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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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  • Amit K Bhandari
  • Almas Heshmati

Abstract

Since the early 1990s, the employment structure of organized manufacturing industries in India has undergone substantial changes with 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 concern of job insecurity in the labor market. The paper focuses on wage inequality between permanent and contract workers, since contract workers earn substantially lower wages than their counterparts. The study uses data at the individual level from a recent labor survey of organized manufacturing industries in the India. The lower wage earned by contract workers is largely due to cost cutting, rather than differences in labor productivity. The issue of job insecurity has been modeled in the form of a binary logistic model. The factors affecting job security are divided into productivity-related attributes such as level of education and skill, and institutional attributes such as labor market rules and regulations and union membership. Contrary to the general expectation, the study finds that permanent workers are more concerned regarding job insecurity than the contract workers.

Suggested Citation

  • Amit K Bhandari & Almas Heshmati, 2008. "Wage Inequality and Job Insecurity Among Permanent and Contract Workers in India: Evidence from Organized Manufacturing Industries," The IUP Journal of Applied Economics, IUP Publications, vol. 0(1), pages 80-111, January.
  • Handle: RePEc:icf:icfjae:v:07:y:2008:i:1:p:80-111
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    References listed on IDEAS

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    1. 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.
    2. 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.
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    Citations

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    Cited by:

    1. Rahul Suresh Sapkal, 2016. "Labour law, enforcement and the rise of temporary contract workers: empirical evidence from India’s organised manufacturing sector," European Journal of Law and Economics, Springer, vol. 42(1), pages 157-182, August.
    2. repec:ilo:ilowps:466556 is not listed on IDEAS
    3. Almas Heshmati & Biwei Su, 2017. "Analysis Of Gender Wage Differential In China’S Urban Labor Market," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 62(02), pages 423-445, June.
    4. Nguyen, Huu-Chi. & Nguyen-Huu, Thanh Tam. & Le, Thi-Thuy-Linh., 2016. "Non-standard forms of employment in some Asian countries : a study of wages and working conditions of temporary workers," ILO Working Papers 994901213402676, International Labour Organization.
    5. repec:spr:manint:v:54:y:2014:i:4:d:10.1007_s11575-014-0215-6 is not listed on IDEAS
    6. Shyam Sundar, K.R., 2011. "Non-regular workers in India : social dialogue and organizational and bargaining strategies and practices," ILO Working Papers 994665563402676, International Labour Organization.
    7. George, Elizabeth. & Chattopadhyay, Prithviraj., 2015. "Non-standard work and workers : organizational implications," ILO Working Papers 994883083402676, International Labour Organization.
    8. 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).

    More about this item

    JEL classification:

    • J70 - Labor and Demographic Economics - - Labor Discrimination - - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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