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Three months on, the CorroHealth file is closed. Some 800 employees in Kochi and Kozhikode were relieved overnight on 3 July; by 20 July the company had settled for seven months’ gross salary. The employees had asked for reinstatement; they did not get it. A competent outcome by the standards of Indian labour administration, and an admission of how little leverage anyone had. The state’s case had rested on one proposition: that the Industrial Relations Code the company invoked was not in force in Kerala.
That proposition has since been abandoned. On 21 September the Chief Minister told an INTUC gathering that Kerala will implement the labour codes, Kerala and West Bengal being by then the only states not to have begun. His reasoning was the honest one: the codes have replaced the statutes they consolidate, so a state refusing them keeps no operative labour law at all. Ten weeks on, the ground the dispute was fought on has been conceded. What the episode exposed was not the strength of Kerala’s labour regime but its obsolescence. A firm whose assets are contracts and cloud logins cannot be picketed at the gate like the proprietor of the Malayalam cinema of the 1980s — its capital is frictionlessly mobile, and administrative coercion only ensures its rapid departure. The state could deliver money, not work.
Now consider a retrenchment nobody registered. Kerala’s private bus fleet has fallen from roughly 35,000 vehicles before 2011 to about 7,000, and daily ridership from 1.32 crore in 2013 to 64 lakh a decade later. At two to three crew per vehicle, besides mechanics and workshop hands, the jobs lost run into tens of thousands — many times over CorroHealth. There was no conciliation, no court direction, no union march. The difference is not scale but visibility: organised labour mobilises only where workers are legible, and the bus sector is thousands of operators owning a vehicle or two, with nobody to bargain with. More telling still, no employer chose to shed labour here. Those jobs were destroyed by permit conditions, frozen fares, nationalised routes and a state competing on the roads it regulates. When state regulation causes economic attrition, the resulting losses are diffused, uncounted, and shielded from political accountability.
What the two cases share is the absence of an alternative. Neither outcome was settled by statute. The CorroHealth employee’s severance was large because the state could embarrass a listed foreign firm; the bus crew got nothing because there was nobody to embarrass. What decided each worker’s fate was how many other employers were within reach of her skills, and on that count Kerala is thin. A deeper market would not have made a crisis of 800 jobs: elsewhere a retrenchment that size is absorbed within the year and reported, if at all, on the business pages. That it took a Labour Minister, a High Court and three weeks of protest to resolve one here is not evidence of a protective state. It is a measure of how few such employers Kerala has.
That is the young worker’s position, consistently misread. She is not seeking a job for life; she is looking constantly, ready to move the moment the next role pays better, and willing to accept a separation package if it is rewarding. What she needs is not protection from exit but enough employers that exit costs her nothing. True security lies in employer density, not administrative friction.
Scale is not the adversary of labour rights; it is their precondition. Stringent thresholds did not formalise Kerala’s informal economy; they taught enterprises to stay below them and out of manufacturing. The 1,03,596 units registered under the Year of Enterprises in 2023–24 generated 2,18,179 jobs — barely two per unit, mostly in services. In a firm of a thousand, severance is negotiated rather than announced and a union has something to organise; in a firm of two, neither exists at any price. Kerala converted militancy into firm-size suppression, and firm-size suppression into low productivity and stagnant real wages.
Two disciplines follow. The first is to stop intervening in the labour market where no intervention is warranted: a target of 150 global capability centres and two lakh jobs by 2031 sits awkwardly with a reflex that treats every retrenchment as a law-and-order event. The second is to stop being player and umpire at once; bus transport is a private good the state need not own and cannot fairly regulate while owning. What replaces both is protection attached to the worker rather than the job — portable social security and severance insurance travelling with the individual, one standard irrespective of firm size, and time-bound adjudication that provides speed over lingering friction.
Kerala’s problem is not that it protects labour too much, but that it overprotects only the labour it can see.
Dr D Dhanuraj is the Founder-Chairman at the Centre for Public Policy Research (CPPR), Kochi, Kerala, India.
Views expressed by the authors are personal and need not reflect or represent the views of the Centre for Public Policy Research (CPPR).
Dr Dhanuraj is the Chairman of CPPR. His core areas of expertise are in international relations, urbanisation, urban transport & infrastructure, education, health, livelihood, law, and election analysis. He can be contacted by email at [email protected] or on Twitter @dhanuraj.
