Presentation on October 19th, 2001 at Bangalore

by: ASHIT K. SARKAR on behalf of the



The undersigned thanks the Study Group for their kind invitation to present his views on the above topic during the National Consultation, in continuation of his earlier presentation on Nov 20th, 2000 to the 2nd National Commission on Labour, and hopes that actions will emerge by the Government on the recommendations without excessive delay.

1. Globalization: the concept, history & the process in India (& research papers) need little debate other than for academic purposes. As such, this aspect is left to the many competent academicians who will cover this area with distinction. However, what is now essential is quick and early responses to the impact of liberalisation and globalization on the national economy, and the strategy to deal effectively to maximize the benefits all round to the nation, its people and the economy, and this Study Group hopefully will be able to address and emphasise this urgency in their recommendations.

2. The Manufacturing Industry in India is very much affected with the belated but inevitable and much needed liberalisation. This has brought new challenges and competition from both within and also internationally strong & technologically advanced organisations, and this competitive environment makes it paramount for the industry to urgently improve performance in very many areas: quality, productivity, technology upgradations, research & development, innovation, costs, management processes, brand building, etc. These are not one shot improvements, but require continuous on-going attention and action, and often operational flexibility becomes a major necessity for success. However, the legal system and accepted practices & norms in India do not provide the kind of environment, where many of the required changes can be made easily or quickly, and in fact, prohibits quite a few change processes! These factors need to be appreciated and addressed by the Government, and the NCL must strongly support speedy changes.

3. Other participants will no doubt cover data on the impact of globalisation, & needs of other sectors of industry or economy, in their presentations.

4. I can do no better than re-emphasise some of my comments & the suggestions made in the earlier presentation to the 2nd NCL, as below:

"The essential need for any management of the Industry is ongoing improvement in the shareholder value. This can only be achieved through all round excellence that results in consumer satisfaction, and being competitively placed in the market. To achieve this, there is a continuous requirement to modernize, upgrade or produce new products of a high consistent quality at minimal or competitive cost. This demands high productivity, manpower efficiency, technology upgradations, lower cost of materials & waste, good management etc. as the most important elements. Regrettably, despite the recognition of these factors, the rules and legislation do not support such activities, and often block them! These need encouragement and legislative support.

With the challenges faced by the Industry both in a highly competitive domestic and international market, it is vital that the organisations are permitted the flexibility that they need desperately due to changing or seasonal product or quantity demands, as well as the freedom to utilize specialist groups to carry out ancillary jobs instead of being forced to do it themselves. Employment of Casual, Temporary or Badli workers, or Contract work or workers, should not be discouraged, and should instead be made easier to meet such needs of the industry. However, for such workers Minimum wages, safe working conditions and general welfare may not be permitted to be relaxed, and be protected adequately. Contract work should be permitted & must be made simpler, and easier. In fact, such simplification will in reality increase the utilization of the large unemployed labour force available in the country, many of them not getting employed currently even for part time otherwise due to the laws being non-supportive to the varying or flexible production requirements - a loss both to the Industry, as well as to the concerned unemployed people - and therefore, to the nation finally.

The other reality that needs urgent addressing is that with increasing competition and the ability of some organisations to provide excellence and better value to the consumer, some Companies will surely fail. This changed scenario has become more vital with liberalization, and will be on the increase. The draconian laws governing the closure, sale, transfer or reorganization of such failing organisations remain a drain on the national economy, and instead of cutting the losses, only encourage postponing the uncertainty at considerable expense to all concerned. Supportive exit policies for employees of such companies with realistic benefits should be encouraged, instead of prolonging the agony of all. Provisions to make such surplus people employable or becoming self employed through training etc. should help in reducing the difficulties to some extent. Ideally, social security for all unemployed persons is necessary, which the country can ill afford at the present time.

Amongst them, one of the strategies used is VRS of surplus people - while this is permitted, it needs positive reinforcement, support and boost. Similarly lay-offs of surplus people, or work for part time during lean periods may be permitted easily without excessive roadblocks - perhaps with improved protection to the concerned employees. This will be beneficial to both the employees and the industry in the long run. In today's scenario, despite being aware of the market difficulties, even most responsible Unions & employees are unable to constructively meet these challenges, and due to the current legislation, end up in industrial struggle instead of attempting to safeguard & protect the long term common interests of both parties in achieving market success - a necessity for the survival of both.

While provision for dealing with lawful or illegal industrial actions, strikes etc. are available, there is no remedy provided against individual or group go-slow, willful damage to product, materials or breakdown of machinery through sabotage/industrial action, or to gherao, intimidation, assaults, etc. or threats to willing employees, supervisors or managers, - which cause huge losses to the industry & the nation, but are often very difficult to prove against specific perpetrators, and generally witnesses are afraid to give any evidence. Any irresponsible Union supporting or propagating such activities should be held responsible, and there should be provision for strong condemnation and group penalties permitted for such actions, and burden of proof need to be relaxed in such cases through simple yardsticks for defining such activity.

Broadly, the plethora of current legislation tends to stifle efficient industrial activity, and more often than not becomes the grounds for corrupt practices. There are often conflicting provisions between various laws, which have been highlighted in many reports and have needed considerable time by various courts to decide - wasting time and resources. They tend to be the 'brakes' to good law-abiding corporations, whilst the irregular practices by many continue with impunity. It is very strongly recommended that many of the antiquated laws and sections need to be removed entirely, and only the basic fundamental laws should remain in the statute. This main hurdle of multiplicity of laws and rules demanding excessive paper work, court cases, appeals etc. on petty matters are the most frustrating barriers to the Industrial managers, which need to be replaced with possibly "Codes of Conduct" that does not need excessive legal remedy, without reducing the justice needs or practices. Many of the "Sections or Rules" need to be replaced with "Guidelines" that permit reasonable flexibility to the management of industrial activity, without diluting the main purpose."

5. We are all aware that the same Indian employee who is considered to be not so productive in the Indian situation, is highly prized in foreign countries! This is mainly due to the over-protective environment in India that demands no responsibility from the employee or the Unions to talk of, while conferring a very large number of rights. The enlightened developed countries provide considerable rights to both employees & Unions, but also make strong demands on their obligation to their employers. This balance ensures that both parties get the best from each other. AIMO believes that the employees and the Unions are partners in our joint effort for the success of the organisations and are not adversaries, and do have a common stake. NCL may emphasise these vital points, and lay guidelines for the same in reducing disputes.

6. The impact of the general slow down of the world economy since last year, which has been further exaggerated due to the horrific September 11th, 2001 terrorist activity in the US, and the follow up retaliatory actions in Afghanistan, makes the Indian industrial situation far more vulnerable, requiring necessary corrective actions urgently. The NCL may recommend interim relaxation in rules etc. awaiting final amendments to the various laws, which are bound to be time consuming. This may ensure survival of some of the industries and their employees, partially arrest the dip in the national economy, and increase the confidence level amongst the industry that the Government does mean business! Success of the manufacturing industry, and all other sectors, are the essential means of improving India's position in the global economy, and require a performance supporting/oriented environment, where the legal system can both impede, or contribute. The task for NCL is to reduce the former.

7. The challenges are not insurmountable, and with suitable infrastructure and the supportive environment, INDIA CAN DO IT.