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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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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.

Suggested Citation

  • Bhandari, Amit & Heshmati, Almas, 2006. "Wage Inequality and Job Insecurity among Permanent and Contract Workers in India: Evidence from Organized Manufacturing Industries," Ratio Working Papers 88, The Ratio Institute.
  • Handle: RePEc:hhs:ratioi:0088
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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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    Cited by:

    1. 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.
    2. 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, WZB Berlin Social Science Center.
    3. 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.
    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. 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.
    6. repec:ilo:ilowps:466556 is not listed on IDEAS
    7. repec:spr:manint:v:54:y:2014:i:4:d:10.1007_s11575-014-0215-6 is not listed on IDEAS
    8. George, Elizabeth. & Chattopadhyay, Prithviraj., 2015. "Non-standard work and workers : organizational implications," ILO Working Papers 994883083402676, International Labour Organization.
    9. Basu, Arnab K. & Chau, Nancy H. & Soundararajan, Vidhya, 2018. "Contract Employment as a Worker Discipline Device," IZA Discussion Papers 11579, Institute for the Study of Labor (IZA).
    10. repec:spr:ijlaec:v:60:y:2017:i:3:d:10.1007_s41027-018-0107-6 is not listed on IDEAS

    More about this item

    Keywords

    Job Security; Discrimination; Wages; Decomposition; Permanent and Contract Workers; Manufacturing;

    JEL classification:

    • 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
    • J70 - Labor and Demographic Economics - - Labor Discrimination - - - General

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