Tuesday, September 08, 2015

Fostering equality: Government may limit portion of contract workers in companies to 50%

NEW DELHI: The government is considering fixing the proportion of contract  workers that an organisation can hire, a move that may help it dilute opposition  to labour reforms but is sure to trigger stiff opposition from industry. 

The first draft of the proposal will be finalised soon, after which the  government will kick-start consultation with key stakeholders, including trade  unions and employers, a senior labour ministry official told ET.

While it is still  in the concept stage, the plan being considered is to limit the portion of  contract workers in companies to 40% to 50% of the total workforce, with a pay  that is no less than the government-prescribed minimum wages.

Fostering equality: Government may limit portion of contract workers in companies to 50%
The proposed changes to the Contract Labour (Regulation & Abolition) Act may  also make it compulsory for companies to absorb contract workers to the regular  fold whenever a permanent position opens up. The move could spell a bonanza for  contract workers as they could get an opportunity to join the regular workforce  with better wages and benefits. But companies - both private and state-run -  which are increasingly employing contract workers because the ease of hiring and  firing according to changing requirements, may see it as a hitch.
Fostering equality: Government may limit portion of contract workers in companies to 50%
The central government is the biggest purchaser of contract services: in  2012-13, it hired more than 20 lakh contract workers through nearly 43,000  licenced contractors. Prime Minister Narendra Modi's government has been pushing  key labour reforms to improve ease of doing business in India as well as enhance  the working and living standards of workers. But much of the reforms have been  termed as anti worker by labour unions, which on September 2 held a nationwide  strike to protest proposed labour policies.

The latest plan may find favour with the  unions, though they may still demand similar wages for workers on contract and  regular employment, and not minimum wages.

"No such proposal has come  to us yet but hiring fixed proportion of contract workers would certainly  restrict the misuse and exploitation of contract workers at the hands of the  employers," a central trade union representative said. One of the aims of the  new move, the labour ministry official said, is upgrading the skillsets of workers by linking part of  their increments to this.

According to the official, under the fresh  round of changes proposed to the Act, companies will have to provide a small  mandatory annual wage increase to contract workers. They will be entitled to a  major hike once in five years provided that they upgraded their skills to match  the levels of regular workers. "India is committed to move towards  regularisation of workers,  he said.

"Our effort is to provide a window of opportunity to the  contract workers to become regular by upgrading their skill and hence we are  mulling key changes to the Contract Labour (Regulation & Abolition) Act."  Owing to the flexibility of terminating the services of contract workers as well  as lower cost of employing them, companies generally hire more contract workers  than they need. The existing law cannot address the problems of contract  labourers since a mere  three lakh of the 80 million people on contract today are in the organised  sector. As a result, even the ambit of the Act is being widened to include  unorgaisned contract workers, who would be mandatorily hired through a staffing  agency. 

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