Businessworld
Feroz Ahmed
India’s organised labour force is in transition. Political parties and their unions continue to approach labour issues through the prism of job security — a primary reason why labour reform in the country has never really taken off. This despite studies repeatedly showing that a less rigid approach to labour will benefit the economy.
Most workers and their employers believe that existing labour laws do not represent the aspirations and mindsets of the new workforce. But they have made their peace with this because they believe that changing laws — especially things like chapter 5b of the Industrial Disputes Act (IDA) which requires a unit with 100 or more workers to take government permission to lay off or retrench workers — is impossible.
According to estimates, close to 30 per cent of the manufacturing workforce in India are short time contract workers. Two decades ago, they comprised only 7 per cent of the workforce. (In the US, barely 4 per cent of the workforce is temporary.) Most of them are employed for six months and are removed thereafter to prevent them from claiming a right to be permanently employed. These workers also get wages that are roughly half of what permanent workers make.
Indeed, corporate India has multiplied its revenues and assets over the last decade but its blue-collar jobs have stagnated or come down. While some of it is thanks to technology-led efficiencies, it is equally true that with companies resorting to part time workers, those extra hands aren’t showing up in data. (Government data captures only full time employees.)
For example, Maruti Udyog last hired permanent labour in 1999; since then, the company’s car production has gone up from about 400,000 cars per year to about 630,000 cars per year.
For their part, employers are unhappy having to resort to such practices. They would rather have laws that create a liquid employee market and allow employers to compete for better workers through better wages and conditions.
Narendra Akouri, vice-president (human resources), Hero Honda Motors, argues that the law creates distortions because firms are forced to hire part time workers. “Our average worker takes home about Rs 30,000 every month. Not because the law stipulates it or the next door factory pays a competitive amount, but because we value the contribution our workers make to the company’s shareholders,” he adds.
Others point out to the SEZ policies as an indication of how even the government is looking at solutions to get around labour laws. For example, government is pursuing an amendment to the IDA that will allow it to grant public utility status to all export-oriented units in SEZs and, thus, prevent strikes in those units. Already, by declaring industries such as IT as essential services, many state governments have robbed workers the right to strike.
In all this, the unions, who have been staunchly against labour reform, agree that the labour markets are in churn and many of today’s workers don’t want to be associated with many of the traditional causes that unions stand for. For example, both CITU secretary W.R. Vardarajan and INTUC vice-president Ashok Singh say that union membership levels in the organised sector have fallen in the last decade. Indeed, unions are increasingly resorting to membership from the unorganised sector to remain relevant.
Some union leaders argue privately that unions are beginning to soften their positions, but it is a slow process. “After all, what is a VRS, but another way of letting go of workers? And all of them happened with blessings of unions,” says one. He goes on to argue that there is enough pressure building up for unions to be more flexible on employment issues.
