Employment by contract

Contractualisation is affecting employment quality

- 

Contractualisation is affecting employment quality. Despite witnessing years of rapid economic growth, India has seen modest employment creation in its formal manufacturing sector.

The latest Annual Survey of Industries (ASI) data reflects an increasing trend of contractualisation. Between 2001-02 and 2022-23, the absolute number of workers in India's formal manufacturing sector more than doubled, increasing from 5.96 million to 14.61 million. However, during the same period, the share of workers directly employed by factories went down, while contract workers' share increased from 21.8 per cent to 40.7 per cent.

Contractual workers are not directly employed by firms but are hired on a contractual basis, often through third-party agencies. The ASI data also exhibits large inter-state variations. In Bihar, 68.6 per cent of its industrial workforce is employed as contract labour, while the corresponding share for Kerala is only 23.8 per cent.