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Budget 2018: Will govt take steps to offer formal status to millions of contract workers?

Date: 2019-01-28 Author: Suchita Dutta, Executive Director, Indian Staffing Federation

The notions of employee welfare, job security, service benefits and career advancement are in various levels of evolution in India, which has its teeming millions of working people. While the bottom heap of the workers seldom have any claim to formal, collective identity, even a large chunk of workers in organised sectors too face a similar fate. They are the contract workers or the ‘temp hires’ whom corporates recruit from third party labour suppliers.

Millions of contract workers in the country are still outside the ambit of proper industry status and formal recognition. Surprisingly the government itself is the largest employer of contract workers in the country. Some industry watchers put the number of contract workers in the country at 15 million, followed by sizeable numbers employed in IT and other behemoths. Contract labour accounts for about 55 percent of public sector jobs and 45 percent in the private sector in India. Will the Union Budget 2018 propose any step to bring contract workforce into the formal setting? That’s a matter of conjecture but the industry experts have had their wish-lists. IB Times India asked experts what flexi employers and employees expect the government to do for the sector.

Here’s Suchita Dutta, executive director of Indian Staffing Federation, sharing her expectations for the contract staffing sector from the upcoming Union Budget 2018.

Formal status to flexi/contract workers

India has 2.9 million flexi workers, the third largest contract workforce in the world. This number is certainly dwarfed by the informal sector that employs many millions more. However, the flexi worker segment is, in all probability, the area with the highest growth rate.

The battle of employability to employment will be better addressed if people in contract jobs are skilled and recognised properly. That’s where contract/flexi staffing industry plays a crucial role in the growth of the country. However, the segment and its problems are overlooked.

The policymakers are still not taking steps to give formal industry designation for the contract staffing companies. The question of ratification of the ILO C181 norms is a case in point. This ultimately prevents crucial reforms in this industry. This is also hurting employment mobilisation effectively.

National license to operate in flexi/contract staffing

The recent move of seeking suggestions for changes in Contract Labour Regulation and Abolition (CLRA) Act and approval of new wage code bill are initiatives taken by the government to promote reforms in India. These are welcome changes.

However, the government needs to understand that reform is a difficult bridge to cross inasmuch as the demands of the industry and workers are taken into account.

Contract labour accounts for 55 percent of public sector jobs and 45 percent of private sector jobs. First of all, the word Abolition should be removed from the Act as it will help create more jobs in the formal sector and provide social benefits to contract workers, which are two main concerns of the government today. Secondly, the government should take up the matter of giving operational license (national/state) for staffing players. More Income taxpayers can be added

While reforms and benefits are announced for people in unorganised sectors one thing is mostly overlooked – most reforms focus on short-term solutions without any real benefits.

The plan to offer social security for all in the unorganised sector without organising the unorganised players first is not going to go very far in action. Instead, policymakers should realise that if corporates are formally allowed to work with tripartite contract staffing companies who can provide continued employment to the flexi staff, then more people could be added to the tax net. Gradually, this would turn job seekers into taxpayers.

Today, the government misses out on this potential taxpayer bracket because of the short-term contracts.

Social security ambit to be widened systematically

The employment facilitators or the organised staffing companies are the only way to reduce unemployment and widen the ambit of people coming under social security. The government has to look at creating systems that support this form of employment creation. It not only allows corporates to enhance productivity but also helps job seekers become skilled workforce.

Ease of business and sustainable investments

Contract staffing makes business easy for the corporates by addressing productivity issues, just-in-time needs and by providing project-based workforce. This allows companies to be more compliant and act in the interest of the economy and job growth.

(As originally appeared in International Business Times – https://www.ibtimes.co.in/budget-2018-will-govt-take-steps-offer-formal-status-millions-contract-workers-757237)

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