1. “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of light, it was the season of darkness, it was the spring of hope, it was the winter of despair.” ― Charles Dickens, A Tale of Two Cities

2. This could well be a description of the Indian situation today. Even as the prospects of India being an economic super power and enjoying the fruits of a demographic dividend are visible over the horizon, we have the harsh realities of poverty, violence, hopelessness, corruption, a falling rupee, increasing fiscal deficit and the fear that we may once again revert to the low Hindu rate of growth.

3. In such a scenario the labour ecosystem emerges as a critical success factor for organizations and indeed for the nation. For a country like India the goal has to be to create a labour ecosystem which will make us competitive and yet be fair and inclusive.

For this to happen, it is imperative that:  
A. Industrial relations is recognized as a critical success factor and becomes a strategic business process which is treated with the same rigour, sense of urgency and importance that is given to other business processes like finance, operations, marketing and new product development. This implies having a strategy, being subject to continuous review and being continuously on the top management radar screen
B. The focus should be on productivity and innovation rather than on short term labour cost arbitrage. Focusing only on the cost side and not looking at the potential benefits may lead to myopic decisions that are self defeating in the long run. And this has been the bane of the way industrial relations has been practised in a large part of the industry. 
C. Unleashing the potential of labour must be accompanied by a fundamental shift in paradigm from the win-lose approach that both labour and management have had till now, to a win-win approach where through dialogue we try and find solutions to each others problems. Listening- with an open mind and empathy is a critical skill that both labour and management need to learn
D. It is time for us to stop pointing fingers at each other and take responsibility for looking at ourselves in the mirror and focusing more on what we need to do in this whole exercise rather than blaming others or doing nothing till someone else creates the conditions which we look for. 

4. Contract labour willy-nilly has come almost centre-stage in this whole debate. While contract labour as a mode of employment is here to stay, what is required is to look at the conditions under which contract labour operates with special focus on compensation, the behaviour of management and the permanent workforce vis-à-vis contract workers, their involvement in innovation / productivity initiatives, training and skill development, levels of engagement and a sense that they are being heard and their contribution is being recognized. And, of course, basic hygiene factors like Safety, Medical Facilities, Canteen, Uniform and Social Security. Contract Labour is a ticking time bomb that needs to be addressed immediately and not put under the carpet.

5. If the challenge that India faces is restated in terms of the need to develop human assets to build competitive businesses, rather than merely managing the costs of labour, we stand a higher chance of engaging all stakeholders in a collaborative process to achieve consensus on the way forward and collaboration is essential if we want to see consensus from all stakeholders, union, government, management and civil society – rather than relying merely on the imposition of policies and regulations. 

6. Changes in labour laws are necessary because many of our laws are very old, because there are too many and often contradictory laws and because they are poorly administered. However, changing laws will be an incomplete solution. Management capabilities and practices must be improved to develop cooperation within enterprises towards the win-win goal of continuous improvement of the enterprises competitiveness and growth

7. We need to reframe the contentious debate about labour laws into collaborative deliberations about more comprehensive changes in human resources strategies. There are enough research studies that show that focus on developing human capital is far more effective in improving competitiveness than management approaches focused totally on managing the costs of labour.

8. The one question that needs to be answered with data is the impact on a firm’s profitability if higher compensation is paid to contract labour. An analysis of this cost across multiple sectors and scenarios indicates that in most cases providing more equitable compensation to non-permanent labour.

a. Has limited negative impact on key profitability and return on capital metrics 
b. Leads to many benefits like  better industrial relations, improved incentives for skill development and higher labour productivity

9. I believe that while we have a complex situation, it can actually be used as a great opportunity to revisit many old paradigms and create a platform where the various stakeholders i.e. employers, employees, government, media and civil society, get together to create an ecosystem which is competitive, fair and inclusive.  These three words need to be our North Star – competitive, fair and inclusive.

It is my firm conviction that if:
· we focus on the right questions
· approach the problem with an open mind and the determination to find solutions, 
· focus on unleashing the potential of the workforce, rather than just short-term labour arbitrage,
we can infact herald a new era of industrial relations which will be characterized by innovation, productivity and growth.

10. The key is for all stakeholders to adopt a win-win approach, understand each others points of view and be willing to give and take. Dialogue provides the key to the kingdom and if there is one mechanism that we need to mine deep and wide, it is the process of dialogue.  Several like-minded industry associations namely FICCI, CII, ASSOCHAM, EFI, NHRDN, AIOE, SCOPE and NIPM have recently come together on a common platform to suggest a practical and acceptable plan of action for the creation a violence free workplace that will also be competitive, fair and inclusive.  Five focus areas have been identified, and we hope to come up with a practical course of action that we will then discuss with trade unions, government and civil society over the next few months.

11. These five focus areas, which should apply to manufacturing & services sectors, are:

i) To co-create a Code or Charter of Behaviour which sets out voluntary guidelines for acceptable behaviour.  The basic philosophy is that each of the stakeholders takes responsibility instead of just pointing fingers.
ii) On a continuing basis have conferences and workshops across the Country which bring together employers, workers, trade unions and governments to have a social dialogue on the proposed Code of Behaviour
iii)Bring industrial relations onto the radar screen of top management and the Board
iv) Focus on capability building and education
v)Evolve guidelines for the atypical workforce, including contract labour.

12. I am not here to hold a brief for all employers. There may be some who do things that are clearly unacceptable and need to change their ways.  But equally, the vast majority of employers would like to work within a framework of principles and values and be genuinely interested in unleashing the human potential of the workers in the pursuit of creating long term competitive advantage, where employers and workmen interact and engage with each other in their multiple roles and not just as “productive resources.”  This requires that both sides 

· Be willing to “listen” and provide “psychological air.” especially to the younger work force.
· Keep looking for third alternatives through openness and dialogue.
· Believe in the power of win-win solutions rather than win-lose conflicts.
· Always remember to keep channels of communication open, especially during periods of confrontation / strife.  
· Avoid taking positions that are “irreversible” and, finally,
· Believe in ourselves – That we can bring about large change by working on many small changes.

13. At the end of the day, there is no silver bullet. It is a process of people engaging with each other, wanting to make a difference, having a passionate desire to create a better world, staying the course and being prepared to run the marathon.

14. One can argue that all this is a Utopian dream, and far removed from the harsh realities of the workplace. May be so, but any transformation starts with a dream, This will be a departure from the past and there will certainly be a risk of failure. But, as the old saying goes “nothing risked, nothing gained”.

15. In conclusion, at the risk of sounding poetic, India stands ready to go into the next orbit which can remove poverty, hunger and disease for millions of our people.  The decisions we take could either convert that potential into a reality, or a disaster.  We owe it to ourselves, our constituents and future generations to move ahead with wisdom and foresight.

16. I am sure that is how it will be.

Thank you very much, ladies and gentlemen, for your patient hearing.