Contractual Labour in India
Indian Economy
- PYQs5
- Articles1
Background
UPSC cares about contractual labour due to its significant implications for labour rights, social security, economic inequality, and industrial relations. It's a critical aspect of India's informal economy and labour market dynamics, impacting a large segment of the workforce.
Contractual labour refers to workers employed by a contractor to perform work for a principal employer, often on a temporary or project-specific basis. In India, the Contract Labour (Regulation and Abolition) Act, 1970, and subsequently the Labour Codes, govern the employment of contract labour, aiming to regulate their working conditions and prevent exploitation.
Facts & tables
- Higher Risks
- Contracted workers consistently face higher occupational safety risks compared to permanent employees.
- Causes of Vulnerability
- Reasons include less training, fragmented accountability between the contractor and principal employer, and often being deployed in hazardous roles.
- Central to Accidents
- The prevalence and conditions of contract labour are central to understanding the recurrence of industrial accidents in India.
- Economic Context
- Increased dependence on contractual labour is often linked to cost-cutting measures and financial stress in industrial units, sometimes exacerbated by economic policies like divestment.
| Type | Reference |
|---|---|
| Conceptual area | Labor & Demographic Economics |
| Conceptual area | Welfare Schemes & Social Policies |
| Body | Role |
|---|---|
| Ministry of Labour and Employment | Regulates contract labour through legislation and policy formulation |
| Labour Courts/Industrial Tribunals | Adjudicate disputes related to contract labour and enforce labour laws |
Prelims angle
Prelims angle: Multi-statement analysis
Prelims angle: Factual recall
- Workers employed via contractor for a principal employer.
- Face higher safety risks due to less training and fragmented accountability.
- A central factor in understanding industrial accidents.
- Governed by specific labour laws (e.g., Contract Labour Act, Labour Codes).
- Implications for labour rights, social security, and economic inequality.
| Year | Framing tags |
|---|---|
| 2022 | Factual recall, Institutional roles and functions |
| 2021 | Multi-statement analysis, Factual recall |
| 2020 | Multi-statement analysis, Conceptual understanding |
| 2019 | Statement-based questions, Conceptual understanding |
| 2018 | Factual recall, Conceptual understanding |
Timeline
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Labor & Demographic Economics
Conceptual area
-
Welfare Schemes & Social Policies
Conceptual area
-
Prelims 2018
Factual recall, Conceptual understanding
-
Prelims 2019
Statement-based questions, Conceptual understanding
-
Prelims 2020
Multi-statement analysis, Conceptual understanding
-
Prelims 2021
Multi-statement analysis, Factual recall
-
Prelims 2022
Factual recall, Institutional roles and functions
-
Foreseeable accidents: On the recent industrial accidents in India
Contractual labour in India, while offering flexibility to employers, often leads to precarious working conditions, higher safety risks, and limited social security for workers due to fragmented accountability and inadequate training, contributing to industrial accidents.
See also
Past papers
2018–2022 · 5 questions
In the news
Foreseeable accidents: On the recent industrial accidents in India
Contractual labour in India, while offering flexibility to employers, often leads to precarious working conditions, higher safety risks, and limited social security for workers due to fragmented accountability and inadequate training, contributing to industrial accidents.
Try these PYQs
With reference to the casual workers employed in India, consider the following statements:
1. All casual workers are entitled for Employees Provident Fund coverage.
2. All casual workers are entitled for regular working hours and overtime payment.
3. The government can by a notification specify that an establishment or industry shall pay wages only through its bank account.
Which of the above statements are correct?
Statement 1 is not correct: The Government had launched a scheme viz Casual Labourers (Grant of Temporary Status and Regularization) Scheme of Government of India, 1993. As per the scheme, Temporary status would be conferred on all casual labourers who were in employment and who have rendered a continuous service of at least one year, which means that they must have been engaged for at least 240 days (206 days in case of offices observing 5 days week). Statement 2 is correct: The Supreme Court has decreed that casual workers are also entitled to social security benefits as stipulated in the Employees Provident Funds and Miscellaneous Provisions Act. The Court's ruling stemmed from its interpretation of Section 2(f) of the EPF Act, wherein the definition of an "employee" encompasses a broad scope, including any individual engaged directly or indirectly in connection with an establishment's work and receiving wages. A bench of the Supreme Court affirmed this viewpoint. Statement 3 is correct: The government has the authority to specify through a notification that an establishment or industry is obligated to disburse wages exclusively via its bank account.
Consider the following statements :
As per the Industrial Employment (Standing Orders) Central (Amendment) Rules, 2018
1. if rules for fixed-term employment are implemented, it becomes easier for the firms/companies to lay off workers
2. no notice of termination of employment shall be necessary in the case of temporary workman
Which of the statements given above is/are correct?
Statement 1 is correct: Fixed-term employment and ease of layoff. The amendment introduces the concept of "fixed-term employment" for the first place. While it doesn't automatically make layoffs easier, it allows companies to hire for specific projects or periods without them becoming permanent employees. This can potentially make restructuring or downsizing during economic downturns easier for companies with fixed-term employees compared to permanent ones (who have greater job security). Statement 2 is correct: Notice period for temporary workmen.
The amendment clarifies that no notice period is required to terminate the employment of a "temporary workman," which is someone hired for a specific, non-continuous job or for a short period.
In India, which one of the following compiles information on industrial disputes, closures, retrenchments and lay-offs in factories employing workers?
In India, the primary agency responsible for compiling information on industrial disputes, closures, retrenchments, and lay-offs in factories employing workers is the Labour Bureau The Labour Bureau is an attached office of the Ministry of Labour and Employment, Government of India. It plays a crucial role in collecting, compiling, and disseminating labor statistics across various aspects, including industrial relations.
With reference of the Indian economy after the 1991 economic liberalization, consider the following statements:
1. Worker productivity (per worker at 2004-05 prices) increased in urban areas while it decreased in rural areas.
2. The percentage share of rural areas in the workforce steadily increased.
3. In rural areas, the growth in non-farm economy increased.
4. The growth rate in rural employment decreased.
Which of the statements given above is/are correct?
Statement 1 is incorrect. After the 1991 economic liberalization, worker productivity increased both in urban and rural areas. While urban areas experienced higher growth, rural areas also saw improvements, especially with the rise in non-farm activities. Statement 2 is incorrect. The percentage share of rural areas in the workforce has steadily decreased since liberalization. This is because more people have moved to urban areas for employment in the industrial and service sectors, contributing to the growing urban workforce. Statement 3 is correct. In rural areas, the growth of the non-farm economy increased significantly. With liberalization, the diversification of rural economies into sectors like manufacturing, construction, and services grew, reducing the dependency on agriculture. Statement 4 is correct. The growth rate in rural employment decreased after 1991. While the rural economy diversified, the agricultural sector did not provide enough employment opportunities to absorb all the labor, leading to lower growth in rural employment. Hence, option B is the correct answer.
International Labour Organization's Conventions 138 and 182 are related to -
The International Labour Organization's Conventions 138 and 182 are both related to child labour. Convention No. 138 is the Minimum Age Convention. It requires member countries to set a minimum age for employment and work towards the elimination of child labour. Convention No. 182 deals with the Worst Forms of Child Labour. It calls for the prohibition and elimination of the most severe forms of child labour, such as slavery, forced labour, and trafficking. These conventions are considered fundamental by the ILO, meaning all member states must respect, promote, and work towards their aims regardless of ratification.