Polity & GovernancePriority2025-10-08

Draft National Labour and Employment Policy Released

Why focus: GS2 Social Justice — tests Shram Shakti Niti 2025, integration of EPFO/e-SHRAM, and 35% female workforce targets in How-Many-Correct format.

In News

What Happened

The Ministry of Labour and Employment released the draft National Labour and Employment Policy (Shram Shakti Niti 2025) on October 8, 2025, for public consultation. Rooted in the concept of 'śrama dharma' (dignity of labour), the policy outlines a digital-first approach to integrate existing schemes like EPFO, ESIC, PM-JAY, and e-SHRAM into a Universal Social Security Account (USSA) by 2030.

Why It Matters

With nearly 90% of India's 500 million-strong workforce in the informal sector and a rapidly expanding gig economy, existing labour laws fail to provide adequate safety nets. This policy marks a historic shift in governance from mere regulatory enforcement to active employment facilitation, aiming to provide portable benefits, achieve a 35% female labour force participation rate, and ensure future-ready social protections.

Background

History & Context

India's labour governance was historically fragmented across 29 central laws, leading the 2nd National Commission on Labour (Ravindra Varma Committee, 2002) to recommend comprehensive consolidation. This culminated in the passage of four Labour Codes between 2019 and 2020 (Wages, Industrial Relations, Social Security, and Occupational Safety, Health and Working Conditions). However, nationwide implementation stalled because 'Labour' is in the Concurrent List (Entry 55), requiring aligned rules from state governments. Concurrently, the Supreme Court's directives during the pandemic prompted the August 2021 launch of the e-SHRAM portal, which registered over 290 million unorganised workers. Despite this data milestone, a cohesive framework to translate registration into actual benefits was missing. The draft Shram Shakti Niti 2025 bridges this gap by providing a definitive technological and institutional blueprint to operationalise the inclusive vision of the Labour Codes.

What Changed

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Role of the Ministry: The MoLE has officially shifted its mandate from a traditional regulatory/enforcement agency to a proactive 'National Employment Facilitator'.
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Universal Social Security Account (USSA): Replaced siloed welfare schemes by mandating the integration of EPFO, ESIC, PM-JAY, e-SHRAM, and State welfare boards into a single, portable digital account for all workers.
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Digital Public Infrastructure (DPI) for Employment: The existing National Career Service (NCS) is being upgraded into a DPI, acting as an AI-driven digital marketplace for multilingual job matching, skill alignment, and verified credentialing via a unified National Labour Stack.
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Compliance and Inspections: Transitioned from physical, discretionary inspections to a single-window digital compliance portal allowing self-certification for MSMEs, alongside AI-based risk inspections to enforce the OSH Code 2020 and achieve 'near-zero' workplace fatalities.
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Institutional Framework: Mandated the creation of District Labour Resource Centres (DLRCs) to serve as one-stop grassroots hubs for worker registration, grievance redressal, and skilling support.
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Accountability Architecture: Introduced the Labour & Employment Policy Evaluation Index (LPEI) to benchmark States' performances, accompanied by an Annual National Labour Report to be tabled in Parliament.
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Phased Implementation: Established a timeline with Phase I (2025-27) for institutional setup, Phase II (2027-30) for the nationwide USSA rollout, and Phase III (Beyond 2030) for predictive analytics and continuous policy renewal.

What Did NOT Change

Despite its progressive digital architecture, the draft policy does not legally reclassify gig and platform workers as formal 'employees', meaning they continue to be excluded from traditional industrial relations rights like unionisation and collective bargaining. Furthermore, it leaves the funding mechanism for the Universal Social Security Account ambiguous, failing to clearly mandate compulsory financial contributions from platform aggregators or employers in the unorganised sector.

Prelims Angle

NCERT Connection

Class 11 Indian Economic Development, Chapter 7 (Employment: Growth, Informalisation and other issues). The chapter discusses the 'informalisation' of the Indian workforce, where millions work without social security benefits typical of the formal sector. Shram Shakti Niti 2025 acts as a direct policy intervention against the vulnerabilities of informalisation. By leveraging digital tools like the Universal Social Security Account, it seeks to extend formal-sector protections (health, pension, insurance) to informal and gig workers without necessarily altering their legal employment classification.

Common Misconceptions

✗ The policy formally classifies gig workers (like food delivery partners) as regular 'employees' of the tech aggregators.

✓ The policy extends portable social security benefits to gig workers through the USSA but explicitly avoids redefining the legal employer-employee relationship, keeping them outside the purview of formal employment contracts.

Media headlines often equate 'granting social security' with 'granting employee status', blurring the distinction between welfare provisions and legal industrial classification.

✗ Shram Shakti Niti 2025 replaces the four Labour Codes passed in 2019-2020.

✓ The policy does not replace any legislation. Instead, it serves as the executive roadmap and digital architecture (like the National Labour Stack) required to actually implement the provisions of the stalled Labour Codes.

The comprehensive scope and transformative language of the policy make it sound like new overarching legislation, rather than an implementation framework.

Practice Questions

Q1

How Many Correct

Consider the following statements regarding the Draft National Labour and Employment Policy (Shram Shakti Niti 2025): 1. It proposes to upgrade the National Career Service (NCS) into a Digital Public Infrastructure (DPI) for Employment. 2. It guarantees legal 'employee' status and collective bargaining rights to all registered platform and gig workers. 3. It introduces the Labour & Employment Policy Evaluation Index (LPEI) to benchmark the performance of States in labour governance. How many of the above statements are correct?

Q2

Match the Following

Match the institutional concepts proposed under Shram Shakti Niti 2025 (List I) with their respective functions (List II): List I: A. Universal Social Security Account (USSA) B. District Labour Resource Centres (DLRCs) C. National Career Service (NCS) D. LPEI List II: 1. Digital Public Infrastructure for AI-driven job matching 2. Integration of EPFO, ESIC, PM-JAY, and e-SHRAM 3. Benchmarking tool to foster cooperative federalism among States 4. Grassroots one-stop hubs for registration and grievance redressal

Q3

Assertion & Reason

Assertion (A): The Shram Shakti Niti 2025 redefines the primary role of the Ministry of Labour and Employment from regulatory enforcement to acting as a 'National Employment Facilitator'. Reason (R): The policy seeks to entirely deregulate occupational safety standards for MSMEs by exempting them from the Occupational Safety, Health and Working Conditions (OSH) Code 2020.

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