Walk into any major Indian airport and observe carefully. The CISF personnel who once staffed security and screening posts have been quietly replaced in many functions by private contractual workers. Ask them what they take home every month. You will rarely hear a number above Rs 25,000, and often it is closer to Rs 15,000. On paper, their salaries may be higher, but the outsourcing agencies that deploy them have their own disbursement arithmetic, and the worker bears the brunt of every deduction.

If this is the reality in one of the most visible public spaces in the country, where the state itself is the ultimate client, imagine the condition of a blue-collar worker in a nondescript factory in a mofussil town or a peripheral industrial estate. It is these workers who needed protection most urgently, and it is precisely these workers whom the Modi government’s four new labour codes have left the most exposed. Central rules for the new codes, implemented in November 2025, were notified earlier this month (on 8–9 May).

That’s not simplification; it’s legalising exploitation in the language of reform.

The consolidation of 29 labour laws into four codes is being marketed as a landmark achievement. Overlapping, contradictory statutes did impose real compliance burdens, especially on small businesses. Some of these changes have merit — for instance, universal minimum wages, formal recognition of gig workers and mandatory appointment letters. But reforms must be judged not by stated intentions but their architecture and these codes tilt structurally towards capital and corporate interests.

An honest reading of labour reforms must also reckon with three decades of post-liberalisation experience. The labour law changes of the 1990s were based on an understanding that stringent pro-worker regulations led to lower investment, employment and productivity in registered manufacturing. It was a well-documented pattern, captured by the Besley-Burgess analysis of Industrial Disputes Act amendments between 1958 and 1992. This research became the intellectual scaffolding of the reforms.

But over the next 30 years, the informal sector in fact expanded. Wages stagnated while corporate profits soared. The lesson was that worker protections are not bad per se for industry. It is badly designed, inconsistently enforced regulations that create perverse incentives.

The most consequential changes

The provision that reveals the true character of the new labour codes is the trebling of the retrenchment approval threshold from 100 to 300 workers. Under the old Industrial Disputes Act, any establishment employing 100 or more workers required government approval before retrenchment, layoff or closure. The new threshold of 300 means that more than 80 per cent of India’s manufacturing establishments can now hire and fire without any government oversight. No accountability, no protection for the worker.

The codes also require workers to give 60 days’ notice before a strike plus a cooling-off period of 14 days. It effectively takes away their right to spontaneous collective action. In addition, a workers’ union must now command 51 per cent membership to be formally recognised, a threshold that sidelines smaller unions and reduces representation for diverse worker groups. Rules governing working hours, leave and termination will not apply to establishments with fewer than 300 workers, leaving out most of India’s industrial units.

Workers in small factories will be most vulnerable, with the threshold for defining an industrial unit as a ‘factory’ now raised to 20 or more workers (for units with power) and 40 or more workers (for units without). Wage offences can now be settled by paying a fee, effectively monetising illegality and turning violations into a manageable business cost.

What the codes ignore

The new codes have been notified at a time when the labour market is already in deep crisis. Real wages in rural India have grown at close to zero per cent since 2014. Regular wages, according to the government’s own Periodic Labour Force Survey, contracted between FY22 and FY24, even as GDP grew at 6.7 per cent.

While salaries and wages stagnated (about 57 per cent of India’s blue-collar workers get less than Rs 20,000 a month), the profits of the Nifty 500 companies grew at 34.5 per cent a year compounded between 2020 and 2024.

The government’s argument that worker protections suppress productivity is false to the point of dishonesty. Productivity is not a single-variable outcome. The ILO-recognised KLEMS framework for measuring productivity captures capital, labour, energy, materials and services as determinants of output. It requires that labour be measured not just quantitatively but in quality terms: education, skills, occupational profile.

In this framework, an economy that cheapens labour may generate short-term cost advantages for individual firms, but it reduces aggregate productivity through skill erosion and demand suppression.

The new codes pay no attention to these factors. The Modi government has put out no white paper or approach document that analyses the relationship between labour regulation, wages and multi-factor productivity. There has been no transparent, evidence-based policy dialogue. When its own Economic Survey 2024-25 acknowledges underemployment, this constitutes a big governance failure.

IT, gig workers and the invisible precariat

The crisis extends well beyond factory gates. India’s IT sector, with 5.4 million employees and over $250 billion in annual exports, operates in a near-vacuum of labour laws. Mass layoffs in 2023 and again in 2025-26, attributed to AI-driven restructuring, occurred without any meaningful state intervention. There is no effective trade union in the sector. Non-compete clauses, variable pay and immediate termination provisions are standard. The new labour codes change none of this.

India’s 12 million-strong gig workforce is projected to reach 23.5 million by 2030. Its formal recognition in the codes is a step forward, but aggregators contributing 1-2 per cent of turnover to welfare funds, while setting rates that require 14- to 16-hour work days to earn a living wage is not social security, it’s eyewash.

The proposed 90-day qualifying period for benefits will exclude millions of multi-platform and seasonal workers. Algorithmic de-boarding, which means that a worker can be blocked from an app without notice or human review, has no legal remedy anywhere in the four codes.

The codes also neglect the large numbers in precarious white-collar jobs in retail, financial services, hospitality and media, where employees have long work hours without overtime and ‘performance-linked’ pay that frequently short-changes them. Nor have they any unions to represent their case or an institutional voice to safeguard their interests.

The democratic subtext

There is a dimension to this debate that goes beyond economics. Labour unions and student movements were historically the nurseries of India’s democratic leadership. Over the past three decades, both have been systematically marginalised.

To restore the health of India’s democracy, these institutions must be revived. The BJP will never champion that cause. Precisely why the Congress and the Opposition must fight for the restoration of labour rights — as a constitutional entitlement, as the centrepiece of an alternative political vision.

What must change

The codes need an overhaul. The retrenchment threshold must be restored to 100 workers or replaced with tiered, enforceable protections. The 51 per cent union recognition threshold must give way to proportional representation. The 60-day strike notice must go; it is unconstitutional.

A meaningful National Minimum Wage, consistent with the Anoop Satpathy Committee’s recommendation of Rs 375 per day at 2019 prices and indexed to inflation, must be enacted and enforced. An Algorithmic Accountability Act must require platforms to disclose the logic of automated work allocation, pricing and disciplinary decisions.

A Universal Social Security Fund must cover all forms of employment, including gig, platform, contract and informal work. And an independent National Commission on Labour Productivity must be constituted to produce a public white paper on what drives India’s productivity gap, before any further legislative changes are made.

The recent labour agitations in Noida, Surat, Haldwani, Manesar, Gurugram, Faridabad, Bhiwandi were not local grievances; they were the portents of a nationwide uprising. The workers were telling us what to expect when wages are suppressed for a decade, when protections are stripped away, and the right to organise is systematically weakened. The government turned a deaf ear then. If it doesn’t pay heed even now, as the new labour codes seem to indicate, it is preparing the ground for a mass upheaval.

Views are personal

Gurdeep Singh Sappal is a Permanent Invitee to the Congress Working Committee. More by the author here

There was a time in Nehruvian India when the poor had faith in a simple yet revolutionary idea: ‘Padh jaayenge, toh badh jaayenge’. Education was the great leveller. It was the escape route out of caste, out of poverty, out of the inherited disadvantages of birth. Education was enshrined in the Constitution as a promise to India’s most poor and disadvantaged citizens.

Public universities, the IITs, the IIMs, government medical colleges were not merely institutions; they were the physical architecture of social mobility.

But the faith India’s poor and excluded had in education is faltering. And it’s not by accident but the consequence of a policy drift.

What began as creeping privatisation two decades ago has been deliberately accelerated under 12 years of BJP rule, turning it into a strategy designed to price education out of the reach of the poor. Coupled with stagnant salaries, the cost of education is leading to worsening poverty.

The entry of private capital into higher education began in the late 1990s and accelerated through the 2000s. It was propelled by the experience of underperforming and crumbling public universities. The infusion of private capital, it was believed, would bring both quality and greater access. But the experience of the past three decades has proven the folly of those expectations.

India’s higher education system is the third largest in the world by enrolment. We have 43 million students in over 60,000 colleges and 1,200 universities. These numbers underline the monumental wasted potential.

A country that aspires to be a knowledge superpower is producing graduates who can’t find jobs and innovators who fail the test of commercial application. It is re-engineering education in a way that dulls critical faculties and equates success with the ability to crack multiple-choice tests.

The higher education economy

The single most consequential effect of privatisation has been the transformation of a public good into a private commodity. Private institutions have mushroomed while public ones by and large are starved for resources.

The fees of premium institutions have shot up. The tuition fees of IIM-A (Ahmedabad), for example, surged from Rs 4 lakh in 2007 to Rs 27 lakh in 2021; of IIT Bombay from Rs 1.08 lakh in 2008 to Rs 8 lakh in 2024-25. In the private sector, a regular BA degree in an average university today costs Rs 3–6 lakh; a BTech Rs 8–20 lakh. Management degrees can cost from Rs 5–30 lakh. And the burden of higher cost has been passed on to students.

High tuition fees is not the whole story. India’s higher education system has been captured at the point of entry by a parallel, unregulated, multi-billion-rupee coaching industry. JEE and NEET, the two national entrance examinations for engineering and medicine, are so disconnected from the school curriculum that it is now practically impossible to crack these exams without coaching. The entrance examination, which is supposed to select talent from the educational system, has itself become a separate educational system.

The GST collection from coaching institutes grew from nearly Rs 2,200 crore in 2019-20 to over Rs 5,500 crore in 2023-24! This is an industry that profits from the failure of the formal education system; it’s a business model built on institutional inadequacy.

The coaching industrial complex is not educating India; it is extracting wealth from anxious families by exploiting the gap between what schools teach and what entrance tests demand.

Education as a loss-making investment

In the UPA years under Dr Manmohan Singh, salaries in India grew three to five times over ten years. Nurses, engineers, teachers, civil servants, private sector employees, all saw real income growth.

In these circumstances, the investment in education felt like a rational decision because the ‘returns’ were generous. The social contract between education and its reward was intact.

By contrast, for nearly a decade in the Modi years, starting salaries for fresh graduates have stagnated at Rs 3-4 lakh per annum, even as the cost of education has multiplied three to seven times. And this, if they get a job. Most don’t!

The last available figures of the All-India Survey of Higher Education (AISHE) 2021-22 show total enrolment in higher education at 4.33 crore. The average has hovered in the same range for the past few years. In 2023, only 81.2 lakh got a job, including 39.1 lakh in sectors like IT services and banking.

The India Skills Report 2025 places graduate employability at 60 per cent for BTech graduates and 45 per cent for arts graduates. Nearly 45 per cent of graduates aged 20 to 24 are jobless. In 2024, two out of five IIT graduates, or 40 per cent, went unplaced.

Meanwhile, corporate profits in several sectors have gone up five times. Wealth is being generated alright, but it’s not reaching those who labour. Wages are decoupled from growth. By design. Labour protections have been weakened systematically. Wage floors have not been raised to compensate for inflation and employment has been ‘casualised’. The rich are getting richer and the poor graduate gets a crippling debt with his degree.

This is not a market outcome; it’s a policy outcome. When corporate profits grow five times and salaries do not move, the distribution of economic gains has been determined by a government that chose whose interests it will prioritise and protect.

The accreditation scandal

Aspiring families will pay any price for a degree if the brand has cachet, if the positioning is attractive. This psychology drives the explosion of private universities. Designer courses are being fashioned with fancy names for maximum marketability and advertised aggressively with fraudulent placement statistics.

Gullible students and their families are often unable to tell a good course from a scam. Accreditation ratings and NIRF (National Institute Ranking Framework) ratings are of little help. The accreditation architecture itself is in a shambles. In February 2025, the CBI arrested NAAC inspection committee members for accepting cash, gold, laptops and phones in exchange for A++ ratings.

The NAAC (National Assessment and Accreditation Council) dismissed 900 of its 5,000 assessors after the scandal, but it still didn’t invalidate the fraudulent grades they had awarded! Tainted institutions with fake A++ ratings continue to attract students and their families’ hard-earned money.

In March 2025, the Madurai bench of the Madras High Court stayed the NIRF rankings. It found that the National Board of Accreditation (NBA) relies entirely on unverified, self-submitted data. A 2024 exposé found over 50 institutions falsely advertising accreditations or using forged certificates.

****

The government’s own Economic Survey 2024-25 acknowledged the need for regulatory transparency in higher education. It’s an admission that the current framework is failing.

Investing in education is today making families poorer. Even those fortunate enough to get jobs work on salaries that will take them years to recover just the fees paid for their education.

During the UPA years, an entire generation moved into their own houses, buying them on EMIs. Today, it’s practically impossible for young employees to dream of their own house.

When the poor and marginalised conclude that education is no longer affordable, that a degree will lead nowhere, that the salary will never recover the cost, they will gravitate towards a rational decision: to stop sending their children to universities.

When that happens, these children will perforce return to hereditary, caste-based occupations, undoing the Constitutional promise of social mobility for all Indian citizens.

Gurdeep Singh Sappal is a Permanent Invitee to the Congress Working Committee. More by the author here