Economic Survey 2025-26 Exposes Labour Reform Implementation Gaps
Even as the central government advances its ambitious overhaul of India's labour regime through four comprehensive new labour codes, the Economic Survey 2025-26 has raised critical concerns about a widening chasm between reform intentions and ground realities. The survey specifically highlights persistent challenges facing gig workers, women, and newly skilled youth, suggesting that legislative changes alone may not be sufficient to transform labour-market dynamics.
Labour Codes Promise Versus Reality
Notified in November last year, the four labour codes represent a significant consolidation of 29 existing labour laws into a more streamlined framework. These reforms promise expanded social security coverage, minimum wage guarantees, and simplified compliance mechanisms designed to balance worker welfare with industrial competitiveness. According to Puneet Gupta, partner at EY India's people advisory services-tax division, "The Economic Survey 2025-26 underscores labour law reforms—through the implementation of the four Labour Codes—as a major step toward creating a simpler, modern, and more inclusive labour framework."
The survey acknowledges potential benefits including safer work environments and more flexible arrangements that could enhance gender diversity. However, it simultaneously points to deep-seated structural issues that continue to undermine reform effectiveness: volatile incomes within India's rapidly expanding gig economy, limited access to formal credit, disappointing job retention rates despite massive skilling initiatives, and women's ongoing underrepresentation in stable formal employment.
Gig Worker Marginalization Persists
The Economic Survey, tabled on Thursday, reveals troubling data about India's gig workforce. While the sector has expanded dramatically—growing 55% from 7.7 million workers in FY21 to 12 million in FY25—income volatility remains a fundamental challenge. Approximately 40% of gig workers earn less than ₹15,000 monthly, and this financial instability creates significant barriers to accessing credit.
Most gig workers remain "financially invisible" to traditional lenders due to insufficient credit histories, even as platform companies have implemented some improvements in onboarding and payment processes. The survey emphasizes that "there is a growing focus on expanding social security, income protection, and grievance redressal mechanisms for gig and platform workers to safeguard their well-being."
Shaik Salauddin, co-founder of the Indian Federation of App Based Transport Workers, echoed these concerns: "This is what we have been fighting for—how gig workers face income volatility, algorithmic control, and limited financial inclusion. Stronger labour protections are no longer optional; they are urgent." These findings come amid growing unrest among gig workers, including recent strike attempts against major food delivery platforms.
Skilling-Employment Disconnect
Beyond gig work challenges, the Economic Survey identifies a persistent gap between skilling efforts and labour-market outcomes. Despite substantial investments in training programmes, the survey flags low job retention rates and limited wage growth among trainees. "The central challenge in India's skilling landscape is not the absence of training effort but the weak translation of training into durable labour-market value," the document states.
The survey criticizes current approaches for prioritizing enrolment numbers and certifications over actual employment results. It calls for a fundamental shift toward outcome-based skilling, recommending that public funding and incentives be linked to placement quality and job retention rather than training volumes. "The first step is to re-anchor incentives around outcomes and retention," the survey advises, suggesting that training provider contracts should be tied to verified employment outcomes including six- and twelve-month retention rates and evidence of earnings growth.
Industry experts offer contrasting perspectives on this approach. Shantanu Rooj of TeamLease Edtech agrees that "the widening gap between formal education and industry requirements makes skilling, apprenticeships and work-integrated learning critical to sustaining our demographic dividend." However, Ronnie Screwvala of upGrad cautions against overly narrow linkages between skilling and employment, arguing that this perspective ignores self-employment opportunities and could constrain future job creation if funding becomes too dependent on immediate placement metrics.
Gender Inclusion Challenges
Women's participation in India's workforce represents another area of concern highlighted by the Economic Survey. While female labour force participation has increased from 23.3% in 2017-18 to 41.7% in 2023-24, significant disparities persist. Women account for just 21.3% of regular wage or salaried jobs compared to 27.2% for men during the September quarter of 2025-26.
The survey identifies multiple structural barriers including limited mobility, lack of affordable housing, and inflexible work arrangements that conflict with caregiving responsibilities. It emphasizes the need for policies promoting shared domestic duties and improved care infrastructure. "Despite these improvements in economic participation, women workers continue to face structural barriers... underscoring the need for a multipronged policy approach to further enhance participation," the document states.
Businesses have responded to pandemic-era declines in women's workforce participation with initiatives like flexible hours and remote work options. Additionally, there's growing emphasis on encouraging women's entry into STEM fields, though data shows women aged 25+ with advanced degrees constitute just 2.9% of the employed female workforce across rural and urban areas.
As India's total workforce surpasses 560 million, the Economic Survey 2025-26 presents a nuanced picture: while labour code reforms represent important structural changes, their successful implementation requires addressing deep-rooted challenges affecting vulnerable worker segments. The survey's findings suggest that comprehensive policy approaches—combining legislative reform with targeted interventions for gig workers, improved skilling outcomes, and enhanced gender inclusion—will be essential for creating a truly inclusive and productive labour market.
