Businessmen fear that the move will increase cost and render the Indian industry uncompetitive. They argue that while it is important to work towards improving wages and working conditions of labourers, it should be brought about through better implementation of existing laws and not by crippling the industry.

The argument for abolition of contract labour is to stop exploitation of labour, improve their wages and service conditions, give them security of employment and to meet the requirements of social justice.

T K Bhaumik, an industrialist from Calcutta, points out that solutions to these problems already exist within the framework of existing Indian labour laws. "An implementation problem cannot be solved by makingnew legislations. What is required is a strengthening of the state implementation machinery for the detection and correction of exploitation of workers and misuse of the system." R C Sarangi of Indal Electronics, Bangalore, agrees with Bhaumik. He argues that if the basic amenities are provided to the labour force then their condition is bound to improve irrespective of the fact whether they are regular employees or are on contract.

Sarangi says that in Bangalore, there are some companies where the condition of contract labour has improved over the years. "They are in a position to sit and negotiate with the contractor and the principle employer." Every three years they receive some long-term settlement just like regular employees. Sarangi says that it is not the law but the attitude of the law enforcers which has to be changed.

Abolition of contract labour is undesirable for the industry in more than one way. According to a CII report, the flexibility offered by contract labour arrangements is a keyfactor promoting its use especially in industries with cyclical levels of production and fluctuating output and demand such as construction, plantations, petrochemicals, etc.

Industrialists say that it is impractical to expect industry to hire regular employees for non-regular work. "There are certain kind of work which is required on a one-time basis. How can we engage labour for it on permanent basis," asks Michael Dias, secretary general, The Employers' Association.

The steel industry is one of the biggest employer of contract labour. T Tiwary, a steel manufacturer, says that the contract labour in the sector get much more than the prescribed minimum wages. "When workers are paid less than minimum wages then the employer, employee and the enforcement agency are at fault." Baldev Singh, a Delhi-based industrialist, focuses on a point which is there in every businessman's mind but very few say it out loud. Says Singh, "It has been observed that as soon as a person is made permanent, he becomes reluctantto work. His productivity decreases." Singh says that the Government should also ensure that once a worker is made permanent he should continue to give in his best to an enterprise.

Speaking at a seminar organised by the Confederation of Indian Industry, Union labour minister Satyanarain Jatiya said that while the concern of the entrepreneurs over abolishing of contract labour was genuine, the condition of labour can also not be ignored. "We have to strike a balance."

Jatiya said that business should be given a chance to succeed but not at the cost of labour. He stressed the need o remove intermediaries as they create trouble. The minister promised to incorporate the demands of businessmen while framing new legislation.

Tiwary says that if contract labour is abolished, it does not mean that the condition of all the labourers will improve. "It is natural that the firms will try to save on labour wherever possible if such a law comes into force." This will lead to a large number of labour losing theirjobs and the industrial productivity declining. "Benefit of the abolition will be reaped by only a handful of contract labourers while the rest will suffer." In its recommendations, CII has said that employment of contract labour in non-regular, non-perennial, non-core and non-process jobs should continue. Says Dias, "In non-core jobs, like canteen, house-keeping etc, companies will simply do away with the jobs if they are asked to make the employees permanent."

CII is of the view when the activity is part of supporting infrastructure such as security, gardening, canteen, cleaning services, courier, etc. of the establishment, contract labour should be allowed. Similar should be the case with activities directly dependent upon the order book position for export orders. For activities that are seasonal in character and activities related to project work involving construction of new facilities, modernisation and upgradation of existing infrastructure, annual shutdowns and emergency break-downs, contractlabour should not be abolished. For loading/unloading and material transfer of products and raw material, hiring of contract labour should be allowed as also in the case of time bound activities such as market surveys, launch of a new product or initial activities to assess the market feasibility of a certain product. The business community seems to be saying that while it is prepared to pay penalties if it is found to be violating regulations and abusing and exploiting labour, the government should not cripple it by a total abolition of contract labour.

Contract Labour (Regulation & Abolition) Act, 1970: Section 10

1. Notwithstanding anything contained in this Act, the appropriate Government may, after consultation with the Central Board or the State Board, prohibit, by notification in the Official Gazette, employment of contract labour in any process, operation or other work in any establishment.

2. Before issuing any notification under sub-section (1) in relation to an establishment theappropriate Government shall have regard to the conditions of work and benefits provided for the contract labour in that establishment and other relevant factors, such as-

a) whether the process, operation or other work is incidental to, or necessary for the industry, trade, business, manufacture or occupation that is carried on in the establishment;

b) whether it is of perennial nature, that is to say, it is of sufficient duration having regard to other nature of industry, trade, business, manufacture or occupation carried on in that establishment;

c) whether it is done ordinarily through regular workmen in that establishment or an establishment similar thereto;

d) whether it is sufficient to employ considerable number of whole-time workmen.

If a question arises whether any process or operation or other work is of perennial nature, the decision of the appropriate Government thereon shall be final.