Sudip Dutta
On 21 November 2025, the Central Government notified the four Labour Codes with the objective of bringing “flexibility” into the world of labour. In response, workers and peasants across the country have decided to go for a General Strike on 12 February 2026. If the government remains adamant, we may be compelled to prepare for a multi-day strike; certainly, a great battle lies ahead of us.
Undoubtedly, the imposition of these Codes makes the advance of fascism in our country’s governance more evident, while also reminding us that fascism emerges as a political instrument when capitalism can no longer resolve its crises through ordinary means. Hence, it is essential to understand the concrete historical and political-economic background of these Labour Codes; thereafter, we will try to understand how these Codes will impact students of today and the future generation of the working class.
Historical perspective of codification
The proposal to codify Indian labour laws emerged from the Second National Labour Commission. The First National Labour Commission (1966–69), though inherently designed to smoothen and systematise the extraction of surplus from labour, was rooted in a welfare-state framework – promoting labour protection, employment security, collective bargaining, and strong regulation to some extent. These were essential for capitalist construction in a newly liberated colony. In contrast, the Second Commission (1999–2002), shaped by a neoliberal outlook, viewed labour mainly as an economic input, treated regulation as a market distortion, and sought to dilute protective laws in the name of efficiency and ease of doing business, redefining the State as a facilitator of capital accumulation. The Commission’s proposal to codify all labour laws into four or five Codes was strongly opposed by trade unions, leading to mass protests in 2003, a change of government in 2004, and the shelving of the codification process.
Subsequent governments initiated reforms in a piecemeal manner but did not attack the existing laws as a whole. The process of codification resumed after the Modi government came to power in 2014. Although the Codes were passed in Parliament in 2019 and 2020, widespread protests and resistance across the country delayed their notification until last month. To understand the cause behind the current desperation of the government, however, it is necessary first to examine the bourgeois theoretical framework of labour-market flexibility. This framework argues that permanent employment strengthens workers’ bargaining power and wages, thereby discouraging employability, and claims that insecure employment will attract investment and increase recruitment.
The flawed labour flexibility theory
The argument of labour flexibility theory is fundamentally flawed for several reasons. First, in India, labour laws cover only a minuscule section of the workforce, as more than 90 per cent of workers are in the unorganised or self-employed sector and are largely outside the purview of labour regulation. Second, despite the widespread use of contractual and other non-regular forms of employment in both public and private sectors in last two decades, India continues to face historically high unemployment, showing that flexibility has not increased employment. Most strikingly, even after the Rajasthan government amended its labour laws in line with the present Codes in 2014, no substantial growth in employment has occurred in the organised sector.
In fact, labour flexibility theory is based on a wrong hypothesis propagated by Say’s Law. It proposes that all profit or surplus will be immediately invested by the capitalist class; thus, more surplus to employers means further investment and more employment. The reality, however, is that capitalists invest in the productive sector only if the rate of return is higher than that in other financial sectors. Therefore, to sustain the animal spirits of investment across sectors, returns to capital must remain high in all industries. For this, the wage bill must be reduced across sectors – one may add to this the current attack on MGNREGA; the new VB-GRAMG Act is designed to lower the wage share of rural and agricultural workers. Even though this lowering of wages creates another crisis – the crisis of under-consumption and over-production.
A desperate government in favour of its masters
Before coming to this point, it is necessary to glance at India’s industrial reality. For several years, India’s industrial production has been in a phase of sharp slowdown, with the Index of Industrial Production (IIP) recording the weakest growth in fourteen months. Parallel to this slowdown is a striking wave of enterprise closures: over the past five years, more than 2.04 lakh private companies have shut down, and the government has clarified that there is no plan to rehabilitate the employees of these defunct companies. While corporations cite low expected returns to justify the lack of investment, strikingly, India’s corporate profits reached a 15-year high in FY 2023–24.
Government economic policies clearly display a bias in favour of big corporate profitability, reflected in public sector bank loan write-offs exceeding ₹58,000 crore in FY 2025 alone and totalling ₹12.08 lakh crore from FY 2015–16 to FY 2024–25, thereby shifting the burden from big defaulters onto the public. Alongside these fiscal transfers, the government has launched incentive schemes that channel public money to large private companies in the name of growth and employment generation, notably the Employment Linked Incentive (ELI) Scheme with an outlay of ₹99,446 crore, offering large subsidies with little accountability for investment, technological upgradation, or job creation.
India on the brink of crisis
Despite these extensive concessions, productivity declined by 2.38 per cent in 2022–23, the share of machinery in gross fixed capital formation has shrunk, and private firms are not reinvesting profits in modernisation or technology. This is steadily reducing India to an assembly hub rather than a genuinely industrial economy.
Certainly, all incentive measures are not being converted into industrial investment. The reason is peculiar – the extreme centralisation of capital under neoliberalism. Growth benefits are captured almost entirely by the top 1 per cent. Even within the top 500 companies, the pattern of profit concentration is alarming. The top 10 firms enjoy extremely high profit rates; the next 40–50 maintain high profits; but the remaining 450 are struggling. Indian capitalism is now dominated by a handful of giant corporate groups, whose profitability depends on squeezing costs across their extended value chains.
This is where the structural crisis becomes visible. The next tier of large firms can sustain their profits only by cutting the benefits of their relatively better-paid employees. However, attacking this group would shrink the consumer market for high-priced goods. This employee group benefited in the early decades of liberalisation, but their incomes started declining after 2017 and have still not recovered by 2024. Thus, a clear consumption crisis has emerged. The Central Government’s 2025–26 income tax relief is essentially an attempt to address this contradiction.
Labour Codes as the weapon to shift the crisis onto the lower strata of present and future working class
The natural route of escape for upper-tier, higher-wage firms is to shift their burden further downward. This is now feasible because medium and small enterprises act as suppliers within their value chains. These medium and small enterprises are unable to raise prices because of stiff competition. Moreover, the 50 per cent tariff imposed by Trump, aimed at mitigating the impending crisis in the US and shifting its burden onto India, will put further downward pressure on export-commodity market prices. Thus, to make this large employment-providing MSME sector survive, invest, and mitigate the crisis, the Modi government has brought in the Labour Codes – enabling further intensification of the exploitation of workers. They push wages down, casualise employment, and suppress labour rights. Undoubtedly, the entire mechanism of these Codes is a process of transferring the current crisis of Indian capitalism onto the poorest segment of workers employed in medium and small industries. The changes in the Labour Codes make this abundantly clear.
Labour Codes will permanently finish the concept of a permanent and protected job
The four new Labour Codes systematically weaken labour protections by sharply raising worker-number thresholds across key areas where technological progress should have reduced them. This excludes the vast majority of workers, even in the organised sector – especially in MSMEs – from legal protection. The OSH Code increases the factory threshold and raises the applicability of contract labour regulation from 20 to 50 workers, while the Industrial Relations Code raises the requirement for prior permission for lay-off, retrenchment, and closure, as well as for Standing Orders, from 100 to 300 workers, allowing employers to hire and fire at will. Safety, health, and welfare provisions are similarly diluted, enabling employers to evade obligations such as appointing safety or welfare officers and providing canteens, crèches, or ambulance services. The Codes also legalise fixed-term employment for permanent work, making job insecurity the norm, undermining seniority and promotions, and discouraging collective organisation. Fundamental labour rights are further curtailed by making union registration more difficult, virtually prohibiting strikes through mandatory notice and conciliation restrictions, and imposing severe penalties. Finally, the Codes expand the scope to increase spread-over to 12 hours, dilute overtime protections, and legitimise a four-day work week with 12-hour workdays, causing grave harm to workers’ health and family life. Every year, thousands of workers die in workplace accidents in our country, and the new Labour Codes have severely weakened the inspection system related to workers’ safety.
Alongside this has come the Labour Force Policy 2025, whose main objective is to bring the entire country’s labour force into a single digital database and supply it according to the needs of capital. All permanent work will be replaced by gig-nature labour, meaning that the process of gradually pushing the entire labour force outside all regulation has begun. This arrangement for unrestrained plunder is essentially a process of placing the burden of crisis onto working people in order to save India’s crisis-ridden capitalism.
The New Education Policy to facilitate the new labour policy
The entire project is designed to restructure future forms of labour, making them completely fragmented, temporary, and unarmed at the disposal of capital. Through the introduction of the New Education Policy, a new category of workforce is already being prepared to support the restructured economic realm – one can recall the Government’s budgetary announcement of one crore internship subsidy and link it with the mandatory apprenticeship for higher education under NEP. These two policies are in sync with each other in destroying the future of stable and protected labour.
Informalisation of employment relations – casualisation and contractualisation – has already expanded through apprentices and trainees under various government-sponsored schemes such as On-the-Job Trainees (OJTs), Long-Term Trainee Employees (LTTEs), Learn While You Earn, Junior Executives, Fixed Term Employees (FTEs), and trainees under NEEM, NETAP, and SITA schemes. Permanent workers constitute only about 10 per cent of the total workforce in some industries.
Automation and the resultant de-skilling are continuously outmoding the necessity of dedicated, task-specific, experienced labour power. The mode of production is moving in a direction where fresh trainee batches, along with a huge reserve army of unemployed, vocationally educated youth equipped with state-of-the-art knowledge of automation and technology and the ability to learn fast, are going to occupy a major share of the core productive workforce on the job—they will be recruited on a meagre stipend, supplied through NEP coursework, utilised in core production jobs, and thrown away after two or three years.
This is fascism, and we will defeat it
Thus, a new fascist trend has emerged, whose function is to destroy the working class’s capacity to resist – not only today, but permanently in the future – in order to allow unhindered capitalist profit-making. At the same time, the rise of neo-fascism reveals capitalism sinking into its own systemic contradictions, with neo-fascist policies emerging as its only apparent escape route.
Today, the organised movement of the country is trying to take the challenge in an offensive mood. The struggle to defeat these Labour Codes must be made not merely a resistance, but more aggressive, with the aim of changing the system itself. This crisis demands militant movements that cultivate collective power and new consciousness among the working masses. The 12 February 2026 strike will be followed by a multi-day general strike if the government does not roll back its decisions. Capitalism’s deepening contradictions have generated alternative social and economic possibilities. The time has come when workers of the present will march together with the working class of the future – students and youth – to build militant solidarity to uproot this exploitative system. Our task is to critically identify the scope for united assertion and heighten consciousness towards social transformation.