And what we can do about it…

[This address was prepared for the Round Table organised by Cerebrus Consultants, on Jan 10, 2019 at Pune. I could not attend the roundtable unfortunately due to health reasons. My video was screened. Here is the full text of my speech.]

At the outset I congratulate Ms Varada Pendse and Ms Mohana of Cerebrus Consultants for organising a round table on Employee Relations. I feel it was long overdue. Round table conferences lead to understanding various facets of a subject. My job here is to ‘Build Perspectives on Employer-Employee Relations.’ Chris Pine, the American actor said, “The only thing you sometimes have control over is perspective. You don’t have control over your situation. But you have a choice about how you view it.” The Employee Relations scenario poses intricate problems. At the end of this round table I hope we will have made up our m ind on ‘how to view it.’

I retired in 2009, and since then I have been on a discovery mission. My field is industrial relations. I have blogged about my discoveries and my experiences which, hopefully, some of the participants here may have read. The stories are about indiscriminate employment of contingent workforce in the industry.  The stories are about how it is impacting lives of thousands of men and women today. The stories are about gross exploitation and hopelessness of the situation. And there are a few stories which give us hope and reinforce our belief that the world can be transformed for good.

I would like to touch upon the developments in the past, discuss challenges before us today, and discuss possible solutions at the national and enterprise level. We pick up the story in the eighties.

The Dice Is Loaded Against Unions and Workers

The decade of eighties dealt a body blow to the power balance between employers and unions which was till then so strongly in favour of the unions. There is no secret that the unions exploited the situation to the hilt in the seventies, with a brief halt during the emergency.

When we look back on ‘Emergency’ days from the framework of power balance, we realise that the employers, as a class, had their first taste of power during the twenty-one-month period of ‘Emergency.’ It was during the Emergency that the right to strike was suspended. The implications of suspension of right to strike are obvious to all. That the textile strike which started in January 1982, less than five years after Emergency was lifted, benefited and emboldened the employers is no secret.

The prolonged textile strike was an expression of deep frustration against the mill owners. I am inclined to see it also as an expression of deep frustration against the Government which had returned to power after failure of the Janata Government.

This backdrop of events is important for our discussion today because the national scenario has been impacting industrial relations significantly in our country. The number of work stoppages declined from 2488 in 1983 to 430 in 2006. And mandays lost per thousand workers in organised sector declined from 1951 to 753.[1] And we should not mistake reduction in work stoppages and mandays lost as symbols of harmonious industrial relations.

While we say that the Globalisation started in 1990, many decisions were taken in the decade of eighties which were in that direction. Several organisations declared voluntary retirement schemes. ‘Cutting down the flab’ was a popular expression. The flab invariably represented the workers.  

The unions had lost their power by the time the decade of nineties arrived. The unions were perceived as obdurate organisations resisting every change. They were also seen as irresponsible organisations. These images of unions survive even today. The unions were decimated in the decade of the nineties and with them was decimated the necessity of fostering industrial relations.

Let me turn to a relatively recent event. ‘On 2nd September 2016, an estimated 18 crore Indian public sector workers went on a 24-hour nationwide general strike against Prime Minister Narendra Modi’s plans for increasing privatization and other economic policies. The strikers also protested in favour of social security, universal healthcare, and an increased minimum wage. It was called the largest strike in human history.’[2]

The strike was only partially successful and did not have much of an impact.[3] Perhaps it was the evidence that the industrial relations situation had turned on its head. The dice is loaded against the unions.

We have also witnessed a nationwide strike yesterday and the day before.

The Neo-Liberal Policies of Government Are Producing Precariat

The Government has launched the ‘Make In India’ initiative. For meeting its objectives, 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.  

The Government of India has launched schemes like NEEM, in April 2013, which have noble objectives, but in practice it is promoting exploitation. 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.

The inevitable fallout of such neo-liberal economics is ‘precariat.’

We are aware that thousands of workers are employed in the industry on contract or as trainees or as temporary workers. All of them constitute the precariat. I have written about them and recorded videos of workers who for eight or ten years have been working without a secure job, and on bare subsistence wages.

There are two important implications of neo-liberal economics[4] :

a.       First, a re-location of activities from the advanced to the underdeveloped world, to take advantage of the low wages prevailing in the latter. We have seen this happen. India and China are thriving because they offer low labour cost.

b.       Second, it alters the character of the State everywhere, so that the State, instead of apparently standing above classes and defending the interests of all, including even the oppressed classes, becomes more openly and directly linked to the interests of the corporate-financial oligarchy….” This should remind us of the allegations about the Government being hand in glove with Ambanis and Adani.  

In 2012 Noam Chomsky made some observations which I will present to you. Noam Chomsky is a philosopher, cognitive scientist, a social critic and a professor at MIT in USA. This is what he says in his article ‘Plutonomy and the Precariat: On the History of the U.S. Economy in Decline’:

In 2005, Citigroup came out with a brochure for investors called “Plutonomy: Buying Luxury, Explaining Global Imbalances.” It urged investors to put money into a “plutonomy index.” The brochure says, “The World is dividing into two blocs — the Plutonomy and the rest.”

Plutonomy refers to the rich, those who buy luxury goods and so on, and that’s where the action is. They claimed that their plutonomy index was way outperforming the stock market. As for the rest, we set them adrift. We don’t really care about them. We don’t really need them……  ..These days they’re sometimes called the “precariat” — people who live a precarious existence at the periphery of society. Only it’s not the periphery anymore. It’s becoming a very substantial part of society in the United States and indeed elsewhere. And this is considered a good thing.

So, for example, Fed Chairman Alan Greenspan, [who was] hailed by the economics profession as one of the greatest economists of all time — was testifying to Congress in the Clinton years, and he explained the wonders of the great economy that he was supervising. He said a lot of its success was based substantially on what he called “growing worker insecurity.” If working people are insecure, if they’re part of the precariat, living precarious existences, they’re not going to make demands, they’re not going to try to get better wages, they won’t get improved benefits. We can kick ’em out, if we don’t need ’em. And that’s what’s called a “healthy” economy, technically speaking. And he was highly praised for this, greatly admired.[5]

Mumbai Mirror[6] carried a report and a photograph of a worker who has been working for eighteen years on contract at HPCL. He climbed up a hundred-foot chimney to draw attention to his plight. That is the image of precariat!

Recently Raghuram Rajan published an article titled ‘Eight things India must do in 2019: The economic challenges we face and the reforms we need to carry out now’[7] in The Times of India. He suggested a scheme for employing young men as interns. Such a scheme can become a tool of exploitation at the hands of the Government which is the biggest exploiter today.

In a nutshell, Globalisation has worked against the interests of the labour. Moreover, there are no pangs of conscience in the business community. We must devise schemes which will address the realities of the Indian scenario.

As if this was not enough, the world has already stepped in to what we call Industry 4.0 while this situation is developing in our country. There are apprehensions about what future has in store for the working class.

Industry 4.0 Will Aggravate The Situation

Industry 4.0 includes cyber-physical systems, the Internet of things, cloud computing and cognitive computing.[8] This fourth industrial revolution has already started and we are in the midst of it.  

The Indian Institute of Science (IISc) is building India’s first smart factory in Bengaluru with a seed funding from the Boeing Company.[9] Andhra Pradesh government aims to turn the state into an Internet of Things (IoT) hub by 2020.

What challenges will be presented to us? The developing countries will find that the jobs are moving back to developed nations. This is because the competitive advantage of lower labour cost will be lost with the automation. In other words, developing nations will face loss of jobs. The digitized factory of Adidas will move production away from Asian countries.

With potential for job losses, the social threats will be very high. Developing countries like India do not have a good health and social security schemes. So, this threat will be highest for us.

We will face the issue of technological obsolescence. But several new jobs created. Those new jobs will require different skills. Menial jobs will be lost first. The new jobs will mean new skills. So, training and retraining becomes important.

To sum up, the situation will represent a turmoil in every sense of that word.

What should we do?

Let us discuss the agenda at two levels: Organisational level and National level.

In his interview to The Hindu in Oct 2017, Mr V Ramnath, the MD of Racold, said that Racold was growing at 7 to 8% and they had plans to double it by October 2018 through new initiatives,[10] and yet Racold closed down its Pune plant stealthily[11] on October 31, 2018. We should not be surprised if Racold still meets its growth target. Racold case begs the question ‘Are harmonious employee relations relevant for business growth?’ Several organisations are growing through outsourcing production to China.

Let us return to the scenario where organisations are manufacturing their products in India. With Government not overseeing implementation of its laws, with large labour pool available, and with rampant exploitative practices, we can only turn to the leader of the organisation to adopt people practices that value fair play. We need a transformational leader who will build an institution. When you are building an institution, you manage the enterprise with a set of values which spell human rights and dignity.

Do we see such leaders? Yes, we do. Rare breed though!

I have blogged about Govindkaka Dholakia who runs a billion-dollar enterprise SRK Exports P Ltd. He employs about 6500 contract workers whose service conditions are identical to the permanent workers. Both draw wages up to Rs One lakh in a month.

The two other cases, Marico and HiTech Engineers adopted practices which are based on deeper view of employer- employee relationship. We are aware that Marico managed their Kanjikode plant with inverted pyramid concept. Workers in that plant decided several issues which were work related and discipline related. I have written about the excellent implementation of Toyota Production System at HiTech Engineers Ltd. Mr Hemant Mondkar, the entrepreneur shares wealth with his workers calculated on a formula informed to all employees. It is based on economic value-added. His factories employ a small number of contract workers and he shares economic value added with his contract workers too. He was inspired by Polyhydron. These are rare cases of institution building; and these are inspiring!

Whether it was Marico or HiTech Engineers, one aspect of their enterprise stands out, and yet it is somehow missed out in discussions. It is the workplace democracy.

Admittedly these institutions stand out like oasis in the Sahara Desert of industrial scenario today. The message is, however, clear. That it is possible to create and run organisations with workplace democracy and fair play. Employees cannot ask more from their employers.

On the national front, the problem becomes too complex. It is not amenable for simple solutions. We can only think of a broad direction. I propose three suggestions.

First, we ought to recognise that there is no substitute to rigorous implementation of laws. Nothing will move to ameliorate the condition of the lowest strata of employees in a lawless situation. We need laws which promote reforms and also grant sufficient compensation to the affected employees. Reforms are essential, and so also social justice. Unfortunately, labour is no longer represented well in the parliament.

Second, Global Agreements should be adhered to. There is an increasing trend of global agreements. These are agreements between MNCs and International federation of unions. The global agreements support freedom of association and collective bargaining. Reports suggest that the global agreements have promoted social dialogue. The Indian experience is however different. Not many Indian units recognise the global agreements. There is a documented case of DHL on this point.[12] I hope the response of the MNCs in India will change.

Third, we should explore providing ‘universal basic income’ to people. We know that the current economic system is generating extreme inequality and injustice. Economists who believe that provision of universal basic income is both a political and economic solution to the current situation.

Let me quote extensively from a short paper published by FICCI, less than two years ago, on April 18, 2017.

[Quote] ‘Universal Basic Income was mentioned in the Economic Survey 2016-17. UBI concept has attracted greater attention in recent times driven by the anticipation that technological disruption (robotic automation and artificial intelligence, others) would cause mass unemployment (extensive job losses) globally and especially in advanced economies. Hence, governments across countries are deliberating the option of UBI to provide citizens a guaranteed amount of income, irrespective of their economic or employment status….

…. As India adopts rapidly evolving technologies, UBI would also aid in addressing expected unemployment arising from obsolescence of workforce…….. One other major argument against basic income is that the poor may spend it on alcohol, drugs and other unwanted activities; though this argument has been refuted by the findings of the pilot study conducted in rural Madhya Pradesh through the Self-Employed Women’s Association in 2011 – ‘Madhya Pradesh Unconditional Cash Transfer Project’. Under this project, over 6,000 individuals were provided with the ‘basic income’ for duration of 12 to 18 months. Experiences across the world on the use of unconditional cash transfers have also shown that expenditure has been made on worthwhile goods and services.

…… Alaska Dividend is the closest policy to basic income in the world today. It has been paying dividends to all citizens (residents who have lived within the state for a full calendar year and intend to remain a resident of Alaska) of Alaska since 1982. In 2010, Iran became the first country to introduce basic income to its citizens. Brazil was the first nation in the world that has passed a law on basic income.’ [Unquote]

So, we have a model to work on. I have been reading Guy Standing’s book ‘Basic Income: And How We Can Make It Happen’. The solution seems to be in sight. We need a conscientious society to implement.

Karl Marx said “The philosophers have only interpreted the world, in various ways. The point, however, is to change it.” His words which are inscribed on his grave, should be our guiding light. Otherwise they might get inscribed on thousands of our countrymen’s graves.

Vivek S Patwardhan 

“What you leave behind is not what is engraved in stone monuments, but what is woven into the lives of others.”

[1] See: http://shodhganga.inflibnet.ac.in/bitstream/10603/40172/11/11_chapter4.pdf

[2] Indian General Strike of 2016: https://en.wikipedia.org/wiki/Indian_general_strike_of_2016

[3] Strike by 18 crore workers results in ₹18,000-cr loss: https://www.thehindubusinessline.com/economy/strike-by-18-crore-workers-results-in-18000cr-loss/article9066500.ece

[4] See ‘Neo-Liberal Capitalism and its Crisis’  http://peoplesdemocracy.in/2017/1105_pd/neo-liberal-capitalism-and-its-crisis

[5] Plutonomy and the Precariat: On the History of the U.S. Economy in Decline Noam Chomsky https://chomsky.info/20120508/

[6] Demand for permanent job from a 100-ft-high perch https://mumbaimirror.indiatimes.com/mumbai/civic/demand-for-permanent-job-from-a-100-ft-high-perch/articleshow/67357258.cms

[7] Eight things India must do in 2019: The economic challenges we face and the reforms we need to carry out now. Raghuram Rajan & Abhijit Banerjee [TOI Jan 1, 2019] https://timesofindia.indiatimes.com/blogs/toi-edit-page/an-economic-agenda-for-2019-the-challenges-india-faces-and-the-reforms-it-needs-to-carry-out-now/

[8] ‘Industry 4.0’  https://en.wikipedia.org/wiki/Industry_4.0

[9] ‘Industry 4.0: IISc building India’s 1st smart factory in Bengaluru’ [June 29, 2016]  https://timesofindia.indiatimes.com/city/bengaluru/Industry-4-0-IISc-building-Indias-1st-smart-factory-in-Bengaluru/articleshow/53441112.cms

[10] ‘Water heater firm Racold to double market share in a year’ [The Hindu Oct 13, 2017]  https://www.thehindu.com/business/water-heater-firm-racold-to-double-market-share-in-a-year/article19855683.ece

[11] See ‘Unconscionable Is The Racold Closure’ https://vivekvsp.com/2018/12/racold-closure/

[12] Solidarity with DHL India workers : Trade union rights are being blocked   www.itfglobal.org/en/cross-sectoral-work/supply-chain-logistics/in-focus/solidarity-with-dhl-india-workers/ I