Business Today

Labouring for change

Suman Layak        Print Edition: Feb 17, 2013

Naushad Forbes, Director at Forbes Marshall, says the Pune-based engineering company has changed its attitude towards workers employed on contract. "Instead of thinking about how much they cost, we look at their productivity," says Forbes.

"We found many contract workers were as productive as our permanent workers. Our outlook on their training and skill development has changed."

Forbes Marshall is one of many companies that are beginning to view contract workers in a different light. Contract workers, hired through labour contractors, are often poorly skilled and get paid less than regular employees for the same work, leading to resentment among these workers .

Industry-wide efforts have now started to improve the situation, particularly in the wake of the violence at car maker Maruti Suzuki's Manesar factory last July when one senior executive was killed and several injured after workers went on a rampage.

Companies prefer having part of their workforce on contract to retain the flexibility to adjust to business cycles and also to save costs they would have to incur on permanent staff. "During the lean period we need only 40 per cent of the people we need during the peak," says Pradeep Bhargava, Executive Director at Cummins India. The Pune-based engineering company provides canteen facilities, uniforms, protective equipment, and accident insurance to its contract workers.

Maruti, which terminated pacts with labour contractors at the Manesar plant, now hires workers directly. It had 1,869 contract workers in Manesar last year. Since October, it has hired about 1,500 temporary workers, or temps, in place of contract workers. The temps account for 40 per cent of the total workforce at the factory. They get salaries comparable to entry-level permanent employees (around Rs 37,800 per month). But their tenure is subject to market conditions.

"Temps who have worked with us will be given priority whenever we re-hire people during the peak season. Some temps are offered permanent jobs," says a Maruti executive.

Bhargava, also the chairman of the Confederation of Indian Industry's western regional council, is spearheading a CII pilot project which is targeting an improvement in the lot of contract workers. Tata Steel Vice Chairman B. Muthuraman and Rajeev Dubey, who heads human resources at Mahindra & Mahindra Group, are also part of the initiative. Other companies that are supporting the move include consumer goods maker Hindustan Unilever, and engineering companies Larsen & Toubro, Godrej & Boyce, and Thermax.

The pilot project aims to lay down some ground rules for the industry regarding the employment of contract workers. The first task is to determine how many perennial jobs are required in companies across sectors. "If you need 70 workers at all times and 100 at the peak, then you should not employ more than 30 contract workers," says Bhargava. The initiative also aims to reach a consensus among companies on wages for contract workers. It says that contract workers should be paid around 60-70 per cent of the wages of an entry-level permanent worker. The third goal is to provide uniforms, protection equipment, subsidised food and accident insurance to all employees.

The Employers' Federation of India (EFI), a nodal committee of employers, launched a similar initiative in October. The initiative aims to create a workplace that is "competitive, fair and inclusive" for contract workers. The EFI includes representatives from CII, Assocham, and the Federation of Indian Chambers of Commerce and Industry. It also includes representatives from the Standing Conference of Public Enterprises, an association of state-run companies. "It is a 20-member discussion group right now. We will bring trade union leaders on board later," says Dubey, EFI's President. "The goal is to come up with recommendations that the government as well as industry can implement."

Still, there is a long way to go before common ground is found. "All contract workers should be gradually made permanent," says Gurudas Dasgupta, Member of Parliament and General Secretary of the All India Trade Union Congress. "Companies are trying to use more contract workers to keep costs low and rake in super-profits."

Additional reporting by Manu Kaushik

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