For several decades, we have always had huge numbers of workmen on contract in every industrial establishment. Since these are mostly agricultural labourers who are ready to work for less-than-normal wages on a purely temporary basis, contract labour is here to stay.

That said, recent strikes at NLC, Neyveli and the earlier one at Maruti Suzuki would suggest that the seeds of industrial conflict are very much alive.

Be that as it may, what is really intriguing is the fact that there has been, of late, a big emphasis on employing diploma holders and graduate degree holders, in engineering, from various disciplines, on a contract basis. They are normally taken as trainees, with a consolidated salary, for three years, and at the end of each year, there is some salary revision. In many cases, they are covered by the Apprentices Act, in the first year.

A growing practice

Though accurate figures are not available, in the Oragadam and Sriperumbudur industrial belts of Chennai, it is a well known fact that at least there will be around 4,000 such technical manpower on contractual basis. In other locations, including Mumbai, this is a growing practice.

The Modi government is game to this practice, and the so-called Skill India initiative is perhaps inclusive of this practice, which is not at all healthy for various reasons, and one that has serious socio-economic implications.

First, since the contract labour do not have any chance of being absorbed on regular rolls, their dedication and commitment to the job, is always very less, when compared to regular staff. They tend to jump to regular jobs at the first given opportunity.

The supervisors and managers who train them have a torrid time. Across industries, in highly specialised production, maintenance and quality control jobs, for instance, having regular people on a confirmed basis is actually a big plus, particularly when the organisation brings in automation and goes in for most advanced technology. However, the short-sightedness of the managements is always visible here.

Continuity of change is consequently a huge problem.

Second, the contract technical labour have very poor self-esteem and self-worth, more so, when they start inevitably comparing themselves to the more lucky peers who do similar jobs, but get paid fat salaries and perks. The conflicts at home, and in the society, naturally follow.

Next, such technical labour do not get easily married, for financial security reasons, bringing in its wake other social problems. The tendency to be distracted towards the opposite sex is a huge problem.

Fourth, not a single banker will ever give them any loan. Personal loans, vehicle loan and housing loans are simply out of reach for these people, thus putting tremendous pressure on the banking system and bank managers. There are no takers, even among confirmed labour, for such loans, and there is already a crisis brewing.

Going redundant

Fifthly, since the technical workforce cannot go back to their traditional farming practices, they are always put to a huge disadvantage at the end of the third year, if they fail to find a regular job.

A huge amount of automation is taking place in several industries, and this is already making many jobs redundant; in the process, the tendency is to hire a huge number of trainees at the lower levels, and train them for regular jobs.

So, the alternative at the end of the third year, sadly, is another contract job.

Sixth, since the managers or the HR department do not get to know the trainees personally, in the case of prolonged absenteeism there is no control, since the trainees are always on the search for regular jobs.

Having a big pool of technically qualified manpower on contract basis, is actually a big drag on the managements. The so-called cost cutting exercise, is actually a very costly one.

For instance, no one cares about quality time spent on training such manpower on a continued basis. The cost of such time of supervisors and managers is disproportional to the apparent cost advantage of hiring the labour temporarily.

Apart from this, the lack of socialisation skills of such manpower leads to problems. Inter-personal conflicts with regular labour, due to jealousy and ego issues, actually gives enough headaches to the supervisors and managers who are normally charged with the responsibility of solving such conflicts — one can easily imagine the waste of time here.

The HR executives also do not have much of a choice — regular visits to the diploma polytechnics and to the engineering colleges to keep the pipeline going, is a huge task, resulting in their taking the blame from line managers in case of any shortfall.

Economic impact

There are disastrous effects on the local economy, as there is always less spending on even basic necessities. One can imagine the cumulative effects when we assess such losses on a consolidated basis from several quarters. India is still a developing country, and regular manpower in industrial establishments is a big pre-requisite for stability in the economy and, to the concept of a welfare state.

The IT and the banking industry, for example, are excellent examples, where well-settled manpower spends large sums of money on various necessities and luxuries. If such spending is cut, the net result is not at all conducive to economic growth.

There is an urgent imperative to stop this growing menace of contractual technical manpower. The sooner managers realise the larger implications of their short-sighted approach, the better, not only for their own sake, but also for society at large.

The writer is a management consultant