Economists at State Bank of India said on Tuesday that implementing the new labor codes will increase consumption in the country by up to ₹75,000 crore. Additionally, this move will lead to at least a 15 percent increase in the number of people working in the organized sector.
They stated that these codes, implemented from November 21, will provide social security to up to 85 percent of people within the next three years, and the unemployment rate will decrease by up to 1.3 percent in the medium term.
“Considering the approximately 30 percent savings rate, after the implementation of the labor codes, each person will be able to consume an additional ₹66 per day. This will collectively increase total consumption by approximately ₹75,000 crore,” the economists said in a report.
They added that these four labor codes will empower both workers and companies, creating a safer, more productive, and contemporary workforce that meets today’s requirements.
Regarding increased social security, the report mentions that approximately 44 crore people work in the unorganized sector, of which about 31 crore workers are registered on the e-Shram portal. If even 20 percent of these people transition from informal wages to the organized wage system, around 10 crore people will benefit.
If this happens, social security coverage will reach 80-85 percent within the next two to three years.
The report indicated that the formal employment rate could increase by up to 15.1 percent. The reduction in unemployment rate will depend on the implementation of reforms, companies’ adjustment costs, and supplementary rules by states.
