The staffing industry in India, valued at around ₹33,000 crore, has grown at an estimated 15-20 per cent from 2014 largely on account of the formalisation agenda pursued by the Central government. . Close to three million flexi staff have benefited from the formalisation, urbanisation, and financialisation agenda pursued by the government, by providing them access to a life of dignity and protection.
It has been a force multiplier for over 65 industries in India. It is, therefore, important that the government factors in the growth needs of the staffing sector in its Budget for 2019. The following specific areas need attention in the Budget.
Employability, education
While in the previous Budget there was some emphasis on higher education, there was also a shift in focus away from vocational education and skill initiatives.
The government could consider partial exemption from GST, from 18 per cent to 5 per cent, for the outsourced services in higher education to create low-cost educational institutions that offer services at all levels — primary, secondary and higher education.
Similar exemption may be given for the staffing industry to create the right incentives to formalise the contract staffing industry as well as boost overall formal job creation.
It is important to bear in mind is that this sector has already provided formal employment to at least six million youth and can do better with appropriate support from the government.
Reforms, amendments
Budget 2019 should also provide viable options for the staffing industry to come up with an alternative mechanism to authenticate their employees and associates online. The barring of private companies from using Aadhaar for KYC authentication has increased compliance costs and is posing a huge challenge for formal job market aspirants and affecting, thereby, employment generation in India.
As regards the recently proposed additions to the Maternity Benefit Act, the government must budget for partaking half of the total leave benefits, by absorbing 13 weeks of wages out of the 26 weeks. Also, the government should also look at setting up crèches with all the attendant facilities as proposed in the Maternity Benefit (Amendment) Act 2017, and allow employees eligible for such benefit to use these crèches at a very nominal cost.
There’s also the need to give staffing industry employees three key salary choices: whether or not to make the 12 per cent employee contribution to PF; pay the 12 per cent employer contribution to EPFO or NPS; and ESIC or private insurance.
Ease of doing business
One expects the government to propose plans for centralisation and complete digitalisation of compliance in order to lower costs. Currently, any organisation needs to undertake around 60,000 compliances and 3,800 filings a year to stay compliant. This goes against the ‘ease of doing business’ mandate.
The Shram Suvidha Portal must adopt the PPC — paperless, presence-less, cashless — framework in employers-government and employees-government interactions. Also, filing of a single online return (as against 8-10 now) for multiple labour laws should be allowed. All this will lead to ease of doing business in India.
Another important aspect the government needs to address is Unique Enterprise Number (UEN): Every company in India currently has multiple numbers (25 plus) that include Labour Identification Number (LIN)/Shram Pehchaan Sankhya (SPS), Corporate Identity Number from ROC, and PAN (Permanent Account Number). Adopting PAN as UEN — rather than create a new series — is logical because it is already being used for income tax, Customs, excise and service tax.
By enabling affirmative actions in the Budget, the government can pave the way for economic growth and prosperity.
The writer is President, Indian Staffing Federation, and Co-Founder of TeamLease Services.