The implementation of the new labour codes will significantly boost the economy and reduce the unemployment rate in the country. According to a report by the State Bank of India, the new labour codes could reduce unemployment by up to 1.3 per cent, which would translate into additional employment generation of 77 lakh.
The report highlighted that the implementation of the new labour codes, which came into effect on the 21st of this month, will increase the share of formalisation in the labour force by at least 15 per cent, pushing total formal workers to 75.5 per cent from the current estimated share of 60.4 per cent. The report also pointed out that social sector coverage could rise to 85 per cent, strengthening the country’s labour ecosystem. The report stated that with a savings rate of 30 per cent, the reforms could result in a consumption rise. This would lead to an overall consumption boost of 75 thousand crore over the medium term, giving a major push to domestic spending and economic growth.
SBI noted that around 44 crore people in the country currently work in the unorganised sector, out of which nearly 31 crore workers are registered on the e-Shram portal. With this transition, the country’s social security coverage is expected to reach 80 to 85 per cent in the next 2 to 3 years.
The report also emphasised that the implementation of the four labour codes will empower both workers and enterprises, creating a workforce that is protected, productive and aligned with the changing world of work. In the new labour codes, 29 existing labour laws merged into four comprehensive codes to simplify labour regulations and improve workplace governance. The four codes include The Code on Wages, 2019; The Code on Social Security, 2020; The Occupational Safety, Health and Working Conditions Code, 2020; and The Industrial Relations Code, 2020.
