In FY26, states will be ranked on labor well-being and productivity – Economy News

The states of India would now be ranked annually also on the basis of their ease of work, and not just their success in creating an atmosphere conducive to business growth and on various social parameters.

The Union Ministry of Labor is likely to introduce a “Workplace Employment and Welfare Index” (LWEI) from the next financial year in a bid to improve labor well-being and employment opportunities, according to an official source.

The LWEI would rank all states and union territories on a number of parameters, including the extent of social security coverage for workers, worker productivity levels, wages, uniformity in implementation of labor laws and employment policies.

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“The ministry is working with NITI Aayog, National Council of Applied Economic Research (NCAER) and other stakeholders to develop the index,” the official said. “LWEI will also help create a level playing field for businesses across the country by ensuring consistency and uniformity in laws,” the source added.

Globally, the “Labor Rights Index” (LRI) is a comparative tool and international qualification standard that allows users to compare labor legislation across the world, covering markets in 145 countries.

The LRI, developed by the WageIndicator Foundation, assigns scores to countries on a scale of 0 to 100, across 10 indicators, with 100 being the highest possible score. The indicators are: fair wages, decent working hours, job security, safe work, fair treatment, child and forced labor, etc. India’s score in 2024 was 65. Hungary and Greece had the highest score of 96, while the US score was 63.5. , and China’s was 73.5.

Manmeet Kaur, partner at Karanjawala & Co, said the proposed LWEI would promote healthy competition among states to create work- and business-friendly environments, thereby increasing the ease of doing business.

Vaibhav Bhardwaj, partner at Khaitan & Co, said current variations in local laws have often undermined employers’ efforts to treat all employees working across India equally, as they are required to arrange employment-related benefits in a state-specific basis and also assume varying compliances. “The LWEI will potentially ensure more uniform labor laws across India,” he added.

The Narendra Modi government, in 2019-2020, consolidated 44 labor laws into the four codes with the aim of strengthening trade and investment, facilitating the ease of doing business and facilitating compliance. Several minor offenses were decriminalized through the codes, while skills development and dispute resolution were given due priority.

The four codes are: Social Security Code 2020; Occupational Safety, Health and Working Conditions Code 2020; Industrial Relations Code 2020; and Wages Code 2019. Although the government has not yet announced any date to notify the labor codes, it aims to do so by next year.

The FE reported last week that 25 of the country’s 28 states and all eight union territories have finalized their draft rules under these four codes. According to sources, the remaining three states, including West Bengal, which had already raised several concerns over the codes, have agreed to frame subordinate legislation to give effect to the codes.

Currently, states are rated by central agencies including the department of promotion of industry and commerce and the Niti Aayog based on various performance criteria that include environment for start-ups, sustainable development goals as well as health and education. .