Nos. 72 & 73, May 2018
Nos. 72 & 73 (May 2018)
India's Working Class and its Prospects
India’s Working Class under Neoliberal Rule
In the neoliberal period, the working class in India has suffered massive retrogression – in terms of real wages, quality of employment, working conditions, and fighting strength. Objective factors have contributed to this retrogression: certain constraints which emanate from the political economy of India and the consequent nature of the Indian working class, as discussed in the Introduction to this special issue; Capital’s global attack on Labour from the early 1980s; the post-1991 shift in the Indian government’s policies to a more explicitly anti-worker, pro-Capital, stance; and the globalisation of the Indian economy, which drives a ‘race to the bottom’ in labour standards in order to promote exports.
But to explain the retrogression in terms of such factors alone would imply that the working class lacks the capacity to act, and is merely fated to being buffeted by objective forces. Whereas these very attacks on the working class might instead have elicited a powerful, organised and sustained resistance movement. That they did not do so implies that there are also subjective reasons for this retrogression, i.e., reasons relating to the consciousness and fighting strength of the working class. Responsibility ultimately lies on the forces that should have organised resistance, but failed to do so.
Deteriorating conditions under neoliberal ruleIn recent years, there has been a sharp deterioration in the overall condition of the working class in what is called the ‘organised sector.’1 The organised sector spans organised manufacturing, non-manufacturing (construction, mining, and utilities), and services.
Below we look at conditions in organised manufacturing units, which are covered by the Annual Survey of Industries.
(i) Real wages of organised sector manufacturing workers fell sharply after 1995-96, and remained depressed till 2009-10, after which they revived. However, even in 2015-16, real wages remained below the figure for two decades earlier, 1995-96. This has delivered a huge bounty to Capital. To give an idea of the loss to workers: Had real wages not fallen after 1995-96, but remained at the same level thereafter, factory workers would have received an additional income totaling approximately Rs 386,000 crore (in 2015-16 rupee terms) over these 20 years.
Even as real wages of workers remained depressed in these two decades, output per worker rose steadily. Thus wages as a share of net value added in the organised manufacturing sector fell from 20.1 per cent in 1995-96 to a low of 10.6 per cent in 2007-08, thereafter reviving only partially to 14.6 per cent in 2015-16. If the wage share had not fallen, i.e. if wages had remained throughout at the same ratio of net value added as in 1995-96, workers would have received an additional Rs 937,202 crore in this period (in 2015-16 rupee terms).
‘Value added’ consists of wages, profit, interest, and rent. The first of these is what Marx called ‘necessary labour’, i.e., the cost of reproduction of labour power; the latter three make up the surplus. So the decline in the share of wages in value added means a rise in the rate of surplus value extraction by the capitalist class.
Growing use of contract labour
In the organised sector as a whole (including the organised sector in construction, utilities, mining and services), the share of ‘informal workers’, i.e. those without job security and social security benefits, rose from 41 per cent in 1999-2000 to 58 per cent in 2011-12. (IHD 2014, 56) That is, the majority of the workers in the organised sector are now ‘informal workers’. Thus the growth in organised sector employment has been accompanied by a sharp deterioration in the quality of the employment.
Establishment economists have produced numerous studies attempting to show that the reason for the use of contract labour in industry is the ‘rigidity’ of India’s labour laws, which supposedly make it difficult to remove workers once they are hired. According to these economists, firms need the flexibility to respond to fluctuating demand, but legal provisions prevent the removal of permanent workers in firms with more than 100 workers; hence these firms resort to using contract labour.
In fact, however, India’s organised sector firms have hired and fired on a large scale without worrying about the alleged rigidity of labour laws. Thus between 1982-83 and 1986-87, the organised manufacturing sector shed 0.5 million jobs, or 8 per cent of the total. Even more dramatically, between 1997-98 and 2001-02, the sector shed 1.7 million jobs, or 22 per cent of the total (see Chart 2). A sector which can reduce its workforce by 22 per cent in four years cannot claim to suffer from ‘rigidity’. Rather, it indicates that workers abysmally lack job security.
A recent study (Kapoor and Krishnapriya 2017) demolishes the myth that rigid legal protections for workers have driven firms to resort to contract labour. In fact the expansion of contract labour has been fastest in states in which labour laws are more ‘flexible’ (i.e., where pro-worker provisions have been diluted the most, or removed). Whereas pro-liberalisation economists claim that firms use contract labour to avoid their regular workforce rising over 100 (in order to avoid legal restrictions on retrenchment, which apply to firms with more than 100), in fact the use of contract labour is highest in large firms, far beyond the 100-worker limit. And it is not labour-intensive firms responding to fluctuating demand that have the maximum share of contract labour. Rather the maximum share of contract labour is in capital-intensive firms, where the workforce is relatively stable. Indeed two capital-intensive industries, automobiles and other transport equipment, saw the largest increase in contract labour, from levels of 12-13 per cent in 2000-01 to 45-48 per cent in 2011-12. All this makes clear that the growing use of contract labour is motivated not by the need for ‘flexibility’, but by the drive to reduce wages and boost profits.
The period of the most rapid growth saw the sharpest deterioration of job security. In 2004-05, 63 per cent of regular workers in the organised manufacturing sector had no written job contract; by 2011-12 this jumped to 73 per cent. The deterioration was even more dramatic for women regular workers, rising from 68 to 87 per cent. Taking regular and contract together, 91 per cent of women workers had no written contract. The percentage of regular workers who did not have access to any social security benefits (provident fund, pension, gratuity, healthcare/maternity) rose from 48 per cent to 60 per cent. (Sood 2014)
Downward pressure on wages
The downward pressure on real wages can be seen starkly in the case of the automobile industry. As mentioned earlier, the share of contract workers in the automobile industry rose dramatically, from 11.6 per cent in 2000-01 to 44.7 per cent in 2011-12. While the number of regular workers doubled during this period, the number of contract workers went up 13-fold. As a result, even as the automobile industry workforce grew rapidly, which ordinarily would be expected to fuel wage demands, real wages in the automobile industry actually fell steadily through the entire period (see Chart 3). By 2015-16 real wages were 18 per cent lower than in 2000-01. Auto industry wages are converging with the general wage level for the factory sector: In 2000-01, auto industry wages were 76 per cent higher than the average for the factory sector as a whole, but by 2015-16 they were only 28 per cent higher.
Labour power supply as a business
We work with our clients for hiring or identification of temp resources and take the selected resources on our payroll for providing the payroll support services to the client. Alternatively we also take on our payroll, resources pre-identified by clients or existing ones from any other sources. TeamLease takes complete responsibility for all HR Administrative activities, statutory employee benefits and compliances for the outsourced resources. The operational and performance related aspects are monitored by the client and the client retains complete control of the same.2
This wholesale demolition of labour laws has sanction from the highest authorities. The co-founder and executive chairman of TeamLease, Manish Sabharwal, “serves as a Member of the National Skills Mission, Member of the Central Advisory Board of Education, and an Independent Director on the Board of the Reserve Bank of India (RBI)”, apart from being a well-known newspaper columnist. TeamLease’s website informs us that it “is uniquely positioned to address your requirements in the domain of regulatory and labour law compliances.... Our ability to negotiate and liaison with the regulatory authorities and our initiatives on the public policy reform front also enable us to offer to you a credible and strong service offering in this field.”
A 2015 research report (Crisil Research 2015) estimates the size of the ‘flexi-staffing’ industry at 1.7 million, and projects a compound annual growth rate of 20-25 per cent between 2014 and 2019, by which time the industry size should be 4.7 million. While the overwhelming bulk of such labour supply is carried out by unorganised sector suppliers, Crisil expects the organised sector component (i.e., firms like TeamLease) to increase their share as a result of “favorable amendments in labor laws”. Other prominent firms in the field include multinational firms such as Randstad, Adecco, Quesscorp, and Manpower.
Super-exploited labour is also supplied to manufacturing giants in the form of ‘trainees’. TeamLease leads the National Employability Through Apprenticeship Program (NETAP), a public private partnership (PPP) of Teamlease Skills University, the Confederation of Indian Industry, and NSDC under the Ministry of Human Resource Development. It is intended to promote apprentices on a mass scale by keeping them on their rolls and managing all regulatory obligations for up to two years. (Ruthven 2014) In the words of a consultant who has worked extensively for one a vocational training and placement agency implementing the Government’s ‘Skill India’ mission,
My experience has shown that Skill India serves industry in two important ways: in helping to maintain a steady stream of flexible workers, and in providing a way to tie in these better educated workers for longer periods on trainee contracts through partnershi with industry. It is to secure the availability of compliant and flexible workers at minimum cost, rather than to access a better skilled workforce, that industry has engaged with Skill India. (Ruthven 2017)She describes the management strategy thus: systematically raise the hopes of contract workers, temporaries, and apprentices that they will be regularised, while never regularising them; sign settlements with the permanent workers, often a small minority of workers (e.g. 15 per cent at Honda’s Greater Noida plant); close existing plants in industrial areas, and move further into the hinterland; and protect expensive equipment by playing on workers’ aspirations of a ‘clean’, ‘hi-tech’ job with status. (Ruthven 2017)
True, ‘Skill India’ has little to do with imparting skills, but certainly it is providing big Capital with labour power at a wage below the cost of reproduction of labour-power. The ‘skilling’ agencies in effect play the role of contractors, bringing in circulating migrant labour from the rural areas through multiple networks. Ruthven (2014) calculates that average wages earned by trainees placed by the National Skill Development Corporation in June 2013 (excluding IT and software jobs) were just Rs 5,888, close to the abysmally low national minimum wage; many jobs were around Rs 4,000, some even lower. Compare this to the average monthly consumption expenditure of a ‘farmer household’ in 2012-13, according to the National Sample Survey, was Rs 6,426. (RUPE 2017)
Joint enterprise of ruling class institutions
During the entire liberalisation period, much attention has been focussed on proposed changes in labour laws. In the early 1990s itself, the Inter-Ministerial Working Group on Industrial Re-structuring and the Goswami Committee on Industrial Sickness and Corporate Restructuring both strongly recommended that Chapter VB of the Industrial Disputes Act (IDA), 1947, be completely deleted, giving employers a free hand to ‘hire and fire’ at will. (Ibid.) Similarly, the corporate sector and establishment bodies have called for changes to the Contract Labour (Regulation and Abolition) Act (CLA), 1970, which, in theory, would abolish the use of contract labour for perennial jobs and for work being done by regular workers. Correspondingly, opposition to proposed changes in labour laws has been a central slogan of the central trade unions, and later the broader National Platform of Mass Organisations, over the entire liberalisation period.
However, in fact since 1992 there has been little amendment of labour laws, barring three states. (Kapoor and Krishnapriya 2017) Nevertheless, as we have seen, ‘hire and fire’ has operated de facto in a widespread fashion, and Chapter VB of the IDA has not posed any obstacle to this. Further, as Sood observes, “The CLA [Contract Labour Act], 1970 seems to hold no ground at all in practice.” How has this drastic change been brought about without formal legislative measures? A combination of methods has been employed simultaneously, the crux of which is the political offensive of the ruling class, which has given appropriate signals to the state machinery at all levels. Since 1991, hundreds of thousands of workers have been forced to leave their jobs with paltry ‘voluntary retirement’ payments (aggregate official data is not available in this respect). Tens of thousands of factories have closed without legal formalities. One study observed:
perhaps setting up of the National Renewal Fund – to finance mainly retrenchment of workers in public sector enterprises – was a signal of the government’s tacit support for similar initiatives in the private sector. Although the labour laws remained the same, their enforcement was diluted or government ignored their evasion by employers. In effect, it was reform by stealth. (Nagaraj, cited in Sood 2014)This drive actually began in the 1980s, and intensified in the 1990s. One major development in the 1980s was the outsourcing of textile production from organised sector mills to unorganised sector powerlooms, much of it sold by organised sector firms under their own brands. In 1980-81 the organised mill sector produced 4.6 million square metres (mn sq m) of textiles, accounting for 36 per cent of textile production, and powerlooms produced 4.8 mn sq m, accounting for 38 per cent. By 1990-91, however, the respective shares had changed dramatically, to 2.6 mn sq m (11 per cent) and 13.3 mn sq m (57 per cent); and by 2003-04, 1.4 mn sq m (3 per cent) and 26.9 mn sq m (64 per cent). (Hirway 2011) The organised mill workers of cities such as Mumbai, Ahmedabad, Kanpur, and Coimbatore, who had created the surplus on the basis of which many business houses grew, and who were important actors in the history of India’s working-class struggles, were summarily wiped out – even as textile production grew. Similarly, it was in the 1980s that Hindustan Lever (now Hindustan Unilever) began outsourcing a sizeable proportion of detergent production to small units. (RUPE 1991)
Managements have waged a widespread joint drive to change the terms of labour. From the latter half of the 1980s managements began refusing to conclude new settlements with their existing unions; indeed, in a reversal of the normal situation, managements began the practice of presenting ‘charters of demands’ to their unions — dictating reduction of workforce, complete freedom of deployment anywhere, linking wages to ‘productivity’, and freedom to use contract labour. (A cover story of Business World at the time of the historic 1988 lock-out of the Hindustan Lever plant in Sewri, Mumbai, termed the phenomenon “The Militant Employer”.) It became standard practice to victimise union activists, impose illegal lock-outs (often by such simple devices as failing to pay the electricity bill), and force workers to accept 'voluntary' retirement schemes. (RUPE 2005)
Managements now knew they had the explicit backing of the administration:
The collusion of governmental authorities with managements’ illegal actions was crucial to the success of these methods. Proceedings were not initiated or seriously pursued in the case of illegal lock-outs and other offences. Among other steps, the Government explicitly stated on several occasions that no fresh nationalisations would be carried out. The Board for Industrial and Financial Reconstruction, which was purportedly set up to revive such sick companies as could be revived, actually operated as an elaborate mechanism for owners to extract tax concessions, loan write-offs, and concessions from the starving workers, but the BIFR completely failed to ensure the reopening of illegally closed units.
Significantly, the attack on the working class continued seamlessly in the entire period of liberalisation, despite various parliamentary parties having enjoyed power at the Centre and in the states. State governments can change existing central labour laws with the approval of the President of India. Moreover, the administrative machinery governing most of industrial labour comes under the state government. Hence state governments, in theory, have significant room to improve or worsen the implementation of labour laws. However, the retrogression in working class conditions has spanned all states. A survey of industrial workers carried out in 2008-09 in two states, Gujarat and West Bengal, ruled at the time by the BJP and the Left Front respectively, found that contract labour accounted for 70-75 per cent of the industrial workforce in both states. (Maiti 2009)
Judiciary implements neoliberal policy
That change in judicial stance took place in the 1990s. It was expressed in a number of rulings. Many of these rulings were made in direct contradiction to a substantial body of precedent, and in the absence of any new legislation, underlining the fact that the courts implemented these changes as part of the new ruling class policy. The Supreme Court bluntly stated in one labour case:
The changes brought about by the [subsequent] decisions of this Court probably having regard to the changes in the policy decisions of the government in the wake of prevailing market economy, globalization, privatization and outsourcing is evident. (IHD 2014, 136)<
For example, in Air India vs United Labour Union and others (1996), the Supreme Court first held that where contract labour is abolished, the principal employer is obliged to absorb the contract labour. However, the same Court in 2001 overturned this judgement; at one stroke this made it meaningless for contract workers to apply for abolition of contract labour in their workplace. In 2010, the Supreme Court overruled a judgement of the Rajasthan High Court and ruled that it is for a non-regular employee to prove that he/she has continuously worked for 240 days a year to seek regularisation of work; in 2007 it held that an illegally sacked employee, even if reinstated, would not be entitled to back wages; and in 2005 it held that it was the worker’s burden to prove that he/she was not gainfully employed in the interim period. (Sood 2014) Apart from this, in case after case, the courts have simply closed the door on contract workers.
The courts also entered the more explicitly political realm repeatedly. On August 6, 2003, a Division Bench of the Supreme Court pronounced (in the case of the summary dismissal of Tamil Nadu government employees) that government employees had no “fundamental, legal, moral or equitable right” to strike work. In Communist Party of India (Marxist) vs Bharat Kumar and Others (1998), a three-Judge bench of the Supreme Court upheld the decision of the Kerala High Court that no political party or organisation has a right to call or enforce a bandh (general shutdown). The Kolkata High Court passed an order placing a near-complete ban on public processions.
A crucial element in the entire offensive has been the creation of a climate of despair and resignation. In tandem with the actions of managements, the Government and the corporate mass media have carried out a systematic propaganda drive to the effect that the current changes in the terms of labour are inevitable, are part of a worldwide change and cannot be resisted; workers' only hope lies in creating self-employment or in developing the skills required in the new economy. Their failure to get jobs, or jobs that pay a living wage, results from their lack of enterprise and unwillingness to adapt. This propaganda drive has helped demoralise workers not already overcome by other odds, and sap their will to resist.
However, this propaganda could have been blunted if the major trade unions had waged serious, militant, and prolonged struggles against the State-Capital attack, and built substantial solidarity even for struggles not under their own leadership. In this essential task they have failed.
The principal form of opposition by the major trade unions to the existing policies is more or less annual nationwide ‘bandhs’, or general strikes. In all 13 all-India strikes/stoppages of work took place in the 21 years between 1991 and 2012, raising demands regarding a range of economic policy issues such as proposed labour law amendments, inflation, foreign direct investment, privatisation, and so on. (IHD 2014, 127) The numbers participating in these strikes have been seemingly impressive. However, they have tended to become an annual ritual, with little activity in the intervening period and little impact on the class struggle. These annual events do not in themselves constitute a movement.
Labour unrest: declining, or simmering?
However, while it is true that there is not a widespread, organised, movement, that does not necessarily mean that there is an absence of “unrest”. For one, the data on industrial relations are incomplete, and can be to some extent misleading; for example, various forms of conflict may not get classified formally as a ‘labour dispute’. There is no doubt a shift in the expressions of industrial conflict, and the channels through which they get expressed:
The strikes and agitations in the 2000s have been marked by violence and unrest. The rise in the share of non-regular workers and the growth of the unorganized sector, arguably due to the globalization drive, has affected the character of industrial conflicts. These are no longer conventional shop-floor disputes to be constitutionally settled, i.e., by resort to set procedures of resolution of conflicts and disputes. As a result, strikes, the conventional expression of protest and conflict, may not occur as often as in the past. But the diminution in strikes does not mean industrial peace. It takes place in various forms including strikes, and thus a climate of ‘unrest’ prevails. Unrest is more fundamental and widespread and involves even the unorganized sections of workers and can manifest in a wide range of actions such as strikes, sabotage, violence, agitations and other individual forms. It is more comprehensive and encompassing than the conventional forms of industrial conflict. (IHD 2014, 127)
Along with official statistics, we need to look at unofficial sources such as Faridabad Mazdoor Samachar, Gurgaon Workers’ News (www.gurgaonworkersnews.com), Sanhati (www.sanhati.com), Thozhilalar koodam (www.tnlabour.in), Nagarik (www.enagrik.com), Bigul, Hamari Soch, reports of People’s Union for Democratic Rights, and the like, to get a picture of the actual state of unrest among industrial workers. There is evidence of both repression and resistance. However, resistance frequently takes place spontaneously, in an unorganised way, and outside the frame of the established trade unions:
The police has in the recent past often intervened in the industrial conflicts, and clashes between the police and the protestors have become more prominent, e.g. Honda Motorcycles and Scooters India (HMSI) conflict and in Regency Ceramics conflict. Trade unions and commentators have often alleged, and not without substance, on how the use of security guards, bouncers and other musclemen by the employers and contractors to discipline workers degenerated into violent deeds, e.g., conflicts in Rico, Sunbeam, Maruti Suzuki, Viva Garments, and so on.... Workers allegedly acting as irate mobs have attacked managerial personnel and the latter have often succumbed to the injuries, e.g., Pricol, Graziano, Regency Ceramics, Maruti Suzuki and so on.... These conflicts clearly reflect the inadequacies of the institutional framework to govern the labour market and the industrial relations system... (IHD 2014, 128)
Major upsurges, such as the 2015 agitation of women tea workers in Munnar, Kerala, the continuing struggle of Maruti workers, and the 2016 agitation of garment workers in Bengaluru have taken place independently of the major trade unions. In brief, it appears that class conflict has been simmering under the surface, and is not captured in official data. However, the established trade union movement has failed to channel this simmering rage into a powerful, organised, and sustained resistance movement.It is true that in the post-1991 period the State has more openly and aggressively represented the interests of corporate capital vis-a-vis the working people.3
It is also true that globalisation places downward pressure on wages, as competing exporting countries engage in a ‘race to the bottom’; this is part of the mechanism of imperialism in the present period. While these two factors do partly explain the worsening conditions of workers, they do not explain the paucity of organised trade union struggle against these conditions. The State’s dropping of all pretences to neutrality, and its openly anti-worker stance, should have provoked an organised mass movement of workers. If it did not, we must seek political reasons for this failure.
A striking example of the failure of the leading trade unions has been in the public sector, where privatisation has been carried out step by step, but has faced only muted, or in some cases nominal, opposition. To take a recent instance: after calling a five-day strike of Coal India Ltd in 2015 against the BJP government’s ordinance opening the coal sector to private firms, and receiving widespread support from workers, the leading trade unions called off the strike in just two days, on the basis of nothing more than vague verbal assurances by the Coal Minister. A similar story has played out in the piecemeal privatisation or contractualisation of various other giant public sector enterprises, such as in electricity and railways. One by one various wings or departments of the erstwhile public sector enterprises have been whittled down, outsourced, or simply shut.
Since it was the public sector that once enjoyed the strongest labour protections, and constituted the bulwark of trade union strength nationwide, trade unions’ muted or nominal opposition in the public sector has strengthened the hands of the State and Capital against the workers at large. It has strengthened the belief that struggle is impossible, privatisation is inevitable, and the most that can be done is to protect the jobs of the existing permanent workers for the time being.
The onslaught on the working class is certain to continue, even if there is a change in Government, as we have seen for the last three decades. The resistance to this onslaught will depend on the concrete struggles and concrete solidarities that get built in these challenging times. If the existing workers’ platforms fail to meet this challenge, new ones will have to emerge to do so.
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1. The National Commission on Enterprises in the Unorganised Sector (NCEUS) defined the organised sector as consisting of private enterprises which employ 10 or more workers, as well as all Government departments, public sector enterprises and public-private enterprises. (back)
2. Similarly, another firm, Imogene Solutions, states on its website: “Our Employee Leasing Service works by the simple device of transferring employees from a company on to the payroll of Imogene Solutions and then leasing them back to the company on a temporary basis, taking over all the HR [human relations] management tasks.” https://www.imogene.in/e-kamgar-manpower-outsourcing-employee-leasing/ (back)
3. However, this does not constitute a change in character of the State as such, but in its mode of operation. (back)
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