Contract Labour: The future of youthful labour power of the country on contract

In February 2014 the ASSOCHAM (Associated Chambers of Commerce and Industry of India), an organisation of the capitalists, issues a press release, according to which between 2008-09 and 2012-13, the number of contract workers increased by 39% over the entire country. The use of contract labour has increased in all such sectors where work is of a permanent nature. These include – vehicles production, construction, telecommunications, IT sector, BPOs, FMCG, health services, education, etc. In the above mentioned sectors, work is of perennial nature and workers should be employed on permanent basis.

Some figures on contract system

Figures show that while the number of contract workers increased by 39% between 2008-09 and 2012-13, the number of permanent workers increased only by 25%. If we look at the sectoral figures then we find that rise of contract employment during this period was 60% in telecommunication industries, 56% in the auto sector, 54% in education, 52% in construction, 51% in enterprises manufacturing consumer goods. In IT and BPO sectors the rise was 42%, in hospital services 35% and in pharma and health services it was 32%. 

The ASSOCHAM press release states that contract labour system exists in industry and services and doctors, scientists, managers and chartered accountants are also getting recruited on contract basis. In many of the multinational companies more than 50% of the workforce employed is on contract across various departments, who are recruited through various contractor agencies.

Contract work straightforwardly means that the workers so hired are deprived of their rights which acrue to them as a worker. Increasing number of contract workers is clearly demonstrating that the capitalist class wants to maximise their profits by reducing the wages of the workers to the minimum possible.

Youth constitute the greatest number of workers of our country. In our country, youth or those who will become young adults in a few years, constitute a majority of the population. The capitalists of the world are eyeing this youthful workforce and want to make use of them. The capitalist class wants to tap the energy of this youthful workforce at the least wages to fulfil its ambition of making huge profits. Therefore, the capitalist class wants to deprive the workers of every type of social security and rights.

In the decades of the 1960s and 70s, workers opposition to the use of contract labour by capitalists was very intense. There were several large agitations to end the contract system. At that time, the Central Government had to pass the Contract Labour (Regulation and Abolition) Act. This was passed on 5th September 1970.

As the name of the law itself indicates, the avowed aim of the Contract Labour Act was to end the contract system; however, it has been used to allow the use of contract labour and for increasing the exploitation.

Right from the beginning, the demand of the workers has been that there should be no contact system. This law is applicable to establishments with more than 20 workers. So this law deprives the workers of their rights in establishments employing less than 20 workers. Moreover, it legitimises contract employment where the work is not of a permanent nature thereby gives opportunity to the capitalist for exploiting the workers.

In practice, most of the Indian and foreign capitalists split their operations into several units and use different contractors to provide the workers. The attendence register in every such unit, shows less than 20 workers so that these need not be registered under the Contract Act and workers rights are violated.

If we look at the details, we will see that in the last 20 to 30 years this law has been made more and more flexible for the capitalists. Through a number of court judgments, various types of work have been taken out the purview of the Contract Act. Courts have ruled at first that this act does not apply to security personnel. Later, sanitation workers have been excluded from this law. All this has been done on the basis of the claim of the capitalists that the workers get too much protection under the labour laws and these have to be reduced.

Capitalists argue that contract system should be considered legitimate for all work that does not come under their core activity. The discretion lies with the management to decide what work is “core”.

Under the Contract Labour law, there are no provisions to ensure ESI, PF, gratuity, vacation, bonus facilities for the workers. Neither does it force the contractor to ensure these facilities are made available for his contract workers. Contractor will only implement these when the establishment comes under the purview of the ESI Act (1948). Although ESI Act and Provident Fund Act apply to the contractor, he escapes it by deducting these from a worker’s wages but does not deposit it in the account of the worker. He asks the worker to register with ESI but does not give the worker his ESI card. To ensure that he is not caught, he dismisses the worker once every 6 months and appoints him again. This way he is escapes the implementation of this law.

The workers who work on contract are deprived of all their rights because they are hired on such conditions which are fully in favour of the capitalist. Under the contract labour system, workers can be easily deprived of all the rights that they have won through years of struggle.

If a capitalist or owner of a company violates the Contract Labour Act, then the punishment is merely three months’ imprisionment and a fine of Rs. 500/-. This does not compel the contractor or appointer to ensure workers get social security or other rights.

The use of contract labour in all sorts of work has become an unwritten norm. However, for regular work and work that goes on for years altogther, workers must be hired on a permanent basis and they must be given rights given under the law.

In the last few years contract workers are being used in government work. For example the clerical employees in government offices are being employed as per agreement to work for years at the same salary and without social security and without the rights due to workers such as annual vacation, right to form unions, etc.

Contract workers are deprived of security of life also. When there is an accident then the family of the deceased worker does not get any compensation. This is because it is very difficult for the worker’s family to prove who the employer of that worker was. Workers appointed by contractors are neither given any kind of identification cards nor any kind of pay slip.

The contract labour system is not only detrimental to the workers who work on contract, it is also detrimental to the society as a whole. The contractors appointed by the capitalists often appoint untrained workers where work is sensitive and requires skill. This way he avoids the expense of training workers. However, it is dangerous for uses of services when the contractor uses untrained workers for critical tasks in the transportation, by rail, road, and air, traffic direction, etc.

All over the country in all big industries, mines, public sector enterprises, government departments, hospitals, schools, universities, multinational companies, airports, etc., contract workers are being used for last several years. In all these places, workers appointed on contract have continuously waged a struggle to demand regularisation.

Recently, thousands of contract teachers demonstrated in front of the Delhi government for several days. They were demanding that they should be made regular. Similarly, drivers and conductors of the Delhi Transport Corporation were on dharna for similar demands.

For contract workers, the contract system is a curse, which ruins their lives. Contract workers have to work long hours. Far from getting overtime, they are not even given their full pay for the hours they work. Their pay is much less than the pay of a regular worker. They don’t even get annual increments.

In several multinational companies, the situation is that the same work is done by different categories of workers, like contract worker, trainee worker and permanent worker. Among these the maximum number, about 70%, are contract workers and trainee and regular workers constitute the remaining 30%. The contract workers get paid only about 6,500 to 8,000 after ESI and PF is deducted. Similarly, for the teachers in government schools in Delhi, contract teachers are paid Rs. 750/- per day. They are not paid during the vacation. These are only a few examples out of the countless such cases across the country.

Last year in the month of May, the workers of Maruti Udyog went on a strike for several days to demand regularisation and recognition of their union. However, administration paid no heed to their demands. The administration neither regularised the workers nor allowed them to form their union. On the contrary, they conspired to throw the workers out and hundreds of workers were imprisoned on false charges.

It is the responsibility of the state to ensure that all adult citizens can find safe, secure employment that is suitable for living. However, the state is imposing the contract labour system on the workers and forcing the workers to work at less pay. The report issued by ASSOCHAM bears testimony to this fact.

What is the solution?

We must demand a law that can ensure that everyone gets an appropriate and secure job. There should be universal registration of workers because crores of workers are denied legal guarantee of rights as their employment is not registered. All wage-earners must get definite minimum wage, pension and other facilities without any exception as a right. The law must make compliance with all these provisions compulsory.

The capitalist system cannot survive without exploitation. There is a direct confrontation between working class and capitalist class in this system. The capitalist class strives to increase its profit by continuously increasing the level of exploitation.

Working class has to wage a struggle with the aim to end exploitation. Working class must strengthen its organisation from the perspective of class struggle. The aim of the struggle of the working class has to be to uproot the capitalist system and establish its own rule.

All of us workers, working in factories, mines, MNCs, service sector, etc., will have to intensify our struggle to change the capitalist profit making orientation of economy. We will have to establish a new economic system which will be in the interest of ensuring the wellbeing of all toilers and downtrodden people. In this economic system, the surplus value created will be used to continously raise the living standard of the people. Only the working class can lead such an economy that will end all forms of exploitation and give birth to a society where exploitation of men by men will be impossible.


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