The share of contract staffing shall reduce from 29 per cent to an estimated 15 per cent of the formal workforce
Flexi-Staffing is an engine for job creation. Over the last decade, the organized flexi staffing industry represented by the Indian Staffing Federation has managed to provide employment to over five million youth. In a country where for the next 20 years a million youth will be added to the workforce, a flexi-job is better than no job. Charlie Chaplin once said, “You will never find a rainbow if you are looking down.” The country is witnessing an era where talks about labour reforms are moving away from coffee table discussions to actual execution.
Those who have been pitching their own self-interest as national interest while opposing labour reforms have painted a sordid story of how all employers are here to exploit, how employees have no voice, how all employers are big companies, how shareholders pay wages and not customers missed the five painful defects in India’s labour market:
• 12 per cent manufacturing employment as our nemesis
• 50 per cent agricultural employment of low productivity where 240 million Indians produced less food grains than 4 million Americans
• 50 per cent self-employment (the poor cannot afford to be unemployed so they are subsistence self-employed)
• 94 per cent informal employment (100 per cent of net job creation since 1991 has happened informally)
• India has 3 lakh apprentices as against Germany’s 4 million, Japan’s 11 million and China’s 20 million out of an overall capacity of 4 lakh apprentices.
The recent amendments proposed by the Labour Ministry are remarkable while they may not still be complete and comprehensive. Their acknowledgement that MSMEs, which could propel future growth of the country, are at the receiving end of Licence and Inspector Raj, needs a distinct treatment (single labour law for MSME), their acknowledgement that its important to enable companies to set shop in India (Amendments to the Factories Act), their acknowledgement that we need more apprentices at work place (Amendments to the Apprentice Act), their acknowledgement that we need more women in the formal workforce (Changes in the Factories Act provision) – spreads ample optimism.
In addition, Arun Jaitley’s bold declaration of providing youth of the country three salary choices (a petition promoted by TeamLease and actively supported by Indian Staffing Federation) is a shot in the arm for the 94 per cent of our youth who on account of our 44 central labour laws and over 100 state specific labour laws have been by designed to languish in informal employment. The three choices that employees would have a choice of are:
• Opting out or in from paying their own contribution of PF to the EPFO
• Option to pay employer’s contribution of PF to the EPFO or to NPS
• Opting to pay their current ESIC contribution to ESIC or to any other IRDA regulated insurance scheme
In addition, our labour ministry in its new avatar deserves a pat on their back for fixing basic plumbing issues by allowing for single online filing of most compliance challans. As a consequence of these and more, we can anticipate more job creation in the formal sector than the informal. The share of contract staffing shall reduce from 29 per cent to an estimated 15 per cent of the formal workforce. Over a period of time, wages too will improve as was seen in China where wages rose to 20 per cent of US wages as against 5 per cent a decade ago.
In this backdrop, the formal flexi-staffing industry shall manifest its existence beyond the perception of providing labour law arbitrage (a bizarre myth). On the one hand, it will enable organizations to manage their peaks, their seasonal requirements, providing a sophisticated matching platform to find talent across the country and providing an eco-system to experiment with new ideas and new jobs which otherwise would have been throttled in the womb. On the other hand, it will provide our youth a stepping stone to create an opening balance in their career, providing them access to formal skill adoption, by providing them with wage and health security besides access to all statutory benefits, by providing them with social recognition. Its heartening that there seems to be a growing acceptance of our role as catalysts to job creation, yet there is a long road ahead.