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New labour codes in India to make 4 Day Work Week and 12 Hour Shift – Impact on the economy?

New labour codes in India to make 4 Day Work Week and 12 Hour Shift – Impact on the economy?


  • GS 3 || Economy || Economic Reforms || Public Sector Reforms

Why in the news?

  • India is likely to implement four new labour codes on wages, social security, industrial relations, and occupational safety by the next fiscal year beginning 2022.
  • The new set of regulations consolidates  44 labour laws under 4 categories of Codes namely, Wage Code; Social Security Code; Occupational Safety, Health & Working Conditions Code; and the Industrial Relations Code.
  • The Parliament has already passed all the four Codes and it has also received the President’s assent.


  • Under these new codes, several aspects related to employment and work culture, in general, might change –including the take-home salary of employees, working hours, and the number of weekdays.
  • If the new labour codes are implemented, there’s a likelihood that employees in India may be able to enjoy a four-day workweek from next year, as opposed to the current five-day workweek.

The four codes are

  • The Code on Wages, 2019,applying to all the employees in organized as well as unorganized sectors, aims to regulate wage and bonus payments in all employments and aims at providing equal remuneration to employees performing work of a similar nature in every industry, trade, business, or manufacture.
  • The Code on Occupational Safety, Health, and Working Conditions, 2020seeks to regulate the health and safety conditions of workers in establishments with 10 or more workers, and in all mines and docks.
  • The Code on Social Security, 2020consolidates nine laws related to social security and maternity benefits.
  • The Code on Industrial Relations, 2020seeks to consolidate three labour laws namely, The Industrial Disputes Act, 1947, The Trade Unions Act, 1926, and The Industrial Employment (Standing Orders) Act, 1946. The Code aims to improve the business environment in the country largely by reducing the labour compliance burden of industries.

Advantages of the 4-day work week

  • Extra leisure time– The fundamental goal of a four-day workweek is to improve workers’ quality of life.
    • Many employees are likely to be thrilled with the possibility of spending extra time on leisure activities and recovering effectively from their weekly pressures.
  • Increased efficiency and productivity– Companies can also benefit from lower office rental costs and more energized and productive staff.
    • Working a shortened workweek means employees can spend more time relaxing. A relaxed employee has a clear mind, gets distracted less easily, and has fewer problems focusing on work.
    • Based on the Microsoft Japan example, the four-day workweek brings promising results on increasing employees’ productivity. In 2019, during the summer holiday, the company paid their employees the same salary for fewer hours worked. They also shortened half of the meetings, from 60 to 30 minutes.
    • The experiment resulted in a 40% increase in productivity, significantly lowering operating costs such as paper and electricity consumption.
  • Prevents job burnout
    • People who work for more than eight hours per week are struggling with a better work-life balance. Working too much affects mental health negatively, and the consequences can be seen worse overall well-being. It also causes problems with physical health caused by the higher stress levels.
    • Such behaviour leads straight to less job satisfaction and employee engagement.
    • It results in a three-day weekend, can greatly support a healthier work style, and helps maintain the accurate work-life balance. Working only four days and the promise of free Friday makes employees well-rested.
  • Less stress Impacts health positively – It affects both physical and mental health positively. They’re less vulnerable to stressful situations and pay more attention to their responsibilities. Also, having less time to fulfill the duties in only four days brings more focus, which results in avoiding distractions.
  • It will benefit sectors such as information technology and shared services.
    • In the banking and financial services industry, 20-30% of people can use the long working hours template for four or five days and enjoy a longer break.
  • Countries like Japan, New Zealand, Ireland, and Scotland have already made a move in this direction and have a 4-day workweek. This week, in a move to reduce the stress of employees, the United Arab Emirates has reduced its working hours for its federal employees.
  • Around 85% of workers in Iceland have the option of working just four days a week.


  • Reduction in employment opportunities- Some experts say that this may lead to a day’s work converting into two shifts instead of three and reduce employment opportunities.
  • Up to 12 hours of work plus commute time for four and five days, will be taxing on workers, especially in factory settings.
  • Impact on work-life balance– According to the experts the work-life balance may get impacted.
  • Less take-home salary- The labour codes also attain added significance because once these are implemented, there would be a reduction in the take-home pay of employees and firms will have to bear a higher provident fund liability.
  • Impact on the informal sector- The informal sector workers in India face the risk of violations of their human and labour rights, the dignity of livelihood, unsafe and unregulated working conditions, and lower wages, among several other vulnerabilities.
    • The regulations do not provide any kind of social protection to the great majority of informal sector workers, including migrant workers, self-employed workers, home-based workers, and other disadvantaged groups, who are prevalent in rural areas.
  • Urban centric- While the government claimed that the change was aimed at extending statutory protection to unorganized sector workers and the gig economy (including need-based minimum salaries, non-hazardous working conditions, and universal social security entitlements),
  • Framework with No Rights: The Code makes no mention of social security as a right, nor does it relate to the Constitution’s provision for it.
  • Part-time workers- The codes have also missed laying down uniform provisions for part-time employees.
  • No grievance Redressal mechanism- Furthermore, it contains no suitable grievance resolution process, leaving millions of workers exposed in the absence of defined social guarantees.

Way forward

  • Taking Care of Migrant Workers and the informal sector: According to a recent Institute of Human Development Report, the total number of vulnerable migrant workers might be somewhere between 115 and 140 million.
    • As a result, it is critical that the proposed rules explicitly explain how their application would be applied to the migratory informal sector.
  • The government’s concept of one India one ration card is a step in the right path in this regard.
  • MSME Strengthening: MSMEs employ about 40 percent of the informal workforce. As a result, it is logical that the strengthening of MSME will contribute to economic recovery, job creation, and economic formalization.
  • Skilling up- Large corporations should also be responsible for skilling of the workers in unorganized sectors as a CSR Expenditure.

Mains model Question

  • The growing informal character of the labour, combined with a lack of government accountability, creates fertile ground for rising inequality. Discuss.