New Delhi: Workforce under flexi-staffing, or those provided through contractors to various employers, grew at a compound annual growth rate (CAGR) of 16.3 per cent to 3.3 million in 2018 as compared with 2.1 million in 2015, according to a report by the India Staffing Federation (ISF).
The rise in number of flexi-staffing workers indicates formalisation of workforce. They get provident fund, group insurance, health insurance and other social security benefits available to formal sector workers.
Besides, the employers have virtually no need to comply as many as 44 labour laws. The contractors, or flexi-staffing firms, providing the workforce take care of all such legal obligation.
The report released on Tuesday by ISF, which is an apex body of the flexi-staffing sector in the country, also showed that India emerged as the fifth-largest market worldwide in flexi-staffing in 2018 and the country would have 6.1 million flexi-workforce by 2021.
According to the report, the reforms that had significant impact on job formalization includes Skill India Initiative, GST Reform, EPF Reform and ESIC Reform among others.
It showed that Haryana, Gujarat, Karnataka, Madhya Pradesh, Andhra Pradesh and Telangana are the states with high growth potential for flexi-staffing.
Besides, Andhra Pradesh tops the list of states with favourable business environment.
The report by the ISF, which has over 110 members into the business of flexi-staffing on its board, also said CAGR in this segment will accelerate from 16.3 per cent in 2018 to 22.7 per cent to 2021.
The report said the goods and services tax (GST) and demonetisation are two key reforms to drive job formalisation in the 2016-18 period and the reforms or policies to formalise around 11.03 million jobs between 2018 to 2021.
It also stated that logistics, BFSI (banking, financial services and insurance) and IT/ITeS, retail and the government would be the top-five sectors employing over 55 per cent of total flexi-workforce by 2021.
ISF President Rituparna Chakraborty said, “With one million youth added to the workforce every month, India’s position and performance in the labour area is of both significance and immense interest to the world. 2015-2018 have also seen some of the most significant reforms and policy shifts in the space that has seen accelerated transition from informal to formal employment in the same period.”
However, she said this crucial area was suffering from lack of data and validated perspectives and as the industry’s apex body, ISF took it upon itself to fix this gap.
“The report points out that the government’s current agenda of job creation can be achieved by boosting the aggregate effective demand in the economy through formalisation, industrialisation, urbanisation, financialisation and skilling,” she added.
ISF Vice-President R P Yadav said, “The report establishes flexi-staffing as a key job creation engine. The higher CAGR for flexi-staffing in 2018-21 also spells good tidings for the space which truly is well on its way to emerge among the top 3-4 markets for flexi-staffing worldwide in couple of years.”