This Policy Brief comes on the heels of reports that the Central Government has deferred the implementation of the latest Labour Codes, for want of state-level rules.
The latest labour law reforms of the Modi Government constitute four distinct Codes on (a) wages; (b) social security; (c) industrial relations; and (d) occupational, health, safety and working conditions. They were enacted to consolidate and update an obsolete framework.
While the proposed labour reform extends social security benefits to gig workers, its overall implications for the digital economy remains mixed.
The Policy Brief suggests that certain elements of the Codes, remain out of sync with key attributes of the digital economy, namely economies of scale, network effects and the importance of momentum.
Moreover, the new labour codes add rigidity, uncertainty and regulatory discretion in terms of hiring, work hours, labour management and firing costs—that will negatively impact the digital economy.
For instance, the Occupational Safety, Health and Working Conditions (“OSHWC”) Code restricts employers from engaging contract labour in their ‘core’ activities.
The Policy Brief concludes with concrete suggestions which can improve the framework’s overall suitability for Digital India.
These suggestions include a strong focus on targeted income support for gig workers and specific measures to operationalise the delivery of benefits for gig workers under the Social Security Code.
Further, the Policy Brief suggests means to reduce regulatory discretion through i) adoption of clear standards and procedures; and ii) promotion of self-certification schemes for digital businesses.
