Contractorization of labour and the fight against it


Contractorization of work has fallen like a curse upon the Indian proletariat. The trend in Indian capitalism has been to make work more and more precarious in order to more thoroughly exploit the working class. Contractorization is being more and more preferred as a medium of employment as it blurs the lines of employment responsibility and helps capitalists escape legal compulsions towards their workforce. It promotes abuses like arbitrary retrenchments, non-payment of minimum wages, and denial of welfare measures which are the right of the workers. But this has not been unanswered and without opposition.

With the spread of contractorization of work, there has been has given rise to a movement against this. A trend of struggle against contractorization has emerged emerged which has seen more and more trade unions playing a proactive role in regularizing contract workers. The aim being fought for is for the total abolition of the contract worker system. It is important to note that despite the existence of a legal framework in force, in the form of the Contract workers, (regulation and abolition) Act 1970, and the Contract Labour (regulation and abolition) Central Rules 1971, abuses on contract workers still persist. As in many similar cases, legislation of this kind serves more as a fig leaf than any real protection.

A brief overview of some important struggles :

Contract workers throughout the country are mobilizing against unfair and exploitative treatment at the hands of their employers. Some have achieved notable victories, as was the case with the BSNL contract workers at Kerala. An indefinite strike was started by contract and temporary workers in Kerala from 12th of August with demands for wage revisions and implementation of ESIEmployees Social Insurance (ESI) and EPFEmployees Provident Fund (EPF) which resulted in a comprehensive agreement. The agreement guarantees :

1. The employees engaged for Cable/Line maintenance will be paid @ Rs.258/- + DA


2. All other workers will be paid @ Rs.236/-+DA


3. EPF and ESI will be implemented.


4. Work less than 4 hours will be treated as part time and ESI & EPF will be implemented.

5. Payment of bonus will be considered and provision will be included in the tender.

6. ID card certified by BSNL officer will be issued.

7. The system of Work Contract will not be implemented at present.

This was a notable victory of contract workers in BSNL’s Kerela SSA and a model which can be followed in other circles.

Similar struggles had been initiated out in Goa last year where around 350 contract workers went on strike for regularization of jobs. This was after the local management had assured the workers of guaranteeing they would guarantee them statutory welfare measures like leave, weekly off, holidays, overtime, bonus and a wage revision. Reports from Karnataka show similar mass mobilizations, with a 1,000 contract and casual workers agitating for regularization. The demands include payment of minimum wage, implementation of social security measures like EPF and ESI, and reinstatement of retrenched workers. While the treatment of contract workers fares is better in public sector companies owing to better accountability, abuses do take place even here. The scene in the private sector however, is decidedly worse, where even token regard to labor laws is absent. This difference in public and democratic political accountability is a huge benefit of nationalization even under capitalist conditions with a bourgeois ruling class.

One of the most intense struggles involving contract workers, thus far has been seen in Maruti Suzuki where a major portion large number of arbitrarily retrenched workers have been contract workers. What began as a strike against unjust and unfair labor practices in Maruti has transformed into a movement which has shaken shaking the confidence of the bourgeoisie everywhere in the country. An unprecedented rolling strike took place and the protest movement continues. Among the major issues in this mobilization has presented before us is the point of is precisely the job security of contract workers. And as always, throughout the struggle the state machinery has shown itself to be decisively in favor of corporate interests over worker’s interests.

The bourgeoisie aims to pauperize, fragment and weaken the working class everywhere, and contractorization has been among one of the best ways to achieved this. The ambition of Indian capital to attain global standing has only exacerbated this in the name of ‘growth and development’. But this is not without there is, as always, resistance. The struggles occurring both in the private and public sector shows show us this. However, in most cases these are piecemeal efforts aimed with very defensively aims and with a very empirical perspective in place. Good as they may be, they do not overturn the system of pauperization in place which puts systematic pressure to pauperize the working class in the whole nation. However, past struggles of workers have given us a good foundation to fight on. This is best reflected in the welfare measures which the different governments in power have been forced to make concede. And the struggles have led to a legal framework for regulating and abolishing contract work.

The legal framework in place :

The key piece of legislation on the question of contract workers is the Contract Labour regulation and abolition Act of 1970. The Act was instituted in a period of heightened class struggle and in a time when contractorization of work was only a nascent phenomenon. Though this act, as well as the central rules framed in 1971, were meant to provide relief against arbitrary and exploitative practices of employers against contract workers, and to this effect regulate (and in some cases abolish) the system of contract work, in reality, this has proven to be a red herring. The good intentions have proved to be a mirage.

The continuing exploitation of contract workers as seen from examples above, show that the laws in force are not only inadequate but are poorly implemented. Among the most glaring inadequacies present in of both the aAct and the Rules, is the ambiguity on responsibility of payments and the the non-admission of liability of the principal employer. A huge loophole has been left out which has encouraged the worst abuses of contract work, in the ambiguity on responsibility for ensuring wages and facilities for contract workers. As per Sections 20 and 21 of the Act, the first responsibility for ensuring payment of wages is given to the contractor rather than the principal employer. The Principal Employer assumes responsibility only in the event that the contractor fails to meet his obligations. More often than not, the principal employer jettisons responsibility for the contract worker entirely.

The Act also provides for a regulating mechanism in the appointment of duly authorized representatives. This is sorely inadequate in achieving its target, in the objective of ensuring due payment at the hands by the contractor. In absence of a strong mechanism to compel the payment of wages to contract workers, the abuses remain unchecked.

Among the biggest inadequacies however, and possibly its greatest weakness is that it doesn’t apply to workers of the unorganized sector. The act has explicitly stated that it only applies to establishments employing more than 20 workers. This provides a very easy loophole has been left out where the employer and contractor can avoid the obligations imposed by this enactment their legal obligations by simply dividing the factory or office establishment.

However, as a welcome respite the judiciary has occasionally stepped in to provide some relief and bring about clarity in the laws. Notably, the Supreme Court in the cases of Standard Vacuum vs their workmen (1960IILJ) wherein, contract labor was forbidden in four areas of work were debarred from employment of contract workers :

Where work is of a perennial nature and goes on from day to day.;

The work is incidental to and necessary to the work of the factory.:

Where it is sufficient to employ a number of permanent workmen.;

Where most of the work is being done through regular workmen.

Thus far, this has been among the most significant judgments dealing with contract workers and has expanded the ambit of exclusion of contract work.

Similarly important judgments include the case of Gujarat State Electricity Board vs Union of India and Air india Statutory Corporation Ltd vs. United Labour Union & others. These however, deal with the question of absorption of contract workers in cases where contract work is abolished. The first judgment held that the Act should be amended by incorporating a suitable provision for an industrial arbitrator in cases where contract work is abolished, while the second deals with an employer’s liability for absorbing contract workers. The former decision was never acted upon by the government and no such amendment has been made till date, while the latter judgment was prospectively was overruled. The employer, it was held, could not be automatically compelled to absorb the contract workers. If anything these The fate of these judgments in favor of the workers’ interests plainly show the limitations of the judiciary when it comes to guaranteeing and enforcing laws intended to help the workers.

All in all however, the long term aim of abolishing contract work and bringing about a full regularization of workforce remains untouched by the legal framework in place. Even in its aims of providing relief to contract workers from the prolific abuses the legislations in place fall shorts on many grounds. The Judiciary is bound in by its own institutional framework has in the bourgeois system, and has very limited scope to go beyond the legislative frameworks in place advance the interests of the workers in their contradictions with the capitalists. Despite the occasional respite given, the scenario on the whole remains dire and shows that a long and concerted struggle is needed to ensure even the most basic needs of the workers.

The direction of struggle, towards a campaign for abolition of contract work :

As is the case with most labor laws and welfare measures in place, they are paid scant regard by capitalists and are often reduced to mere letters. The case with laws on contract labour is no different. While we must take advantage of every opportunity these concessions have given give us, empowering us in the task of organizing contract workers, we must not have any illusions. Our aim is the full abolition of contract work and a framework ensuring job security and a guarantee of welfare for all. This To achieve this aim requires a united struggle embracing all contract workers across the nation. What is more, the solidarity between contract workers and regular workers is indispensable for a strong movement to emerge.

The position of the contract worker is one facing double exploitation. On the one hand the worker is exploited as insecure and easily exploitable workforce coerced labour by the principal employer while on the other hand he is exploited by a parasitical middle man in the form of the contractor. The contractor controls an important supply of labor within his enterprise and pockets the surplus through both from the literal sale of the laborer to the company as well as from the denial of statutory guarantees to the worker.

But it must not be forgotten that in a bourgeois democracy exploitation is accompanied by concessions whose scale depends very much on the vigor of working class action and the vision of its leadership. The Labour legislation, though inadequate, gives enough scope to mount a legal and open challenge against the worst aspects of the contractorization system. Demanding all those benefits guaranteed by law while preparing the ground for expanding fighting to expand the welfare that can be accorded of the working class by improving its living conditions and share of the national wealth is the crucial dialectic of our approach to the everyday struggle for a decent life under capitalism. This in turn must aim at the complete abolition of the contractorization system while making the conditions of work for contract workers in the present situation as good as possible.

Our ultimate goal, it goes without saying, is to abolish the economic system which thrives on these injustices and takes advantage of unemployment and insecurity to damage people’s lives. A modern society based on human values and mutually beneficial relations between all its members has nothing in common with our present-day capitalist societies. These are shot through with greed, corruption, brutality and a callous disregard for human life and well-being. They are reaching the end of their historical tether, and we are only too willing to cut it for them and put them out to pasture, like retired wild beasts who have spent a lifetime breaking the bones and eating the flesh of gladiators.

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