ISF Unveils Blueprint For Formalising India's Informal Workforce

The Indian Staffing Federation (ISF), the apex body representing India's fast growing contract staffing industry, unveiled “India@Work: Vision Next Decade”, a blueprint for formalisation of India’s vast informal workforce and implementation of labour codes in the country. ISF’s vision paper comes at a time India prepares for an economic surge, but the growth being uneven and leaving millions of workers seeking government policy/subsidy support.

ISF’s Vision paper urges for formalisation of a vast informal workforce of over 400 million in the country, which could be driven through organised staffing companies. The report cites that India with almost 85 per cent informal labour, generating more than half of the country’s GDP, requires a structural shift towards structured, formal employment. While the government is trying to address issues for the migrant workers, ISF is going beyond stop gap solutions, inviting inclusion through formality in the labour market. A noticeable distinction was seen during the pandemic, where the formal workforce, comprising less than 15 per cent, had access to their social security, which aided them in overcoming the challenges, as per the report.

Key recommendations made in the paper by ISF include removing employment bottlenecks, urgency to action implementation of the four labour codes in India, policy changes and encouraging schemes, consideration of employment services as ‘merit services’, with lower GST slab tax rates at 5 per cent with ICT benefits instead of the current 18 per cent and linking of skilling initiatives to employment.

In conversation with BW Businessworld, Suchita Dutta, Executive Director, Indian Staffing Federation said, “The document delineates key strategies for formalising labour workers. Firstly, it addresses the necessity of reducing employment bottlenecks and aligning skills with job opportunities. Secondly, it emphasises the facilitation role of both industry and government, particularly in bridging the gap between marginalised workers and established employers. This involves establishing a robust conduit, managed by stakeholders, to facilitate entry into organisations with rigid entry barriers. The document underscores the importance of addressing challenges faced by workers, especially in transitioning 40 crore people over the next decade. It highlights the significance of policy changes, particularly the implementation of labour codes, to streamline business operations and ensure worker protection and welfare through mechanisms like EPF and ESI. Additionally, it advocates for reducing the GST rate on staffing services from 18 per cent to 5 per cent to incentivize formal employment, particularly for MSMEs, thereby fostering market expansion and creating more job opportunities. This adjustment aims to align employment costs with consumption levels, making formal employment services more accessible and contributing to overall economic growth.”

ISF’s vision is underpinned by a comprehensive strategy aimed at catalysing a significant shift in employment dynamics. This strategy entails several key initiatives: first, extending government protection schemes to approximately 5 crore domestic workers; second, tapping into rural and semi-urban talent pools to expand job opportunities; third, conducting upskilling and training programmes to enhance employability; fourth, providing comprehensive employment solutions, including accommodation at labour camps; fifth, ensuring medical and insurance coverage for all workers; sixth, implementing government-provided LINs for tracking migrant workers; seventh, facilitating the transition of informal workers into formal roles; and finally, engaging with industries and sectors with low formal employment uptake to encourage their participation in formalising their workforce through government support and guidance.