Indian pharma and healthcare sectors working to formalize workforce with third party payroll

Bengaluru, October 27, 2022:

Indian pharma and healthcare sectors are working to formalise their workforce with third party payroll. This follows after employers citing their major concerns with an informal workforce. From an employer perspective, formalisation is needed because the primary challenge is to manage wages. There is also the issue of persistent skill gaps among the workforce. Yet another is frequent absenteeism that distorts the planned work schedule.

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.”

Across healthcare & pharmaceuticals, employers have started taking cohesive steps towards formalization. Companies feel that managing an informal workforce is challenging. As a result, majority of companies are prioritizing formalization with third party payroll. Now, with steps being taken to simplifying labour laws under the new labour code, formalization is going to become a mandate rather than a choice, he added.

Teamlease in its study titled ‘Reinventing business with workforce formalization’ which is an analysis of the healthcare & pharmaceutical companies highlighted that employers acknowledged that informal workers face many limitations due to the absence of social security. The wages are low with no medical and leave benefits.

Sunil Attavar, former president, Karnataka Drugs and Pharmaceutical Manufacturers Association begs to differ and noted that specific to the pharma sector, 90 per cent of its employees are part of the formal workforce and on the company rolls. The industry may have 10% of the overall workforce under the contract employee category to meet the surge in demand and cover the gap in non-core areas like secondary packing.

However most companies treat formalization as a priority. Incidentally employers of large organizations have already initiated major steps towards creating a formal workforce. From a job role point of view, employers expressed the intent to formalize the role of sales executive. Additionally, employers are also keen to formalize profiles like electrician, community health worker, marketing executive and supply chain executive, said Balasubramanian.

Companies across these sectors are optimistic to see immediate tangible outcomes through formalization. The companies expect attrition to reduce, and many are weighing in on enhanced business productivity and are expecting workforce optimization, he said.

While the overall sentiment towards formalization is very promising, however, there are still employers who do not consider formalization as an immediate priority. One of the primary reasons for this is that many employers 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, said the companies, said Balasubramanian.Pharmabiz