Decoding the Landmark Number
The headline figure of 72 lakh (7.2 million) new workers is a significant milestone in India's journey towards formalising its vast workforce. This number is closely linked to the goals of stimulus schemes like the Aatmanirbhar Bharat Rojgar Yojana (ABRY),
which was launched in October 2020 to incentivise employment creation during the COVID-19 recovery phase. The scheme was specifically designed to encourage employers registered with the Employees' Provident Fund Organisation (EPFO) to hire new staff. When the scheme was extended, projections estimated it would generate around 71.8 lakh formal sector jobs, a figure that aligns almost perfectly with the 72 lakh mentioned. These weren't just any jobs; they represented a crucial first step for many into the formal economy, providing them with a Universal Account Number (UAN) and an entry point into India's social security framework for the first time.
The Promise of Social Security
For these millions of new entrants, joining an EPFO-registered establishment means gaining access to a safety net that is a cornerstone of formal employment. The primary benefit is the creation of a provident fund (PF) account, a form of retirement saving. Under schemes like ABRY, the government subsidised these contributions for two years, covering both the employee's (12% of wages) and employer's (12% of wages) shares for smaller companies. This not only eased the financial burden on businesses but also ensured that low-wage workers, earning less than Rs 15,000 per month, began accumulating a retirement corpus. Beyond the provident fund, being part of the formal system opens the door to other benefits, including pension schemes and insurance, which are vital for protecting workers against economic shocks, illness, and old age.
Formalisation: A Step in the Right Direction
Bringing such a large number of workers into the formal sector is a significant achievement. India's workforce has historically been dominated by the informal sector, with estimates suggesting over 80-90% of workers lack formal contracts and social security protections. This leaves them vulnerable to income shocks and without access to benefits like paid leave, health insurance, or a pension. Government initiatives that incentivise formal hiring play a crucial role in tackling this structural challenge. By reducing the cost for employers, these schemes encourage the creation of jobs with written contracts and statutory benefits, thereby boosting the formal economy, enhancing productivity, and providing a more stable livelihood for millions.
Persistent Gaps and Lingering Challenges
Despite this progress, the story of social security in India is far from complete. While 72 lakh is an impressive number, it represents a fraction of India's total workforce. The vast majority of workers remain in the informal sector, untouched by such schemes. Furthermore, there are often challenges in implementation. Low awareness among workers about their entitlements, administrative hurdles, and a digital divide can make it difficult for even eligible beneficiaries to access their benefits effectively. There is often a wide gap between policy on paper and the reality on the ground, with many workers in vulnerable positions unable to bargain for their rights. The introduction of the Code on Social Security in 2020 was a move to unify various laws and extend coverage to gig and platform workers, but its full implementation across states remains an ongoing process.
The Bigger Picture for India's Workforce
The successful enrolment of millions of new workers serves as both a proof of concept and a reminder of the scale of the task ahead. It shows that well-designed government interventions can make a tangible difference in formalising employment. However, it also highlights the need for a more comprehensive, universal social security system. Experts argue that for India to truly leverage its demographic dividend, it must ensure that every worker, regardless of whether they are in the formal, informal, or gig economy, has access to a basic safety net. This involves not just creating schemes but also simplifying procedures, increasing funding, and ensuring that benefits are adequate and easily accessible to all.
