New government must focus on jobs, get more women to join labour force

Mumbai: The unambiguous political message from Tuesday's Lok Sabha election verdict, which saw the ruling BJP fall short of a majority, is that the incoming government will need to focus sharply on job creation in a country where roughly two-thirds of the people are under 35 years, many of them unemployed, analysts said.

They say that focus now needs to be on creating higher-paying jobs, and getting companies, specially small and medium scale enterprises (SMEs), to employ at a big scale. The new government will also need to encourage women to join the formal labour force in large numbers, and create opportunities and infrastructure in poor states such as Uttar Pradesh and Bihar that are a huge source of migrant labourers.

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"The government has to prioritize job creation in its economic policy and break from the old, defeated narrative of growth first and jobs later—jobs must fuel sustainable growth. For this, we need an industrial policy that supports sectors that absorb more labour," said Sabina Dewan, president and executive director, JustJobs Network, a research firm. Dewan said that there needs to be immediate focus on "effective labour regulations, including for the gig economy, implementation of a statutory minimum wage and provision of social security."

According to the latest data from Periodic Labour Force Survey (PLFS) , unemployment rate in urban areas for those aged 15 years and above fell to 6.7% in January–March 2024, from 6.8% a year ago.

But, clearly, that is not enough.

NDA Win Signals Labour Codes

"Accelerating capex investments into creating employment, specially in the manufacturing, construction, e-commerce and BFSI (banking, financial services and insurance) sectors in tier-2- and 3 cities is needed. Changes need to be made in the Shops and Establishments Act to include more policies for gig workers, which in turn will attract more employees," said Guruprasad Sreenivasan, executive director and chief executive officer (CEO) of staffing firm Quess Corp.

Also read: Fresh formal job creation dipped in Nov: EPFO

The Bharatiya Janata Party won 240 seats, less than the simple majority of 272 in the 543-seat Lok Sabha needed to form a government on its own. However, the National Democratic Alliance that it leads has secured 295 seats, entitling the coalition to form the next government.

The opposition INDIA bloc, led by the Congress, has won 231 seats, significnatly improving its tally from the 2019 polls when the BJP on its own had won 303 seats.

“Based on pre-election reports, it was understood that the labour codes would be implemented, at least in part, during the first 100 days of the new government taking charge. Now that we have the results of the elections, it would be prudent for employers to start reviewing relevant internal practices and policies in anticipation of the impending implementation of the labour codes,” said Bishen Jeswant, partner, Cyril Amarchand Mangaldas.

Labour Market Dynamics

Migrant workers, who constantly move to wherever job opportunities take them, form a significant votebank, and the new government would need to pay attention to them. A large chunk of them join the informal workforce and often do not have access to healthcare facilities and safety nets such as provident funds.

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"Improving healthcare and housing along migration corridors from Uttar Pradesh, Bihar, Jharkhand, and Bengal and some of the northeastern states to the western and southern regions is also essential. These steps will create an equitable labour market and strengthen the economy," Kartik Narayan, CEO, staffing, TeamLease Services, said.

Some of these migrants are part of the blue-collared workforce employed in factories on the payrolls of a company or through-third party vendors. While this set of employees has some benefits, those who are seasonal workers are often left without any policies aiding them.

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Rosa Abraham, assistant professor at Azim Premji University, expects the new government to work on getting more women to join the formal labour force. According to the latest PLFS data , female unemployment rate decreased from 9.2% in January-March 2023 to 8.5% in January-March 2024.

“While employment numbers have gone up for women, there are many who are self-employed and may not even get salaries. The investments that should have jumpstarted employment have not happened yet and policies need to come in to bring in employment via SMEs,” she added.