Among the sweeping changes being ushered in by the new labour codes introduced by the government of India, the State Bank of India (SBI) has released a report that discusses how the reforms will affect the country’s workforce.
As per the mentioned SBI report, after a short transition phase, the new labour code may reduce unemployment by 1.3% over the medium term, depending on reform implementation, firm-level adjustment costs, and complementary state-level rules. Based on the current labour force participation rate (15 years +) at 60.1% and the average working age population at 70.7% across rural and urban areas, SBI predicts the generation of 77 lakh new jobs.
“With a saving rate of approximately 30%, the implementation will result in a consumption boost ₹66 per person per day post implementation. This could lead to an approximate consumption boost of ₹75,000 crore. Thus, the labour codes implementation is poised to give a major boost to consumption as well,” said Dr Soumya Kanti Ghosh, Group Chief Economic Advisor, SBI.
The SBI report added that the new labour codes will help empower both workers and enterprises, building a workforce that is protected, productive and aligned with the evolving world of work, hence, paving the way for a more resilient, competitive and self-reliant nation.
About 44 crore people in India are part of the unorganised work sector, with 32 crore registered under the e-Shram portal. “By assuming 20% will shift from informal payroll to formal payroll, it will benefit around 10 crore beneficiaries. With this, we expect India’s social security coverage may reach 80-85% in the next 2-3 years,” the report added.
According to the PLFS dataset, the SBI report shared, 60.41% of the workers in India are in he formal sector. The report estimates that this share will increase by 15.1% after the implementation of the new codes, bringing the formal sector workforce to 75.5%.
