Brief Context
Context May 1 is observed as the International Workers Day, commonly known as Labour Day. International Labour Day Also referred to as May Day, in some regions it is observed on the first Monday of May. The day serves to acknowledge the social and economic contributions of workers and to draw attention to the continuing fight for workers rights and fair labour conditions globally.
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Syllabus: GS3/Economy
Context
- May 1 is observed as the International Workers’ Day, commonly known as Labour Day.
International Labour Day
- Also referred to as May Day, in some regions it is observed on the first Monday of May.
- The day serves to acknowledge the social and economic contributions of workers and to draw attention to the continuing fight for workers’ rights and fair labour conditions globally.
- The origins of International Labour Day date back to the late 19th-century labour movement in the United States.
- On May 1, 1886, workers across America launched a strike demanding an eight-hour workday, May 1 was chosen to commemorate the strike.
- In India, the first Labour Day celebration was held in Chennai (then Madras) in 1923 by the Labour Kisan Party of Hindustan.
- Canada’s first Labour Day celebration took place in 1872, nearly a decade before the United States officially recognised it.
International Labour Organisation (ILO)
- It is an United Nations Agency established in 1919 as part of the Treaty of Versailles that ended World War I, and it became the first specialized agency of the UN in 1946.
- India became a founding member of the ILO in 1919, even before gaining independence.
- It has 187 Member states.
- It sets labour standards, develops policies and devises programmes promoting decent work for all women and men.
- It is the only tripartite U.N. agency that brings together governments, employers and workers.
- It is headquartered in Geneva, Switzerland.
Key Features of the Labour Market in India
- Dual Structure of the Economy: India’s labour market exhibits a dualistic nature, consisting of:
- A formal sector, which offers job security, fixed wages, and legal protections.
- An informal sector, which is largely unregulated and insecure.
- Dominance of the Informal Sector: Nearly 80–90% of the workforce is employed in informal jobs such as daily wage labour, small-scale agriculture, street vending, and domestic work.
- High Dependence on Agriculture: A significant portion of India’s workforce is still engaged in agriculture (around 40–45%).
- However, agriculture contributes a much smaller share to GDP, indicating low productivity.
- This leads to disguised unemployment, where more people are employed than actually required.
- Demographic Dividend: India has one of the youngest populations in the world, with a large proportion in the working-age group. This presents an opportunity for economic growth, provided that:
- Adequate jobs are created;
- The workforce is properly skilled and trained.
- Low Female Labour Force Participation: Female participation in the labour force remains significantly low compared to global standards.
Major Challenges in India’s Labour Market
- Informalisation of Employment: Even within the formal sector, there is increasing use of contractual and temporary workers. This reduces job security and benefits.
- Jobless Growth: India has experienced a “jobless growth” phenomenon where high GDP expansion, often averaging over 6.5%, has not produced proportional employment for its growing workforce, leading to a decline in the worker-to-population ratio.
- Skill Mismatch: There is a significant gap between the skills possessed by workers and those demanded by industries. This leads to unemployment even among educated youth.
- Regional Imbalances and Migration: Economic opportunities are unevenly distributed across states. This results in large-scale migration from less developed regions to industrial hubs.
- Gender Inequality: Women face lower participation rates, wage disparities and limited career advancement opportunities.
Labour Laws in India
- The Government of India has announced the implementation of the four Labour Codes with effect from 21st November 2025 rationalising 29 existing labour laws:
- Code on Wages, 2019: Regulates wages, bonus payments, and equal remuneration.
- Industrial Relations Code, 2020: Deals with trade unions, employment conditions, layoffs, and dispute resolution.
- Code on Social Security, 2020: Merges laws on provident funds, pensions, insurance, maternity benefits, and gratuity.
- Occupational Safety, Health and Working Conditions Code, 2020: Consolidates regulations on safety, working hours, health, and welfare.
- Labour laws in India apply to both organized and unorganized sectors, although enforcement in the unorganized sector remains a challenge.
- Enforcement agencies include the Ministry of Labour and Employment, state labour departments, and specific boards (e.g., EPFO, ESIC).
Conclusion
- India’s labour market presents a combination of structural challenges and emerging opportunities.
- The focus must be on creating inclusive, productive, and sustainable employment to fully utilise the country’s demographic advantage and ensure long-term economic growth.
Source: AIR