1

Shri Vile Parle Kelavani Mandal’s Narsee Monjee

College of Commerce and Economics (Autonomous)

FYBCOM
Semester I

TOPIC: - Studying the impact of New Labour Code 2022: The Demand and
Supply side story.

Submitted by:

C001 - Jenil Kamdar, Sap ID: 45208220137

C002 - Ishana Kanunga, Sap ID: 45208220479
C004 – Hussain Kapasi, Sap ID: 45208220374
C007 – Shaunik Kapoor, Sap ID: 45208220861

Roll No:

C001, C002, C004, C007

 2

TABLE OF CONTENTS

CONTENT PAGE NO
3-4
INTRODUCTION
4
IMPACT OF NEW LABOUR CODES
4-8
CHANGE IN LABOUR
INTERACTION BETWEEN DEMAND AND SUPPLY
SHIFTS IN LABOUR SUPPLY
CONCLUSION
BIBLIOGRAPHY

PLAGIARISM REPORT

.
 3

INTRODUCTION

Worker empowerment is essential for empowered, prosperous and Atmanirbhar

India. Even after 73 years of independence around 90% of workers work in unofficial sector
that does not have entry to all social guarantees. The total number of workers composed of
organized and unorganized sectors, is over 50 crores This is the first time that government
cares about the workers in organized and unorganized sectors and their families. The
working class used to be entangled in cobwebs several labour laws. Central government has
taken a revolutionary step forward in the right direction to give them freedom and true
meaning. The central government for that has taken historic step of codification of 29 laws in
four codes in order for workers to get security along with respect, health and other welfare
measures with simplicity which are mentioned below

The Code on Wages, 2019

An Act to amend and consolidate the legal guidelines regarding wages and bonus and
subjects linked therewith or incidental thereto.
Guarantee to review the minimum wages in every 5
years. Guarantee for timely payment of wages
Equal remuneration to male and female workers.
To remove regional disparity, introduction of the provision of floor wage.
 4

The Code on Social Security, 2020

An Act to amend and consolidate the legal guidelines regarding social safety with the
intention to increase social safety to all
personnel and people both within side the prepared or unorganized or another sectors and for
subjects linked
therewith or incidental thereto.
This act focuses on provision of benefit of pension scheme (EPFO) to all workers of different
sectors.

The Industrial Relations Code, 2020

An Act to consolidate and amend the legal guidelines regarding Trade Unions, situations of
employment in business
institutions or undertaking, research and agreement of business disputes and for subjects
linked
therewith or incidental thereto

The Occupational Safety, Health & Working Conditions Code, 2020

An Act to consolidate and amend the legal guidelines regulating the occupational safety,
fitness and operating situations of the folks hired in an established order and for subjects
linked therewith or incidental thereto.
 5

IMPACT OF NEW LABOUR CODES

Markets for goods have demand and supply curves, so does the market for labour. The law of
demand applies in labor markets this way: A higher income - that is, a higher price in the
labor market—leads to a decrease in the quantity of labor demanded by employers. while a
lower income leads to an increase in the quantity of demanded of labour. The law of supply
functions in labor markets: A higher rates for labor leads to a higher quantity of labor
supplied; a lower rates leads to a lower quantity supplied.

CHANGE IN LABOUR DEMAND

Labor demand is derived demand It arises from demand for the goods it helps produce The
greater the consumer demand for a product, the greater the producer demand for the labor
required to produce it Therefore, the expected increase in demand for commodities will
increase the demand for the type of labour, which produces those commodities.
The elasticity of demand for labor therefore depends on the elasticity of demand for its output
Labor demand is generally inelastic when workers' wages are only a small fraction of total
 6

wages Demand, on the other hand, is elastic if demand for the goods it produces is elastic or
if cheaper substitutes are available The labor demand also depends on the price of
cooperating factors Demand for labor rises. Another factor affecting labor demand is
technological progress In some cases, labor and machinery are used in a certain ratio For
example, the introduction of automatic looms reduces the demand for labor. In a typical
modern social situation, the demand for labor comes from employers. Employers use labor
and other factors of production to make a profit in the enterprise. The asking price for labor
is therefore the wage an employer is willing to pay for that particular type of work.

The labor demand curve shows the amount of labor that employers are willing to hire at a
given wage or wage rate, other things being equal. A change in wages or wages leads to a
change in the magnitude of labor demand. As the wage rate rises, employers will want to hire
fewer workers. The amount of labor required will decrease and there will be upward
movement on the demand curve When wages fall, employers are more likely to hire more
workers The amount of work will increase, causing the demand curve to move down.

Demand for labor is based on the demand for the goods or services produced. For example,
the more new cars consumers demand, the more workers automakers need to hire. Therefore,
the demand for labor is called "derived Shifts in the labor demand curve. occur for many
reasons One of the main reasons is that the demand".

As the demand for goods and services increases, the demand for labor will increase or shift
to the right to meet employers' production needs. When the demand for goods and services
falls, the demand for labor will fall or shift to the left Table 2 shows that, in addition to
derived labor demand, demand can also shift in response to several factors.

FACTORS RESULTS

DEMAND When the demand for the produced goods increases, both
FOR the output rates and profitability increase. As a result,
OUTPUT producers demand more labor to increase the level of
production.
 7

EDUCATION A well-trained and educated workforce leads to an increasing

AND TRAINING demand for this workforce on the part of employers. An increase
in labor productivity shifts the demand for labor to the right If the
workforce is not well educated or trained, employers will not hire
employees from this workforce as they will have to invest
significant time and money in training this workforce Demand for
them will shift to the left.

TECHNOLOGY Technological change can act either as a substitute or as a

complement to work.
When technology acts as a substitute, it replaces the need for
labor that an employer must hire For example, word processing
has reduced the number of typists needed in the workplace This
shifted the demand curve for typists to the left Increasing the
availability of certain technologies can increase the demand for
labor Technology, acting as a supplement to labor, increases the
demand for certain types of labor, shifting the demand curve to
the right.
For example, the increasing use of word processors and other
software has increased the demand for IT professionals who can
solve software and hardware problems related to an organization's
network Ever improving technology will increase the demand for
a skilled workforce who know how to use technology to increase
productivity Those workers who do not adapt to technological
changes will experience reduced demand.

NUMBER An increase in the number of firms producing a given product

OF increases the demand for labor and leads to a shift to the right. A
COMPANI reduction in the number of firms producing a given product
ES reduces the demand for labor, resulting in a leftward shift.

GOVERNME Compliance with government regulations can increase or

NT decrease the demand for labor at a given wage. In healthcare,
REGULATIO state regulations may dictate that nurses must be hired to
NS perform certain medical procedures This will increase the need
for nursing staff. Less trained health workers will be banned
from performing these procedures and the demand for these
workers will shift to the left.

PRICE AND Labor is not the only factor influencing the production process
AVAILABILI For example, a clerk in a call center needs a telephone and
TY OF computer terminal to enter data and record sales The demand for
OTHER call center salespeople will increase as the number of telephones
RESOURCES and computer terminals available increases This shifts the
demand
 8

curve to the right. As the amount of resources increases, the

demand for labor will increase If the terminal or the phones are
down, the demand for that labor will decrease When other
resources decrease, the demand for labor decreases. Similarly,
when the prices of other inputs fall, production becomes more
profitable, and suppliers need more labor to increase production
The opposite is also true Higher resource prices reduce the
demand for labor.

INTERACTION BETWEEN DEMAND AND SUPPLY

This chart shows wage determination for specific types of jobs in the industry The SS curve
represents labor supply in industry DD is the labor demand curve for this industry The
demand and supply curves intersect at E The wage rate OW is thus determined. If demand or
supply conditions change, the equilibrium wage rate will change Under competitive
conditions, the wage rate equals both the marginal return product and the average return
product in the long run. If wage rates are lower than average earnings, firms make above-
average profits As a result, new firms enter the industry, increasing labor demand and
pushing wage rates in line with average income products. However, if wage rates outpace
average revenue growth, businesses start to lose money. This causes companies to exit the
industry, reducing labor demand and leading to lower wage rates. This graph shows that the
long run equilibrium wage rate is his OW ON hires workers at OW wage rates. This OW rate
is equal to the marginal return product (MRP) and the average return product (ARP) at point
E Point E is the long-term equilibrium position of the firm.
 9

SHIFTS IN LABOR SUPPLY

Labor supply means different numbers of workers in a particular type of work, offering
employment at different wage rates (a) provide labor for industry;
(b) supply labor to the economy as a whole; For the industry, labor supply is elastic So if a
particular industry needs more workers, it can lure workers from other industries by offering
higher wages. Existing employees can also work overtime. This effectively means an
increase in supply The supply of labor in industry is governed by the laws of supply, namely
the laws of supply of small quantities at low wages and large quantities at high wages. Thus,
the industry's labor supply curve increases from left to right The supply of labor across the
economy depends on economic, social and political factors, or institutional factors such as
population and gender distribution, attitudes towards marriage, family size, contraception,
and standards of health facilities and hygiene. Labor supply may be affected. It is reduced by
refusing to work for a certain period of time This happens when workers are organized in
unions A worker cannot accept wages offered by an employer if they do not guarantee the
maintenance of a familiar standard of living. But, as we will see, higher wages are paid only
if higher wages are justified by higher marginal productivity. Workers with low marginal
productivity cannot demand higher wages solely because of their standard of living Roughly
speaking, given the number of potential workers, we can say that the labor supply can be
defined as the list of labor units at prevailing wage rates.

This depends on two factors:

(a) The number of workers who are willing and able to work at different wages;
(b) The number of working hours that each Worker is willing and able to put in at
different wages
 10

Backward Sloping Supply Curve of Labour:

While labour’s supply curve sloping upwards from left to right is the general rule, an
exceptional case of labour’s supply curve may also be indicated. When the workers’ standard
of living is low, they may be able to satisfy their wants with a small income and when they
have made that much, they may prefer leisure to work. That is why it happens that,
sometimes, increase in wages leads to a contraction of the supply of labour.
This is represented by a backward-sloping supply curve as under.

For some time this particular individual is prepared to work long hours as the wage goes up
(wage is represented on OY—axis in Fig. 31.1). But beyond OW wage, he will reduce rather
than increase his working hours.

The supply of labour is upward-sloping and adheres to the regulation of supply: The higher
the rates, the more the supplied quality and the lower the rates , the les quantity supplied. The
supply curve tradeoff among imparting labour into the marketplace or the use of time in
entertainment sports at each given rate level. The better the wage, the greater labour is
inclined to paintings and forego.
 11

Table below lists impact regarding the mentioned elements that causes increase or decrease.

FACTORS RESULTS
NUMBER An accelerated variety of employees will cause the supply curve
OF to shift to the right. An accelerated variety of employees may be
WORKERS because of numerous elements, inclusive of immigration, growing
populace, an getting older populace, and converting
demographics. Policies that inspire immigration will growth the
supply of labour, and vice versa. Population grows while start
prices exceed dying prices; this subsequently will increase supply
of labour while the previous attain running age. Getting older and
consequently retiring populace will lower the supply of labour.
Another instance of converting demographics is greater ladies
running out of doors of the home, which will increase the supply
of work.

REQUIRED The greater required education, the lower the supply. There is a
EDUCATI less supply of PhD mathematicians than of excessive faculty
ON arithmetic teachers; there may be a lower supply of cardiologists
than of number one care physicians; and there may be a lower
supply of physicians than of nurses.
GOVERNME Government rules also can have an effect on the supply of labour
NT POLICIES for jobs. On the only hand, the authorities can also additionally
guide policies that set excessive qualifications for sure jobs:
instructional schooling, certificate or licenses, or experience.
When those qualifications are made tougher, the variety of
certified employees will lower at any given wage. On the
opposite hand, the authorities might also subsidize schooling or
maybe lessen the desired degree of qualifications. For instance,
authorities would possibly provide subsidies for nursing faculties
or nursing students. Such provisions could shift the supply curve
of nurses to the right. In addition, authorities rules that extrade
the relative desirability of running as opposed to now no longer
running additionally have an effect on the labour supply. These
encompass unemployment blessings, maternity leave, baby care
blessings and welfare policy. For instance, baby care blessings
can also additionally growth the labour supply of running
mothers. Long time period unemployment blessings can also
additionally discourage task trying to find unemployed
employees. All those rules have to consequently be cautiously
designed to lower any terrible labour supply effects.
12
 13

BIBLIOGRAPHY

Coulter, S. (2020) Everyday economics: A user’s guide to the modern economy. Newcastle upon Tyne,
England: Agenda Publishing.

Mauritius (2012) Labor laws of Mauritius or a collection of the laws specially relating to masters and
servants at Mauritius including the acts of the government of India on emigration to that colony.
Rarebooksclub.com.

Mittal, A. (2021) Every detail about upcoming new labour laws 2022 for workers, SAG Infotech Official
Blog. SAG Infotech Private Limited. Available at: https://blog.saginfotech.com/new-labour-laws/amp
(Accessed: November 10, 2022).

ResearchGate (no date) ResearchGate. Available at: https://www.researchgate.net/ (Accessed: November

10, 2022).

Seth, T. (2014) Demand and supply of labour (explained with diagram), Economics Discussion. Available
at: https://www.economicsdiscussion.net/demand/demand-and-supply-of-labour-explained-with-diagram/
1755 (Accessed: November 10, 2022).

The Financial Express (2022) “What the New Labour Codes mean for employees?,” 15 September.
Available at: https://www.financialexpress.com/money/what-the-new-labour-codes-mean-for-employees/
2668611/lite/ (Accessed: November 10, 2022).

(No date) Gov.in. Available at: https://labour.gov.in/sites/default/files/Labour_Code_Eng.pdf (Accessed:

November 10, 2022).
 14

PLAGIARISM SCAN REPORT

Date 2022-11-10

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INTRODUCTION

Worker empowerment is essential for empowered, prosperous and Atmanirbhar

India. Even after 73 years of independence around 90% of workers work in unofficial sector that does not have entry to all social
guarantees. The total number of workers composed of organized and unorganized sectors, is over 50 crores This is the first time that
government cares about the workers in organized and unorganized sectors and their families. The working class used to be entangled
in cobwebs several labour laws. Central government has taken a revolutionary step forward in the right direction to give them freedom
and true meaning. The central government for that has taken historic step of codification of 29 laws in four codes in order for workers
to get security along with respect, health and other welfare measures with simplicity which are mentioned below

The Code on Wages, 2019

An Act to amend and consolidate the legal guidelines regarding wages and bonus and subjects linked therewith or incidental thereto.
Guarantee to review the minimum wages in every 5 years.
Guarantee for timely payment of wages
Equal remuneration to male and female workers.
To remove regional disparity, introduction of the provision of floor wage.

The Code on Social Security, 2020

An Act to amend and consolidate the legal guidelines regarding social safety with the intention to increase social safety to all
personnel and people both within side the prepared or unorganized or another sectors and for subjects linked therewith or
incidental thereto.
This act focuses on provision of benefit of pension scheme (EPFO) to all workers of different sectors. The
Industrial Relations Code, 2020
An Act to consolidate and amend the legal guidelines regarding Trade Unions, situations of employment in business
institutions or undertaking, research and agreement of business disputes and for subjects linked therewith or
incidental thereto

The Occupational Safety, Health & Working Conditions Code, 2020

An Act to consolidate and amend the legal guidelines regulating the occupational safety, fitness and operating situations of the
folks hired in an established order and for subjects linked therewith or incidental thereto

IMPACT OF NEW LABOUR CODES

Markets for goods have demand and supply curves, so does the market for labour. The law of demand applies in labor

Page 1 of 2
 15

markets this way: A higher income - that is, a higher price in the labor market—leads to a decrease in the quantity of labor demanded
by employers. while a lower income leads to an increase in the quantity of demanded of labour. The law of supply functions in labor
markets: A higher rates for labor leads to a higher quantity of labor supplied; a lower rates leads to a lower quantity supplied.

CHANGE IN LABOUR DEMAND

Labor demand is derived demand It arises from demand for the goods it helps produce The greater the consumer demand for a product,
the greater the producer demand for the labor required to produce it Therefore, the expected increase in demand for commodities will
increase the demand for the type of labour, which produces those commodities.
The elasticity of demand for labor therefore depends on the elasticity of demand for its output Labor demand is generally inelastic
when workers' wages are only a small fraction of total wages Demand, on the other hand, is elastic if demand for the goods it
produces is elastic or if cheaper substitutes are available The labor demand also depends on the price of
cooperating factors Demand for labor rises. Another factor affecting labor demand is technological progress In some cases, labor and
machinery are used in a certain ratio For example, the introduction of automatic looms reduces the demand for
labor. In a typical modern social situation, the demand for labor comes from employers. Employers use labor and other factors of
production to make a profit in the enterprise. The asking price for labor is therefore the wage an employer is willing to pay for that
particular type of work.

The labor demand curve shows the amount of labor that employers are willing to hire at a given wage or wage rate, other things being
equal. A change in wages or wages leads to a change in the magnitude of labor demand. As the wage rate rises, employers will want to
hire fewer workers. The amount of labor required will decrease and there will be upward movement on the demand curve When wages
fall, employers are more likely to hire more workers The amount of work will increase, causing the demand curve to move down.
Shifts in the labor demand curve. occur for many reasons One of the main reasons is that the demand for labor is based on
the demand for the goods or services produced. For example, the more new cars consumers demand, the more workers automakers need to hire.
Therefore, the demand for labor is called "derived demand".

As the demand for goods and services increases, the demand for labor will increase or shift to the right to meet employers' production
needs. When the demand for goods and services falls, the demand for labor will fall or shift to the left Table 2 shows that, in addition
to derived labor demand, demand can also shift in response to several factors.

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 16

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FACTOR
S
RESULT
S
DEMAND FOR OUTPUT
When the demand for the produced goods increases, both the output rates and profitability increase. As a result, producers demand
more labor to increase the level of production.
EDUCATION AND TRAINING
A well-trained and educated workforce leads to an increasing demand for this workforce on the part of employers. An increase in
labor productivity shifts the demand for labor to the right If the workforce is not well educated or trained,
employers will not hire employees from this workforce as they will have to invest significant time and money in training this
workforce Demand for them will shift to the left.
TECHNOLOGY
Technological change can act either as a substitute or as a complement to work.
When technology acts as a substitute, it replaces the need for labor that an employer must hire For example, word
processing has reduced the number of typists needed in the workplace This shifted the demand curve for typists to the left Increasing
the availability of certain technologies can increase the demand for labor Technology, acting as a supplement to labor, increases the
demand for certain types of labor, shifting the demand curve to the right. For example, the increasing use of word processors and other
software has increased the demand for IT professionals who can solve software and
hardware problems related to an organization's network Ever improving technology will increase the demand for a skilled workforce
who know how to use technology to increase productivity Those workers who do not adapt to technological changes will experience
reduced demand.
NUMBER OF COMPANIES
An increase in the number of firms producing a given product increases the demand for labor and leads to a shift to the right. A
reduction in the number of firms producing a given product reduces the demand for labor, resulting in a leftward shift.

GOVERNMENT REGULATIONS
Compliance with government regulations can increase or decrease the demand for labor at a given wage. In healthcare, state
regulations may dictate that nurses must be hired to perform certain medical procedures This will increase the need for nursing staff.
Less trained health workers will be banned from performing these procedures and the demand for these workers will shift to the left.

PRICE AND AVAILABILITY OF OTHER RESOURCES

Labor is not the only factor influencing the production process For example, a clerk in a call center needs a telephone and computer
terminal to enter data and record sales The demand for call center salespeople will increase as the number of telephones and computer
terminals available increases This shifts the demand curve to the right. As the amount of

Page 1 of 2
 17

resources increases, the demand for labor will increase If the terminal or the phones are down, the demand for that labor will decrease
When other resources decrease, the demand for labor decreases. Similarly, when the prices of other inputs fall, production becomes
more profitable, and suppliers need more labor to increase production The opposite is also true Higher resource prices reduce the
demand for labor.
SHIFTS IN LABOR SUPPLY
Labor supply means different numbers of workers in a particular type of work, offering employment at different wage rates
(a) provide labor for industry;
(b) supply labor to the economy as a whole; For the industry, labor supply is elastic So if a particular industry needs more workers, it
can lure workers from other industries by offering higher wages. Existing employees can also work overtime.
This effectively means an increase in supply The supply of labor in industry is governed by the laws of supply, namely the
laws of supply of small quantities at low wages and large quantities at high wages. Thus, the industry's labor supply curve increases
from left to right The supply of labor across the economy depends on economic, social and political factors, or
institutional factors such as population and gender distribution, attitudes towards marriage, family size, contraception, and
standards of health facilities and hygiene. Labor supply may be affected. It is reduced by refusing to work for a certain
period of time This happens when workers are organized in unions A worker cannot accept wages offered by an employer if they do
not guarantee the maintenance of a familiar standard of living. But, as we will see, higher wages are paid only if higher wages are
justified by higher marginal productivity. Workers with low marginal productivity cannot demand higher wages solely because of
their standard of living Roughly speaking, given the number of potential workers, we can say that the labor supply can be defined as
the list of labor units at prevailing wage rates.

This depends on two factors:

(a) workers who are willing and able to work at different wages;
(b)working hours that each Worker is willing and able to put in at different wages.

Backward Sloping Supply Curve of Labour:

While the general rule is that labour’s supply curve sloping upwards from left to right, an exceptional case of labour’s supply curve
may also be indicated (see Fig.
31.1) When the workers’ standard of living is low, they may be able to satisfy their wants with a small income and when
they have made that much, they
may prefer leisure to work. Due to this, sometimes, increase in wages leads towards contraction of the supply of labour.
This is represented by a backward-sloping supply curve as under.(exceptional curve)
For some time this particular individual is prepared to work long hours as the wage goes up. But beyond OW wage, he would rather
reduce than his working hours to be increased.

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This chart shows wage determination for specific types of jobs in the industry The SS curve represents labor supply in
industry DD is the labor demand curve for this industry The demand and supply curves intersect at E The wage rate OW is thus
determined. If demand or supply conditions change, the equilibrium wage rate will change Under competitive conditions, the wage
rate equals both the marginal return product and the average return product in the long run. If wage rates are lower than average
earnings, firms make above-average profits As a result, new firms enter the industry,
increasing labor demand and pushing wage rates in line with average income products. However, if wage rates outpace average
revenue growth, businesses start to lose money. This causes companies to exit the industry, reducing labor demand and leading to
lower wage rates. This graph shows that the long run equilibrium wage rate is his OW ON hires workers at OW wage rates. This OW
rate is equal to the marginal return product (MRP) and the average return product (ARP) at point E Point E is the long-term
equilibrium position of the firm.

The supply of labour is upward-sloping and

adheres to the regulation of supply: The higher the rates, the more the supplied quality and the lower the rates , the les quantity
supplied. The supply curve tradeoff among imparting labour into the marketplace or the use of time in entertainment sports at each
given rate level. The better the wage, the greater labour is inclined to paintings and forego entertainment sports. Table below lists
impact regarding the mentioned elements that causes increase or decrease.

FACTOR
S
RESULT
S
NUMBER OF WORKERS
An accelerated variety of employees will cause the supply curve to shift to the right. An accelerated variety of employees may be
because of numerous elements, inclusive of immigration, growing populace, an getting older populace, and converting demographics.
Policies that inspire immigration will growth the supply of labour, and vice versa. Population grows while start prices exceed dying
prices; this subsequently will increase supply of labour while the previous attain running age. Getting older and consequently retiring
populace will lower the supply of labour. Another instance of converting demographics is greater ladies running out of doors of the
home, which will increase the supply of work.

REQUIRED EDUCATION
The greater required education, the lower the supply. There is a less supply of PhD mathematicians than of excessive faculty
arithmetic teachers; there may be a lower supply of cardiologists than of number one care physicians; and there may be a lower supply
of physicians than of nurses.
GOVERNMENT POLICIES
Government rules also can have an effect on the supply of labour for jobs. On the only hand, the authorities can also additionally guide
policies that set excessive qualifications for sure jobs: instructional schooling, certificate or licenses, or experience. When those
qualifications are made tougher, the variety of certified employees will lower at any given wage. On the opposite hand, the authorities
might also subsidize schooling or maybe lessen the desired degree of qualifications.

Page 1 of 2
 19

For instance, authorities would possibly provide subsidies for nursing faculties or nursing students. Such provisions could shift the
deliver curve of nurses to the right. In addition, authorities rules that extrade the relative desirability of running as opposed to now no
longer running additionally have an effect on the hard work deliver. These encompass unemployment blessings, maternity leave, baby
care blessings and welfare policy. For instance, baby care blessings can also additionally growth the hard work deliver of running
mothers. Long time period unemployment blessings can also additionally discourage task trying to find unemployed employees. All
those rules have to consequently be cautiously designed to
lower any terrible hard work deliver effects.

Matched Source

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