Union Budget 2019 India: The staffing industry has been a force multiplier for over 65 industries in India.
By Rituparna Chakraborty
Budget 2019: India has made remarkable progress in the last two decade with almost a tenfold GDP growth. Although this growth trajectory has made India the sixth-largest economy in the world, much remains to be done. Of the 475 million labour force in India approximately 92% constitutes informal employment working in unorganized sectors – primarily agriculture followed by manufacturing, services, logistics, construction, textiles, trade and transportation stuck with very low levels of education. Only 2% skilled workforce as compared to Germany which has 75%, UK has 68%, and South Korea with a whopping 96%. On one hand there are approximately 15 million fresh entrants into the workforce every year on the other the net enrolment in vocational education and skilling initiatives like apprenticeships is a meagre 3.5 million per year. Compare this to China which has 11 million and USA with 11.3 million, we are far behind. A large portion of the informal workforce does not have access to decent working conditions and a job of dignity. Instead they are vulnerable to exploitation as they find self-employment through informal means such as middle men and word-of-mouth references.
The staffing industry has been a force multiplier for over 65 industries in India. The flexi workforce has reached 3.3 million formal flexi staff in 2018, which has immensely benefited due to structural reforms and policy amendments such as EPF Benefits, ESIC Benefits, GST, Skill India, Demonetization and extension of fixed term contract to all the sectors pursued by this government. By providing them access to a life of dignity and protection under the law of the land has also been a key facilitator to economic growth. So, it is important that the government factors in the growth needs of industries including ours in its budget for 2019.Right now, more than India’s employment issue, it is its wage problem that is posing the biggest challenge. Everybody who wants a job has a job, they just don’t have the wages as per standard. Since the issue is wages, it is imperative for Govt. to focus on formalization, urbanization, industrialization, financialization, and human capital in the upcoming Budget 2019. Furthermore, there should be tax sops to attract quality employment in education and government should consider introducing schemes on the lines of Ayushmaan Bharat for the education sector as well to deliver the benefit of education to the masses of the country.
Since GST council has turned out to be a successful model of centre-state partnership, it augurs the need to form a similar model council of state and centre that commits to rationalization, simplification and digitization of the 60,000 compliance rules, 3,100 filings and 5,500 changes a year. Another important area that we hope that government address in this budget is around Unique Enterprise Number (UEN). There is a vital need to create a Universal Enterprise Number (UEN) to replace the 25+ current numbers that enterprises get from multiple government departments to enable various government entities (issuing import licenses, building permits, EPFO, ESI, etc.) operate smoothly.
By creating an innovative infrastructure of opportunities in Budget 2019 through Employment, Employability, and Education and by focusing on labour reforms government should allow employee a choice to EPFO and ESI monopoly, permit payment to NPS and Health Insurance since this decision was announced two years ago but not implemented yet. Ideally, ISF would like to recommend a single code encompassing all labour laws but to begin with, we need the already drafted labour codes see the light of the day. Also, to Continue tax targeting of Formal Employment by Service Enterprises; extend 80JJAA by 3 years by making our youth resilient to prepare themselves for the future, we hope India should be able to add more formal jobs which will cultivate healthy growth for both staffing industry in India and its overall economic progress.
In the context of apprenticeship the government should form National Apprenticeship Corporation by merging RDAT and BOAT. The government should scale up Apprenticeship subsidy for formal enterprises, enable linkage of Apprentices to Degrees; distance and online education regulations hold this back and focus governance on decentralisation. The government should also Scale up Apprenticeship subsidy for formal enterprises.
Overall, in the upcoming budget, the government would show steps towards resolving the current issues of creating quality jobs across sectors through economic, social and labour policy intervention improve female labour force participation and introduce reforms that would enable a healthy growth for MSMEs – a major job booster for our economy. The first set of reforms implemented has strengthened India’s position on the global economic map and marked India as a key destination for international investment. This growth has led to a rise in India’s global standing and has drastically improved the country’s socio-economic indicators. However, this growth has also raised expectations of people within and outside the Indian economy with anticipation for more growth from the economy and creation of large scale employment opportunities.
Author of the article is President, Indian Staffing Federation