Mumbai, Dec 14: Demonetisation will give rise to organised workforce, which will eventually help them to become part of the ecosystem, according to human resource (HR) solutions and HR technology company PeopleStrong.
"Demonetisation will give rise to organised workforce. Small time entrepreneurs who operate by giving cash salary to workers will now start moving towards opening accounts for their employees," PeopleStrong co-founder and CEO Pankaj Bansal told PTI here.
India's total workforce is 600 million, of which 9 per cent belong to the organised sector and the remaining 91 per cent fall under unorganised category, he said.
The unorganised sector has been affected largely as most of the transactions, some of them as daily wages, happen through cash.
"Now this will be reduced eventually as they occupy a strong base of the economy," he added. Bansal said unorganised sector comprises mostly of unbanked people who will move to banking in coming days including Jan dhan, post offices and mobile banking, which will give boost to the government's efforts of financial inclusion for everybody towards the organised workforce.
He said these small businessmen will now declare the number of employees working for them and open their bank accounts helping them become part of the organised ecosystem.
"This is a good news for organised workforce that will significantly increase from 9 to 15 per cent in next one-two years. Formal jobs will also go up as the number of people who will be paid through banks and cheques are going to increase.
Moreover, the cost of informality has gone up as there is a limitation to cash," according to Bansal. Improved Central laws are also likely to support the unorganised sector into becoming organised, he said.
"Labour laws are improving thereby labour change will come with social security (Provident Fund) and Employee State Insurance (ESI). Labourers will now become a part of a recognised sector and a part of the mainstream economy.
Most of the labour laws are under discussion and are being relooked by the government. Apprentice Act has also been relaxed," he said. This trend is just the beginning, he said, adding that in next one-two years the momentum will gather up.
"The entire process will take at least two years to settle down. At the end of December, the whole ecosystem will go up and will not remain stagnant as it was last year. Cash economy will also continue as it can't go away completely," he added.