ABSTRACT
During the last couple of decades, most economies in the world have been witnessing a substantial change in employment contracts along with a change in economic environment instigated by various policies towards competitiveness (Stone, 2006), and it is hypothesised that they must have impacted on productivity growth. This has been an emerging topic of discussion in the productivity literature. It is observed that industries increasingly tend to employ workers on contractual terms and conditions (often known as ‘flexible’ or ‘contract’ workers). They are largely hired for short-term contracts with a commitment of offering limited benefits, and are often supplied/ monitored by the outside agents (NCEUS, 2007). By employing the workers under such flexible contracts, their participation in the union activities or shrinking attitude to team production could be greatly monitored, and this might enhance the residual surplus and productivity growth. India has experienced substantial changes in employment relations in the labour market and also maintained a decent economic growth rate in recent years, but not in productivity growth. We investigate in this chapter whether the increased contractualisation of the workforce in India might have impacted on productivity growth. In the previous chapter, it was observed that residual growth originated through wage saving has a favourable impact on employment generation. However, one should investigate the effect of contractualisation on productivity gain.
