India's contract labour surge carries risks for jobs and the economy

Contract workers are typically not directly employed by factories but are hired through third-party agencies

The latest Annual Survey of Industries 2023-24 points to a worrying trend — the rise of contractualisation. Contract workers now account for 42 per cent of the workforce engaged in the organised manufacturing sector. This is the highest since 1997-98, when their share was only 16 per cent. In fact, contractualisation has risen by nearly 8 percentage points in the last 10 years, while the share of workers directly employed by factories has displayed a consistent declining trend. For a country like India, which must rely on labour-intensive manufacturing, rising contractualisation signals deterioration in the quality of employment being generated.