Bhoomika Singh
India is the fifth largest economy in the world and India Inc is one of the largest job generators. The employment comes from the organised industries in India that contribute to the GDP as well. However, it’s a fact that most jobs are in the unorganised clusters in various industries that cater to around 6.3 crore MSMEs. For those working in the unorganised or unregulated workforces, there are no specific laws, wages or policies. They fall under the Staffing Industry, which covers a meagre 2 per cent of the possible employable population in India.
Of the 400 million employable people in India, about 10 per cent are employed in the organised sector, while about 250 million are self-employed. This leaves almost 110 million people who are employed by the temporary or flexi-staffing sector and the unorganised sector.
To bring a workforce system, laws and regulations into the staffing industry or the private employment services, the Indian Staffing Federation (ISF) is working towards growing this market.
The ISF is looking at interacting with law-making authorities to persuade them to recognize the staffing industry and to create adequate and appropriate laws to manage it. Hoping to establish a lasting awareness about itself among the key stakeholders (The government, employers, staffing companies, job seekers, trade unions, industry bodies, etc.), the ISF is the apex body representing the staffing industry that is authorised to talk with government agencies and other trade bodies on behalf of the staffing or private industry.
Staffing or private employment services act as enablers for providing social security and long-term medical and retirement benefits to temporary or flexi-staff. Promoting staffing employment services therefore will address various issues about the employment benefits being provided to employees.
While doing a lot on its part to put the unorganised workforce in the reckoning, the ISF also has some expectations and suggestions for the government for the upcoming Union Budget 2023-24.
PLI like schemes
Through schemes such as the PLI and the PMRPY, there will be a strong impetus towards formal employment generation as the PLI has been a great scheme for strengthening India’s economy.
Similar schemes and programmes, if implemented across sectors like agriculture, construction, etc., where a highly informal workforce is engaged, will ensure an increase in formal employment.
Additionally, new employment generation, which will bring new social security beneficiaries in these sectors, could be utilised as an incentive for the successful completion of projects. It will aid in faster project completion and speed up the formalisation of employment.
The MSME sector, which employs a workforce of nearly 120 million, is out of the ambit of social security. PMRPY schemes can bring about new employment generation, encouraging employers and supporting formal employment. It could include voluntary coverage by companies that are outside the ambit of these schemes.
Early implementation of Labour Codes
The Labour Codes, which are a positive step by the host country of the G20 Summit, have already been approved by the parliament and are awaiting implementation.
In the year of the G20 Summit, we look forward to hearing about the government’s implementation roadmap for the Labour Codes and seek more clarity on it from the finance minister during the presentation of the Union Budget.
With the government’s focus on FDI in manufacturing, PLI schemes and the infrastructure push, labour reforms will provide the single biggest boost to the efforts of those who are working to attract foreign investment into the country and will also accelerate job creation across industrial sectors.
Social security is important
Providing social security benefits to gig workers will serve to bring social security outside of the confines of labour codes and make it available for the benefit of millions who are currently adopting gig work as a mode of employment.
Similarly, social security benefits for domestic workers will bring a large section of the underprivileged domestic workers employed at various households into the social security ambit. If individual household owners are rewarded for providing social security to their domestic workers, there is a higher possibility of the ‘mindset adoption’ of this scheme.
Any social security paid by a household owner to their domestic workers should be treated as a benefit towards their income tax (rewards individual).
Relaxation from inflation
For the individual worker at the individual level, the most important aspect of the Union Budget 2023-24 will be about it factoring in the inflation and the pandemic-related stress over the last three years into the various policies and plans that it comes forward with.
The government has been reviewing corporate taxes downwards, whereas individual tax slabs including cess remain high. Now that the COVID-19 related economic slowdown is behind us, the government needs to give more into the hands of the people so that they can spend more. Thus, everyone is expecting an increase in the Section 80C standard deduction and other slabs, a removal of the cess, and a relook at lowering the tax slabs.
Tax relaxations for employees
For providing employment-oriented tax support to support the growth of formal employment, the government has enabled job-oriented tax support in the form of Section 80JJAA of the Income Tax Act. The eligibility criterion for that is drawing a salary of a maximum of INR 25,000 per month.
However, most new hires in the Indian workforce are at salaries higher than this. Over the past many years, the salary slabs have not been increased to factor in inflation. The ISF recommends hedging this to certain minimum wage increases, thereby continuing coverage even while the overall wages grow.
In conclusion, the ISF has a prominent role to play in the alignment of the unaligned workforce and for that they have some very fair demands from the government.
With over 110+ members, the ISF has generated employment for over 9 million people over the last ten years and currently employs over 1.4 million flexi staff annually. The principal focus of the federation’s activities is to strengthen triangular employment relationships, in which the staffing company is the employer of the temporary worker, who works under the supervision of the user company.
The purpose of the ISF is to enhance the long-term growth of the staffing industry and to ensure that it continues to make positive contributions to the economy and to society as a whole.
