Open Forum
New Delhi, 23 March 2017
Contract Labour
MAJOR ITEM FOR
REFORM
By Dr S Saraswathi
(Former Director,
ICSSR, New Delhi)
To achieve “Ease of doing business” and to promote “Make in India”, labour
reforms are necessary. A major item in the reforms presently under the Government’s
consideration relates to legal backing for contract labour – a growing section
of labour indispensable in production and trade, but badly lacking protection.
Recently, the Labour Ministry has notified draft rules that would allow the
principal employer or contractor hiring contract labour to file unified annual
returns under the Contract Labour (Regulation and Abolition) Act, 1970 in the
specified form.
Contract labour, according to official estimates, accounts
for about 55 per cent of public sector jobs and 45 per cent of those in private
sector. About 2 million contract workers are in the organised sector. There is
no record of unlicensed contract workers outside the purview of law whose
number must be much higher scattered in unorganised sector facing double disadvantage
in work-life.
Reform and regulation of contract labour will thus touch
one-half of total workers and will shake up the informal sector to its
responsibility towards labour, on which its dependence is growing. The workers comprise skilled, semi-skilled,
and unskilled work force.
New forms of informal employment are emerging even in organised
sector in India
due to the advantage of greater labour flexibility and the demands of globalisation.
The practice of outsourcing work, the necessity of 24-hour labour to reach all
parts of the globe, the requirements of increasing specialisation and division
of labour, and higher participation of women have combined to increase contract
employment as a prominent feature of all kinds of work – manual, skilled,
and intellectual. Contract labour is
non-standard form of employment and has grown all over the world as a result of
technological change, and introduction of new forms of industrial and commercial
organisation.
The very mention of “contract labour” brings before our
minds workers toiling at construction sites, roads, factories, public works
like water supply and drainage, and electricity -- all at the receiving end of
numerous labour problems that still haunt production and services. They have a
common feature that they are hired for a specific work and are disbanded after
the job is completed.
Many concerns also go relentlessly on with contract labour
as a measure of economy though they have continuous work thus having “regular”
contract workers for even routine work despite the mandate that people doing
regular work should be on the rolls of the organisation and not on
contract. Manual scavenging, entering
manholes, and cleaning septic tanks manually, which are all prohibited on
paper, fall to the lot of contract workers on regular basis.
Contract labour is distinguished from direct labour in
employment relationship with the establishment, working conditions, and even in
the method of remuneration. It is categorised as “indirect” employees – hired,
supervised, and paid by a contractor, who is compensated by the establishment.
Contract employees are not on the regular pay roll of the establishment.
A workman is deemed to be employed as contract labour when
he is hired by an establishment by or through a contractor. The contractor is
virtually the employer for the contract workers who has no link directly with
the establishment, and may not even be aware of the establishments for which he
is contributing labour or their chiefs.
Contract work has become the outstanding feature of both
public and private sector, particularly in mining, manufacturing, and some other
services. Even the formal sector tends to split the work and resort to
sub-contracting work and get linked to informal sector in which contract work
is mostly the norm. In fact, it has a bright future in India.
There are different types of job or labour or mixed contract.
It may be part-time, fixed time, agency staff, consultation and freelancing,
call labour and so on. The arrangement may be bi-partite, tri-partite, and
triangular between workers, employers, and the establishment. The
intermediaries may be placement agencies, experts in the field, registered
organisations, etc.
In a developing country like India, whatever be the ultimate
goal, labour reforms must address issues from the point of labour welfare. In
the name of “ease of doing business” or introducing labour flexibility, Indian
labour is presently not in a position to give up its protective legislations or voluntarily make sacrifices to help
establishments face global competition.
NSS data have revealed a shocking record: that more than 75
per cent of workers do not have formal job contract and do not enjoy social
security. Contract labour is governed by the Contract Labour (Regulation and
Abolition) Act of 1970. This Act permits
contract labour only for work that does not form part of the core operation of
an establishment.
The objective of the Act is to prevent exploitation of
contract labour and to introduce better working conditions. The Act lays down
that contract workers also should be provided with basic amenities like rest
room, water, toilet facilities, etc. The ILO Convention 181 regarding private
placement agencies prescribes a tri-partite relationship in contractual hiring.
India
is a signatory to this Convention, but the Government has not yet ratified it.
Contract labour system was considered a social evil by the
First Labour Commission in 1969. But, it
has become the main strategy for making labour market “flexible” today. The
Second Labour Commission in 2002 suggested formulation of labour codes as in
many western nations and exempting establishments employing less than 50
workers from Contract Law. The Seventh Pay Commission has suggested framing
uniform guidelines.
Contract workers are indispensable in our economy, but their
grievances are many. Spending one’s career in contract work jumping from place
to place without job security and labour welfare measures is no ideal
situation. Public or private sector
establishments depending heavily on contract workers do suffer labour problems
like prolonged strike for months at a stretch as witnessed in Neyveli Lignite
Corporation (NLC), where regularisation of contract workers has become the main
issue in labour-management relationship.
The Government of Maharashtra, Rajasthan, and Madhya Pradesh
have taken a lead in reforms by limiting the application of the 1970 Act to units employing more than 50 workmen and not
20. Units employing 20 to 49 workers will not come under the law which
regulates wages, holidays, hours of work, and other conditions of work. The
comprehensive labour code of the Centre is likely to introduce this change as
also restricting application of Industrial Disputes Act to establishments
employing over 300 workers and not 100 as before. Such laws are likely to
result in splitting up a job in smaller units engaging less than 50 workers to
be altogether free of labour rules.
The notion that “ease of doing business” is generally not
labour-friendly can be erased only
through enlarging “ease” to small enterprises, genuine labour
flexibility and opening of opportunities.
Developing countries caught in the web of globalisation are really in a
dilemma and are facing the wrath of labour and groping to pacify labour and
encourage production. Hire and fire policy is not suitable in a nation where
social security remains a dream. However, a silver lining is that labour will
be tempted to improve skills and enter more and more in self-employment to do
what they had been doing as contract workers. ---INFA
(Copyright,
India News & Feature Alliance)
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