From skilling to modern labour force: Here’s how Budget 2023 can unlock talent in India

An exciting and path-breaking possibility looms before India. According to a recent CII report, India can leapfrog its GDP from $3 trillion today to $9 trillion by 2030 and $40 trillion by 2047, if it can create productive employment of its demographic dividend.

It is certainly an ‘if’, but not an impossible one. For you see, in a rapidly aging world, India remains young — and this opens an extraordinary opportunity. According to the UN Population Statistics database, India is set to add another 183 million people to the working age group (aged 15-64 years) between 2020 and 2050. When we do the math, we realise that a huge 22 per cent of the growing global workforce over the next 30 years will come from India.

The Indian labour market — at an inflection point of possibilities

For decades, the Indian labour market has not quite lived up to its potential — in spite of a strong economic growth between 2004 and 2018 (CAGR of 7 per cent), and employment growth at a CAGR of 5 percent during the same period. Post-pandemic, the labour market recovery has been fragmented across industries and sectors. While the return of salaried jobs has been gradual, there has been a rise in employment amongst small traders, wage labourers, and farmers — and in self-employment.

This reality, however, does in no way take away from a bright future ahead of us. With the right policies to create jobs that prepare the workforce for the future, and the right investments to build both physical and digital infrastructure, we can create tremendous opportunities for our youth, and tap into the rising global demand for technical skills.

Extraordinary opportunities call for extraordinary efforts

With the Union Budget 2023 around the corner, all eyes rest on how it can create a pathway to productive building of the country’s abundant human capital.

Like Martin Luther King Jr., I have a dream too — a country with equal and enough opportunities for all, a country where everyone gets a fair shot at living a value-oriented and purpose-driven life. In that context, starting with the staffing industry, here are my specific recommendations ahead of the Union Budget 2023.

#1 – Focus on job creation opportunities

The government’s initiatives (PLI scheme, Make in India, Atmanirbhar Bharat, etc.) have provided the impetus, no doubt, but the budget must continue the momentum to create new job opportunities across sectors.

#2 – Enhance greater skilling initiatives for the youth

According to the India Skills Report 2022, only 48.7 per cent of India’s youth is employable in a scenario where about 75 percent of companies report a skill gap. Bridging this skilling gap cannot be more urgent if we are to provide meaningful work opportunities to India's youth. We hope the budget will invest further on the existing initiatives (Skill India, Desh Stack E-portal, Digital University, etc.)

#3 – Industry Status for Staffing

The staffing industry plays a critical role in opening up employment opportunities for the ‘aam aadmi’ (common man), and fueling economic growth. It also provides value-added services for businesses by helping them manage technology, skilling and other requirements. Certainly, this deserves to be given an industry status.

#4 - Roll out labour codes with clear timelines

This is vital and it would help if the central and state governments set up help desks in the initial phases to ease its implementation.

Additionally, my wish list includes the following specific recommendations:

● Bring in suitable amendments to the Income tax Act sensitizing the issuance of orders within committed timelines — especially given the commendable levels of digitization and automation achieved

● Enable efficient reporting mechanism and tools for 26AS to enable transparent and accurate reconciliation with books where the data is voluminous

● Reduce employees’ PF contribution to 5 percent (from the current 12 percent) to enable higher disposable incomes, and a fair chance for professionals to invest their money in other instruments

● One-time GST correction window for the initial tumultuous years of GST implementation

● Centralized registration under GST for large service providers to streamline and simplify compliance, refunds, assessments, audits, etc.

● Abolish gratuity, which has no relevance in a world where people change jobs almost every two to three years

● Extend the Service Exports from India Scheme (SEIS) for FY 2020-21 and FY 2021-22 to give a much-needed boost to service industries

● Permanent disallowance under IT Act on delayed statutory remittances for staffing service providers, given their undue dependence on principal employers

With India set to become the most populous nation with a peaking demographic dividend, the time is now or never.

Views are personal. The author is MD & CEO, Randstad India

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