New Delhi [India], November 25 : The implementation of the government's new labour reforms could significantly boost employment and formalisation in India's labour market over the medium term, highlighted a report by the State Bank of India (SBI).
The report stated that the new labour codes could reduce unemployment by up to 1.3 per cent, which would translate into additional employment generation of 77 lakh people.
It stated "India's new Labour Codes after a short transition phase could reduce unemployment by upto 1.3 per cent over the medium term........ This would imply additional employment generation of 77 lakh people".
This assessment is based on the current labour force participation rate of individuals aged 15 years and above at 60.1 per cent, and the average working-age population at 70.7 per cent across rural and urban regions.
According to the report, the implementation of the new labour codes will increase the share of formalisation in the labour force by at least 15 per cent, pushing total formal workers to 75.5 per cent from the current estimated share of 60.4 per cent, as per PLFS data.
The report also noted that social sector coverage could rise to 85 per cent, strengthening the country's labour ecosystem.
The report further stated that with a savings rate of approximately 30 per cent, the reforms could result in a consumption rise of around Rs 66 per person per day after implementation.
This would lead to an overall consumption boost of Rs 75,000 crore over the medium term, giving a major push to domestic spending and economic growth.
SBI noted that around 44 crore people in India currently work in the unorganised sector, out of which nearly 31 crore workers are registered on the e-Shram portal.
By assuming that 20 per cent of these workers move from informal payroll to formal payroll, around 10 crore individuals could directly benefit from improved job security, social protection and formal employment benefits.
With this transition, India's social security coverage is expected to reach 80-85 per cent in the next 2-3 years.
The report also emphasised that the implementation of the four labour codes will empower both workers and enterprises, creating a workforce that is protected, productive and aligned with the changing world of work.
The reforms, which came into force on 21 November 2025, merged 29 existing labour laws into four comprehensive codes to simplify labour regulations and improve workplace governance.
The four codes include, The Code on Wages, 2019; The Code on Social Security, 2020; The Occupational Safety, Health and Working Conditions Code, 2020; and The Industrial Relations Code, 2020.
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