The shocks and after-shocks of COVID-19 pandemic flow across social, health and economic contours and it also exposed deep structural vulnerabilities in India’s labour market, particularly within the industrial sector. Assuming COVID-19 as a surprising and untimely independent variable, it also proved as a litmus test for labour market, organized and/or unorganized labour market hitting people irrespective of place, organization, age and gender. Using secondary data from the CMIE Consumer Pyramids Household Survey (CPHS), the study reveals that vulnerable groups experienced notably higher job losses than their peers. The analysis indicates that marginalized castes (SC-ST-OBC), younger individuals, women, and non-regular workers faced much greater employment declines during the COVID-19 crisis. However, states with stricter labour law frameworks did not necessarily perform better in job retention, particularly for marginalized non-regular workers, highlighting the need for stronger labour protections and enhanced enforcement of labour laws to safeguard jobs during economic downturns.
India’s industrial sector is governed by a complex framework of labour laws aimed at protecting workers’ rights and regulating employer-employee relations. Until recently, India had 35 central laws in place. Besides, the two most important legislations are the Industrial Dispute Act of 1947 and the Contract Labour (Regulation and Abolition) Act of 1970. These laws regulate multiple dimensions of employment, including wages, layoffs, retrenchments, and working conditions of regular and contract workers. However, in 2019-2020, the central government consolidated these laws into four comprehensive labour codes: Wages, Industrial Relations, Social Security, and Working Conditions. The Indian labour law regime seeks to balance industrial growth and workers’ welfare. For industries, it aims to promote industrial peace and operational stability by regulating labour practices and dispute resolution. For workers, it emphasizes safeguarding their rights, ensuring fair wages, job security, workplace safety, and access to social security measures like pensions, insurance, and maternity benefits. Ultimately, it intends to create equitable working conditions that protect workers from exploitation.
Supporters of labour laws, including academic researchers and labour unions, argue that while Indian labour laws are comprehensive and appear strict on paper, their enforcement has historically been weak. They emphasize that these laws predominantly benefit only regular workers in the formal-sector workers, excluding contractual workers (i.e. workers employed through third-party contractors) and casual workers from its purview. These non-permanent or non-regular workers account for 38.6% of India’s labour force. Additionally, contractual workers possess lower bargaining power compared to regular workers, as they often lack representation by labour unions.
Employers in the industrial sector have long criticised India’s labour laws as unnecessarily complicated, restrictive, and rigid. They say that the regulations make it difficult to hire and fire employees by imposing difficult procedural and cumbersome compliance requirements. Academic literature argues that firing restrictions can hinder labour adjustments and thereby affect the allocation of resources and productivity. They argue that this rigidity reduces industrial flexibility, inhibits investment, and stifles firm’s market competitiveness. It is also argued that the fragmented legal system, which includes many overlapping rules, causes uncertainty and raises transaction costs, stifling industrial expansion and employment generation.
International literature reveals that COVID-19 caused extensive employment disruptions, disproportionately affecting vulnerable populations and exposing weaknesses in job security laws. The failure of labour laws to safeguard workers’ interests during Covid-19 reignited the debate on labour laws, seeking collaborative policy responses to safeguard the working-class population, especially the vulnerable sections of the labour force.
In India, a growing body of literature has examined the impact of COVID-19 on employment across sectors. Vyas et al. highlight its disproportionate effect on women and youth. Piacentini et al. note exacerbated labour market disparities by age, gender, and caste. Abraham et al. report that women were seven times more likely to lose jobs and eleven times less likely to return. However, limited attention has been given to employment effects through the lens of labour market segmentation or informalization, which has serious implications particularly for the vulnerable sections of the population. Further, the available sources does not investigate whether labour laws offered any protection against job losses during COVID-19 across different segments of the job market.
The only ‘Consumer Pyramids Household Survey’ (CPHS) dataset has been used here for assessing the immediate impact of lockdown on employment changes. This is a leximetrics approach to classify states in terms of the enforcement of labour laws. The analysis demonstrates that there was a substantial decline in employment during the COVID-19 period, and non-regular workers were the most affected. These workers lost 74.62% of their jobs, while regular workers saw a 62.98% decrease. This disparity extended across labour law regimes. Within stricter labour law states, permanent job loss was much greater compared to states with more flexible labour laws.
Non-regular workers lost jobs at a higher rate in all labour law regimes, by 39.39% in strict states and by 34.11% in flexible states. Moreover, caste, age, and gender also played an important role in shaping vulnerability. Marginalised castes (SC/ST/OBC) experienced a 32.91% reduction in employment, nearly double the loss observed among upper castes (16.05%). Younger workers (18–35 years) faced the highest job losses at 43%, compared to older workers aged 36–64. Women also faced a 30.07% loss in employment.
The article underscores several critical policy directions. Policymakers should, in particular, emphasise ensuring employment and general welfare for these vulnerable groups through effective social protection schemes, such as financial assistance and job placement. Second, since the pandemic has widened gender gaps in employment, gender sensitive employment policies should be prioritised to limit the disproportionate negative impact on female employees and contributory factors in the recovery process. Lastly, it’s crucial to tackle caste-based discrimination in a way that includes everyone to make the job market fairer for all.
Dr. Mohmad Iqbal is Assistant Professor, Madras School of Social Work, Chennai, TN.
Mir Audil Bashir is PhD Research Scholar, Islamic University of Science and Technology, Awantipora Kashmir.
