Implementation of labour codes, lower GST rate can help in formalisation of India’s workforce: ISF report

A new report by the Indian Staffing Federation titled "India @ Work: Vision Next Decade" suggests several measures to formalize India's workforce, given that almost 85% of the labor force operates informally. It advocates for urgent implementation of the four Labor Codes, policy adjustments, and a revision in the goods and services tax (GST) rate for employment services. \r

The report proposes categorizing employment services as 'merit services' with a lower GST slab tax rate of 5% instead of the current 18%, aiming to boost formal employment and social security protection for the 40 crore informal workforce. Additionally, it recommends linking skilling initiatives to employment, particularly focusing on mobilizing daily wagers into first-time formal employment across various sectors like construction, mining, transportation, and manufacturing. \r

The report underscores the role of the staffing industry in driving formalization by providing formal employment, ensuring compliance with laws, and offering protection to contract workers, thereby facilitating the transformation from informal to formal employment.