More On ‘Is Bombay Dyeing Dying?’
Published here are two responses to ‘Is Bombay Dyeing Dying?’ that deserve attention of all readers. Read on:
My dear Vivek:
My response to your blog:
In many companies, the engagement of contract labour exceeds the permanent workforce by many times. The days when contract labour comprised 20-40% of the workforce have gone into oblivion. Apart from this in many of the companies in Ranjangaon, Chakkan, Nagar belt and other areas like Shirwal, a new earn while you learn scheme supplies cheap labour and companies proudly state that this is their way of Corporate Social Responsibility. The contract labour is also engaged directly in production and the Government Officials approve the same by turning a blind eye to the misuse of the contract labour sanctioned for material movement but actually engaged on production. They also justify that if they were not to do so, the investments will be flowing to Gujarat and Rajasthan or Andhra where the government was rolling out the red carpet. Would you like to jeopardise new investments into Maharashtra, they ask? Perhaps valid!!
Contract workers work harder and give more output than the permanent workmen, but are paid either the Minimum Wages or slightly more than the Minimum Wages. Where they are paid appreciably more than the Minimum Wages, the company publicizes this as a completely fair and best practice though the permanent workman doing identical work may be getting two or three times more pay than the contract worker. It requires incidents like Maruti to bring to light the rot that has steeped in our HR practices but few are prepared to learn and improve their HR practices to ensure that there is also some fair play and justice in dealing with all the stakeholders who support the industry.
This is just one dimension of the new business. there is also another aspect that the government and others including the workers and the unions should also understand. That is the fact that some businesses are doomed to failure and closure. This is also a dimension which we have to accept, if we want new investments. Businesses will have to be closed and some employments may become redundant and skills will become obsolete. The existing resources will have to develop new skills or adapt their capabilities to survive in the future ready world, if they have to survive. As events in Chennai show, closing down of Nokia and Foxconn was something never expected when these multinationals set up plants in Tamil Nadu and offered huge number of jobs. But where are the jobs today? The company has closed down. Generous VRS has not helped the company in reducing the numbers substantially. Unions and the workmen are pressurising the government to prosecute the employer for closing down without permission and send the employer to jail. This is the other side of the coin. Nokia had to close down after the acquisition by Microsoft. Foxconn closed because Nokia said that they do not want any output anymore. And without alternative buyers, Foxconn did not have a market for the products it produces at Chennai. This is also a development of the new world economy and such things do happen. No fault finding here but merely being process wise. These are the lessons of the global economy.
Revision of the severance compensation and benefits is certainly called for and for companies making losses, some consideration in the benefits payable for closing down will certainly be practical as burdening them beyond their capability will have repeat history of the Textile mills. At least the mill lands in Mumbai proved their saviour, but this may not always be possible for every business. So legal severances in a simple transparent and speedy manner is preferred to the present dispensation of opaque, bureaucratic bungling that precedes the actual permission for closure. Companies like Pfizer show that even an offer of 50 lakhs and 3 tolas of gold is not enough for some to accept “VRS” and bring about closure of employment. This has unreasonably raised the cost of severance packages for several small and medium enterprises employing more than 100 workmen. How on earth is the small employer to fund such fancy expectations?
Perhaps all this or answers to such perplexing questions in another your HR Blog HResonance!!
Dr. R. Krishna Murthy
[Dr R Krishna Murthy is a highly respected HR and ER consultant, thinker and author. And Director of Industrial Relations Institute of India. He is also editor of ‘Arbiter.’]
******
Saptarshi wrote:
Sir, what is the way out. I have read all posts in the last couple of months. Add to them issues being raised by Coal unions, Food Corporation of India trade unions, Port and dock workers. There is also some globalized support to cement unions, the Holcim-Lafarge campaign, on a merger happening between two Indian cement majors! I do not find any solutions Sir. I do not see anything happen to the corporations who have been bending it.
The trumpet of manufacturing growth gets blown periodically, some pro industry reforms happen without much positive sentiment. What needs to be done? I see this as a fight between system and culture. And I do not see any possible solution, way out, no one taking heed… I am actually concerned as what should be the rightful approach to employee relations in our land?
My dear Vivek:
My response to your blog:
In many companies, the engagement of contract labour exceeds the permanent workforce by many times. The days when contract labour comprised 20-40% of the workforce have gone into oblivion. Apart from this in many of the companies in Ranjangaon, Chakkan, Nagar belt and other areas like Shirwal, a new earn while you learn scheme supplies cheap labour and companies proudly state that this is their way of Corporate Social Responsibility. The contract labour is also engaged directly in production and the Government Officials approve the same by turning a blind eye to the misuse of the contract labour sanctioned for material movement but actually engaged on production. They also justify that if they were not to do so, the investments will be flowing to Gujarat and Rajasthan or Andhra where the government was rolling out the red carpet. Would you like to jeopardise new investments into Maharashtra, they ask? Perhaps valid!!
Contract workers work harder and give more output than the permanent workmen, but are paid either the Minimum Wages or slightly more than the Minimum Wages. Where they are paid appreciably more than the Minimum Wages, the company publicizes this as a completely fair and best practice though the permanent workman doing identical work may be getting two or three times more pay than the contract worker. It requires incidents like Maruti to bring to light the rot that has steeped in our HR practices but few are prepared to learn and improve their HR practices to ensure that there is also some fair play and justice in dealing with all the stakeholders who support the industry.
This is just one dimension of the new business. there is also another aspect that the government and others including the workers and the unions should also understand. That is the fact that some businesses are doomed to failure and closure. This is also a dimension which we have to accept, if we want new investments. Businesses will have to be closed and some employments may become redundant and skills will become obsolete. The existing resources will have to develop new skills or adapt their capabilities to survive in the future ready world, if they have to survive. As events in Chennai show, closing down of Nokia and Foxconn was something never expected when these multinationals set up plants in Tamil Nadu and offered huge number of jobs. But where are the jobs today? The company has closed down. Generous VRS has not helped the company in reducing the numbers substantially. Unions and the workmen are pressurising the government to prosecute the employer for closing down without permission and send the employer to jail. This is the other side of the coin. Nokia had to close down after the acquisition by Microsoft. Foxconn closed because Nokia said that they do not want any output anymore. And without alternative buyers, Foxconn did not have a market for the products it produces at Chennai. This is also a development of the new world economy and such things do happen. No fault finding here but merely being process wise. These are the lessons of the global economy.
Revision of the severance compensation and benefits is certainly called for and for companies making losses, some consideration in the benefits payable for closing down will certainly be practical as burdening them beyond their capability will have repeat history of the Textile mills. At least the mill lands in Mumbai proved their saviour, but this may not always be possible for every business. So legal severances in a simple transparent and speedy manner is preferred to the present dispensation of opaque, bureaucratic bungling that precedes the actual permission for closure. Companies like Pfizer show that even an offer of 50 lakhs and 3 tolas of gold is not enough for some to accept “VRS” and bring about closure of employment. This has unreasonably raised the cost of severance packages for several small and medium enterprises employing more than 100 workmen. How on earth is the small employer to fund such fancy expectations?
Perhaps all this or answers to such perplexing questions in another your HR Blog HResonance!!
Dr. R. Krishna Murthy
[Dr R Krishna Murthy is a highly respected HR and ER consultant, thinker and author. And Director of Industrial Relations Institute of India. He is also editor of ‘Arbiter.’]
******
Saptarshi wrote:
Sir, what is the way out. I have read all posts in the last couple of months. Add to them issues being raised by Coal unions, Food Corporation of India trade unions, Port and dock workers. There is also some globalized support to cement unions, the Holcim-Lafarge campaign, on a merger happening between two Indian cement majors! I do not find any solutions Sir. I do not see anything happen to the corporations who have been bending it.
The trumpet of manufacturing growth gets blown periodically, some pro industry reforms happen without much positive sentiment. What needs to be done? I see this as a fight between system and culture. And I do not see any possible solution, way out, no one taking heed… I am actually concerned as what should be the rightful approach to employee relations in our land?
[Saptarshi is a TISS graduate and works for ITC]
Vivek S Patwardhan
Your blog as usual is very informative, has picked up relevant issue of compliance and fairness.
However, one risk in discussing such matters is readers rush into conclusions such as who is the culprit and then who is the victim. If we peel the first few layers, few more dimensions emerge.
To begin with, let us do a WHY-WHY analysis..!
• Why do companies in India prefer to have contract labor heavy manpower model?
• Why do companies want to employ trainees, apprentices (fixed term employees) in place of permanent workmen?
• Why are companies opting for increased outsourced manufacturing instead of doing everything in-house?
This will help us understand other side of the Raymond story, which is so typical for any Indian manufacturing company.
A lot has changed in last 10 years in terms of pace of innovation, technology changes, globalized supply chain, breaking of foreign trade etc. Since most of the manufacturing in India is labor intensive, it has greater bearing on factories and workers. So, how much has labor regulatory environment changed in last 10 years to enable Indian industry and the workforce? Nil.
Here are some real-life examples of this generation factories:
• Products with short and / or unpredictable life cycle (e.g. mobile phones). One year you are expanding lines by 100%, next year you are discontinuing lines to cut down inventory.
• Highly export dependent businesses – some slowdown in US/UK and they discontinue orders to India without any advance notice.
• Deflationary market where companies have to guarantee YoY price reductions (e.g. Electronics, Automotive). So, how can labor costs stay flat or even reduce through various means?
• Competing with China and Korea: Indian counterparts are asked to give cheaper and yet better quality products.
• Studies have indicated the miserable plight of workmen who have taken VRS from the factories. Monetary packages, however hefty have vanished in no time – leaving workmen in lurch.
Against this backdrop, here are demands of the Indian labor and trade unions:
• No contract labor
• If not possible, contract labor paid similar wages as permanent labor
• Life time employment guarantee. Don’t touch anyone
• No production, fine, but no layoff
• Guaranteed wage increases
• Training – we will attend but pay overtime or other incentives for it
This means, we will have to look at the entire labor canvas with completely new lens. Marrying the labor interests with new realities of the industry is the key.
• Flexibility of the employer to organize his operations as per business requirement. Layoff is normal.
• Safety net for employees till they find new jobs
• Trade Certifications so that employee skills are marketable
• Allowing non-core employees but ensuring that they are paid fair, having a nation-wide policy
• Programs to make unions as business partners and not just institution of opposition
• More powers to the government to mediate and settle disputes proactively rather than decade long battles.
Till such changes are brought about, every Raymonds will be pointed as culprit.