Revamping Labor Codes: A New Era for Workforce and Consumption

The implementation of new labor codes is set to boost consumption by Rs 75,000 crore, enhance formal workforce participation by 15%, and extend social security to 85% of the workforce over three years. This reform aims to create a protected and productive workforce, reducing unemployment and boosting the economy.

India's new labor codes are anticipated to significantly bolster economic consumption by Rs 75,000 crore as they promise to increase the formal workforce by up to 15%, according to a report by SBI economists on Tuesday.

The codes, effective from November 21, are also expected to enhance social security coverage to 85% within three years and reduce unemployment by 1.3% in the medium term. With an approximate 30% saving rate, these changes could lead to a per capita consumption increase of Rs 66 per day.

The economists highlight that the reforms will empower both employees and businesses, creating a more secure and adaptable workforce. There are approximately 44 crore workers in the unorganized sector, with 31 crore registered under the e-shram portal. A predicted shift of 20% from informal to formal payrolls could benefit 10 crore people, significantly boosting social security and formalization rates.

(With inputs from agencies.)