~ 59% of companies across these sectors want to migrate their informal workforce to formal ~
~ 56% of companies are prioritizing formalization with third party payroll ~
Mumbai, 22nd September, 2022: Equipped with an in-depth understanding of the employment ecosystem in India, leading staffing firm, TeamLease Services, has launched a first of its kind report on ‘Reinventing business with workforce formalization’, today. Focusing on the FMCG, FMCD and Healthcare & Pharmaceuticals sectors, the report highlights that 59% of companies across the aforementioned industries intend to formalize the informal part of their workforce. Amidst this cohort; 37% companies are from FMCG, 36% from FMCD and 27% from healthcare and pharmaceuticals sectors.
Citing the aspect that managing an informal workforce has become extremely challenging, employers have also listed their major concerns with an informal workforce. 45% of employers feel that the primary challenge is to manage wages, while 21% employers find persistent skill gaps among the workforce. Additionally, 15% of employers have also cited frequent absenteeism as a challenge.
Sharing his views, Mr Balasubramanian A, Vice President and Business Head – Consumer and Healthcare, TeamLease Services, said, “The path to formalization is an essential one. Over 90% of our workforce is still informal. This is concerning not only from a macro economic standpoint but has also become an everlasting impediment for businesses. Through the pandemic, organizations dealt with a new slew of challenges, much of which continues today. Hence, companies have been reinventing their business strategies, and formalizing the workforce is a key constituent in this journey.”
Deep diving into the employee perspective, the study highlights that 31% employers acknowledge that informal workers face many limitations due to the absence of social security. On the other hand, 21% believe that wages are low and 25% cite that there is lack of medical and leave benefits.
“Across sectors like FMCG, FMCD and Healthcare & Pharmaceuticals, employers have started taking cohesive steps towards formalization. 65% of companies feel that managing an informal workforce is challenging. As a result, majority of companies, about 56%, are prioritizing formalization with third party payroll. While 64% of companies has already initiated major steps, 67% are planning to implement within the year. Now, with conducive steps being taken towards simplifying labour laws under the new labour code, formalization is going to become a mandate rather than a choice”, added Mr Balasubramanian.
Nearly half, which is 43% of the employers surveyed, treat formalization as a priority. Incidentally employers of large organizations (about 80% of the large cap companies surveyed) have already initiated major steps towards creating a formal workforce. The report further highlights the measures that organizations have undertaken in their journey towards formalization.
From a job role point of view, 29% of the employers expressed the intent to formalize the role Of Sales Executive. Additionally, employers are also keen to formalize profiles like Electrician, Community Health Worker (9% each), Marketing Executive (7%) and Supply Chain Executive (5%).
Companies across these sectors are optimistic to see immediate tangible outcomes through formalization. 61% of the employers expect attrition to reduce, 58% are weighing in on enhanced business productivity and 41% are expecting workforce optimization.
While the overall sentiment towards formalization is very promising, there is however, still 24% of employers who do not consider formalization as an immediate priority. One of the primary reasons for this is that many employers (46%) feel that the process has complex statutory requirements and is cost heavy. However, for India to create high impact employment and in the journey of putting India to work, formalization of the workforce has become the imperative need of the hour.
The report ‘Reinventing business with workforce formalization’ is an in-depth analysis of the sentiment of FMCG, FMCD, Healthcare & Pharmaceutical companies towards formalizing their workforce. The survey was conducted with 230 employers across these sectors. The Intent to Formalize is defined as the proportion of the employers (across and within sectors and cities) that are willing and able to formalize their workforce.