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Wage Inequality and Job Insecurity among Permanent and Contract Workers in India: Evidence from Organized Manufacturing Industries

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Author Info

  • Bhandari, Amit Kumar

    ()
    (Kalyani Institute of Applied Research, Training and Development)

  • Heshmati, Almas

    ()
    (Jönköping University, Sogang University)

Abstract

Since the early 1990s, the employment structure of organised manufacturing industries in India has undergone substantial changes with the steep rise in the use of contract workers in place of permanent workers. This process has led to increased wage inequality, discrimination as well as the concern of job insecurity in the labour market. We focus on the wage inequality between permanent and contract workers, since contract workers earn substantially lower wages than their counterpart. The study uses data at the individual level from a recent labour survey of organised manufacturing industries in India. The lower wage earned by contract worker is largely due to cost cutting, rather than differences in labour productivity. The issue of job insecurity has been modeled in form of a binary logistic model. The factors affecting job security are divided as productivity related attributes like level of education, skill etc. and institutional attributes such as labour market rules and regulations, union membership etc. Contrary to the general expectation the study finds that permanent workers are more concern of job insecurity than contract workers.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2097.

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Length: 33 pages
Date of creation: Apr 2006
Date of revision:
Publication status: published in: ICFAI Journal of Applied Economics, 2008, 7(1), 80-111
Handle: RePEc:iza:izadps:dp2097

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Related research

Keywords: job security; wages; decomposition; discrimination; permanent and contract workers; manufacturing;

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References

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  1. Almas Heshmati, 2003. "Productivity Growth, Efficiency and Outsourcing in Manufacturing and Service Industries," Journal of Economic Surveys, Wiley Blackwell, vol. 17(1), pages 79-112, February.
  2. Heckman, James J. & Lochner, Lance J. & Todd, Petra E., 2006. "Earnings Functions, Rates of Return and Treatment Effects: The Mincer Equation and Beyond," Handbook of the Economics of Education, Elsevier.
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Cited by:
  1. Rai, Soumi, 2012. "Human resource management and labour relations in the Indian industrial sector," Discussion Papers, Research Group Globalization, Work, and Production SP III 2012-301, Social Science Research Center Berlin (WZB).
  2. Su, Biwei & Heshmati, Almas, 2011. "Analysis of Gender Wage Differential in China's Urban Labor Market," IZA Discussion Papers 6252, Institute for the Study of Labor (IZA).
  3. Shyam Sundar, K.R, 2011. "Non-regular workers in India : social dialogue and organizational and bargaining strategies and practices," ILO Working Papers 466556, International Labour Organization.

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