Wait for Legal Status may Get Longer for Contract Workers
Labour ministry reconsidering earlier decision to formalise contract workers, draft bill on hold
New Delhi: The government is re-examining its earlier decision to grant legal status to contract workers by amending the Contract Labour Act, potentially delaying the process of formalisation of a large section of the country’s workforce.
The development is likely to hit contract workers, who are often deprived of any social security benefits, besides staffing firms that are facing immense regulatory hurdles, thus slowing down the process of enhancing ease of doing business in the country.
Asenior government official told ET that the Bandaru Dattatreyaled labour ministry has gone back to the drawing board as far as regulating the appointment of contract workers is concerned and is thinking afresh on the issue.
“While the draft bill of 2015 has been put on hold, the ministry is evaluating options to regulate appointment of contract workers under one of the four codes now,” the official said, requesting anonymity. Both the government and the corporate sector employ a large number of contract workers. Contract labour accounts for 55% of public sector jobs and 45% of those in the private sector.
For more than two years, the labour ministry has been working on labour codes on wages, industrial relations, social security and welfare, and safety and working conditions to simplify, rationalise and amalgamate 44 labour laws into four labour codes.
The existing Contact Labour (Regulation & Abolition) Act denies adequate legal protection to contract workers and is seen as discouraging the formalisation of the labour force, thus depriving many employed in the informal sector of adequate safeguards.
Since 2015, the ministry along with various stakeholders has been considering various options to grant contract workers legal status, primarily the proposal to drop the word ‘abolition’ from the law and giving staffing firms a national licence.
Even a draft bill on the contract labour (regulation and abolition), 2015 had been put in place for stakeholder consultation.
The bill, which provided for a provision of licence besides defi-
For more than two years, the labour ministry has been working on labour codes on wages
Existing Contact Labour (Regulation & Abolition) Act denies adequate legal protection to contract workers
ning contractor and establishments to be covered under the Act, has now been put on the backburner after nearly two years of intense negotiations.
The number of contract labourers in the country is on the rise primarily because they can be paid less than permanent workers and the ease with which they can be sacked.
About 300,000 contract labourers out of an estimated 80 million are employed in the organised sector, depriving the vast majority of social security benefits Contract labour accounts for 55% of public sector, 45% of private sector jobs
as they are part of the unorganised sector.
Convention 181 of the International Labour Organisation (ILO) about private placement agency prescribes a tripartite relationship in contractual hiring. While India is one of the signatories of ILO, it is not among the big 42 countries that have ratified this convention.
ILO director general Guy Ryder on his recent visit to India said that the country needs to make efforts to create more “decent jobs” and formalise its workforce.