Make In India: HR Must Focus on Quality of Employment

Make In India: HR Must Focus on Quality of Employment

I feel honoured by the invitation to speak at this seminar and present my views on ‘Contribution of HR in Make in India vis-à-vis Generation of Employment & its challenges.’ [Address at the Indian Merchant Chambers’ Seminar on Oct 20, 2016]

The subject gives an impression that it is tailor made for economists. I am not one. My views are formed essentially by my managerial experience and the realities of employee relations I noticed, in the last seven years. I hope that deliberations in this seminar will raise a good debate and serve the purpose of this seminar well.

I wish to thank the organisers especially for choosing this subject. Ever since Make in India was launched on 25th September 2014, there has been focus on getting FDI and generating employment. The role of HR in Make In India needs to be examined because there are some insufficiently explored arena. It is my intention to highlight some. I would like to focus on it immediately by stating the central argument of my talk.

My central argument in this address is that the ‘Make in India’ campaign is focusing on employment generation or job creation, in other words, on the number of jobs. They are focusing on quantity. And that it is neglecting the most vital aspect – quality of employment. That is exactly where the HR Managers can contribute!

And that they can contribute it at two levels – at the organisational level as well as at the broader level of HR associations like NHRDN and NIPM.

The Dilemma of ‘Make in India.’

What is the purpose of launching Make in India? The purpose is to encourage organisations, Indian as well as MNCs, to manufacture their products in India. […a McKinsey analysis found that rising demand and multinational corporations’ (MNCs) desire to diversify global production bases to India could help the country’s manufacturing sector grow six-fold to $1 trillion by 2025, while creating up to 90 million domestic jobs.][1] Make in India’s success will see jobs at the high end of technology as well as at the lower end by promoting ancillary industries. Obviously doing so will lead to economic growth, it will create more employment, and it will, in turn, lead to social progress and prosperity. In other words it must help us lead to our well-being. The catch word is ‘well-being.’

The work of OECD and ILO will help us understand this concept of well-being better.

Five years ago, in 2011, Organisation for Economic Co-operation and Development [OECD] launched ‘Better Life Index’ which allows people to compare countries’ performances according to their own preferences in terms of what makes for a better life.

In similar development, International Labour Organisation evolved the concept of Decent Work. ILO sums up Decent work well: ‘Decent work sums up the aspirations of people in their working lives. It involves opportunities for work that is productive and delivers a fair income, security in the workplace and social protection for families, better prospects for personal development and social integration, freedom for people to express their concerns, organize and participate in the decisions that affect their lives and equality of opportunity and treatment for all women and men.’

You will appreciate that Make in India must finally deliver a better life or well-being to people, it must satisfy aspirations of people otherwise we must regard Make in India initiative as a failure.

In order to fulfil this objective, the Government of India must get foreign direct investment so that more employment can be created. But the FDI comes if you are competitive. Under these circumstances the Governments come under pressure to lower labour standards as well as wages so that the investments are attractive. But doing so defeats the entire purpose which is to improve standard of living and well-being of people. This is accusation of trade unions against the Government. While the Government is getting FDI, it has also allowed the garment industry to appoint employees on fixed term basis, effectively making them temporary hands.

This is the dilemma of Make in India. It is a ‘Catch 22’ situation. We have to make this country attractive for FDI and yet avoid lowering of labour standards and wages. This is the tight rope walking.

This analysis tells us that if Make In India is to be successful, we must focus on the quality of employment AND the quantity that is number of jobs getting created.

Priority: Focus on Quality of Jobs.

Let me explain the concept of quality of jobs.

An average employee spends more than 48 hours at work. His earning helps him maintain or achieve a certain standard of living. It determines his well-being, and that which he can offer to his family. Work and well-being of an employee are very intricately linked. OECD has done good work on the subject of quality of jobs. They say that three factors are important:

Firstly the Earning Quality, meaning the extent to which earnings contribute to workers’ well-being. About this less said the better in our country. The minimum wages are woefully inadequate to permit a family of husband, wife and two kids to live honourably. Moreover, many employers or contractors are not paying minimum wages. The increase in real wages of Indian workers since 1990s is negligible. In the case of Chinese workers it is substantial. [India’s real wage growth was 1% in 1999-2007, while labour productivity rose by 5%. In 1999-2007, China’s real wage growth was 13.5%, while labour productivity growth was 9%, according to two charts detailing growth in wages and labour productivity in Asia for 1997-2007 and 2008-11 in the Global Wage Report 2012-13.][2] At the same time the divide between the least paid and the highest paid has widened so much that it is clear that the benefits of globalisation have not reached the lowest paid employee.

The second factor OECD mentions is the Labour Market Security which captures those aspects of economic security related to the risks of job loss and its economic cost for workers. Let us look at what has been the experience.

The Economic Times Magazine in their Sept 11-17 edition carried a three page long report titled ‘Stranded.’ It notes that 753 startups have closed down in the last five years. The case of AskMe is well known, when it closed down 4000 persons lost jobs. Recently Parle Biscuits closed down their factory at Vile Parle. Factories have been wiped out from the map of Mumbai and Thane. Several thousand persons have lost jobs.

Add to this the lack of rigour when it comes to implementation of labour laws. Contract labour is indiscriminately employed. In several companies, permanent labour and contract labour is employed to do the same jobs. The ratio of permanent to contract labour is often 10:90. That situation makes labour market security at its worst level.

The third aspect is Quality of the Working Environment which captures non-economic aspects of jobs including the nature and content of the work performed, working-time arrangements and workplace relationships. This too is a neglected area. In some new age industries the physical working environment may be good, but across the industry there is a lot to be desired. With contract labour employed in high number, all jobs involving hardship are given to them. Working time arrangement in the industries in Gujarat is shocking. A shockingly high percentage of employees work on a twelve hour shift. If you think that this is the state of affairs only in Surat or in Silvassa, I invite you to go to Ahmedabad and check what is happening in the textile mills there. While working to increase productivity, no organisation is focusing on the nature and content of the job.

You may think that I am pleading extreme cases. Indeed, some organisations in the metro cities are good, but they represent an island. Here is another piece of evidence:

International Trade Union Confederation (ITUC) published Global Rights Index in 2015. They categorised worst countries to work for. The ITUC Global Rights Index was developed for the first time in order to increase the visibility and transparency of each country’s record on workers’ rights.

The scale is 1 to 5, and 5 plus. 5 Plus is the worst meaning ‘No guarantee of rights due to the breakdown of the rule of law.’ And 5 means ‘no guarantee of rights.’ The difference is only in the cause – countries with breakdown of law are a shade worse than countries which provide no guarantee of rights. Where does India stand? It is placed at 5. ‘No guarantee of rights.’

Remember that I am speaking with evidence. And the point I am making is that the quality of employment is terrible in India, and it is not on the radar screen of Make in India campaign.[3] For those who work in metro cities this reality may be difficult to comprehend. And that’s the difference between India and Bharat as they say.

What needs to be done?

Work at Two levels: At the Policy Level

I feel that the contribution of HR will come at two levels. Organisational and at the National Policy level.

There is a huge agenda to be done at the national level. We see flouting of labour laws at will. In the last seven years I have seen scores of unscrupulous employers and union leaders alike. At the same time the Government wants to promote self-certification. There is a role for HR professionals’ organisations like NHRDN and NIPM.

I would give them three point agenda: Firstly these institutions should work at promoting ethical behaviour. Secondly, they should work with the Government to develop a pragmatic solution to redundancies and redeployment. Thirdly, they should promote quick settlement of disputes.

Our society is litigious one, it carries on litigation endlessly. And now there is even a worrisome trend – that of flouting even Supreme Court orders. In this context, the agenda of HR professionals’ organisations gains vital importance.

Work at Two levels: At the Organisational level

As for working at the organisational level, I would like to quote the HR Guru Dr Jeffery Pfeiffer. He says, “Pay people well and do everything to take their mind off money.” There are recipes for the HR work to support Make in India program. He is also referring to make work itself rewarding.

I recently wrote a blog. The title was a quote. ‘We asked for workers, we got people instead.’ It is a quote of a Swedish author Max Frisch. It captures the reality of industry and employees. People working in industry wish to do a good job and want to lead a good happy life. If HR can advance their agenda of doing a good job and leading a good life, the quality of jobs and employment improves. That is the simple message even of OECD’s Job Quality model.

A workable solution is hidden in the OECD’s definition of ‘quality of jobs.’

In recent times people have experimented with various work group activities to improve the work and make it interesting for the employee. Quality movement of the last three decades created a wave of such initiatives. One of the guiding case would be NUMMI of Toyota. NUMMI was a huge turnaround story and it was also a story of high quality of jobs of Toyota workers. This is just one case from which we can draw our inspiration.

Summing up

We HR professional know that intangibles are more important than tangibles. Quality of jobs is more important than quantity of jobs. HR professionals have a great opportunity to serve the nation at two levels. I am reminded of what Deepika Padukone said, “I believe chemistry is based on the trust between two performers. What actually works is something intangible – being extremely comfortable in each other’s presence.” There are three players in this scenario: The Government, the employers and the employees. Their chemistry, their trust is critical to the success of Make in India.

Vivek S Patwardhan

[1] ‘Make in India: A tectonic shift for human resources’ [Business Online, Jan 6, 2015]

[2] Indian real wages fell in 2008-11: ILO report  quoted in Mint Dec 07, 2012

[3] In their report Global Slavery Index 2016, Walk Free Foundation estimated that 58% out of 45.8 million living in slavery are found in India, China, Pakistan, Bangladesh and Uzbekistan. The estimated number in India is 1.83 Cr.