The government is set to introduce a ‘Labour Welfare and Employment Index’ (LWEI) to rank Indian states and Union territories (UTs) based on key parameters such as employment, labour welfare, social security coverage, and productivity. This initiative aims to foster ‘healthy competition’ among states and enhance the ease of doing business, according to a report by The Financial Express.

By ranking states and UTs based on the LWEI, the government aims to drive states to focus on areas where labour law codification is lacking or inadequate. This focus is expected to bring about more consistent employment policies and benefits, especially for businesses operating in multiple states.

The Ministry of Labour is expected to launch the LWEI in the coming weeks following consultations with state governments, NITI Aayog (the policy think tank of the government), the International Labour Organisation (ILO), and other relevant central ministries.

This initiative might be announced by Finance Minister Nirmala Sitharaman during her Budget speech, which is poised to take place next month.

The LWEI is expected to promote uniformity in the implementation of labour laws across the states and ultimately improve labour welfare, The Financial Express report noted. The introduction of the index is designed to make states more competitive and responsive to the evolving employment and labour requirements, directly benefiting workers and enhancing transparency and business operations.

This would be similar to the Labour Rights Index, which serves as a comparative tool and international standard for evaluating labour legislation across 135 countries. This tool is essential to providing information and insights to workers to help improve their working conditions.

Currently, 24 states and union territories have established rules under all four labour codes. However, West Bengal, Meghalaya, Nagaland, Lakshadweep, and Dadra & Nagar Haveli have yet to formulate rules under any of the codes, according to a recent study by the government’s VV Giri National Labour Institute.

Vasudha Mukherjee New Delhi
3 min read Last Updated