutorily covered.
29.7.5 Concerns Raised by Critics
- Threshold increases (lay-off / retrenchment / standing orders at 300+) leave more workers without the protections.
- Definition of “worker” still excludes large segments of the new economy.
- Compliance burden falls largely on the formal employer — informal sector remains under-covered in practice.
- State-level rules are still being finalised, delaying implementation.
- Union concerns that strike-notice and approval requirements weaken industrial action.
29.8 7 · Other Major Changes in the Modern IR Landscape
29.8.1 Decentralisation of Bargaining
Bargaining has shifted from industry-region (textiles, plantations, banking, ports) toward plant-level and enterprise-level negotiation — and within enterprises, increasingly toward individual contracts in white-collar work.
29.8.2 Tripartism Continuing
The Indian Labour Conference (ILC) and Standing Labour Committee (SLC) continue as tripartite consultative bodies, though their influence has declined.
29.8.3 Workers’ Participation Re-Considered
WPM has receded from the agenda as collective bargaining and ESOPs took its place. The Comprehensive Scheme of 1983 remains the high-water mark.
29.8.4 Rise of HR and HRM Practice
Modern HRM emphasises individual engagement, performance management, well-being, talent management — somewhat displacing the collective IR architecture.
29.8.5 International Labour Standards
India remains an active ILO member. Of the eight fundamental ILO conventions, India has ratified six (including the two on forced labour, two on child labour, and the equal-remuneration convention) and has not yet ratified the two on freedom of association (C-87) and the right to organise and collective bargaining (C-98).
29.9 8 · The Future of Work
29.9.1 Forces in Play
- Automation and AI — task displacement and job re-design.
- Platform work and gig economy — atomisation of work.
- Hybrid / remote — workplace dispersed beyond the factory.
- Lifelong learning — skills age faster than careers.
- Care economy and green jobs — new employment categories.
- ESG and stakeholder responsibility — broader claims on the employer.
29.9.2 Likely IR Adjustments
- Portable benefits that follow the worker, not the job.
- New forms of collective voice for platform and gig workers.
- Algorithmic accountability — transparency in management decisions taken by software.
- Skill insurance and lifelong-learning accounts — public-private financing.
- Stronger tripartite framework for the unorganised sector, with aggregator contributions.
29.10 Practice Questions
The Code on Wages was enacted in:
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Under the IR Code 2020, the sole-negotiating-union threshold is:
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"Gig worker" is for the first time defined under which Indian statute?
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Under the IR Code 2020, prior government permission for lay-off, retrenchment or closure is required when an establishment has at least:
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Under the IR Code 2020, the strike-notice requirement of 14 days now applies to:
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The NCEUS / Arjun Sengupta Commission estimated India's unorganised-sector workforce share at approximately:
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Indian economic liberalisation began in:
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Match the Code with its principal coverage:
| (i) | Code on Wages 2019 | (a) | Unions, bargaining, dispute settlement |
| (ii) | Industrial Relations Code 2020 | (b) | EPF, ESI, gratuity, maternity, gig workers |
| (iii) | Code on Social Security 2020 | (c) | Safety, hours, leave, welfare |
| (iv) | OSH&WC Code 2020 | (d) | Wages, minimum wage, bonus |
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The concept of a "floor wage" applicable across India was introduced by:
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Under the IR Code 2020, standing orders apply to establishments with:
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An Uber driver in India is best classified as:
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Bharatiya Mazdoor Sangh (BMS) was founded in:
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SEWA — the Self-Employed Women's Association — was founded in:
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Among the eight fundamental ILO conventions, India has not ratified the ones on:
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CITU was founded in:
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A notable innovation of the IR Code 2020 is the formal recognition of:
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The IR Code 2020 sets up a Worker Re-skilling Fund financed by:
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Under the OSH&WC Code 2020, a "factory" using power must employ at least:
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INTUC (Indian National Trade Union Congress) was founded in:
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India's labour reform of 2019-20 consolidated approximately 29 central labour laws into:
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29.11 Quick Recall
- Drivers of change: liberalisation (1991), globalisation, technology, demographics, skill mismatch, pandemic.
- 1991 effects on IR: shrinking organised-sector share, declining central-union influence, rise of contract labour, shift to productivity / concessionary bargaining, VRS in PSUs.
- Contractualisation — Contract Labour (R&A) Act 1970.
- NCEUS / Arjun Sengupta — over 90 % of workforce in unorganised sector.
- Gig and platform workers — first defined in Code on Social Security 2020 (Sections 2(35) and 2(61)).
- Central unions: AITUC (1920), INTUC (1947), HMS (1948), BMS (1955), CITU (1970), SEWA (1972).
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Four Labour Codes — mnemonic W-I-S-O:
- Code on Wages 2019 — minimum wage, floor wage, bonus, equal pay.
- Industrial Relations Code 2020 — unions, bargaining (sole union 51%, council 20%+), standing orders (300+), retrenchment approval (300+), universal 14-day strike notice, Re-skilling Fund, fixed-term employment.
- Code on Social Security 2020 — EPF, ESI, gratuity, maternity + gig and platform workers, aggregator contribution.
- OSH&WC Code 2020 — safety, hours, leave; factory threshold 20 (power) / 40 (no power); women in night shift with consent; inter-state migrant workers covered.
- ILO fundamentals — India has not ratified C-87 (freedom of association) and C-98 (right to organise & collective bargaining).
- Future of work: portable benefits, collective voice for gig workers, algorithmic accountability, lifelong-learning accounts, broader tripartism for the unorganised sector.