BW Communities

Undoing Unrest

BW Online Bureau Nov 08, 2014

<?xml version="1.0" encoding="UTF-8"?><root available-locales="en_US," default-locale="en_US"><static-content language-id="en_US"><![CDATA[There is trouble brewing on another front for corporate India. Even as it is buffeted by global and domestic economic slowdown, the manufacturing sector is now worried about trouble within. Labour unrest is rising across industries and states. A recent report flagged the rise of militant fringe groups creeping into benign trade unions in Tamil Nadu. The southern state is home to more than 20,000 factories, mostly in the automotive sector. Up in north India, the industrial hub of Pantnagar has suffered a series of labour disruptions in the last few months. This is only an escalation of trouble that auto industry has been facing for the last three years. It reached a peak last year when Maruti Suzuki had to close its plant in Gurgaon, near New Delhi for weeks. The shutdown halved the company's profit for the quarter and caused a serious dent in its annual results. The rise of fringe groups means that labour unrest could become more intense and spread to other sectors. Part of the problem lies in the way workers are employed by companies. Most companies tend to hire contract workers to save on costs. Contract workers are paid 20-30 per cent less than regular workers. Also, they don't get welfare benefits like the regular workers. The companies resort to contract workers not so much to save cost but to maintain flexibility in labour costs. Indian labour laws allow easy hiring, but make firing almost impossible. Companies thus are forced to maintain a contract labour force that can be removed at a short notice. The contract labour laws are more relaxed, to the detriment of workers. This is a vicious cycle. Without flexible labour policy, companies fire contract workers. These contract workers then feel cheated and exploited compared to the regular workers. The result is strikes and unrest. Extreme leftist leaders are exploiting this deepening fissure in factories. The solution lies mostly with the government policies that are encouraging wage apartheid in manufacturing sector. Unfortunately, labour policy reforms are rarely mentioned in the list of urgent reforms needed for the economy. The employers though seem to have realized the dangers of alienating workers.  There are encouraging signs though that employers are changing their attitude to ensure that they give more to workers than is required by law. The Employers Federation of India (EFI) is a body of over 300 large and medium companies that employ millions. EFI says it is no longer the champion of employers alone. The interests of employers lie in interest of the workers. So the EFI is now pursuing a new agenda. "We are promoting competitiveness, equity, fairness, flexibility, productivity and inclusion within the industry," says Rajeev Dubey, President of EFI. Dubey is also President Group HR and member of Group Executive Board of Mahindra and Mahindra. By creating a more caring and inclusive labour ecosystem, the sting can be taken out of complaints and protests of workers. Large and small employers will have to treat workers with more care. They will have to reduce the divisions among them and be fair to all. So far the management and worker talked only during times of strife in tense conditions. EFI hopes to create new a new dialogue between workers, employers and government to foster a healthier atmosphere of faith and prosperity. Labour laws will take a while before they change. Until then, it's the responsibility of employers to improve the conditions of workers. Investing in skills and assuring them of welfare benefits will help increase trust and loyalty. The aim is also to prepare workers for new technologies and processes. Militant groups will then find lesser traction in labour unions. (Pranjal Sharma is a senior business writer. He can be contacted at pranjalx@gmail.com)