The Union Budget 2025-26 arrives at a time when workforce policies across the world are being rethought, labor markets are shifting, driven by economic transitions, new work models, and evolving worker needs. Against this backdrop, the Union Budget 2025-26 recognizes the importance of policies not merely to comply with regulations but as vehicles to drive India’s continued economic growth.
While the 2024-25 budget emphasized labor welfare and broad skilling initiatives, the 2025-26 budget takes a more action-driven approach by strengthening sector-specific skilling, extending formal protections to gig workers and significantly increasing allocations for gender inclusion in the workforce.
These shifts are particularly relevant in light of the newly announced National Manufacturing Mission, which aims to further the “Make in India” initiative. With a strong focus on ease of doing business, developing a future-ready workforce, fostering MSME growth, and ensuring the availability of advanced technology, the mission underscores the need for a skilled and stable workforce that can support India’s expanding industrial and manufacturing sectors.
At Good Business Lab (GBL), we are encouraged to see this focus. For nearly a decade, we have uncovered extensive evidence that shows how policies that support safer workplaces, labor protections, and workforce skilling aren’t just about compliance—they lead to higher productivity, better retention, and stronger business outcomes.
Many of the ideas reflected in this budget align with the real-world challenges we’ve been working to solve—offering an opportunity to scale solutions that benefit both workers and businesses.
Building Safer and More Accountable Workplaces
The Economic Survey 2024-25 highlights how Occupational Safety and Health (OSH) regulations not only protect workers but also enhance efficiency, productivity, and overall wellbeing. Research has consistently shown a strong correlation between improved working conditions and economic growth, making effective OSH implementation a crucial factor in workforce productivity.
Over the years, India has introduced multiple OSH regulations, including the Factories Act (1948) and the Occupational Safety, Health and Working Conditions Code (2020), aimed at improving workplace safety. However, without accessible ways for workers to report safety concerns and labor violations, enforcement remains a challenge.
The Union Budget 2025-26 emphasizes better compliance and enforcement of existing OSH regulations. It recognizes the need for technology-driven solutions such as grievance redressal mechanisms and risk monitoring systems to strengthen workplace accountability.
At GBL, we’ve seen how digital grievance redressal systems can improve workplace accountability. Inache, our anonymous grievance and compliance platform, allows workers to securely report concerns—from safety hazards to abuse to wage disputes—while enabling HR teams to track and resolve them efficiently.
The impact has been clear: In over 60 factories, Inache has reduced grievance resolution times from weeks to just 24-72 hours. Factories using the tool have seen a 13% decrease in absenteeism and a 4.3% increase in productivity.
For businesses, improved communications with workers drives long-term workforce stability. Businesses that prioritize open communication and transparent problem-solving benefit from lower disruptions, higher retention, and stronger business performance.
Strengthening Protections for Gig Workers
India’s gig economy has grown significantly, with millions of workers engaged in platform-based work. However, many gig workers continue to operate without financial security, healthcare, or structured labor rights.
The Union Budget 2025-26 introduces social security measures for gig workers, ensuring they have access to basic protections.
- Registration on the e-Shram portal, ensuring gig workers can access government welfare programs.
- Healthcare coverage under PM-JAY, providing up to ₹5 lakh in health insurance per year.
At GBL, we believe these measures are crucial to establishing a safety net for platform workers, given the on-demand nature of gig work. If implemented effectively, they could improve financial stability for workers and reduce attrition for businesses. However, for gig work to provide sustainable earnings, additional barriers must be addressed.
While gig work offers flexibility, it also presents challenges—workers often juggle multiple platforms, with no single entity accountable for their wellbeing. Algorithmic controls shape work availability, limiting true agency — addressing these issues requires a balanced approach between policymakers and industry leaders to ensure worker security without hindering the sector’s economic dynamism.
At GBL, we are developing solutions to address some of the barriers to worker’s wellbeing in this space. If you are a platform looking to be the preferred choice not just for customers but also for workers, we’d love to collaborate. Reach out to us.
Bringing Work to Workers
“The goal is to generate ample opportunities in rural areas so that migration is an option, but not a necessity,” said Finance Minister Nirmala Sitharaman while presenting the Union Budget 2025-26.
This reflects a growing emphasis on creating jobs where people already live, rather than relying solely on urban centers as engines of economic opportunity. For years, cities have been the default hubs for employment, but as living costs rise and infrastructure struggles to keep pace, this model faces increasing strain. A more distributed approach to job creation will help balance growth and improve economic stability in rural areas.
The 2025-26 budget prioritizes:
- Sector-specific skilling, particularly in rural industries. Programs such as the PM Vishwakarma Yojana have received increased allocations to support traditional artisans and rural entrepreneurs, ensuring that training directly connects to formal job opportunities.
- Investments in rural infrastructure, digital connectivity, and logistics—such as the enhancement of PM Gati Shakti and rural industrial clusters—are also expected to create a more sustainable employment ecosystem beyond urban centers.
At GBL, our research in Jharkhand and Rajasthan has shown that when jobs are geographically closer to workers, aligned with their skills, workforce participation increases. To support this shift, we have been building and testing a decentralized production model by leveraging partnerships with grassroots organizations.
A key opportunity lies in large formal employers shifting aspects of production to rural areas. Investing in decentralized production models can create stable, formal jobs where workers already live while reducing costs and establishing sustainable supply chains that connect workers to national and global markets. In industries where demand for unique, handcrafted, or small-batch products is growing, this model also presents a competitive edge. Scaling it in a structured way could unlock new efficiencies, diverse talent and fresh market opportunities.
Read more on our efforts to develop high impact solutions that help women achieve economic independence, access paid work and empower businesses to reach untapped labor.
Recognizing the Realities of migrant workers
Even as the budget prioritizes rural job creation, migration remains a reality for millions of workers seeking better opportunities in cities. Recognizing their challenges, the Occupational Safety, Health, and Working Conditions Code (OSH Code) includes specific protections for migrant workers, such as:
- Portability of benefits, ensuring inter-state migrant workers can access ration cards and worker welfare schemes regardless of their location.
- Journey Allowance, covering travel costs for workers relocating for jobs, reducing the financial strain of migration.
These measures are a welcome step in strengthening worker security. We are encouraged by these changes, as the lack of support in these areas has long hindered migrant workers from reaching their full potential.
Alongside these efforts, financial inclusion plays a key role in helping migrant workers build security and stability. For migrant workers, financial stability isn’t just about covering daily expenses—it’s about navigating an unfamiliar city. Many arrive with little savings, limited access to formal banking. Without financial flexibility, unexpected costs—medical emergencies, rent deposits—can push them into cycles of high-interest debt. The pressure often forces tough choices: skipping meals, delaying healthcare, or even returning home, disrupting their ability to build stable livelihoods.
Our Earned Wage Access (EWA) program offers a critical buffer, reducing reliance on costly loans and giving workers control over their wages when they need them most. Workers using EWA are 20% less likely to forgo essential expenses and 32% less likely to struggle to make it from one paycheck to the next.
Meanwhile, insights from Workers’ Financial Diaries highlight liquidity constraints and inform solutions that help workers plan, save, and access essential services without debt dependence.
Financial inclusion is essential for establishing stability and building a secure future in a new city. Employer-supported programs provide a crucial safety net, helping workers navigate unfamiliar financial systems.
Beyond financial security, having a voice in the workplace is equally crucial for migrant workers, many of whom face language barriers, limited support networks, and unfamiliar labor protections. Our tech-enabled grievance redressal platform, Inache, helps workers raise workplace concerns anonymously and in real-time, allowing HR teams to resolve issues efficiently and transparently. By ensuring workers have accessible, safe channels to voice concerns, Inache strengthens trust between workers and employers, fostering better working conditions.
Advancing Women’s Workforce Participation
The Union Budget 2025-26 takes a major step toward gender inclusion, increasing the Gender Budget by 37.25% to ₹4.49 lakh crore (8.86% of the total budget). This funding will expand women’s skilling programs—particularly in sector-specific areas such as manufacturing and automotive—workplace safety initiatives, and maternal health support which could help facilitate greater participation in industrial sectors, creating pathways for women beyond traditionally female-dominated roles.
We see this as an opportunity to push for deeper, systemic change. As the budget expands support for women’s workforce participation, it is equally important to ensure that once women enter these industries, they have clear pathways to advance. At GBL, we’ve long advocated for gender-responsive workplace policies that move beyond just increasing participation to building structures that enable long-term career growth.
- Gender Champions Consortium (GCC): To advance gender diversity in the automotive sector, where women make up just 5.6% of the workforce, GBL launched the GCC in partnership with Auto Component Manufacturers Association of India (ACMA), Society of Indian Automobile Manufacturers (SIAM), and the Gates Foundation. The initiative fosters knowledge sharing on best practices, research-backed solutions, and practical strategies to address barriers to women’s participation and career advancement in the sector. It also offers gender advisory services to drive meaningful change, with the larger goal of increasing women’s representation and leadership in the industry.
- STITCH: Hiring more women is only the first step—ensuring they can advance is just as critical. Our STITCH program equips women with the leadership skills needed to move into management roles. Recognized by MIT Solve’s Future of Work Challenge, STITCH has demonstrated measurable impact:
- Supervisors trained through STITCH were 5.8% more productive up to six months after completing the program. They also saw a 6% increase in salary and were 15% less likely to quit, improving retention and career progression.
- Beyond individual growth, the benefits extended to their teams—workers in their lines were more likely to receive incentives and bonuses. By the end of the intervention, the firm saw a net return on investment of 12% proving that soft skills not only empower workers, but are also a profitable investment for the private sector.
Companies that invest in equitable hiring and leadership development will benefit from not just diversity metrics, but stronger innovation, team performance, and business success. And crucially, with ambitious targets for participation now set, it’s crucial that work is redefined to welcome and support the coming wave of women workers.
The Way Forward
The Union Budget 2025-26 reflects a growing focus on building a workforce that is not just employed but skilled, supported and secure while also strengthening India’s productive capacity. These are both worker-first policies and business-first solutions—recognizing that economic growth and worker wellbeing go hand in hand.
It’s encouraging to see these priorities take center stage. As the world of work evolves, we remain committed to ensuring this momentum leads to meaningful, lasting change—where workers can reach their full potential and build dignified lives. When that happens, businesses and economies don’t just grow—they thrive.
The opportunity is here. Let’s make it count.
Write to us at: info@goodbusinesslab.org.
Visit us at www.goodbusinesslab.org.
References:
- Union Budget 2025-26, Ministry of Finance, Government of India. [https://www.indiabudget.gov.in/]
- Economic Survey 2024-25, Ministry of Finance, Government of India. [https://www.indiabudget.gov.in/economicsurvey/doc/echapter.pdf]