by Dr. Das, Joint Secretary, Kamgar Ekta Committee
In the last few months, contract workers in different sectors and parts of the country have organized massive protests—from refinery workers at Indian Oil Corporation Limited and steel plant workers of ArcelorMittal to industrial workers in Noida and Gurgaon. Over the past few years, the share of contract labour in Indian industries has skyrocketed. In most of the industries, more than half the workforce is employed on contract basis. Contract workers are denied every right which they should have as workers. The new labour laws have made the situation worse. It is very clear for us that the capitalist class is benefiting from this while the working class is suffering. Regularisation of contract workers is a long standing demand of the working class.
The data from the Annual Survey of Industries (ASI), released on 27 August 2025, revealed a significant increase in the use of contract labour in India’s organised manufacturing sector. In 2023–24, contract workers made up 42% of the total workforce, compared to about 20% in 1999–2000. This indicates a consistent rise over the past 23 years. Between 2002–03 and 2021–22, the number of contract workers surged by 292.9%, while direct employment increased by only 72.3%.
The use of contract labour has increased across all sectors of the economy – including automobile production, construction, mining, telecommunications, energy, utilities, retail, and service sectors such as IT, IT-enabled services (ITES), BPOs, healthcare, and education. Major companies like TCS, Infosys, Wipro, and Accenture widely employ contract labour in IT and ITES, while large retail firms such as Reliance Retail, Titan, Raymond, and Spencers also rely heavily on such arrangements. In many multinational corporations, contract workers constitute more than half of the workforce.
The effect of increasing use of contract worker is tht very few members of the next generation will have permanent jobs!
Contract labour involves the hiring of workers on a temporary basis, without job security, through a labour contractor. Contract workers are deprived of the rights which they have as workers. They are hired on terms and conditions which are fully in favour of the capitalists. They are usually paid significantly lower wages than permanent employees for similar work. They are deprived of ESI, PF, gratuity, vacation and bonus. In case of death by accident, the family of the deceased worker is not entitled to any compensation. In case of injuries of such nature as to render the worker incapable of doing the same work, the workers are not entitled to any compensation or alternative source of livelihood. Workers appointed by contractors are often not formally registered, nor given any kind of identification cards nor any kind of pay slip, so it is very difficult for a worker to prove that she or he was actually employed by the contractor at the time of the accident.
The recent agitations of contract workers in different parts of the country again highlighted the exploitative conditions in which they are made to work. They are not paid even minimum wage. Wages are not revised for years. State governments have not revised the minimum wage for more than a decade in some states. They are routinely made to work for 12 hours and no overtime is paid. Their exploitation takes place with full connivance of government authorities.
We must not forget that due to persistent struggle of the workers, the government had to pass Contract Labour (Regulation and Abolition) Act, 1970 (CLRA). The Act clearly specified that Contract worker engagement can be only for work that does not form part of the core operations and for work that is not of a permanent nature. This Act has been clearly violated. CLRA was applicable on all the contractors who employed more than 20 workers.
With the implementation of four labour codes in 2025, the new labour laws will be applicable only for the contractors employing more than 50 workers. This is like a free pass to many establishments to freely hire, exploit and fire contract workers completely at their will.
Government and its enterprises are refusing to fill in lakhs of vacancies and getting the work done through contracted workers. They have become some of the largest employers of contract workers over the years!
In 2018, the government legalised fixed term contracts, allowing capitalists to hire workers for a fixed term for permanent work, after which such workers can be thrown out without any rights. The definition of core activities has also been revised, with creation of more exceptions. The discretion lies with the management to decide what work is “core”. Through a number of court judgments, various types of work – such as cleaning, housekeeping, security maintenance, etc. – have been taken out of the definition of “core activity”. This shows the anti-worker nature of our rulers today. Irrespective of which party has come to power, they have all adopted such anti-workers policies and laws. This exposes the fact that all the different ruling parties are managers of the big capitalists and work to fulfil the interests of the capitalist class.
It is very evident that it is capitalist class who is benefitting from the growing share of contract labour. Firstly, they have to pay to contract workers less wages than permanent workers. Secondly, they can use contract workers to do the job for them when the permanent workers are on strike. This creates a false division between the workers. The growing share of contract labour clearly shows who is actually ruling India. No matter which party forms the government, the increasing trend of contractualization in the name of “Ease of Doing Business” is always in the favour of the capitalist class.
The contract labour system is not only detrimental to the workers who work on contract, it is also detrimental to the society as a whole. The contractors appointed by the capitalists often deploy untrained workers for work which involves years of training and high skills. This greatly increases the hazards for the users of these services such as rail and road transport and aviation.
Regularisation of contract workers and employing them as permanent workers is a long standing demand of the working class. Every government has pushed for more and more contractualization. Most of the posts these days, in government as well as private companies, are filled by fixed term contracts.
The entire working class has to wage the struggle for abolition of contract labour and all other forms of exploitation. We must fight with the aim of replacing the system that is oriented towards maximising the capitalist profits with a system which will serve the interests of all the workers and toilers. We must fight for a system in which security of livelihood as well as rights of all those who work will be guaranteed.