In order to surpass the stringent labour regulations, the industry sector in India is largely resorting to contract labourers, who are governed by the "Contract Labour Regulation and Abolition Act of 1970". A primary survey carried out in Karnataka reveals that many of the stipulations made in the Act to safeguard contract labourers are not followed in practice. It has also been felt by the workers that collusive agreement between the labour inspector, the protector of law, and the principal employer (or the contractor) has aided the violation of law. This paper discusses some of the survey findings and formulates a game theoretic model to show why it is economically optimal to collude. It also examines theoretically whether any provision of reward for the labour inspector would help to protect the law.
PurposeThe purpose of this paper is to understand the status of a class of non‐permanent labour in the globalised era in India.Design/methodology/approachTo understand this the paper uses both secondary level information and primary data collected through a survey. Secondary level data are analysed using a panel data model. Here, the hypothesis is: contribution of contract labour to production is greater than that of the regular employees. The primary level survey is conducted to know whether they are exploited due to their non‐permanent stature.FindingsIt is observed from secondary data analysis that the hypothesis is not rejected. Contract labour makes a significant contribution to production, while the regular employees do not. Primary survey also shows that they are exploited in many ways including through non‐payment of minimum wages.Practical implicationsThe paper indicates that, while regulations are in place, they are abused and hence it is the implementation part on which government needs to focus.Originality/valueAnalysis shows how rationalization of employment does not take place due to labour regulations for the regular employees. It also brings to light through primary survey various lacunae in the implementation of the Contract Labour Act. Since survey of such labour class is difficult there are limited studies in this field.
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