By Anibel-Ferus Comelo

At the end of September, a group of about 25 young workers at a well-known transnational company in south India were individually informed that they need not return to work as their services were being terminated. All of them had worked at the company for longer than a year; one had worked there for six years. From one day to the next, these young people, part of a casual ‘permatemp’ workforce, had no idea how they would make ends meet for themselves and their families.

This is the story of a ‘disposable’ workforce that bears the brunt of the great Indian growth narrative promoted to draw global capital.

The high-tech industry reflects – or perhaps is pioneering – a two-tiered system that is one of the most insidious global trends in employment.

It is no different from the story that is unfolding in many sectors of the economy in different parts of the world. For example, the high-tech industry reflects – or perhaps is pioneering – a two-tiered system that is one of the most insidious global trends in employment. On the one hand there is standard, salaried employment with social-security protection; on the other, casual or contract work that keeps workers economically insecure and with limited or no prospects for upward mobility.

Menial employment

India is banking on its demographic dividend: Approximately 60 per cent of its population falls into the working-age bracket (15 to 59 years). Displaced from the traditional occupations of their parents, young workers with technical training are flocking to industrial hubs, looking for succour in factories. Their perception of what a ‘good’ job is, places transnationals at the top of the list of companies they want to work for. And being first-generation industrial workers, they have little idea about employment law or the standards of quality employment.

First-generation labourers prefer contractual work in large companies

Companies exploit the fact that workers aren’t educated enough to understand terms of the contract or their rights | Photo Courtesy – HypeScience

Workers who are hired on a contract basis soon find out that ‘contract’ is just theoretical nomenclature, because often there are no written contracts at all, just verbal agreements followed by work instructions. Even in the case of paper contracts, jobs are limited to fewer than 240 days, the legal limit after which casual employment is required to be ‘regularized’. To circumvent this law, labour agencies give casual workers a ‘break in service’ before re-hiring them for the same work at the same company on a new contract. This way, workers remain on the job for years, doing the same work as regular employees but without the same pay, benefits or labour rights.

Labour: a cost, not a resource

But the bottom line for preference to contractual employment is simply that the profit margins need to rise regardless of the human cost.

There are many reasons given for the employment of workers on a casual basis. Each industry, whether in the manufacturing or service sector, claims that it is due to the fluctuations in orders, the unpredictability of business growth, the need for numerical flexibility in staffing and so on. But the bottom line is simply that the profit margins need to rise regardless of the human cost. And being a responsible employer is not reward enough in a cut-throat business environment.

An important consideration for brands and manufacturers alike is the labour cost – savings that can be accrued from hiring workers on a casual basis. Salaries that regular employees receive are at the legally mandated minimum wage but, by wide consensus, are far below a living wage. Contract workers are paid sub-minimum wages for doing the same work as their regular co-workers.

Yet it is not only labour costs but also the easy hire-fire option that makes the reliance on contract labour so attractive. When third-party intermediaries are given charge of recruitment, screening and administrating a large proportion of the workforce, the real employer can wash their hands of any moral or legal responsibility for their workers. Transnationals typically hire workers through multiple agencies, which means that workers who share the same production space may have different employers of record. Herein lies the most insidious effect of the entrenched contract-labour system.

Violation of labour rights

In effect, contractual workers are fragmented into vulnerable individuals without genuine recourse to the law or any grievance mechanism.

Contractual employment erodes every worker’s fundamental right to organize and to freedom of association – core human rights at work, according to the International Labour Organization (ILO). In effect, workers are fragmented into vulnerable individuals without genuine recourse to the law or any grievance mechanism. Although it is rare for contract workers’ jobs to be regularized, this prospect serves as a shrewd form of labour control, keeping contract workers pliable and opening up space for alarming degrees of shop-floor abuse.

Unrealistic work targets and unsafe working conditions with exposure to noise, heat, dust, toxic substances and faulty machinery – all inexcusable in the 21st century – are commonplace for contract workers. The fear of losing the only source of livelihood for their families keeps workers from complaining or from refusing to do whatever is asked of them. Women, in particular, become easy targets of sexual harassment and tend to be concentrated in extremely short-term jobs until they drop out of the labour market altogether due to family pressures.

Union representation of the regular employees translates into negligible labour power when a large proportion of the workforce is in a precarious situation and, therefore, unable to exercise their right to collective bargaining. It is no wonder that the Indian Supreme Court ruled recently that contractual employment is exploitative enslavement and a violation of human dignity. Challenging it by all means necessary is the most pressing need facing the global labour movement.


This article was first published on  New Internationalist
Featured Photo Source: IndiaMart
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Posted by The Indian Economist