The Allied Nippon factory in Sahibabad industrial area resembles a fortress. At least 15 police personnel, apart from guards of two security agencies hired by the company, are stationed here. Although a week has passed, the situation seems to be grim. Even a bystander is promptly shooed away. The work in the factory has resumed, but only 300 of the 1,100-odd workers have joined back. Given the skeletal workforce, the number of shifts have been reduced from three to one. It is difficult for anyone here to explain what exactly went wrong on the fateful Saturday when a mob of workers lynched the assistant general manager of Allied Nippon, Yogendra Chaudhary. Sahibabad SHO Avneesh Kumar Goutam feels, “It stemmed from a sense of insecurity among the permanent labourers: what if they increase the number of contract labourers and fire us.” On the other hand, MS Chaudhry, VP-HR at Allied Nippon, says, “It was the removal of five contract employees that triggered it. There were disciplinary issues as well. But we never thought the workers would take such an extreme step.” Chaudhry, who was present in the factory on Saturday as well, “just about managed to escape”. His hand is still bruised and the stitches on his head are yet to heal. Two of his other colleagues weren’t as lucky; they are still in the ICU.

Unequal rights

It is difficult to deny the multiple fault lines that emerge not just in this case, but several others of similar nature. The issue of contract or temporary workers is caught in this quagmire. “As much as 30% of the labour force in India is on contract or as temporary workers. Worse still, 99% of these 30% are in the unorganised sector. There is clearly a labour market emergency. Ideally, not more than 5-10% of the workers should be temporary or contract workers. One million people will join the labour force every month for the next 20 years. But the ecosystem of labour laws will not be able to handle the demographic divide. The labour laws need to be urgently reformed. It’s time, as Peruvian president Alan Garcia remarked, to eradicate and eliminate slavery in the 21st century by giving employees of contractors more rights,” says Manish Sabharwal, co-founder and chairman of TeamLease Services, a firm providing manpower solutions.

Sabharwal’s concern is not misplaced. It is reflected in the fact that the number of licences issued to contractors increased from 9,280 in the previous year to 10,389 in 2008-09. But at the same time, a total of 7,419 licences were revoked or cancelled last year, up from 5,657 in 2007-08. Workers employed on contract basis, often left in the lurch by the contractors, have practically no social security or compensation in case of job loss, accident and injury.

?There are two underlying issues: one, the management has been found to be cautious in making contract labour permanent because of fluctuations in production schedule, as well as tremendous cost pressures. But as the industry evolves, I see the percentage of contract labourers in overall workforce coming down. Two, it has been observed that such incidents have taken place when the management has taken action in specific instances of employee indiscipline. Such violent incidents must certainly be condemned,” says Srivats Ram, president of Automotive Component Manufacturers’ Association of India, and MD, Wheels India Ltd. But why does he think incidents of such violent labour-management clashes have suddenly gone up in the past few years? And quite a few of them involve blue collar companies related to the auto sector. “It is a difficult task for a labourer to make a livelihood in an industrial area. The inflation has been rising steadily. Moreover, a lot of disparity prevails in an industrial belt. For instance, a big company may be paying its workers more than the smaller company right next to it. It creates dissatisfaction among the less privileged workers,” Ram adds.

Sharit Bhowmik, dean, School of Management and Labour Studies, Tata Institute of Social Sciences (TISS), feels workers resort to such measures when they are driven to the wall. ?Notice the number of cases where violence was triggered by police atrocities. More often than not, they are indiscriminately terminated by the employers. They are not paid the minimum wages. They are not allowed to make a union; the basic right of association is taken from them, their bargaining rights are curtailed. The issue of dignity also counts a lot. They need social security like savings in the form of PF. Why should they just be ?hired and fired?,? he says.

Undeniably, the need of the hour is to figure out how labour laws can balance requirement of flexibility of market-driven production processes with adequate security for workers. “These are competitive times. How will an employer pay more than the market rate consistent with the minimum wages requirement? And why should an employer take the responsibility of re-engaging contract labour if he doesn’t need it? Moreover, employees in the skilled category have the choice of not serving a particular employer,” asserts MR Gera, expert on personnel management and industrial relations. “The idea of a welfare state was prevalent at the time the law was brought in. The primary objective of the organisation, which could be profit or some other specific agenda, was not taken into consideration then. According to the present interpretation of the law by the apex court, it is completely legal and ethical to engage contract labour for any industry, unless it is specifically prohibited or it is by way of a bogus contract, for as long as required. However, bureaucrats and the politicians don’t want to reconcile with this interpretation. They want to fish in muddled waters,” he adds.

According to H Mahadevan, deputy general secretary, All India Trade Union Congress (AITUC), ?There are three major issues that need to be urgently addressed. Firstly, non-payment of minimum wages needs to be looked into seriously. Secondly, employers don’t let workers register unions or join any trade union. Workers are sacked and harassed if the management comes to know that they are forming an association. Third, contract labour employment is rampant in non-standardised and atypical forms of employment. These need to be addressed on a priority by the government if we want to save ourselves from a possibly dangerous situation in the near future.?

Inadequate laws

According to an International Labour Organisation (ILO) paper on the growth and decline of political unionism in India, the issue of contract labour goes beyond the labour-management dispute and involves the labour-labour dispute as well, with the latter meaning a conflict of interest between the regular staff and those hired on contract. Legal experts seem to agree. ?The trade unions frown and strongly oppose the contract labour system. The regular workers also condemn this system, since it weakens their power of bargaining with the employers and impairs their chances of promotions,? says HL Kumar, a Supreme Court lawyer and chief editor of Labour Law Reporter. Kumar adds that middle-men and contractors make it worse, ?The unions argue that the contract workers are dependent on middle man or agents who hire out workers to employers, often in labour gangs. Such workers are usually indebted to the contractors and this debt bondage leads to exploitation of workers in various ways.?

Few would disagree that the law needs to be urgently revised and interpreted in a single light. ?The rule book categorically says that if the contract labour performs the same or similar kind of work as the workmen directly appointed by the principal employer, the wage rates, holidays, hours of work social security and other conditions of service of contract labour shall be the same as available to the regular workforce. However, the court sees it in a different light, where standards of performance and standards of supervision and standards of personal attainment could make a vital difference. It is quite possible that an altogether different value might be delivered, even if the two categories seem to be doing jobs similar to each other. The apex court has, in a recent case, emphasised the differentials that may exist in the context of total value delivered and the aspects relating to overall responsibility and reliability, as also the issues of accuracy and dexterity displayed,? says Gera. Bhowmik feels that the problem also lies in the way the Contract Labour (Regulation & Abolition) Act, 1970, is interpreted. ?The Supreme Court, through its judgment in the Air India Statutory Corporation case, regularised employees in the case of industries where the contract labour is prohibited, but subsequently over-ruled it in the Steel Authority of India Ltd case. There is a need to amend the Act in such a way that it cannot be challenged,? he says.

Govt role

Last year, a tripartite group was constituted by the labour and employment ministry on the recommendations of the 42nd Indian Labour Conference last year to examine the provisions in the Contract Labour (Regulation & Abolition) Act, 1970, with a view to facilitate greater social protection to contract workers and suggest amendments to the Act. But the members could not reach a consensus in their report that was submitted on December 31, 2009. However, in the conference of state labour ministers in January this year, Anil Swarup, director-general labour welfare (DGLW), proposed to amend the Act and add two provisions. These were: ?In case where the contract labour performs the same or similar kind of work as the workmen directly appointed by the principal employer, the wage rates, holidays, hours of work, social security and other conditions of service of contract labour shall be the same as available to the workmen on rolls of the principal employer. In case same or similar kind of work is not being performed by the workmen directly employed by the principal employer, the appropriate government will notify the wage rates, holidays, hours of work, social security and other conditions of service?. Secondly, ?Whenever a contract is given to a contractor, the contract agreement between the principal employer and the contractor should clearly indicate the wages contribution towards social security schemes and other benefits that are to be paid by the contractor to the contracted workman?.

Sources in the labour and employment ministry say these two amendments were then mooted by the ministry to the Union Cabinet. ?The Cabinet Secretariat had asked the National Institute of Labour to conduct a feasibility study of the two amendments mooted. The report has been submitted recently, and the matter will now be taken forward by the Cabinet,? says a senior official at the ministry. The official feels extremely divergent stands on the two ends of the debate make it difficult to reach some common ground. ?The government has been looking at this issue seriously and has held discussions with various quarters. Mutual apprehensions and misapprehensions are there and we want effective and constructive communication between the warring factions. The fact is, and no one professes it openly, but contract labour is here to stay. Now we have to come to a common ground and see that their rights are protected and that their welfare is looked into properly and that they get similar facilities and payment scales as the regular staff,? he adds.

Collective bargaining

Beyond the legalities, much needs to be done to even begin the process of resolution between the employers and the employed. Experts at the ILO believe that proper and regular communication and understanding between the management and workforce is something every enterprise should strive for and suggest collective bargaining as an efficient tool to arrive at an agreement that satisfies all stakeholders. ?Research shows that collective bargaining has proved to be a really effective instrument towards preventing industry-labour disputes across the globe. In many countries, management, as well as workers, are not aware of the efficacy of collective bargaining as an instrument of improving workers’ rights and also of improvement in the productivity of the company. It provides clarity in the working relationship between the labour and management and helps prevent and solve disputes,? says Marleen Rueda, senior specialist on social dialogue and labour administration, ILO DWT for south Asia, and ILO Country Office for India. And what does collective bargaining culminate in? ?Collective agreements are the most developed mechanisms to manage industrial relations and are the result of collective bargaining. These written agreements between the employers and labourers and their representatives can go a long way in preventing small conflicts between the management and the workers from escalating and going out of hand to take the form of major disputes,? she says. Reuda adds that enterprises that do not have the capacity to reach collective agreements can set up mechanisms like committees, which can create communication channels between the management and the workforce.

Tine Staermose, director, ILO DWT for South Asia and ILO Country Office for India, believes that trade unions are very important for collective bargaining to be effective. ?The role of trade unions is very important as they can speak on behalf of the workers who can’t speak for themselves at an individual level. You can’t have collective bargaining unless you have a collective bargaining agent and that is why trade unions organising contract labourers is certainly a positive approach to prevent possible disputes,? she says.

Trade unionism has been a contentious issue in the country. While experts and officials in the government and outside believe that trade unions are important stakeholders for any sort of resolution to take place, companies are generally vary and apprehensive of these unions, which often have political affiliations. However, unions call these apprehensions baseless and an excuse to deny the basic workman’s rights to the workers. ?Employers are more politically affiliated and motivated now. And this is an absurd argument for me. Trade unions have always had certain ideologies and there is nothing new or undesirable in that. Jawaharlal Nehru was the president of AITUC and so was Subhas Chandra Bose. Workers and trade unions fought and struggled for the independence of this country. So why can’t they do it now for the rights of the working class? The present situation is worrying not because of the political affiliations of unions, but due to the blatant flouting of laws and procedures and exploitative practices, mostly by employers,? says Mahadevan of AITUC.

And while arguments and counter-arguments fly, unfortunate incidents such as the one at Allied Nippon are a brutal reminder that the resolution of this extremely complex issue comes down to the very basics. Complications are bound to dot the path, but as Marleen Rueda sums up, ?The most important factor to strengthen labour-management relations is the willingness of the parties to engage in dialogue, as well as the development of mutual trust.?