Labour reform: New codes to lift consumption by Rs 75,000 crore; SBI sees sharper formalisation ahead

Implementation of the new labour codes is expected to deliver a Rs 75,000-crore consumption boost and raise the share of the formal workforce by at least 15 per cent, according to a research note by economists at SBI on Tuesday.The four codes, enforced from November 21, will also expand social security coverage to up to 85 per cent within the next three years and help reduce the unemployment rate by 1.3 per cent over the medium term, the note said, PTI reported.“With a saving rate of approx 30 per cent, the implementation will result in a consumption boost Rs 66 per person per day post-implementation. This could lead to an approx consumption boost of Rs 75,000 crore,” the SBI economists said.They added that the new framework will empower both workers and enterprises, creating a labour market that is “protected, productive and aligned with the evolving world of work.”SBI economists said India has around 44 crore unorganised workers, of whom 31 crore are registered on the e-Shram portal.Assuming 20 per cent of these workers transition into the formal payroll system, nearly 10 crore people would benefit — pushing social security coverage to 80–85 per cent in the next two to three years.Citing the Periodic Labour Force Survey, the note said 60.4 per cent of India’s workforce is currently formal. The bank expects formalisation to rise by 15.1 per cent under the new regime.The impact on unemployment will depend on “reform implementation, firm-level adjustment costs, and complementary state-level rules,” the report said.