The Crossbill News Desk
Contract workers now make up 42% of employees in India’s organised manufacturing sector, marking the highest share since 1997-98, according to data from the Annual Survey of Industries (ASI) for 2023-24.
This figure has increased by nearly eight percentage points over the past decade, underscoring a persistent shift towards greater contractualisation of the workforce, Business Standard reported.
While the proportion of contract workers last declined in 2013-14, it has steadily increased every year since. In 1999-2000, contract labour constituted just over 20% of total employment in the organised manufacturing sector.
Economists point to India’s legacy labour regulations, notably the Industrial Disputes Act, 1947, as a key factor driving this trend. The law imposes additional compliance requirements and costs on firms employing more than 100 workers, including the need for prior government approval for layoffs, retrenchments, and closures.
In response, many firms have opted to hire a larger share of workers on contract, offering greater flexibility in managing workforce levels and controlling wage costs.
Contract workers, however, typically receive lower wages and have restricted access to benefits such as provident fund contributions and insurance.
Labour market experts caution that this trend has far-reaching implications for income security and domestic consumption. They argue that the rise in contract work highlights the need to align job creation, worker protection, and productivity growth.
In an effort to promote formal employment, the government recently cleared the Employment-Linked Incentives (ELI) scheme. Under this programme, first-time employees are eligible for one month’s wage of up to Rs 15,000, and employers can claim incentives for two years, with an option to extend the benefits for another two years.
Global comparisons reveal significant variation in the prevalence of contract work.
A 2023 study estimated that contract labour accounts for 10.8% of total employment in the US, while Latin American countries such as Brazil and Argentina have seen contract work levels ranging between 10% and 20% at different times.
This figure has increased by nearly eight percentage points over the past decade, underscoring a persistent shift towards greater contractualisation of the workforce, Business Standard reported.
While the proportion of contract workers last declined in 2013-14, it has steadily increased every year since. In 1999-2000, contract labour constituted just over 20% of total employment in the organised manufacturing sector.
Economists point to India’s legacy labour regulations, notably the Industrial Disputes Act, 1947, as a key factor driving this trend. The law imposes additional compliance requirements and costs on firms employing more than 100 workers, including the need for prior government approval for layoffs, retrenchments, and closures.
In response, many firms have opted to hire a larger share of workers on contract, offering greater flexibility in managing workforce levels and controlling wage costs.
Contract workers, however, typically receive lower wages and have restricted access to benefits such as provident fund contributions and insurance.
Labour market experts caution that this trend has far-reaching implications for income security and domestic consumption. They argue that the rise in contract work highlights the need to align job creation, worker protection, and productivity growth.
In an effort to promote formal employment, the government recently cleared the Employment-Linked Incentives (ELI) scheme. Under this programme, first-time employees are eligible for one month’s wage of up to Rs 15,000, and employers can claim incentives for two years, with an option to extend the benefits for another two years.
Global comparisons reveal significant variation in the prevalence of contract work.
A 2023 study estimated that contract labour accounts for 10.8% of total employment in the US, while Latin American countries such as Brazil and Argentina have seen contract work levels ranging between 10% and 20% at different times.
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