Charles Darwin’s theory of evolution posits that adaptability is key to survival—an idea that resonates profoundly with India’s evolving labour market. As industries navigate rapid shifts, the contractual workforce has become a fundamental driver of economic agility and resilience. If work is the stage upon which economies perform, then contract workers are the understudies stepping into lead roles, keeping industries moving at an unprecedented pace.
This shift is not just theoretical; it is backed by numbers. Over the past 12 years, the contract staffing sector has consistently grown at an annual rate of 14-16%, reaching a penetration level of 1.28%. In just the past year, the Indian Staffing Federation (ISF) members onboarded 2.35 lakh new associates, while more than 130 ISF members have a total flexi workforce of 1.81 million as of September 2024. Industries such as e-commerce, logistics, manufacturing, retail, banking, and hospitality have increasingly relied on contract staffing to maintain operational flexibility and cost efficiency. However, as India’s contractual workforce continues to expand, it is paving the way for a deeper transformation—one that accelerates formalisation.
Towards Formalisation
The last few years have marked a crucial phase in the formalisation of India’s workforce. In 2023, 5.4 million contract workers were engaged in formal staffing, generating a staggering ₹48,215 crore in social security and GST contributions. Salary payouts in the industry soared to ₹1,34,568 crore, underscoring its significance in employment generation and economic stability.
A parallel trend is reflected in the Employees' Provident Fund Organisation (EPFO) net additions, which more than doubled from 61 lakh in FY19 to 131 lakh in FY24. Notably, 61% of these new additions are workers below the age of 29, highlighting the role of contractual work in integrating young job seekers into the formal economy. Meanwhile, the government's e-Shram portal has registered over 30.5 crore unorganised workers until December 2024, further accelerating formalisation efforts. The unemployment rate saw a substantial decrease from 6% in 2017-18 to 3.2% in 2023-24.
The Hidden Challenges
Despite these positive developments, India’s contractual workforce faces key challenges that must be addressed to unlock its full potential. For instance, while the demand for contract workers is rising, a significant skills mismatch persists. The Periodic Labour Force Survey (PLFS) reveals that less than 5% of workers aged 15-29 have received formal skill training, underscoring the need for enhanced skilling initiatives to meet industry demands.
Gender disparity remains a key challenge within India’s contractual workforce, with women in blue-collar jobs historically facing lower wages, job insecurity, and limited career progression; however, current trends signal a long-overdue course correction. The Female Labour Force Participation Rate (FLFPR) has risen from 23.3% in 2017-18 to 41.7% in 2023-24, reflecting broader socio-economic shifts driving increased inclusion of women in both rural and urban employment sectors.
Another challenge among temporary workers is the lack of job security and limited access to social security benefits such as provident funds and health insurance. Although the share of casual workers declined from 24.9% to 19.8% between FY18 and FY24, many continue to work under precarious conditions. The recent announcement of a social security scheme for gig workers in the recent budget is a step toward financial security. Yet, much remains to be done to drive growth.
Wage disparity remains another critical concern. Many contractual workers, particularly in agriculture and construction, earn below the minimum wage due to varying state-level regulations. The Economic Survey points out that while corporate profitability peaked at a 15-year high in FY24, wage growth has lagged, widening income inequality. Bridging this gap is essential for fostering long-term economic stability and ensuring sustained market demand.
A Policy-Driven Path
Recognising these challenges, the government is ramping up skill development initiatives to align with global trends such as automation, AI, digitalisation, and climate resilience. The government’s Pradhan Mantri Kaushal Vikas Yojana (PMKVY) program has trained more than 1.57 crore individuals and certified 1.21 crore. Under the Jan Sikshan Sansthan, 27 lakh individuals have undergone training, with 26 lakh receiving certification. Additionally, under PM Vishwakarma, 11.79 lakh artisans have been trained through 3,145 centres spread across 559 districts. 1.24 crore candidates have enrolled in Industrial Training Institutes (ITIs) under the Craftsmen Training Scheme, while 37.94 lakh apprentices have been employed since 2016-17. The new ITI upgradation initiative aims to upgrade 1,000 institutions and train 20 lakh youth over the next five years.
Efforts to improve workforce diversity are also underway. The Economic Survey 2024-25 highlights ongoing labour reforms aimed at increasing female participation in the workforce. For instance, the SANKALP initiative has trained 32,262 women in entrepreneurship between 2021 and 2024, accounting for 67% of its total beneficiaries. Meanwhile, public-private partnerships are expanding vocational training opportunities in emerging sectors such as the digital economy and renewable energy.
Conclusion
The future of India’s workforce depends on how effectively we address the challenges within its growing contractual segment. By investing in skills, fair wages, and social security, we are not just improving job conditions but also unlocking new avenues for growth and economic stability. A well-supported contractual workforce will drive innovation, strengthen industries, and create a more inclusive job market. As India moves forward, ensuring the right policies and support systems will turn these challenges into opportunities for long-term national prosperity.
The author is CEO - Staffing, TeamLease Services Limited
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com)
This shift is not just theoretical; it is backed by numbers. Over the past 12 years, the contract staffing sector has consistently grown at an annual rate of 14-16%, reaching a penetration level of 1.28%. In just the past year, the Indian Staffing Federation (ISF) members onboarded 2.35 lakh new associates, while more than 130 ISF members have a total flexi workforce of 1.81 million as of September 2024. Industries such as e-commerce, logistics, manufacturing, retail, banking, and hospitality have increasingly relied on contract staffing to maintain operational flexibility and cost efficiency. However, as India’s contractual workforce continues to expand, it is paving the way for a deeper transformation—one that accelerates formalisation.
Towards Formalisation
The last few years have marked a crucial phase in the formalisation of India’s workforce. In 2023, 5.4 million contract workers were engaged in formal staffing, generating a staggering ₹48,215 crore in social security and GST contributions. Salary payouts in the industry soared to ₹1,34,568 crore, underscoring its significance in employment generation and economic stability.
A parallel trend is reflected in the Employees' Provident Fund Organisation (EPFO) net additions, which more than doubled from 61 lakh in FY19 to 131 lakh in FY24. Notably, 61% of these new additions are workers below the age of 29, highlighting the role of contractual work in integrating young job seekers into the formal economy. Meanwhile, the government's e-Shram portal has registered over 30.5 crore unorganised workers until December 2024, further accelerating formalisation efforts. The unemployment rate saw a substantial decrease from 6% in 2017-18 to 3.2% in 2023-24.
The Hidden Challenges
Despite these positive developments, India’s contractual workforce faces key challenges that must be addressed to unlock its full potential. For instance, while the demand for contract workers is rising, a significant skills mismatch persists. The Periodic Labour Force Survey (PLFS) reveals that less than 5% of workers aged 15-29 have received formal skill training, underscoring the need for enhanced skilling initiatives to meet industry demands.
Gender disparity remains a key challenge within India’s contractual workforce, with women in blue-collar jobs historically facing lower wages, job insecurity, and limited career progression; however, current trends signal a long-overdue course correction. The Female Labour Force Participation Rate (FLFPR) has risen from 23.3% in 2017-18 to 41.7% in 2023-24, reflecting broader socio-economic shifts driving increased inclusion of women in both rural and urban employment sectors.
Another challenge among temporary workers is the lack of job security and limited access to social security benefits such as provident funds and health insurance. Although the share of casual workers declined from 24.9% to 19.8% between FY18 and FY24, many continue to work under precarious conditions. The recent announcement of a social security scheme for gig workers in the recent budget is a step toward financial security. Yet, much remains to be done to drive growth.
Wage disparity remains another critical concern. Many contractual workers, particularly in agriculture and construction, earn below the minimum wage due to varying state-level regulations. The Economic Survey points out that while corporate profitability peaked at a 15-year high in FY24, wage growth has lagged, widening income inequality. Bridging this gap is essential for fostering long-term economic stability and ensuring sustained market demand.
A Policy-Driven Path
Recognising these challenges, the government is ramping up skill development initiatives to align with global trends such as automation, AI, digitalisation, and climate resilience. The government’s Pradhan Mantri Kaushal Vikas Yojana (PMKVY) program has trained more than 1.57 crore individuals and certified 1.21 crore. Under the Jan Sikshan Sansthan, 27 lakh individuals have undergone training, with 26 lakh receiving certification. Additionally, under PM Vishwakarma, 11.79 lakh artisans have been trained through 3,145 centres spread across 559 districts. 1.24 crore candidates have enrolled in Industrial Training Institutes (ITIs) under the Craftsmen Training Scheme, while 37.94 lakh apprentices have been employed since 2016-17. The new ITI upgradation initiative aims to upgrade 1,000 institutions and train 20 lakh youth over the next five years.
Efforts to improve workforce diversity are also underway. The Economic Survey 2024-25 highlights ongoing labour reforms aimed at increasing female participation in the workforce. For instance, the SANKALP initiative has trained 32,262 women in entrepreneurship between 2021 and 2024, accounting for 67% of its total beneficiaries. Meanwhile, public-private partnerships are expanding vocational training opportunities in emerging sectors such as the digital economy and renewable energy.
Conclusion
The future of India’s workforce depends on how effectively we address the challenges within its growing contractual segment. By investing in skills, fair wages, and social security, we are not just improving job conditions but also unlocking new avenues for growth and economic stability. A well-supported contractual workforce will drive innovation, strengthen industries, and create a more inclusive job market. As India moves forward, ensuring the right policies and support systems will turn these challenges into opportunities for long-term national prosperity.
The author is CEO - Staffing, TeamLease Services Limited
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com)
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