Labour Codes to Generate 77 Lakh Jobs and Boost Consumption: SBI Report

India’s labour landscape is set for a major transformation following the government’s notification of the four labour codes which include the Code on Wages the Industrial Relations Code the Code on Social Security and the Occupational Safety Health and Working Conditions Code. These reforms represent one of the most significant overhauls in India’s labour framework in many years. A new report from the State Bank of India suggests that their implementation could reshape employment patterns consumption levels and the broader economic environment.

According to the report India may witness the creation of nearly 77 lakh new jobs over the medium term. This projection is based on improved compliance simpler procedures and clearer regulations that encourage businesses to expand and hire more workers. The study adds that India’s unemployment rate currently at 3 point 2 percent could decline sharply. In the best case scenario it may fall to 1 point 9 percent reflecting stronger labour participation and more opportunities in both rural and urban regions.

Wage growth is expected to be another major outcome of the reforms. With the Code on Wages ensuring that all workers are entitled to uniform minimum wages the average daily disposable income is likely to rise by approximately 95 rupees per person. This increase in earnings could translate into a nationwide consumption boost of nearly 75000 crore rupees providing additional momentum to the economy.

The report highlights that formalisation of the labour force may rise significantly. India currently has about 44 crore workers in the unorganised sector with many of them registered on the e shram portal. As compliance becomes simpler and procedures become easier a shift from informal to formal employment is expected. The formal workforce could increase by more than 15 percent taking the overall formalisation rate to around 75 point 5 percent. This transition is likely to strengthen social security coverage which may reach 80 to 85 percent over the next few years.

The SBI report concludes that while the transition period may involve some adjustment for employers the long term advantages such as reduced compliance burden clearer rules and a more stable workforce will support economic growth and create a stronger labour market environment for India.