Jaivir Singh (Jawaharlal Nehru University), ‘Law, Skills and the Creation of Jobs as “Contract” Work in India’

This is the fifth instalment of the semester two seminar series organised by the Department of Political Economy at the University of Sydney.

Date and Location

Thursday 6 October 2016, Darlington Centre Boardroom, 4.00pm-5.30pm

Contact

Gareth Bryant, gareth.bryant@sydney.edu.au

Abstract

There is a large literature (and policy suggestions drawing from this discussion) that states that Indian labour laws stifle employment and output. There is however, some cause to take a more nuanced view of the problems generated by the labour laws. It is of course true that while these stringent laws cover regular workers, sizeable sections of the workforce working in the formal manufacturing sector are not subject to the labour laws. Over the last decade or so there has been a change in the law – in that the Indian Supreme Court has interpreted legislation governing contract labour (labour not directly employed but through a labour contractor, referred to in other parts of the world as agency work) to say that employers have no obligation to offer regular terms of employment to contract labour.  This has resulted in an expansion in the employment of this category of labour and a jump in the numbers of ‘contract labour’ can be dated from the judgment. The paper throws up the question as to whether this is an appropriate direction for labour law reform. In this context we invoke the incomplete contracts framework to approach the problem, particularly because the analysis is sensitive not just to employment expansion but incorporates questions of skill.Broadly following these motivations the paper is divided into four parts. In the first part we review the changes in law that have enabled the large-scale use of contract labour, and the questions that this form of employment generates. We go on to describe some of the recent attempts by some Indian states to change labour laws in a manner that leads to lower legal coverage of the workforce. We also note the explicit attempts made by recent legislation to change section of the Apprentice Act to encourage the growth of skills among the labour force. In the second part we use information gathered from a survey of manufacturing firms from Haryana, alongside with some qualitative (case study) information to make inferences on the use of contract labour, skills and investment in the job by workers. In the third part of we outline the broad theoretical thinking behind the incomplete contract model particularly as it pertains to important questions raised in relation to labour market and follow it up with suggestions for meaningful labour law reform that enhance the productive relationship between employer and employee.

All welcome!