Strike a balance between union and management: Rajesh Rai
Are we prepared to tackle the increasing cases of labor unrest? How should management confront such issues of labor unrest?
I don’t think we as a nation are prepared to tackle increasing cases of labor unrest. The resolution is easier said than done, but management supported by the local Government needs to work towards a balance between the interests of the union workforce and the interests of the management (with labor reforms as the back drop). The see-saw should not be tilted towards any one side and law should not be the only factor influencing decisions.
However, since employment is so governed by the law, it’s important for the State Government to be stern in taking action. Apart from the Gurgaon-Manesar belt, there have been problems in other parts of the country, notably the Sriperumbudur industrial corridor near Chennai, Bangalore and Pune. Apex industry bodies such as business chambers, labor unions and the government need to put their heads together to assess what is undoubtedly a disturbing trend and examine ways to reverse this trend.
We have been hearing pious utterances on labor reforms for several years. What should be the direction of labor reforms in India?
The body of legislation that shapes the industrial and labor environment in India is huge. This was enacted a few months before India's independence and guides the hiring and firing rules of the industrial sector and is a good example of a well-meaning policy that is founded on antiquated economics and a handsome misunderstanding of the way markets function. So, the direction is certainly to remove bottlenecks to make the labor reforms both worker friendly and management friendly as much as facilitation from the law. For example, it’s not easy to terminate a worker if he/she is not performing. Terminations should be based on performance and not on the status of employment. But as per the legal procedures it’s not easy to get this done. In fact an amendment made to the IDA in the mid 1980s requires that any firm employing more than 100 workers needs to get permission from the state government before retrenching workers (and in practice that permission is seldom given).
Suppose a firm wants to manufacture a product that has volatile demand. This firm may want to offer workers higher wages, but makes it clear to them that they could be given a month's notice and asked to leave. Such a contract will have no legal standing because the IDA specifies in advance how and when workers may and or may not be retrenched. Hence, we do not see such contracts.
Is India Inc. and trade unions ready for a dialog on wage negotiation? What should be the methodology to be followed to arrive at a minimum wage?
As I see, trade unions are ready for a dialouge for negotiations. Wage negotiation is one part, but the other part is terms and conditions of employment (includes benefits and other aspects). Follow the methodology of industry relevant benchmarking and make it public. This is an exercise similar to what organizations follow at the corporate level for white collar employees, regular benchmarking among the peer group and sharing of the salient aspects such as positioning vis-à-vis the market and getting it aligned with the overall organizational strategy and work force.
Across Indian industries, the traditional management-labor interactions have acquired a new meaning as companies are struggling with a complex fluctuating economic-business environment to rein in costs, including wages. Workers have been frustrated and this has to be seen in the context of the consumer culture that has taken hold of the country. However, this can be made better through ensuring transparency and logic in wage related decisions.
Are there ways in which employment of contract labors be encouraged without making the employees feel that they are losing out in terms of important benefits?
Since it is so driven by legal rules and compliances, it’s important that the law supports in this if it has to be made possible. Also, the labor unrest through contract labor needs to be controlled. They are seen as an external member coming and working for some time within the organization and hence, may also get to be seen as trouble makers (thereby calling for stern action from the Government wherever required). The attempt by some companies, especially multinationals, to discourage unionization has added to the volatility of industrial relations, and their preferred tactic is to employ workers on contract, so as to have a hold over them. Further that is done for a small period of time as the Contract Labor Act can make the worker permanent depending not upon performance but on the length of stay and that cannot be the basis for employment. If it has to be, then the laws of employment need to gear up to make such changes. This is certainly not the way to do away with root causes of the problem, which are far deeper. All of this would have to be worked upon to ensure contract labor employment is encouraged.