The Union Budget 2022, to be presented on February 1, 2022, is eagerly awaited by all sections to see what it entails for them in the year ahead. Everyone has their expectations and suggestions and industry experts say an important aspect that it should address is employment generation by giving a boost to major employment-generating sectors such MSMEs, textiles, hospitality and housing among others, as well as other measures on skill development and labour laws.

“While the government has enabled fiscal capabilities and implemented several measures to support the economy in the last two years through initiatives such as PLI schemes, changes in the MSME sector, and Atmanirbhar Bharat, it is now imperative that the focus be now on job creation,” says Lohit Bhatia, President, Workforce Management, Quess Corp.

Industry experts suggest the following measures to help fuel employment opportunities.

Provide stimulus to skill development to bridge skill gaps in the job market

According to a survey report by FICCI in 2021, at least 9% Indians will be in jobs that do not exist currently and 37% of the workforce will require radically changed skill sets to meet their employment demands.

Viswanath PS, MD & CEO, Randstad India, says there is an urgent need to provide stimulus to the skill development sector.

 “The pandemic has re-emphasised the need to re-skill as well as up-skill existing and potential workforce across levels and sectors, particularly on digitisation skills. A higher outlay by the GoI on skill training for youth to make them job-ready will help bridge the existing skill gaps in the job market. Enhanced skill capabilities will ensure inclusive growth opportunities and make the Indian workforce globally competitive,” he adds.

Online upskilling needs to be the primary focus going forward, as most skill centres have remained non-functional due to Covid-19 in the last 22 months, says Bhatia.

“This can be achieved through the government and Ministry of Skill Development pushing all skill partners to convert programmes digitally and support entities with grants and credits,” he says

While the Centre has introduced many skilling initiatives, collaborations between public and private sector companies can play a major role in skilling/reskilling programmes, feels Ajoy Thomas, VP & business head (retail, e-commerce, logistics & transportation), TeamLease Services.

“Apart from this, the academic curricula must be rebooted to remain in sync with the current realities of the post-pandemic era. While India is renowned for its large talent pool, most graduates are unemployable, given the mismatch of their skill sets with industry requirements. This is the ideal opportunity for the Ministries of Education as well as Skill Development and Entrepreneurship to work in unison to revise the university curricula and skilling programmes as per industry needs,” he adds.

Thomas says the focus on skilling/reskilling of youth is necessary as more than one-third of India’s population will be in the 10 to 34 age group this year. “Significantly, official estimates indicate India must upskill more than 300 million youngsters for ensuring them gainful employment. No doubt, the allocation for skilling programmes requires a manifold hike in budget allocation to meet national objectives,” he adds.

Government employment promotion schemes

Bhatia says the Pradhan Mantri Rojgar Protsahan Yojana (PMRPY) Plan Scheme, which had been designed to incentivise employers for generation of new employment, should be immediately brought back allowing EPFO grants for the first three years for all first time UAN generators.

While the scheme was extended, it was tweaked to primarily benefit organisations with less than 1,000 employees despite massive employment generation taking place only in companies with more than 1,000 employees.

“There is a need for extension of benefits offered in Section 80JJAA of the Income Tax Act which supports job creation, '' adds Bhatia.  

Further, given the wage inflation that has been happening in the past few years, entry-level employment should be considered as with wages up to Rs 30,000 per month for the purposes of Section 80JJAA for employers that create net addition to employment, instead of the current amount of Rs 25,000 per month,” he adds.

Bhatia also suggests that large employers which implement net addition to employment should be bestowed the Gold status as “Champion employers” across the government ecosystem.

Recognition of staffing as a separate industry

As per a report by the Staffing Industry Analysts which covers staffing markets in 60 countries throughout six continents, the most attractive markets for staffing are India and Malaysia, followed by China and Ireland.

The Indian staffing market was worth Rs 368.7 billion ($5.2 billion) in 2020. This is the fourth largest staffing market in Asia-Pacific, after Japan ($66.7 billion), China ($16 billion) and Australia ($15 billion). India’s staffing industry not only ended FY 2021 with a modest 3.6% growth over Mar’20 but also concluded with more than 1.03 million flexi staff across industries.

Viswanath PS of Randstad says given the importance of the staffing industry for a country like India, it is imperative that it is recognised as a separate industry.

“Staffing industry in India is for the 'aam aadmi' to help them find a suitable job as per their qualifications. It plays a critical role in fostering jobs and thereby economic growth and development. This industry enables the creation of more work opportunities and reduces the time required in finding jobs. Increasingly, the staffing industry is also providing value-added services for businesses by helping businesses manage technology, skilling and other requirements. Staffing companies also enable flexi-staffing. They provide a reliable solution to the needs of the business houses wherein demand arises unexpectedly, is seasonal or project-driven.  An explicit legal definition of the industry should be introduced by the enactment of new legislation or appropriate amendments to the existing laws governing employment relations,” he adds.

Viswanath PS adds staffing industry is among the largest GST contributors at Rs 38,800 crore last year approximately, made contributions around Rs 5,400 crore towards EPF and around Rs 1,728 crore towards ESI in last year approximately.

 Wage And Social Security Support for MSMEs

MSMEs, which have traditionally hired 90 per cent of Indian labour, have failed to enter the formal sector because of a lack of growth. Due to this, their employees haven’t received the benefits of social security.

Bhatia says to address this, the Ministry of MSMEs needs to take active steps to ensure sustainable growth at a minimum of 10 per cent each year to eventually achieve large scale development. “The transition of the MSME sector from being in the minor category to entering the major leagues should be reinforced through wage and social security support by the government,” he adds.

Implementation of new labour laws

As per the latest legislation, 44 central labour laws will now be amalgamated into 4 new codes on industrial relations, wages, social security and occupational health safety (OSH), and working conditions. Labour being a concurrent subject, states will have to frame their rules and only then can the codes be implemented in their entirety.

“Budget 2022 should focus on implementing the new labour laws in a well understood and methodical way. State labour rules need to be aligned with the Central rules to avoid any ambiguity. Clarity must be provided for the licensing process. Staffing companies having presence in more than one state should be provided with a national license,” says Viswanath PS

Social security for gig workers

The new Social Security Code offers protection for gig and platform workers, who, given the incoming third wave, are increasingly being sought after. However, Bhatia says implementation is key and the government needs to expedite the utilisation of the earmarked funds to ensure maximum benefit for workers.

Annanya Sarthak, co-founder & CEO of Awign, a tech-led enterprise-focused gig work platform believes that this year's budget will include a push to streamline the gig economy and create an inclusive workforce, all while bolstering the economy's recovery and growth.

“Though the gig economy’s breakneck pace of growth has not as yet been classified as a formal economy, we hope this changes this fiscal year, given gigs are putting food on the table for close to lakhs of the Indian populace, especially the white-collar segment. All in all, the gig economy will grow and how, this will lead to policies and regulation coming in, something that we and our enterprise partners welcome, as it formalises and democratises what has traditionally been viewed as just that - a gig,” he adds.

Government measures for buoyancy of economy

Due to the ‘Great Resignation’ and consequent inflation of wages, talent shortages are already visible. This problem would only compound further as borders open and Indian talent is pursued by more developed countries.

Bhatia says the government must also begin benchmarking individual income tax rates to neighbouring countries, especially as income tax rates on individuals in South East Asia hovers near the 15-22 per cent mark in comparison to Indian rates at 30 per cent plus cess.

“The government can also look at doing away with the various cesses as the economy recovers, and other tax revenues remaining buoyant, allowing more money in the hands of individuals to enhance consumption. Moving stimulus to the consumption side is critical. A one-year moratorium on taxes on new car /new housing purchases can be provided via one time Section 80C. This would provide downstream benefits to the economy,” he adds.

Implementation of PLI Scheme to be key

Bhatia further adds that the implementation of the PLI scheme will be key, and there should be annual targets for each ministry in place under which the scheme falls. “There is a tremendous opportunity with the PLI scheme, which encompasses reduced interest rates, lower tax rates on new manufacturing companies, etc. If the implementation of the labour codes can be timed with the start of the new financial year, we would be able to attract more FDI into manufacturing at this time,” he adds.