A job at hand

The Union Ministry of Labour, according to news reports, has urged States to issue orders permitting fixed-term employment (FTE) across industries. In March this year, the Centre notified FTE under which workers will be entitled to benefits available to permanent workers. The notification does not permit conversion of permanent posts into FTE; therefore, the move, for now, is aimed at turning contract workers into FTE ones. Contract workers stand to gain in terms of the statutory benefits and possibly a greater sense of accountability from the principal employer. Poor work environment of the contract workforce has been a major trigger for unrest in industrial hubs such as Gurgaon and Sriperumbudur. It is, therefore, in the industry’s interest to improve their working conditions. However, informal reports suggest that the industry is reluctant to go ahead, in view of rising costs and obligations. Industries stand to gain from FTEs emerging as a significant category of the workforce, as it gives them the flexibility they have been looking for. This could spur employment, provided the cost of capital does not remain so low as to deter labour use — a factor that is believed to have slowed down job growth in the last decade. FTEs are particularly useful in executing specific projects, such as in the infra sector. They are prevalent in apparel, footwear and sections of the media. In the first two cases, the Centre issued notifications in 2016 and 2017, respectively.

The FTE conditions need to be defined clearly to make them acceptable to both employers and employees. The present rules do not explicitly spell out the minimum or maximum term of an FTE and the maximum permissible number of consecutive FTEs. In China, FTEs have been introduced with clear caveats. For instance, a worker employed without an FTE for a year is deemed to be on an open-ended contract. She is considered a permanent employee after two successive renewals. While introducing FTEs to promote employment, these norms should be arrived at in a transparent, consensual manner. It is also important to bear in mind that labour reforms will not be politically acceptable in the absence of a better social safety net. Countries with flexible labour markets have superior and state-funded health and education facilities.

There is a legal hurdle as well. Since FTE has been notified by an executive order, without Parliament having ratified it, States are not really obliged to pick up the baton. This is because labour is a Concurrent List subject, as per which the States are bound only by a central law — unless, of course, they choose to amend that. The Centre’s notification at present applies to central public sector undertakings and activities that are governed by New Delhi, such as banking, civil aviation, finance, insurance, ports and mining. For the FTE to gain ground across regions and industries, the Centre must take the Parliament route.

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