1.Formalisation for Manufacturing Productivity (Manufacturing Labour)
What & Where
Concept Contractualisation within formal manufacturing used mainly to cut wage bills
Types Contract labour vs regular labour; contract-labour-intensive (CLI) vs regular-labour-intensive (RLI) firms
Geography India’s formal manufacturing sector analysed through ASI data 1999–2019
Quick Facts for MCQs
Legal & Policy
- Code Industrial Relations Code 2020 awaiting state adoption; fixed-term hiring reform stalled
- Misuse Contracting circumvents Industrial Disputes Act protections on retrenchment and layoffs
- Enforcement Weak inspections, especially in MSMEs, allow unchecked contractualisation
Productivity Impact
- Finding CLI firms record 31% lower value added per worker
- Micro-small labour-intensive CLI units show 42% productivity deficit versus RLI peers
- Capital/high-skill CLI segment (≈20% firms) gains only 5–20% productivity
Social Concerns
- Wage Contract workers earn 14.47–31% less than regular counterparts
- Security Limited access to EPF, ESI, maternity benefits heightens precarity
- Skilling High turnover deters firms from investing in training and innovation
Key Data Points
| Feature | Data-Point |
|---|---|
| Contract labour share 1999-2000 | 20% |
| Contract labour share 2022-23 | 40.7% |
| Wage gap contract vs regular (overall) | 14.47% lower |
| Wage gap in large enterprises | 31% lower |
| Employer labour-cost saving via contracts | 24% |
| Productivity gap CLI vs RLI firms | 31% lower |
| Productivity gap small CLI units | 42% lower |
| PMRPY incentive window | 2016 – 2022 |




