Factors influencing the decision to hire contract labour by Indian manufacturing firms

Singh, Jaivir; Das, Deb Kusum; Kumar, Abhishek; Kukreja, Prateek

doi:10.1080/13600818.2019.1624705

Cited by 16 publications

(25 citation statements)

References 17 publications

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“…Similarly, Bhattacharya et al (2011) find that the rigid labor market in India hinders the multinationals from operating in the labor-intensive production process, compared to countries like China and the Philippines. This school of thought also claims that strict labor regulations increase labor substitution with capital or contractual workers (Singh et al, 2019;Hasan et al, 2021). However, some scholars oppose this strand of thought by arguing that the labor regulations could not be held responsible for the Indian economy's sluggish output and employment growth because of non-compliance or weak enforcement of laws (Chatterjee and Kanbur, 2015) and lower applicability to less than 35% of aggregate manufacturing employment (Roychowdhury, 2019).…”

Section: Theoretical Priors and Literature Backgroundmentioning

confidence: 99%

“…(2011) find that the rigid labor market in India hinders the multinationals from operating in the labor-intensive production process, compared to countries like China and the Philippines. This school of thought also claims that strict labor regulations increase labor substitution with capital or contractual workers (Singh et al. , 2019; Hasan et al.…”

Section: Theoretical Priors and Literature Backgroundmentioning

confidence: 99%

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Productivity and job reallocation: evidence from the Indian manufacturing

Goswami

2022

IJM

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PurposeThis study aims to examine the association between productivity growth and job reallocation in terms of job creation and job destruction. It also finds this productivity employment relationship for heterogeneous labor market institutions of the Indian states.Design/methodology/approachThe paper uses longitudinal data of the Annual Survey of Industries of Indian manufacturing from 2009–2010 to 2015–2016 and employs fixed-effect multinomial logistic regression.FindingsThe paper finds a mixed result of total factor productivity (TFP) increase on employment. An increase in TFP is positively associated with employment by reducing the probability of destroying jobs, while adversely associated with employment by reducing the probability of creating jobs. The negative association of the increase in TFP on employment is more in the Indian states with strict labor regulations.Research limitations/implicationsThe relationship between TFP and employment can be endogenous. TFP is calculated as output changes that are not explained by inputs, capital and labor. So, job creation/destruction may affect TFP by changing the composition of employment and/or returns on labor/capital. In addition, this study is only restricted to Indian organized manufacturing.Practical implicationsThe results from this study help deeply understand the Indian labor market. In particular, it provides valuable insights into the “jobless growth” in Indian manufacturing and the recent changes in labor laws.Social implicationsThe findings from this study provide useful information to enhance the robust growth of productive jobs and efficient reallocation of labor.Originality/valueUnlike most papers, which analyzed the relationship between productivity growth and net employment changes, the present paper finds the relationship between improvement in productivity and job reallocation in terms of simultaneous creation of new jobs and destruction of existing jobs. In addition, the paper links this relationship with the existing heterogeneous labor laws of the Indian states.

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Section: Theoretical Priors and Literature Backgroundmentioning

confidence: 99%

Section: Theoretical Priors and Literature Backgroundmentioning

confidence: 99%

Productivity and job reallocation: evidence from the Indian manufacturing

Goswami

2022

IJM

View full text Add to dashboard Cite

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“…Though the verdict was given for such workers who are hired in government enterprises, it highlights how labour is treated through the lens of 'a two-tier caste system of regular and contract workers' in both private and public sectors (Sampath, 2016). Singh et al (2019) argue that even though engaging contract labour could bring immediate cost advantages to any establishment, employers usually opt for regular workers wherever labour is considered crucial for production. The reason is that regular workers have a long-term relationship with their employer-establishment.…”

Section: Analysis Of the Judicial Approach Vis-à-vis Statutory Provisionsmentioning

confidence: 99%

Engaging Contract Labour: Learnings from Landmark Judgements

Mitra

Ghosh

2021

Management and Labour Studies

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Despite debates on its hiring, contract labour is a growing form of employment in India. Establishments usually maintain a workforce composition of both regular workers and contract labour for optimizing their available resources and ensuring financial prudence. However, in the process, they often get embroiled in compliance issues related to regularization and ‘equal pay for equal work’ in the context of contract labour. In this article, we have explored the different judicial interpretations of the Contract Labour (Regulation and Abolition) Act, 1970, on contract labour. For this, we have referred to the landmark judgements passed by the Supreme Court of India on the deployment and regularization of contract labour, and also their entitlement to equal pay for equal work. A scrutiny of these judgements directs us to advise establishments to avoid engaging contract labour in their core and perennial activities. Considering the statutory provisions and the possible legal complications, we have recommended some measures to establishments to mitigate the underlying risks in deploying contract labour alongside regular workforce in similar kinds of jobs or activities. We propose that the legislative framework grants flexibility to industries to generate employment to contract labour, without compromising on the rights of these workers.

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“…Hasan, Mehta, and Sundaram (2020) find that producers in pro-worker states replace labor with capital. Firms use contractual or fixed-term workers for many reasons (Singh, Das, Abhishek, and Kukreja 2019). Some of the reasons are; to reduce the high labor cost (Sapkal 2016;Basu, Chau, and Soundararajan 2018), reduce the bargaining power of the permanent workers (Saha, Sen, and Maiti 2013), stay away from the legal establishment size threshold of 100 workers (Ramaswamy 2013a;Ramaswamy 2013b), increase flexibility as the employers are free to hire and fire the contract workers (Srivastava 2016), deal with temporary shocks (Chaurey 2015), and many more.…”

Section: I) Direct Adverse Impact Of the Strict Labor Regulation On P...mentioning

confidence: 99%

“…However, the use of a contract worker has its demerits. As it is an 'incomplete contract', the workers' underinvest in specific skills (Singh, Das, Abhishek, and Kukreja 2019;Singh, Das, Kukreja, and Abhishek 2017).…”

Section: I) Direct Adverse Impact Of the Strict Labor Regulation On P...mentioning

confidence: 99%