Referring to the surplus labouring population as a necessary product of capital accumulation, Marx in the classic essay on the “General Law of Capitalist Accumulation” said that “It forms a disposable industrial reserve army, that belongs to capital quite as absolutely as if the latter had bred it at its own cost.” He characterized this reserve army as a “mass of human material ready for exploitation”. Indeed this reserve army of labour exhibits itself in many forms such as the unemployed, the casual and contract labour force.

Employment of labour on contract in our country is not something new .This practice has been in vogue during the colonial period and extends to the present. The vast pool of contract labour force occupies a significant place in the structure of the working class in the country, more so, in the context of the growing contractualization of labour under conditions of imperialist globalization.

The Contract Labour System

During the British colonial rule, the colonial capitalist evolved ways to absorb labour on contract to work in their plantations and mills. Agents were at their disposal to bring masses of people to serve them as contract labourers who had no freedom and were treated as slaves. This system of employing labour through intermediaries evoked widespread condemnation that lead to the constitution of certain commissions to go into the issues of labour. The Royal Commission or the Whitley Commission merely noted the existence of intermediaries known as “jobbers” and recommended the dilution of the role of the jobbers. In 1946 there was another commission called the Rege Committee, which on the one hand talked of the need for engaging labour on contract and on the other recommended its abolition only where possible. Such commissions under British rule could do no more than the above, as British capital needed labour whose freedom could be restricted without hindrance. We had, therefore, thousands of people sweating it out in the plantations, jute, textile and in other factories as contract labour. The conditions of this segment of the working class did not change even after the transfer of power in 1947. In 1956, under Nehru, the Second Planning Commission called for progressive elimination of this system where possible.

The abolition of this archaic system was always linked to the issue of possibility which in turn left space for its continuation. Regulation of the working conditions of contract labour apparently took precedence over progressive elimination of the system. In 1969, the First National Labour Commission made recommendations for abolition of the contract labour system where possible and where this was not possible, to regulate it. It was in this backdrop that for the first time in the country an enactment was passed by the parliament that stands as the Contract Labour (Abolition and Regulation) Act, 1970. It should not be forgotten that the Act was preceded by a spate of struggles for better conditions of service by the workers during the colonial and post-colonial period. The sweepers of Calcutta, the plantation labour, the mill hands in Bombay, Calcutta, and Madras and in other places waged struggles for better working and living conditions.

Law of Abolition & Regulation—A Mirage

Thirty six years after the enactment of the law, the practice of employing labour on contract flourishes unhindered and has infact become a rule of business in the period of globalization. Forget the abolition part of the Act, even regulating the system has become a mirage with thousands and thousands of contract workers living in abysmal conditions and denied rights and facilities under the statute. The Act contains various welfare provisions like provision of canteen, rest room, first aid etc. as laid out in sections 16 to 19. It lays responsibility on the contractor for payment of wages under sec. 21 and in case of failure of the contractor to make payment in the prescribed time, it lays responsibility on the principal employer for payment of wages under 21(4). Section 12 makes it mandatory for a contractor to procure licence and sec. 12(1) prohibits the contractor from employing labour without licence. Contract workers are entitled to minimum wage, PF and ESI benefits. But all these remain on paper and are never implemented in practice. The burden of getting them implemented falls on the contract workers who by the position they occupy are always exposed to the risk of losing work. The enforcement agencies rarely take measures to get the provisions of the statute enforced. There are thousands of establishments, factories where contractors do not even fulfil the minimum requirement of possessing a licence, but nothing is done to check and punish such offenders. The failure of the governments in enforcing the statute is too well-known to need further elaboration. Suffice it to cite one instance which amply demonstrates this fact. There are several factories and establishments where contract workers doing work similar to that of regular workers do not get the same wage. Section 25(2) makes it clear that a contract worker who does the same work as that of a regular worker is entitled to same wages. We know how this principle is circumvented and the enforcement agencies are either mute witnesses to this violation or are hand in glove with the contractors. It is said that in the last thirty years of the enactment of the law, only 124 cases had been filed in this regard by the enforcement agencies. Moreover even if cases are booked the long litigation that is normally associated with the judicial system in the country goes to the disadvantage of the contract worker.

Thus the regulatory mechanism to ameliorate the conditions of contract labour has invariably been a casualty. On the other hand the abolition part of the statute has been a major issue of legal controversy and judicial interpretations. One of the issues was that upon abolition of contract labour in an establishment or factory, the contract labour stands displaced from work without the provision of absorption as regular worker or of alternate employment. This in effect meant the continuance of the system. Section 10 of the Act stands at the centre of various judicial pronouncements and interpretations. We do not intend to elaborate on the various variegated judgments on the subject here, but suffice it to say here that despite the existence of a regulatory and abolition Act, the system of contract labour is continually perpetuated.

Growing Trend of Contractualization of Labour

Despite the Act for regulation and abolition of the contract labour system, what we witness today is the growing trend in employing labour on contract in every branch of industry and service. Where, in a particular establishment or factory there were not many contract workers earlier, we see the growth of this segment in them now. Be it the public sector or the private sector, formal or informal sector, the policies of the rulers in the country under the umbrella of imperialist globalization have brought about drastic changes in the structure of the working class as production processes and service activities are transferred to non-permanent labour. The objective division in the working class structure in the country has deepened in the last twenty years with the increasing tendency to contractualize the labour force.

In the Singareni Collieries, one of the biggest state government enterprises in Andhra Pradesh, about fifteen years ago there used to be a regular workforce of around a lakh and sixteen thousand with just a sprinkle of contract workers. There are, today, around eighty thousand regular workers and over ten thousand contract workers. Downsizing the regular workforce and employment on contract obviously went hand in hand. Almost all the CPSUs in the country have taken recourse to employing contract labour in a big way while bundling out regular workers through VRS and other schemes. Private sector companies including the MNCs are steadily adopting non-permanent employment structures. In fact in many of the private sector units we find more number of contract workers than regular workers. The newly designated areas of EPZs or SEZs, the export enclaves under the NEP, occupy a distinct place in employing workers on contract.

Between 1992 and 2002, the percentage of contract workers to regular workers in the manufacturing sector has risen from 12% to 23%. It is estimated that in a state like Andhra Pradesh, where the mantra of economic reforms under the tutelage of the World Bank was in full steam, the percentage rose from 40 in 1990 to 63 in 2002. In the services sector too we find this growing pattern of employing contract labour. From transport, security, hotels to clerical and teaching staff this trend is discernible.

A new feature that has come up in the last fifteen years under the NEP is employment under a Fixed Term Contract (FTC). Many of the service establishments and manufacturing units are employing labour under this label. The government of India had issued a notification in 2003 incorporating FTC in the industrial standing orders thus giving legitimacy for such a contractual labour employment system. How well are the rulers orchestrating their policies at the behest of capital, foreign capital at that, to fashion the labour market in a way that capital demands. Contractualization of labour is one means to realize this flexibility.

Capital has been making a lot of noise about the existence of protective and restrictive laws in the country and seeking changes in them though these laws have never really affected it. Yet with the process of liberalization in the country, it sought the removal of even the formal or marginal barriers in labour laws. It is in this context we see changes in labour laws in the country and in the last decade several states have issued directions to dilute the enforcement of these laws to the advantage of capital. AP, UP, Rajasthan issued orders restricting inspections by labour officers and gave exemptions to many establishments and factories from labour laws. Infact, the erstwhile Government of AP issued GOs giving blanket exemptions from laws such as the CL (A&R) Act. It went one step further when it amended the Act by completely deleting Sections 3 and 10.

It is in this scenario of non-permanent, contractual employment structures that the process of unionization is becoming a challenge to the trade union movement at large. This challenge needs to be countered effectively for which revolutionary trade union organizations in the country need to evolve a coherent strategy of continuous campaign and agitation.