Challenges of skill shortage, regulatory complexities await new Labour Minister

There is also demand for a more responsive and adaptive training system that minimises the time it takes for individuals to become productive contributors.

As Dr Mansukh Mandaviya takes charge of the office of the Union Minister of Labour and Employment, staffing agencies and talent experts highlight that need for the ministry to look into skill shortage issues across sectors.

With massive investments on the line, industry experts say India needs skilled individuals to support the anticipated growth in various sectors, especially in information technology (IT), electric vehicles (EVs), and fintech among others.

Although the industry is hopeful of the benefits of interventions already put in place, such as the Skill India centres, push on degree apprenticeship and so on, it feels that more needs to be done.

“With India making significant progress in the manufacturing sector through initiatives like Make in India, the Production Linked Incentive (PLI) scheme, and the National Manufacturing Policy, there is a growing demand for skilled technical labour. However, many manufacturing jobs require specific technical skills that are often lacking in the local talent pool where these facilities are situated,” Viswanath PS, MD and CEO of talent company Randstad India, told Moneycontrol.

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Further, he said that the rapid growth of digital banking in India is opening up new avenues for employment and economic growth. “To ensure the productivity of the workforce, it is essential to adapt labour laws to reflect the changing nature of work. Liberalising labour laws to allow piece-rate wages based on workforce productivity instead of fixed salaries will incentivise higher performance and efficiency,” Viswanath said.

There is also demand for a more responsive and adaptive training system that prioritises the development of in-demand skills that are attuned to industry trends and minimises the time it takes for individuals to become productive contributors.

Lulu Khandeshi, Chief Human Resources Officer of ManpowerGroup India, said that there has been some evolution in the education system in recent years, but there are two things - making the graduates employable and job-ready and secondly, (providing them) industry-specific skills to keep pace with the dynamism in the labour market.

The challenge is greater cycle time in training and getting people to succeed,  leading to significant time and efforts bring invested, results being  delayed , she said.

Regulatory compliance is a critical aspect of operating within any industry. However, staffing firms say the increasing complexity of regulatory requirements can pose significant challenges for businesses, particularly small and medium enterprises (SMEs) with limited resources and expertise.

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Meeting compliance standards often entails additional administrative burdens, costs, and risks for businesses. Experts highlight that failure to comply with regulations can result in penalties, legal issues, and reputational damage.

“Compliance complexity is adding to business difficulties, increasing operational burdens and affecting expansion goals…hence, there is a need to expedite new labour code implementation,” said Balasubramaniam A, VP and Business Head at TeamLease Services.

In 2020, the Centre introduced four new labour codes in a bid to simplify and modernise labour laws. These codes aim to consolidate a vast amount of existing legislation into a more manageable framework.

The current labour law system in India is a labyrinth of multiple central and state laws. The new codes - the Code on Wages, Industrial Relations Code, Occupational Safety, Health and Working Conditions Code, and the Code on Social Security -  merge these laws into four, more concise sets of regulations.

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Before the 2024 general elections, the central government's Labour Ministry was considering a phased implementation of the labour codes. However, this plan did not materialise, due to a lack of consensus, law experts say.

Further, many industries rely heavily on informal labour, which often operates outside the formal regulatory frameworks. This informal workforce may lack proper training, oversight, and accountability mechanisms, leading to lower productivity levels and challenges in maintaining governance standards within the industry.

Without formal employment contracts or adherence to labour laws, both employers and employees may face uncertainties regarding rights, benefits, and legal protections.

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“Gig workers face significant challenges due to their limited recognition under current Indian labour laws, representing a pressing issue in the labour market…according to foundit, gig jobs have surged by an impressive 163 percent since last year. To tackle this, formalising informal employment and implementing robust social security measures are crucial steps,” Sekhar Garisa, CEO of job site foundit.

He added that extending coverage to all workers will contribute to a more inclusive and equitable labour market, benefiting all segments of society.