On 21 November, 2025, the central government notified the four Labour Codes with the objective of bringing ‘flexibility’ into the world of labour. In response, workers and peasants across the country came out onto the streets, burned copies of the four Labour Codes; they have already started preparing for a General Strike.

Undoubtedly, the imposition of these Codes makes the advance of fascism in our country’s governance more evident, while also reminding us that fascism emerges as a political instrument when capitalism can no longer resolve its crises through ordinary means; hence, it is essential to understand the concrete historical and political-economic background of these Labour Codes.

The proposal to codify Indian labour laws emerged from the Second National Labour Commission. The First National Labour Commission (1966–69), though inherently designed to smoothen and systemise the surplus extraction from labour, was rooted in a welfare-state framework -- promoting labour protection, employment security, collective bargaining, and strong regulation to some extent; these were essential for capitalist construction in a newly liberated colony. In contrast, the Second Commission (1999–2002), shaped by neoliberal outlook, viewed labour mainly as an economic input, treated regulation as a market distortion, and sought to dilute protective laws in the name of efficiency and ease of doing business, redefining the State as a facilitator of capital accumulation. The commission’s proposal to codify all labour laws into four or five codes was strongly opposed by trade unions, leading to mass protests in 2003, a change of government in 2004, and the shelving of the codification process.

The subsequent governments initiated reforms in piecemeal manner, but didn’t attack the existing laws as a whole. The process of codification resumed after the Modi government came to power in 2014; although the Codes were passed in Parliament in 2019 and 2020, widespread protests and resistance across the country delayed their notification until last month. But to understand the current desperation of government, it is necessary to examine the bourgeois theoretical framework of labour market flexibility first; it argues that permanent employment strengthens workers’ bargaining power and wages, thereby discouraging employability, and claims that insecure employment will attract investment and increase recruitment.

This argument is fundamentally flawed for several reasons: first, in India, labour laws cover only a minuscule section of the workforce, as more than 90 percent of workers are in the unorganised or self-employed sector and are largely outside the purview of labour regulation; second, despite the widespread use of contractual and other non-regular forms of employment in both public and private sectors, India continues to face historically high unemployment, showing that flexibility has not increased employment; most strikingly, even after the Rajasthan government amended its labour laws in line with the present Codes in 2014, no substantial growth in employment has occurred in the organized sector.

Actually, labour flexibility theory is based on a wrong hypothesis propagated by Say’s Law; it proposes that all profit or surplus will be immediately invested by the capitalist class; so, more surplus to employers means further investment and more employment. But the reality is that capitalists invest in the productive sector only if the rate of return is higher than in other financial sectors. So, to continue the animal spirit of investment in all sectors, the return to capital must be equally high in all industries; for that, the wage bill should be reduced across the sectors, though it creates another crisis - the crisis of under-consumption and over-production.

Before coming to that point, it is necessary to glance at India’s industrial reality. For several years, India’s industrial production has been in a phase of sharp slowdown, with the Index of Industrial Production (IIP) recording the weakest growth in fourteen months. Parallel to this slowdown is a striking wave of enterprise closures: over the past five years, more than 2.04 lakh private companies have shut down, and the government has clarified that there is no plan to rehabilitate the employees of these defunct companies. While the corporations cite low expected returns to justify lack of investment, strikingly, India’s corporate profits reached a 15-year high in FY 2023–24!

Actually, the government’s economic policies clearly display a bias in favour of big corporate profitability, reflected in public sector bank loan write-offs exceeding ₹58,000 crore in FY 2025 alone and totalling ₹12.08 lakh crore from FY 2015–16 to FY 2024–25, shifting the burden from big defaulters onto the public. Alongside these transfers, the government has launched incentive schemes that channel public money to large private companies in the name of growth and employment generation, notably the Employment Linked Incentive (ELI) Scheme with an outlay of ₹99,446 crore, offering large subsidies with little accountability for investment, technological upgradation, or job creation.

Despite these extensive concessions, productivity declined by 2.38% in 2022–23, the share of machinery in gross fixed capital formation has shrunk, and private firms are not reinvesting profits in modernisation or technology, steadily reducing India to an assembly hub rather than a genuinely industrial economy.

Certainly, all the incentive measures are not converted into industrial investment; the reason is very peculiar - the extreme centralisation of capital under neoliberalism. Growth benefits are captured almost entirely by the top 1%. Even within the top 500 companies, the pattern of profit concentration is alarming. The top 10 firms enjoy extremely high profit rates. The next 40–50 maintain high profits. But the remaining 450 are struggling. Indian capitalism is now dominated by a handful of giant corporate groups. Their profitability depends on squeezing costs across their extended value chains.

This is where the structural crisis becomes visible. The next tier of large firms can sustain their profits only by cutting the benefits of their relatively better-paid employees; but attacking this group would shrink the consumer market for high-priced goods. This employee group benefitted in the early decades of liberalisation, but their incomes started declining after 2017 and have still not recovered by 2024 and thus, a clear consumption crisis has emerged. The central government’s 2025–26 income tax relief is essentially an attempt to address this contradiction.

So, the natural escape route for upper-tier, higher-wage firms is to shift their burden further downward. This is now feasible because medium and small enterprises act as suppliers within their value chains. And these medium and small enterprises are unable to raise prices because of stiff competition. Moreover, the 50 per cent tariff imposed by Trump, aimed at mitigating the impending crisis in the US and shifting its burden onto India, will put further downward pressure on export-commodity market prices. And so, to make this large employment-providing MSME sector survive and invest and mitigate the crisis, the Modi government has brought in the Labour Codes - enabling them to further intensify the exploitation of workers. They push wages down, casualise employment, and suppress labour rights. Undoubtedly, the entire mechanism of these Codes is a process of transferring the current crisis of Indian capitalism onto the poorest segment of workers employed in medium and small industries. And the changes in the Labour Codes make this abundantly clear.

The four new Labour Codes systematically weaken labour protections by sharply raising worker-number thresholds across key areas where technological progress should have reduced them, thereby excluding the vast majority of workers even in the organised sector - especially in MSMEs - from legal protection. The OSH Code increases the factory threshold and raises the applicability of contract labour regulation from 20 to 50 workers, while the Industrial Relations Code raises the requirement for prior permission for lay-off, retrenchment, and closure, as well as for Standing Orders, from 100 to 300 workers, allowing employers to hire and fire at will. Safety, health, and welfare provisions are similarly diluted, enabling employers to evade obligations such as appointing safety or welfare officers, and providing canteens, crèches, or ambulance services. The Codes also legalise fixed-term employment for permanent work, making job insecurity the norm, undermining seniority and promotions, and discouraging collective organisation. Fundamental labour rights are further curtailed by making union registration more difficult, virtually prohibiting strikes through mandatory notice and conciliation restrictions, and imposing severe penalties. Finally, the Codes give scope to expand spread-over to 12 hours, dilute overtime protections, and legitimise a four-day work week with 12-hour workdays, causing grave harm to workers’ health and family life. Every year, thousands of workers die in workplace accidents in our country. The new Labour Codes have severely weakened the inspection system related to workers’ safety.

Along with this has come the Labour Force Policy 2025, whose main objective is to bring the entire country’s labour force into a single digital database and supply them according to the needs of capital; all permanent work will be replaced by gig-nature labour - meaning that the process of gradually pushing the entire labour force outside all regulation has begun. This arrangement for unrestrained plunder is essentially the process of placing the burden of crisis onto working people in order to save India’s crisis-ridden capitalism.

Thus, the new fascist trend has emerged, whose function is to destroy the working class’s capacity to resist, thereby allowing unhindered capitalist profit-making. At the same time, the rise of neo-fascism reveals capitalism sinking into its own systemic contradictions, with neo-fascist policies emerging as its only apparent escape.

Today the organised movement of the country must come out of a defensive mood. The struggle to defeat these Labour Codes must be made not merely a resistance, but more aggressive, with the aim of changing the system itself. This crisis demands militant movements that cultivate collective power and new consciousness among the working masses. Capitalism’s deepening contradictions have generated alternative social and economic possibilities; our task is to critically identify those and heighten consciousness towards social transformation.