Smaller cities outpace metros in hiring growth post labour codes: Report

India’s labour code reforms are coinciding with faster hiring growth in smaller cities, with job listings in tier III and IV markets rising by as much as 56%, according to a report by recruitment platform WorkIndia.

The study suggests that as companies extend operations beyond major metros, emerging urban centres are seeing disproportionate gains in formal employment opportunities. Contrary to earlier concerns that compliance changes might dampen hiring, overall job postings on the platform rose 8.4% following implementation of the new framework.

Among smaller markets, Kolhapur recorded the strongest increase, with job postings climbing 56.3%, followed closely by Udaipur at 55.3%. Goa registered a 23.6% rise, Vijayawada 20.2%, Kochi 17.7%, Coimbatore 14.1%, and Raipur 13.9%.

Taken together, tier III and IV cities are expanding at rates of roughly 12–15% or higher, indicating that formal hiring momentum is shifting toward semi-urban regions, the report said.

The analysis compares platform data from the period before the reforms — October 1 to November 20, 2025 — with trends observed between November 21, 2025 and January 31, 2026.

Larger cities continued to post steady gains, with tier I markets recording aggregate hiring growth of 6.6%.

Ahmedabad led metro expansion with a 19.2% increase in listings, followed by Pune at 13.2%, Mumbai at 8.8%, and Kolkata at 8.9%. The findings suggest that while major employment hubs remain active, smaller cities are currently growing at a faster pace.

Work patterns also shifted during the period studied. Listings for office-based roles increased 8.7%, while work-from-home postings fell 10.4%, pointing to a tilt toward on-site employment. The report attributes this change partly to compliance considerations, as structured workplaces may make regulatory adherence easier to monitor.

Despite these operational adjustments, salary bands showed little movement after the rollout, indicating that companies are absorbing compliance-related costs without immediate wage recalibration. The report interprets this as a transitional phase in which employers are focusing on operational alignment rather than compensation changes.

Gender participation trends also showed divergence. Job postings targeted at women rose 10%, compared with 6.3% growth for men, marking one of the widest recent gaps in hiring acceleration and suggesting improving inclusivity in recruitment patterns.

Commenting on the findings, WorkIndia Co-founder and CEO Nilesh Dungarwal said, "The narrative that Labour Codes would kill jobs was always backwards. What kills jobs is informality, lack of structure, protection, and scalability. What we're seeing now is the opposite: an 8.4 per cent surge overall, 56% in smaller cities, and women's opportunities growing faster than men's."

(With inputs from PTI)