The Evolving Dynamics of Contractual Labor in India
Engaging manpower through someone for particular work is a centuries-old practice worldwide. You cannot imagine any society functioning without this element. This manpower system has always been activity-centric, but after economic liberalization in India, the form or shape of this system of engaging people in business has emerged with certain malpractices, causing concern to a large segment of the working class. This is an era of a live-in relationship, where the contractor "supplies" people to the industry for their jobs. The industry, though heavily dependent on their efficiency and productivity and enjoying the benefits, does not own them. In times of crisis, neither the industry recognizes them nor the contractor.
Legal Framework and Its Impact
This arrangement of a live-in relationship between industry and contract labor is regulated by law. Does the law infuse trust and confidence? Maybe, but in this case, the arrangement only develops mistrust and agony among contractual workers against the industry because certain gaps and ambiguities in the present regulatory system provide ample opportunity for the industry to legally exploit such manpower. The industry should rise and think beyond the law. Doing business for profit is not a sin, but at the same time, all stakeholders must realize the consequences of the present practiced model of contractual labor engagement. The law provides only flexibility in engaging contractual manpower and is not a tool to be used solely for cost-effectiveness. This factor of cost-effectiveness has been included very intelligently by the industry. Now, what the industry wants and practices is the engagement of contract labor that can be removed at any time, having no job security, and that too on bare minimum wages for similar or the same work, which on-roll workers perform and receive much higher salaries. In public sector undertakings, you are bound by internal rules to engage only that contractor who offers the lowest rates to qualify in the bid. When manpower is engaged at the lowest rates, corruption and exploitation will outflow. The treatment of contractual workers as second-class citizens is increasing social disharmony. This issue cannot be ignored by the industry.
Challenges and the Need for Reform
With the current law, a contractual workforce can be engaged anywhere in any process irrespective of the time period unless it is prohibited by the government. Even if it is prohibited at a later stage, the industry (principal employer) is not under legal obligation to absorb the manpower on the company rolls. Courts can only intervene when the system adopted by the industry for engaging contractual manpower is only on paper and a sham. In this tricky situation, what the industry needs is to step in to develop a genuine system of engaging such manpower, where they are paid fairly and treated with dignity.
This time, our cover story focuses on the aspects of this law and practice, the issues and challenges faced by both the industry and the contractual workforce. It will help HR professionals understand the law in the correct perspective and make corrections in their prevailing systems so that both parties can enjoy this live-in relationship happily.
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From India, Delhi
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181Engaging manpower through someone for particular work is a centuries-old practice worldwide. You cannot imagine any society functioning without this element. This manpower system has always been activity-centric, but after economic liberalization in India, the form or shape of this system of engaging people in business has emerged with certain malpractices, causing concern to a large segment of the working class. This is an era of a live-in relationship, where the contractor "supplies" people to the industry for their jobs. The industry, though heavily dependent on their efficiency and productivity and enjoying the benefits, does not own them. In times of crisis, neither the industry recognizes them nor the contractor.
Legal Framework and Its Impact
This arrangement of a live-in relationship between industry and contract labor is regulated by law. Does the law infuse trust and confidence? Maybe, but in this case, the arrangement only develops mistrust and agony among contractual workers against the industry because certain gaps and ambiguities in the present regulatory system provide ample opportunity for the industry to legally exploit such manpower. The industry should rise and think beyond the law. Doing business for profit is not a sin, but at the same time, all stakeholders must realize the consequences of the present practiced model of contractual labor engagement. The law provides only flexibility in engaging contractual manpower and is not a tool to be used solely for cost-effectiveness. This factor of cost-effectiveness has been included very intelligently by the industry. Now, what the industry wants and practices is the engagement of contract labor that can be removed at any time, having no job security, and that too on bare minimum wages for similar or the same work, which on-roll workers perform and receive much higher salaries. In public sector undertakings, you are bound by internal rules to engage only that contractor who offers the lowest rates to qualify in the bid. When manpower is engaged at the lowest rates, corruption and exploitation will outflow. The treatment of contractual workers as second-class citizens is increasing social disharmony. This issue cannot be ignored by the industry.
Challenges and the Need for Reform
With the current law, a contractual workforce can be engaged anywhere in any process irrespective of the time period unless it is prohibited by the government. Even if it is prohibited at a later stage, the industry (principal employer) is not under legal obligation to absorb the manpower on the company rolls. Courts can only intervene when the system adopted by the industry for engaging contractual manpower is only on paper and a sham. In this tricky situation, what the industry needs is to step in to develop a genuine system of engaging such manpower, where they are paid fairly and treated with dignity.
This time, our cover story focuses on the aspects of this law and practice, the issues and challenges faced by both the industry and the contractual workforce. It will help HR professionals understand the law in the correct perspective and make corrections in their prevailing systems so that both parties can enjoy this live-in relationship happily.
Regards
From India, Delhi
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Labor as a Bargainable Factor
Of all the factors of production, labor is considered the most easily bargained due to its surplus and vulnerability. Even though the practice of contract labor is age-old in all societies, its roots always lie in the judicious distinction between the core and incidental activities of a venture. Unfortunately, this distinction has narrowed, resulting in an exploitative mindset driven solely by monetary gains at the cost of humane consideration for one of the indispensable stakeholders.
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From India, Salem
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Of all the factors of production, labor is considered the most easily bargained due to its surplus and vulnerability. Even though the practice of contract labor is age-old in all societies, its roots always lie in the judicious distinction between the core and incidental activities of a venture. Unfortunately, this distinction has narrowed, resulting in an exploitative mindset driven solely by monetary gains at the cost of humane consideration for one of the indispensable stakeholders.
Regards
From India, Salem
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Contract Labor and Its Challenges
Contract labor often receives poor treatment from employers. The unfortunate incident at Maruti Industries a few years ago was partly due to perceived or actual differential treatment between permanent and contract workers. The high level of protection for permanent labor, especially in government PSUs, has led to a sense of total security among them. When management finds it difficult to address or discipline permanent workers, they tend to rely on contract workers to accomplish tasks. As long as this dichotomy exists, contract labor will always remain on edge and continue to be exploited.
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From India, Pune
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Contract labor often receives poor treatment from employers. The unfortunate incident at Maruti Industries a few years ago was partly due to perceived or actual differential treatment between permanent and contract workers. The high level of protection for permanent labor, especially in government PSUs, has led to a sense of total security among them. When management finds it difficult to address or discipline permanent workers, they tend to rely on contract workers to accomplish tasks. As long as this dichotomy exists, contract labor will always remain on edge and continue to be exploited.
Regards
From India, Pune
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A meaningful post on the MAY DAY. An innovative caste system is being evolved or has actually evolved in industrial relation. The sooner we realise the better it is!
From India, Kochi
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From India, Kochi
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Nice post. Despite numerous laws for social security of workers, the insecurity is on the rise. Now that the government is going online with technology in one hand and laws in the other, still, the contract workers and lower-class workers are exploited and won't get the security in social terms.
My personal view here is, the lack of education, awareness, and empathy is the reason for such a situation.
From India, Vadodara
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My personal view here is, the lack of education, awareness, and empathy is the reason for such a situation.
From India, Vadodara
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Contract Labor - PPT.ppt
Go on Core Activity-Contra ct labor.pdf