Over the years, the Government of India and several State Governments have been taking various measures to promote the ease of doing business in India. The four newly proposed Labour Law Codes – Wages, Industrial Relations, Social Security, and Occupational Safety, Health, and Working Conditions – are designed to facilitate ease of compliance, increase openness and accountability, and create employment opportunities, making it easier to conduct business in the country. With these new labor codes, the government also expects to bring an absolute dimensional change and to bring in several reforms in the industry and the labor sector, comprising both permanent/full-time workers and the growing community of gig workers.
But as we know, the implementation of any new law brings its own challenges. As per the industry reports, organizations are both concerned and intrigued since it has the potential to boost employee costs and compliance expenditures. In other words, it not only affects the bond between employers and employees but also impacts the achievement of organizational objectives and goals.
But the real question is – Are all the industrial sectors prepared to adapt and adjust to these new labor codes? In order to better understand how these new labour codes could impact the organizations, especially in terms of workforce cost, compliance, and productivity, we at Ultimate Kronos Group conducted a survey (in association with HR Katha) amongst the HR professionals from across organizational sectors, sizes, and industries. Well, focusing on the bottom line, almost 83% believe that the labour cost will increase due to the changes in wage definitions, and about 60% of respondents feel that it will ease compliance administration. We also saw some optimism when it came to productivity where 30% of the respondents believed that productivity would increase. While 46% of respondents from the manufacturing sector were optimistic, on the other hand, 36% of the respondents from the IT and ITES sector said that the codes would bring down productivity. A majority of 58% of senior professionals think that overtime relaxation can play a major role in influencing/increasing productivity here.
Adding to the facts, as per our study, more people are positive that the new labour laws will have a high impact on employer obligation towards the contract workforce. People from retail, IT & ITES, and healthcare sectors are more positive that it will have a high impact, while those in manufacturing and logistics are divided on the opinion. 58% of the respondents have agreed that the contractual workforce will benefit the most from these labour codes as they will be subjected to the same conditions as permanent employees in terms of working hours, allowances, and other benefits.
Considering these industry insights, the key changes that these labour codes might bring to the table will not only ease compliance but also increase productivity and cost. With compliance becoming easier but more stringent, businesses will need to consider how to apply rules and regulations consistently across different locations, taking into account the inevitable differences between states.
While this large-scale change is happening in the external environment, one of the biggest challenges going to be faced by organizations in this area will be workforce management, including aspects of planning, scheduling, managing productivity, and costs. Industries have already gone through major changes in the workforce management system to support hybrid work models due to the pandemic. The proposed labour regulations could provide an impetus for India to establish a future-ready workforce by leveraging the shift towards digitalization of workforce management procedures and using modern workforce management techniques.
Also, with new alternations entering the mix (Gig and platform workers), the digital makeover of the workforce management will become the need of the hour. These various workforce types should be examined less in terms of cost and more in terms of how they might help organizations better adapt to market and business conditions. As they say, ‘look at the bigger picture’. All this requires technology intervention that will ease the functioning of the HR department of the enterprise.
Investing in a digitized and modern workforce management system will help organizations manage the complexity that the new labour code changes are bound to create. It will also ensure that future-ready, scalable, and flexible platforms are in place to help companies streamline the process and smoothen the transition to a new way of working for India Inc. Thus, making the workforce system transparent and accessible with the help of intelligent workforce technology solutions will be key to implementing new labour rules and will bring the necessary change and required outcome to both employer and employee.
