The Modi Administration does not seem to care for taking people on regular rolls. Everywhere, there is a tremendous emphasis only on what we call "Contract labor". Is this a healthy sign? Can we have millions on contract, and allow a very small section to enjoy all benefits of a regular job? What will happen to the concept of a welfare State, if the present conditions are allowed to continue?
From India, Nagercoil

Let us not criticise the Modi Administration alone. The contracting out jobs has become the norm across all the governments, including the left ones. Now the increasing trend is to award the work on contract basis, at least the work will be done or else the job will not be there. For instance till almost the beginning of 2K, the transport department used to be in house and used to be a constant irritant for the adminstration. Now almost all offices have outsourced this activity, the contractor is providing the vehicle, the driver, the running expenses, the maintenance, etc., for a defined fixed sum payable after a definite period of time. Now the system works and there is very less problems.
From India, Mumbai
Dear Apadharna Sivakumar,

You have raised a query on the contract workers. Your query is not specific to any industry or company as such, but your query is on the welfare of the contract workers as a whole. My reply is as below:

a) Let us look at the genesis of contract staffing. In Europe and the USA as the wages started rising, it became difficult to keep all the workers on the company's roll. To save cost, the low-level service jobs were outsourced. Over a period of time, outsourcing went beyond the borders of the parent country, and the job started getting outsourced to Asian countries. The outsourcing wave generated millions of jobs in Asian countries, and there was economic upliftment. The classic example is Bangla Desh. Its economy purely thrives on outsourced work.

b) However, businesspersons in a few countries like India realised the importance of outsourcing and low-level service jobs were outsourced. Whether it really saved their previous working capital is not known as I am yet to come across any systematic study on this subject. However, the outsourcing industry started booming as it became easy to hire and fire contract workers.

c) Nevertheless, rather than looking at this issue through the prism of social welfare, let me look at it from the management science point of view. Human resources are an important resource. Far from depreciating, the value of this resource appreciates. Against this backdrop, it is important for companies to grow their human resources. Growing the human resources does not mean just training them or promoting them, but it also means showing faith in their capabilities and motivating them. Most of the big corporations have grown not just because of their strategic planning but also because of the suggestions that came from ordinary workers.

d) Nevertheless, the relationship with the contract workers is transactional. The companies do not invest in the contract workers for their growth. Since the companies keep them on the fringe, there is no commitment from the outsourced workers. While the business owners could be deriving delight from the flexibility it gives them to remove the contract employees in a stroke of the pen, for their failure to generate the commitment, they do not count the losses as these are unquantifiable. Since the losses could not be quantified, they live under the false assumption that they do not lose anything.

e) So what is the way out? When will the business owners understand that the disadvantages of outsourcing outweigh the merits? To know this, we may have to wait for one more generation. There is a cycle of economic activities. If there were a cycle of outsourcing, then there would be a cycle of in-sourcing too. Though the phrase "in-sourcing" does not exist, I have used it for the sake of convenience.

f) The fallout of the COVID-19 pandemic was the realisation by the European countries, and the USA, of the disadvantages of outsourcing. Because of the disruption in the supply chain activities or even the business activities itself, the realisation has dawned on them on the self-reliance or dependence on the home-grown activities. But this realisation is not sufficient. It has arisen out of external factors, and not internal ones.

g) Now let me come to the Modi government's attitude towards business. Whether to make the economic policies "business-friendly" or "businessman-friendly" is a difficult choice for a political leader. The former may improve the well-being of the common citizens, but it may not provide a guarantee to sustain political power. In contrast, the latter is always beneficial as being in cahoots with the businesspersons helps in getting the unstoppable flow of political funds. A news report titled "At Rs 1,450 cr, BJP got 61% funding via Electoral Bonds before LS polls" speaks volumes. No further explanation is required to be given!


Dinesh Divekar

From India, Bangalore
I don't agree that Modi government is pro contract labour If you go through the new labour codes it clearly defines Core activities and excludes contract labour from core activitie. So you cannot employee million contract labours under the labour code proposed by the Modi government the old contract labour act passed by the socialist congress govt did not protect interest of workmen
From India, Chennai
Dear colleague,

Yes. It is fall out of gig economy. It has come to stay. The concept of permanent employment will go for a toss and contract workers/ fixed term contracts will dominate the scene.


Vinayak Nagarkar
HR and Employee Relations Consultant

From India, Mumbai
I think worker on contract has been misunderstood as contract labour. I think, the author had apprehension about employment for a certain period or Fixed Term Contract.

By including Fixed Term Contract as a group of employees by the central government, the government has given permission to employ people for a certain period on jobs of permanent nature. Now most of the employers have stopped offering jobs on regular rolls but are offering one year employment. State Bank of India which used to appoint thousands of clerks every year has stopped employing clerks but will appoint only Apprentices for certain periods, ie, three years. Even if the job is permanent nature, everybody is employing on fixed term contract basis only. It is true that at the end of fixed term when an employee's contract is not renewed, he should be paid Gratuity. Who is bothered about 15 days pay? Employer? Or the employee on Fixed Term Contract? For an employer, it is not the 15 days' gratuity which is going to make his nights sleepless but he will be happy to pay it if he can throw out an employee. For an employee what is required is a permanency in employment. If he goes to a bank and asks for a loan will he get it if he is on employment for a fixed term? No he will not get. Even in the marriage market his rating will become POOR when he is on contract for a certain period. This will invariably reduce his productivity as well.

I think what Apadharna-Sivakumar has said is true. The government has been pro employer over the last few years. The Codes on labour are not really attractive for the workers but are beneficial to employers only.

KK has said that "The contracting out jobs has become the norm across all the governments, including the left ones". Which Left Government has supported the contract work? Only Kerala has left in power. There is no such situation. The Contract labour Act has been an Act which remains in paper in many states but not in Kerala. There is a system of regulating employing people through contractors. But in states like Gujarat you can see people being engaged in core activities completely rejecting what is written in the CLRA or the new Labour Codes ( yet to be implemented)

Now coming to Aswat1302, I would say that though workers engaged though a contractor has been given a definition under the new Codes, there has been no measure to identify their number in terms of permanent workmen. the interesting thing is that they will come out of the definition of contract worker once they get annual increments. It would have been better if the government had maintained the old Act (like other Labour Laws) and enforced it properly through administrative measures.

This not at all a healthy sign. With the Union Government's decision to have apprentices, employees on FTC, workers through contractors, the very purpose of welfare state has been defeated. You are creating a workforce who is totally discontent due to insecurity feeling and a bad social status. If you want to make it healthy, you the HR Managers should first of all raise and object the management decisions rather than keeping quite and experimenting more and more means of keeping employees on temporary rolls.

From India, Kannur
Dear all,

In support of the views of the originator of the post, I came across a table that shows the decline of the regular employees and the rise of the temporary workers. Please check the attachment.


Dinesh Divekar

From India, Bangalore

Attached Images (Download Requires Membership)
File Type: jpg The Decline of Regular Employees and Rise of the Temporary Workers.jpg (377.3 KB, 9 views)

The problem is more to do with the cost of labour and the restrictions on removing them.
Business needs flexibility. It should be able to hire more quickly when needed but it should not be forced to keep them on for life if the business declines or the workers are not productive.

Contracting of core labour has grown more and more because business cycles are no longer stable as it was before. No company can be sure its factory will continue to run at 90% capacity for the next 10 years. So they want flexibility, which will come from using contract labour.

Permanent employees remain even if they are unproductive or are too costly. Union will force salary increase for all permanent labour. I have seen poems in Tata Power with salary of ₹ 45,000 a month, plus LTA of a month, compulsory paid bonus of 20% of annual salary. Do tell me how it makes economic sense and why exactly the company will not opt for outsourcing the entire Housekeeping function as soon as it can?

I am not sure why you are picking on PM Modi, So I would like you to tell us what previous governments have done to stop or discourage use of contract labour. The only thing Modi has done is force the change in licensing term from 20 to 50 workers. But licensing never deterred the use of contract labour. It only gave the government officers a source to make money.

From India, Mumbai

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