New Labour Codes To Increase Social Security Coverage To Up To 85 Per Cent In The Next Three Years: SBI Report

Implementation of the new labour codes will boost consumption by Rs 75,000 crore and increase share of formal workforce by at least 15 per cent, economists at SBI said in a note on Tuesday.

The code, which has been implemented from November 21, will also increase social security cover to up to 85 per cent in the next three years and reduce the unemployment rate by 1.3 per cent over the medium term, they said in a note.

"With a saving rate of approx 30 per cent, the implementation will result in a consumption boost Rs 66 per person per day post-implementation. This could lead to an approx consumption boost of Rs 75,000 crore," the note said.

The four codes will empower both workers and enterprises, building a workforce that is protected, productive and aligned with the evolving world of work, the economists said.

Elaborating on the expectation of upping social security coverage, the note said there are about 44 crore people working in the unorganised sector, of which around 31 crore unorganised workers are registered under e-shram portal.

Assuming that 20 per cent shift from informal payroll to formal payroll, it will benefit about 10 crore beneficiaries, which will lead to a jump in social security coverage to reach 80-85 per cent in the next two-three years, it said.

Similarly, on the formalisation front, it cited the periodic labour force survey report to state that the share of formal workers in India is estimated to be 60.4 per cent, and added that SBI economists expect a 15.1 per cent increase in formalisation rate.

The reduction in unemployment rate will depend on reform implementation, firm-level adjustment costs, and complementary state-level rules, it said.