Cabinet note on change in contract labour law soon

Written by fe Bureau | New Delhi | Updated: Oct 11 2012, 06:26am hrs
After a spell of industrial unrest due to wide difference in wages of permanent and temporary workers, the labour ministry is preparing a Cabinet note for amending the Contract Labour (Regulation and Abolition) Act to ensure parity in wages, social benefits and improve enforcement.

The government is also considering amendments in the Minimum Wages Act, Employees Provident Fund Act, Factories Act and the Building and Other Construction Workers Act to ensure better working conditions for labourers, labour minister Mallikarjun Kharge said at a conference.

In recent years, labour unrest has affected production in several sectors such as automobiles and aviation. In July, labour protest in Maruti Suzukis Manesar unit turned violent, killing one and injuring close to 100, while strikes in Air India and Kingfisher led to cancellation of flights and increased losses of the carriers.

According to a survey conducted by the Indian Staffing Federation (ISF), almost half of contract workers engaged by reputed HR firms get an average salary of 5,000-10,000 per month, while 34% of them earn Rs 10,000-15,000, and 12% earn over R15,000. While most contract workers earn much more than the government-set minimum wage of R115 per day, the salaries are still lower than that of regular staff in the formal sector and this goes against the spirit of the present law.

Expressing displeasure over the tardy implementation of labour laws, Kharge said the huge difference of wages between the regular workers and the contract worker lead to cause of unrest.

Though the Contract Labour Act mandates that temporary workers should get wages and social security equal to the regular worker for the same kind of work performed, Kharge said problems occur when the workers are not paid their dues or exploited in terms of wages, hours of work, etc.

A proposal to amend the Contract Labour Act to safeguard the interest of the contract workers in terms of wages and social security is under consideration, he said.

The labour ministry has send its proposals on a Bill to amend the Contract Labour Act to the cabinet secretariat and views of other ministries are being collated. Once Cabinet clears the proposal, the bill can be taken up in the winter session, he told FE after the conference.

Rigid labour laws have limited job growth and prompted companies to prefer hiring contract workers to cut costs and avoid administrative hassles. A recent government survey showed contractual jobs declined by 0.24 lakh during April-June even though direct employment increased by 0.97 lakh sequentially during the quarter.

The organised sector employed 42.7 million workers of the total work force of 404.5 million in 2011. The share of contract or flexi workers was 23.3 million or more than 50% of the total formal sector work force, according to ISF.

Most of these contract workers are casual and only 1.3 million are sourced from reputed staffing firms like Ma Foi, TeamLease, Manpower, Randstad and GI Group, under tripartite agreements. The workforce in this segment is estimated at 1.3 million or 3% of organised sector employment. This is projected to touch 10% by 2025, said K Pandia Rajan, managing director of Ma Foi Strategic Consultants and president of ISF.

The labour ministry recently discussed the issues pertaining to changes in contract labour laws with industry bodies. In its presentation to the ministry, ISF proposed a slew of reforms measures that could boost employment especially contractual jobs.

India should ratify International Labour Organisations Convention No-181 to strengthen its contract labour regulations and align domestic laws with global standards, said Rituparna Chakraborty, co-founder of TeamLease and vice president of ISF.

The ILO norm mandates that all sectors of the economy including government and public sector should be allowed to hire contract labours, ensure that workers get the government-mandated minimum wage and other social benefits, stipulate strict regulation of flexi staffing agencies and setting up of an Ombudsman for redressing grievances of workers.