Fear, Hope and Issues in Industrial Relations Today

Fear, Hope and Issues in Industrial Relations Today

[Speech delivered at AON HEWITT 11th Annual Performance and Rewards Conference, Mumbai on June 14, 2018]

I retired in 2009. The benefit of retirement is that you lose your identity as HR professional, it becomes a thing of the past, and a new identity emerges. In my case this new identity is that of a curious and inquisitive observer of events on the employee relations scenario. Working in organisations puts restrictions on what you can say and write. My retirement removed that fetter. What I am going to submit for consideration to this august audience is what I have seen, heard and felt. It is not hearsay, it is the evidence of this eyewitness. I am going to talk about ‘Fear, Hope and Issues in Industrial Relations Today’.

Ladies and Gentlemen, I have a request: Please examine my statements and submissions not from the viewpoint of an HR professional, but from the eyes of a right thinking member of the society. It will help us take a dispassionate and objective view of the industrial relations scenario.

I will divide my submissions to you in three parts: First, what are the facts and what is the cause of fear. Second, what are the facts and what is giving me hope. And lastly, the issues before us. So here we go:

On Fear:

1.   We know that there are three parties in Industrial Relations. The most powerful of them is the Government. Stated simply, the role of the Government is to keep the wheels of industry running. Think of what happened when IT employees were summarily sacked. Did the Government intervene? When Bajaj Auto worker protested by ‘fast unto death’ in January this year, the Government looked the other way. It is well known that the Government which intervened at the drop of a hat earlier is now looking on like a bystander. I said like ‘drop of a hat.’ That idiom so pictorially refers to signalling the start of a fight. The Government is supposed to intervene even in an apprehended dispute. One reason why we see indiscriminate use of contract labour is because the Government has failed to implement its laws. There should be no doubt in our mind that the Government has abdicated its role.  

2.   As children we have experienced that when father is not at home, the elder brother calls the shots. The situation is not different here with Government pulling wool over its eyes. Employers are emboldened to use contract labour and trainees indiscriminately, the extent is to be seen to be believed. That is what happens in manufacturing industry. What is the extent of problem? A survey was conducted in Pune. For every two permanent workers, three persons are employed in flexible manpower category. And in Pune alone we estimate that they number more than one lakh.  

3.   To encourage skill building the Government has launched National Employability Enhancement Mission or NEEM as it is popularly called. NEEM has provided license for exploitation to the unscrupulous employers. Under the NEEM you can engage practically anybody as a trainee because the requisite qualifications of a trainee are so broadly defined. You can engage anybody in the age group 18 to 40! They are employed by a NEEM agent so you are not the employer and you have no liability except in the case of an accident. So no PF, no ESIC. The NEEM agent rotates trainees from company to company. The net result: No specific training so no skill development, but labour is made available at the minimum wages rate. And a person lands up working as a NEEM trainee for several years. This exploitation is so bad that Sharmik Ekta Mahasangh to which more than 100 unions in Pune are affiliated, has filed a PIL in Mumbai High Court. As I said earlier, in Pune alone there are more than ten thousand trainees under NEEM.  

4.   I have interviewed many trainees in Pune region. Let me share what Swapnil Marathe said to me. Swapnil Marathe worked for six years at Hyundai Construction, but now he is removed from service. He worked as a welder for four years under the Yashaswi Scheme of Earn and Learn. Under the scheme he would get a Diploma if he completed the course successfully. He was required to work for 12 hours a day. So it was not possible to attend classes and finish his Diploma course. The fact is that nobody earns his diploma under that scheme. After completing four years as a trainee, they gave him a break and then engaged through NEEM. They paid him Rs 14500. But after completing one and a half year they transferred him to another factory at Ranjangaon. They said they will pay him Rs. 10000 pm there. Ranjangaon is far away. Swapnil has a family, his wife and two children. He has old parents to look after. Last year he spent Rs 50,000 because his father met with an accident. He asked me ‘How to survive here, Sir?’ 

5.   We have a huge population which works in non-permanent jobs and earn minimum wages year after year. What’s the net result? We are keeping the purchasing power of the workers unchanged over years, while we are granting sumptuous increases in salaries to those who hold permanent jobs. I would like to remind you that India’s real wage growth was 1% in 1999-2007. The benefits of globalisation have not percolated to this strata of the society, and what is more we have denied it to them.  

6.   Exactly a week ago, ITUC [International Trade Union Confederation] published their annual report called ‘Global Rights Index’. ITUC Global Rights Index ranks 142 countries on the degree of respect for workers’ rights on a scale of 1 to 5+. Rating of 1 is a good rating and rating of 5+ is the worst rating. Where does India stand? No marks for guessing. We are rated 5 on a scale of 1 to 5+. You get a rating of 5 which denotes ‘No guarantee of rights.’ ITUC also publishes a list of “ten worst countries to work for workers.” In the report published in 2016, India had the dubious distinction of being in the list. The only solace for us is that India is not there in that list this year, though the rating of 5 is damaging enough. 

7.   My question to this audience is ‘Do we realise that we have created a society of this extreme divide?’ We have an exceptionally large population which is working in insecure employment with subsistence level pay and without any social security benefits to whom even accident compensation is often denied. These are the men who do not know where the NEEM agent will place them next. They do not know what salary he will pay them. Mr Maruti Jagdale, who is an office bearer of Shramik Ekta Mahasangh warns that we are creating a huge mass of exploited men. He warns us that we are creating Naxalites. Does it sound an extreme statement? I invite you to check the reality going out in the field. As for me, I agree, we are sitting on a time bomb of extreme unrest, waiting to explode. Everybody knows the parable of boiled frog, I am afraid that situation will spin out of control. 

8.   We have created what is called ‘Precariat’. It means ‘people whose employment and income are insecure.’ Precariat is a word which is a combination of Precarious and Proletariat. There is a book called Precariat authored by Guy Standing who is a professor of development studies. He warns that the rapid growth of the precariat is producing extreme ‘instabilities in society. Noam Chomsky describes it as ‘a very important book’. The book Precariat has achieved cult status as the first account of this emerging class of people, facing lives of insecurity, moving in and out of jobs that give little meaning to their lives.” You will find that the situation in India is not at all different. My question to you is ‘Do we recognise that the precariat is growing, it is a threat to our Society and that we as responsible citizens, need to do something about it?’I will cull out the issues for discussion, after I speak about a few positives. Those positives provide us hope.

On Hope:

9.   I went to ‘The Tree of Life’ while in Bahrain. It is a four hundred years old tree with a nice green crown, standing on a hill in the Arabian Desert surrounded by miles of sand. There is no rainfall in the hot desert and nobody is certain how the tree survives. Ladies and Gentlemen, that tree symbolises my hope, I retain my hope in this exploitative world of employee relations. 

10.               Yesterday I posted on my blog the story of Mitsuba vs Pricol. Recently the VP of Mitsuba was grievously injured in mindless violence. You will recall that a few years ago the VP-HR of Pricol had also unfortunately met the same fate. But Pricol Company has recovered from the turmoil and it has been awarded National Award for Outstanding Industrial Relations (IR) Practices. All India Organisation of Employers (AIOE) which is an allied body of the Federation of Indian Chambers of Commerce and Industry (FICCI), has conferred the award. That is no small achievement. So we have a hope. It is time for us to cull out lessons from Pricol story. Good policies are essential, so also lessons from rebuilding employee relations like Pricol.   

11.               We discussed the problem of contract labour. Are you familiar with the case of AAK Kamani Oil Ltd? They had about 70 permanent workers and 234 contract workers at their factory at Khopoli. In the last settlement they made all contract workers permanent. All 234! They could have possibly done the settlement without making the workers permanent. It takes strong conviction to take such decision and make it work. They have debunked the theory that permanent workers do not work. Chitra Panniker’s [their VP-HR] video is on my YouTube channel. 

12.               I met Mr Govind Dholakia, the Chairman and MD of Sri Ramkrishna Exports. They have a huge diamond cutting factory at Surat. They employ about 7000 workers, almost all are on contract. But not a single worker lost his job when the business faced headwind in 2008. All contract workers are paid exactly the same with all same benefits including medical insurance as their 100 permanent workers. Believe it or not, all, meaning all permanent workers as well as all contract workers can earn up to Rs 1 lakh a month as wages with incentive. In fact the way contract labour is treated and remunerated in his factory is to be seen to be believed. This is not hearsay. I was allowed to meet and interview any worker anywhere in this factory and also photograph anything as well as video-graph any interview. I am speaking after satisfying myself that Govindkaka Dholakia’s factory is indeed run as told. In fact I wondered why they are engaging contract workers when there is no difference between a permanent worker and a contract worker. We will park that question for the time being. What we need is a leader who acts out of hope and not out of fear, and we can see that it works. 

13.               There are very interesting developments on Employee relations scenario. In a few companies settlements are signed without a charter of demand. It happened in Automatic Stampings & Assemblies Ltd [ASAL] and recently also in Wilo Mather & Platt. Pune based Wilo Mather & Platt went one step ahead. They have not only given good pay rise to their workers but they have also devised a scheme to share the wealth with workers. They have linked a part of compensation to gross profit margin of the Company. Similarly Hi-Tech Engineers in Thane shares wealth with workers on the basis of economic value-added. The point I am making is that there are entrepreneurs who have taken bold and positive steps to build value based industrial relations. 

14.              On another note we see precariat is increasing and will continue to increase with the current schemes. That leads me to ask a question ‘What’s your ER policy?’ While almost all companies are declaring their vision and mission statements and policies on safety, quality and possibly every aspect of management except one: employee relations. Search the net and you will be lucky to find three Indian companies declaring ER policy. ITC comes very close to it, but not quite there. Why is it that Indian companies do not declare their ER policy while MNC companies like Nestle, Toyota, LG have articulated it beautifully and placed it on their website? Because we do not wish to have scrutiny of our governance policies. People will ask questions. We declare vision, mission and corporate values, but not declare employee relations policy. LG has one of the best articulated ER policy, and we find that its Indian unit has merrily flouted it. Tesco which is known in UK for its exemplary ER policies followed diametrically opposite policies in USA. I invite you to read the report ‘The Two Faces of Tesco.’ It is not as if declaring ER policy is the complete answer, yet it is a guidance and check on managers worth having. It is the first step to establish workplace democracy. Indian corporations must not shy away from declaring ER policy if they have to create responsible organisations. The issue I wish to place before you is ‘Do you agree that a majority of Indian entrepreneurs are managing ER out of fear and not out of hope? Do you foresee workplace democracy flourishing or do you see mindless exploitation of workers in future? Do you see workplace democracy as an essential step for ‘Make in India?’’ 

15.               Ladies and Gentlemen, we respond to the words. Words carry images. We talk about permanent workers or permanent jobs. We are aware that there is nothing permanent in this world. Forget permanent jobs, even organisations are not permanent, they sink, or merge or vanish in many ways. This is the reality. Lawmakers, unions and working population do not accept this reality. The exit route must be provided to employers. If it is not done, employers will circumvent the law. So we find that contract labour is often engaged indiscriminately keeping permanent employees less than one hundred. It is common to find ten contract employees for every permanent employee. In some cases all employees are on contract. And unions too are foolishly are resisting the change of law on contract labour and closure of establishments at the national level, while they are unable to do resist it at the organisational level. The Government on their part is not addressing the problem directly but helping the employers by reducing the limit under chapter V-B to 100, and by allowing industries to recruit under NEEM [National Employability Enhancement Mission]. Incidentally NEEM is tagged as National Exploitation Enhancement Mission by the Unions. Now we have Fixed Term Employees in addition. Anomalous situation is created as much by both Government which is beating around the bush and unions which are resisting what is inevitable, and by refusing to accept the reality of situation. The reality is impermanence of everything. The issue I wish to place before you is ‘Do you believe that Indian Government can show the statesman like quality to bring about the reforms in law?’ 

16.               Ladies and gentlemen, we are living in an era which is marked by intolerance, impertinence and impatience. Unfortunately all political leaders exhibit such behaviour. Every day the newspapers carry headlines of utterances of political leaders who use the language of violence. We see these leaders flouting laws and conventions. We see leaders exhorting people to break laws and their misuse of power goes unchecked. I am mentioning this to highlight that what happens in the organisations is often the reflection of what is happening in the society. I would like to ask: ‘What kind of businesses you expect to develop and what kind of industrial relations you expect to emerge in our country where disregard for law is seen at every step and is actively encouraged?’ 

17.               The challenge before us is of gigantic proportion. As professionals I hope we are not found wanting to address it.  

With that, Ladies and Gentlemen, I conclude this address.

Watch the video of the speech here


Vivek S Patwardhan