A rational reform

In today’s globalised economy, where fair wages, decent work, and labour protection are central to sustainable development, the Wage Code, 2019 marks a pivotal shift for India, from enforcement to facilitation. Evidence from several developing nations such as Vietnam, shows how timely and well-designed labour reforms can drive economic growth while advancing social justice.

- BY OM PRAKASH GUPTA

Vietnam’s overhaul of its labour laws, including minimum wage reforms and enhanced worker protections, has contributed to a surge in foreign investment and a steady rise in formal employment. The International Labour Organization (ILO) has consistently underscored the urgency of ensuring fair wage practices as a cornerstone for achieving the Sustainable Development Goals (SDGs), particularly those relating to poverty reduction, decent work, and inclusive growth. At the same time, businesses worldwide have raised concerns about excessive regulatory burdens, complex compliance structures, and punitive enforcement mechanisms that hinder their ability to grow and compete in a rapidly changing global market.

India, as one of the fastest-growing economies and a key player in the global labour market, is not immune to these challenges. With a vast workforce (53.53 crore) employed across both the formal and informal sectors (Economic Survey, 2021-22), the country has long faced the dual task of ensuring wage fairness for workers while simplifying compliance frameworks for employers. The multiplicity of wage-related legislations (Payment of Wages Act, 1936; Minimum Wages Act, 1948; Payment of Bonus Act, 1965; and Equal Remuneration Act, 1976) along with their overlapping provisions and enforcement difficulties, often caused confusion, duplication, and compliance challenges for employers. These inadequacies hampered both economic productivity and worker welfare.