Labour scene 2001

Industrial restructuring and labour issues

-- S.Kumaraswamy and B.Sivaraman

IT WAS a well-publicized New Year gift for the bourgeoisie in India. The Group of Ministers (GoM) on labour reforms made it a point to meet on January 1, 2002 and finalise its recommendations on labour law reforms for formal approval by the Union Cabinet. The necessary bills for legislative changes are expected to be placed before the Parliament during the budget session. The reforms were first officially mooted in the Ninth Plan document, then Yashwant Sinha made it the major highlight in his budget speech this year, a committee headed by Montek Singh Ahluwalia reiterated the same in the interregnum to push the proposal further in the face of spirited opposition by the Left and the unions, there were vigorous campaigns in its favour by the industry chambers and pink papers, and the matter was discussed in the National Developmental Council (NDC) and the support of the states was mobilised and, finally, Vajpayee himself had to throw his weight behind speeding up labour reforms disabusing his labour minister Sharad Yadav of any habitual and outworn idea of consensus. The same government wouldn’t pass the Agricultural Labour Bill or Women’s Reservation Bill on the excuse of absence of consensus, but for passing this anti-labour legislation, it wouldn’t even wait for consultations with the Opposition, leave alone arriving at consensus. This leaves the redundant Second Labour Commission, appointed by the Vajpayee government earlier, free to continue its academic exercise of consultation, with quixotic questionnaires.

The Indian industry which has been somewhat thoughtlessly echoing the neo-liberal demand for sweeping reforms, is, perhaps for the first time, and in a far reaching way, getting a real feel of the pain involved in adjusting to the market conditions under globalisation. The WTO regime, the removal of quantitative restrictions and the lowering of the tariff walls have put them on their toes to discover competitiveness. Before they could bring themselves in line with international businesses the slowdown and the recession in the global markets struck. Consider the industrial scenario. The industrial growth for April-September 2001 was only 2.2%. The overall growth figures do not fully capture the impact of slowdown on the Indian industry. In the first half of 2001-02, only 17% of the manufacturing sector (in terms of weightage in the index) showed double-digit growth whereas 54% of the sector registered a decline and 29% showed single-digit growth. This means recessionary conditions for more than half of the manufacturing industry. In fact, only 3% of the manufacturing sector, growing at more than 50%, drives the economy in the main.

Hence what is going on at present is not a one-time pain of structural transformation or modernisation. Even those who have upgraded their technology and the multinationals who have maintained technological parity with their plants in the West have discovered that the slowdown has made cost-cutting and downsizing a seasonal but perennial affair and laying off workers and their redeployment a normal part of their round-the-year business processes guided by the immediate needs of the market. The more they improve their information flow on markets, production and inventory planning etc., the greater the uncertainty they face. The more they outsource their production, the more precarious becomes the job security of workers in SSIs and component supplying units. Go to any industrial estate and you will find that many small-scale units have become seasonal units and so also the industrial employment in them. An industrial estate worker commented, “We left seasonal agricultural work and came to the city hoping to get round-the-year work in industries. But here too it has come to resemble the work back in the villages. For a few months we get work and for a few months we remain idle”. Many companies send the permanent workers out on “VRS” and take them back as casual workers, often for the same pay. In this respect the VRS in manufacturing industry is quite unlike that in banks. It is not just a matter of shedding the flab. It is not even a matter of financial crunch and high labour costs. It is more a question of acquiring greater resilience, of aligning constant and variable capital in any proportion as required by the market, what with the aggregate turnover time of constant capital becoming an unknown quantity and the business cycle breathing down their necks. And banks with abundant funds and few takers for term loans have readily come forward to bankroll VRS schemes. For companies, it is more like setting aside depreciation funds with the crucial difference of zero replacement costs and possible net financial gains in the longer run. According to financial analysts, the companies would be amortising their VRS expenses in about five years. Though profit margins would be affected to that extent in this period, in the longer run it is a paying proposition, as they would make the companies financially viable, as they would make the companies ‘lean and mean’.
Voluntary retirements galore

THE CORPORATE sector is radically changing its approach towards the voluntary retirement scheme. Generally, it was only multinationals which were known to be liberal in their voluntary retirement schemes. Earlier giants like Ashok Leyland and TI Group were quite conservative regarding the amount they offered for VRS schemes as well as in wage packages. Now they too have changed. The Rs.3900-crore Murugappa Group has started agreeing to a wage settlement above Rs.2000. In 2002, the Ashok Leyland [Ennore] is about to finalise a Rs.3000-plus wage settlement. It is widely believed that their soon-to-be-out VRS package will offer above Rs. 5 lakh compensation. For the compensation amount other than gratuity, the income tax exemption limit is Rs. 5 lakh. For the first time, Ashok Leyland is crossing the limit. The TI group has offered a VRS of 3-month wages as extra compensation besides gratuity. Nearly 25% of the employees of TI Miller went out as their VRS amount crossed the 5-lakh mark. Some 40 or 50 employees have left TI Cycles. By the end of 2001, the management wanted the offer to be more attractive and lucrative. They made it 4 months wages per year of service besides gratuity. 500 out of 800 employees have already left due to this VRS offer. Moreover, there were some unofficial adjustments, too. Employees with lesser service were bound to get a lesser amount of compensation under this formula. Therefore, unofficially, they were given a flat compensation amount. It is sort of a total wash-out of permanent employees. It tells upon the workers’ morale, too.

The AICCTU is locked in complicated and grim battles to safeguard workers’ interests under conditions of sickness and its manipulation by the managements in units like Dunlop, Textool and Kunal Engineering etc. Some of them are under BIFR. It calls for flexible tactics while being firm on basics. AICCTU had to deal with such a contingency in Zeneca Ltd., earlier part of the giant Novartis group, and subsequently, a part of Cygenta, also a very big MNC. Zeneca, an agro company with less than 100 employees, announced closure due to sea erosion, and due to the fact that it could not manufacture any product as a result of cut in orders placed by coastal zone landowners. It was a real closure as they dismantled the entire plant subsequent to the closure. Here the legal dues were only 15-days of closure compensation. We fought and obtained an average of Rs. 6 lakh compensation to the employees besides the pension scheme and 5-year medical benefit for the families of the employees.

The VRS wave

IF IT is only morale that the industrial slowdown is all about, the GoM gift is bound to lift up the bourgeois spirit, if not the economy. A decade after the reforms, the Indian industry is tottering not because of the absence of flexibility in the labour market. It is faltering in its globalisation not due to any “rigid” labour laws. The corporate sector, in fact, was not holding up its restructuring waiting for labour law reforms. They were going on a cost-cutting spree through unprecedented downsizing last year so that the year 2001 can best be described as the “Year of the VRS”. About 80 companies (among the 3000 listed companies) spent as much as Rs.2500 crore on VRS payments alone. Among them were 8 banks which spent Rs.1850 crore on golden handshake and Rs.650 crore were spent by the rest, mostly in the private corporate sector. The Tatas alone have spent Rs.247 crore on VRS expenses in ten of their companies. With an aggregate sales figure of Rs. 99,098 crore, these 80 companies have spent 2.5% of their turnover on downsizing through VRS, and hence posted a lower average rate of profit. UR Bhat of JP Morgan has estimated that the number of VRS separations in 2001 to be in excess of 200,000.

The interesting point is that the VRS wave gives the lie not only to the claim that Indian industry is dying owing to the lack of flexibility on the labour front, it has also exposed the one-sided nature of the flexibility they seek through labour law reforms. For instance, if you look at the average VRS parting payment in private companies in Chennai or Mumbai, it is easily eight to ten times the statutory retrenchment/closure compensation. The Indian industry, whose wage costs are wafer thin – about one-fortieth to one-fiftieth of the prevailing wage rates in the West, especially in manufacturing – have large elbowroom to offer attractive VRS packages, without any threat to their competitive ‘edge’, which in any case they don’t have. The labour law reformers have only selectively proposed scrapping of Section V (B) of the Industrial Disputes Act – closure of units with up to 1000 workers without permission from the state government – and were clamouring for more, like legalisation of a generalised contract system (hire-and-fire), but none of the official quarters have ever mentioned even a single word about substantially increasing the abysmally low closure/retrenchment compensation. This, despite the fact of the corporate sector’s own record in VRS payments showing them to be a mere pittance in comparison. Even the GoM was unwilling to consider anything beyond increasing the closure/retrenchment compensation to 45 days of wages per year of service instead of 15 days as at present. More than that the GoM has gone one step ahead of the earlier budget proposal of Sinha and suggested that companies employing less than 1000 workers be allowed not just to close, but also to ‘layoff’ [temporary denial of employment at half pay] and retrench workers without any prior permission.

The labour cost is among the last of the worries of the corporates. Judging by the size of the VRS packages, the capacity of the corporate sector to pay a higher severance pay is no longer in doubt. Only Vajpayee and Co. refuses to be flexible enough to even reflect the ground realities in the proposed reforms and rigidly remains biased in favour of the corporates. The saffron rulers have thus turned out to be worse than the class they stoop to serve. No wonder then that a frontal political assault on Indian labour has been packaged as ‘economic reform’ and peddled in budget proposals.

Strangely, some managements are also offering fat wage settlements so as to induce workers to go on VRS as the amount would be calculated on the basis of last drawn salary. SAIL, which leads the PSUs in VRS, had plans to shed 60,000 jobs. Last year saw 13,000 workers leaving on VRS but the numbers dwindled to half this year in anticipation of a wage settlement. Instead of the Rs.500 crore targeted, SAIL raised only Rs.315 crore from the markets to finance VRS, even though the government has offered to stand guarantee for raising Rs.1500 crore for implementing the VRS. Hence, despite bad times for the steel industry all over the world, the SAIL management was recently forced to conclude the wage agreement without a major hitch. The SAIL had been dilly-dallying on wage agreement since 1997, providing only a 12% minimum interim relief. Now it rushed in to conclude an agreement, offering a surprise 20% rise to the lowest-paid category of workers over and above the interim relief, lest the wage uncertainly land its VRS plans in doldrums.

Industrial sickness and labour

THE VRS is not the only way of downsizing. Several subsidiaries of companies are being hived off or simply closed. Many plants are being shut down. Even several blue chip companies are downing their shutters. Factory closures have become phenomenal in any industrial area in the country. There are certain segments of Indian industry where large-scale structural overhaul is still underway, where closure rather than job cuts through VRS is the norm. Like, for instance, the textile industry. More than 30 textile mills downed their shutters in fiscal 2000-2001, taking the number of closed textile mills in the country to 383 as on March 2001. More mills reported closure in 2001, or were working only at a fraction of their installed capacity. More than 300,000 workers have been affected by the closure of mills.

Of course, industrial restructuring has been going on for nearly a decade. But the present manufacturing slowdown has speeded it up. The VRS is just one byproduct. Sickness and closures are the main headaches of the corporate sector. Scrapping of V (B) of the ID Act is thought of as one way out. About 95% of the Indian industries would be exempted from government permission for closure under this legislative change. Even then winding up a public limited company is not that easy. SICA [Sick Industrial Companies Act] and BIFR [Bureau of Industrial Finance and Restructuring] continue to be big stumbling blocks. Hence the clamour for doing away SICA and BIFR.

Scrapping the SICA and winding up the BIFR is easier said than done. The main hurdle is the mountain load of NPAs of public sector banks and financial institutions locked up in sick industries. How to sort out this problem? The industry itself seems to be badly divided on this question. Two proposals have been mooted so far. One, bringing in an Insolvency Act to scrap SICA and setting up under it a National Company Law Tribunal to replace the BIFR, AAIFR and Company Law Board. The other move is a package for “Corporate Debt Recast”, jointly worked out by the government and the RBI.

The Department of Company Affairs had prepared an Insolvency Bill. The government tabled it in Parliament in August 2001. Under the Insolvency Act, the government would constitute an industrial revival fund collecting a cess from industrial units, except SSIs and PSUs, and refer the sick unit to the National Company Law Tribunal, which will decide on whether to revive the unit or not, and allocate money from the fund. This is another BIFR clone with the added powers of administering a fund for revival. The industry started opposing the cess, and finally, under a modified proposal, only 18,471 out of 1.35 lakh registered units in the country were to pay a reduced cess of 0.001 per cent of their sales. Only those companies which have taken loans from the public financial institutions would be referred to the NCLT, and the SSIs would be closing down just like that. This proposed revival mechanism would not address the problem of workers in sick units. The National Renewal Fund announced with much fanfare at the time of taking IMF loan is lying dormant, and there has been no official move either to provide relief to the workers of sick industries or to ensure prompt payment of their wage dues and compensation. Under the proposed arrangement, the workers’ dues are not to be settled the moment a company is declared insolvent, but only when the case is finally disposed off. At present it takes anywhere between 7 to 10 years for the workers to realise their dues through the BIFR or court.

Besides this, the government and the Reserve Bank of India cobbled together a package for ‘corporate debt recast’ (CDR) hoping to free capital locked up in thousands of sick units. But no matter how innovative the scheme is, they are unable to sidestep the BIFR, the debt recovery tribunals and the courts as they invariably run up into the question of huge NPAs and only end up with some kind of a BIFR clone. Under the existing SICA, companies are mandatorily to be brought under the BIFR once their net worth erodes by 50%. The Indian industry fattened on public funds by deliberately incurring loss at some point after piling up debts and siphoning off funds because once the company is referred to the BIFR it immediately freezes all recovery attempts by creditors – mostly banks and other public sector financial institutions. Instead of fully meeting their debt obligations and turning around the company by investing in modernisation, the industrial barons opted for the easy way out of letting them lapse into sickness at the cost of financial institutions. The BIFR, after wasting years wrangling over several ‘revival packages’ – with which financial institutions, genuinely suspicious of promoters’ intentions, seldom agree – finally decides for liquidation after several years. It is the workers who get the raw deal in all this and they often have to wait for years to get even their statutory compensation and wage dues, though they are supposed to get the priority in liquidation. Many of the corporates now want a quick exit and, in their frustration, call for scrapping SICA and BIFR. But their past follies are catching up with them to prevent any such easy solution. It is necessary that the trade unions should also intervene in this process proposing their own package to safeguard the interests of workers in sick industries and get them the best deal in case of liquidation. This is because some managements use BIFR reference and sickness as a pretext to force wage reduction and job cuts offering only a pittance as compensation. The case of Dunlop is very illustrative, where the unscrupulous management has driven a viable company into sickness and under BIFR for purely speculative reasons. In spite of BIFR okaying a revival package and the closed industry reopening, the banks refused to further lend the working capital requirement and this situation is being utilised by the management to hold the workers to ransom, making unacceptable demands on wage and job cuts. Hundreds of thousands of workers of sick units face uncertainty today and the government has nothing to offer them, not even interim relief. Even something matching the meagre schemes announced by the governments of West Bengal and Tamil Nadu do not figure in the present discourse of the Vajpayee government on the socalled labour reforms.

Legalising contract labour

THE GoM has reportedly recommended scrapping of the present Contract Labour (Regulation and Abolition) Act 1970 and replacing it with an altogether new act to smuggle in hire-and-fire under its guise. The ministers have obviously been emboldened by the 5-member constitution bench judgement of the Supreme Court on August 30 on contract labour in public sector enterprises, which was the biggest judicial salvo fired against the working class in 2001. The Supreme Court at least had the fig leaf of Special Leave Petitions from the Steel Authority of India (SAIL) and the Food Corporation of India (FCI) against judgements by Calcutta and Bombay High Courts directing regularisation/retention of contract workers. It came up with this ambivalent anti-worker judgement – setting aside several of its own earlier positive judgements, notably the 1995 landmark judgement in the Air India case – only after mulling over the possible impact of regularising 1.3 lakh contract labourers in FCI and 25,000 in SAIL. But the GoM, without any second thought, has recommended extension of the contract labour system to cover all activities and not just ‘core activities’ and covering all sector including private sector and financial and service sectors. Earlier, even Yashwant Sinha’s budget proposal had only suggested amendment to Section 10 of the Contract Labour Act which would allow employers to outsource all activities to contract workers without differentiating between a core and non-core activity but retained some legal protection to contract workers in areas like health, safety, welfare and social security. According to one report, the bureaucrats from Yashwant Sinha’s ministry were opposed to any new law to regulate the service conditions of contract workers. Let the ID Act take care of the contract labourers, they reportedly argued with the officials from the Labour Ministry at the GoM meeting. If anything, this only shows the extent to which the Finance Ministry has sold itself out to do the direct bidding of industry lobbies. The Supreme Court judgement doesn’t automatically apply to the private sector and it still leaves some loophole for legal remedy for contract workers, especially in ‘core activity’ in the private sector. The Finance Ministry wants to plug that hole by calling for abolition of any contract labour legislation whatsoever.

The changing profile of Indian labour

WHAT ABOUT employment trends in an age of industrial restructuring? No data is available yet for 2001. The latest data available is only up to March 2000. Data on factory employment is available from two sources: Central Statistical Organisation (CSO) data, which is based on surveys, and Director General of Employment and Training (DGET) [under the Ministry of Labour] data, which is based on reporting by factories, which usually underreport, concealing data on employment of casual and contract labourers. Even by definition, the CSO covers all workers including those employed through ‘other agencies’ and the DGET returns cover only regularised workers and grossly underreport contract and small-scale industry employment. A comparison of these two sets of data is quite revealing. The CSO data shows a sharp increase in employment while the DGET data shows a marginal decrease for the period 1996-99. In the first place, according to CSO data, despite all-round industrial sickness and restructuring and economic slowdown, factory employment registered a sharp 13% increase in 1999-2000 — reaching close to 10 million in March 2000 from 8.7 million in 1998-99 — after showing a marginal increase of 1.2% in the previous two years. This could mean factories are generating more jobs, but the jobs are going to contract labourers or to small industries. It could also be the case that the permanent workers are being replaced by contract workers to the extent of being statistically significant. Secondly, the CSO also reports on labour costs. The CSO figures on labour costs also bear out this conclusion. According to CSO figures, even as the number of workers has gone up, the ratio of labour cost to the total value of output has gone down from 7.4% in 1996-97 to 6.9% in 1998-99 and further to 6.6% in 1999-2000. The average labour cost per worker in the factory sector has increased only marginally from Rs. 54,000 to Rs.58,000 over 3 years — the rate of increase lagging far behind the inflation rate. The 1999-2000 data, showing a sharp jump in factory employment in a single year, might not yet indicate a reversal of the trend of virtual stagnation or decline in factory employment in the ’80s and even decline in early ’90s in the post-reform years. Perhaps employment has gone down in 2001, the ‘Year of the VRS’. But these data do confirm a basic trend in industrial restructuring, viz. contractualisation of the labour force. The disaggregated CSO data also shows medium and small-scale units registering significant growth in employment, in comparison to large units and public sector units.

Another contradictory phenomenon witnessed in the large private corporate sector is that, while the average wages are going down, the wage bills in the large companies in the private sector is increasing despite the recession. According to an ET survey of hundred large private sector companies their aggregate wage bill has increased by 9.2% in the first half of 2001-02. This is against an increase of only 3.7% in the total cost and 5.1% in total sales. The share of wages, as a result, has increased from 11.1% to 11.7%. [The Economic Times, 4 November, 2001] The ET report goes on to ask: “What prompted Corporate India to raise the wage bill, and so disproportionately too, for that matter, compared to raise in either aggregate expenses or turnover? The answer probably lies in the changing profile of Indian labour. Most of the sample companies have been reducing the workforce in recent years, but are yet spending more on wages due to increase in per worker wage bill. Unskilled workforce is being increasingly replaced by technical and qualified hands. This is reflected in the recent rise in labour productivity also. Over the last five years Corporate India has, in fact, improved the efficiency of labour far better than it has been able to do with capital.” The report has been frank enough to admit that more than two fifth of the sample companies have witnessed an increase in net profit despite increases in the wage bills. In many cases, increasing wages is also partly to induce the workers to leave on VRS rather than for retaining them, as was seen in the case of SAIL.

Despite the general wave of VRS and closures, some parts of the country like Gujarat and Bangalore are witnessing a relative shortage of skilled labour in certain sectors like chemicals and IT. Modernization, in general, has increased the demand for highly skilled workers. It is the average workers, medium or low skilled, who suffer the most. Hence the CII, in a study, has hinted at large-scale migration of skilled labour within the country and advised the employers to keep the big picture in mind while sending out workers permanently through VRS to cope up with temporary economic slowdown.

Disinvestment update

With Yashwant Sinha fixing a budgetary target of Rs.10000 crore to be raised through disinvestment and the disinvestment ministry taking to fast-track salesmanship, the BALCO struggle of 2001 was expected to at least temporarily halt the disinvestment juggernaut of Arun Shourie and establish a benchmark for struggles against privatisation. It did succeed to some extent despite the Congress betrayal, Supreme Court highhandedness and union weaknesses. After BALCO, 13 more units are now on the block and deals for privatisation are expected to be finalised before April 1, 2002. But the flames of public sector workers’ struggles against privatisation have been kept alive by the three-day preemptive strike of coal workers despite a statement by the Coal Minister Ramvilas Paswan that there would be no immediate privatisation in the coal sector. Another glorious preemptive strike was by 600,000 bank workers all over the country who went on a one-day strike on January 4 in solidarity with the workers of the Standard Chartertered Bank. a small multinational bank when it transferred two dozens of its employees. Through an ingenious move, Stanchart was contracting out what were permanent jobs. They were contracting core tasks to outside agencies through a specially floated ‘benami’ agency. They were also forcing ‘VRS’ under threat of transfers. True, the issue concerned a very small number of employees in a small private bank. But there was a larger issue at stake. Since the government has announced policy decision to denationalise banks by reducing its stakes, and large-scale rationalisation is underway due to financial sector reforms, it is necessary to heighten the vigilance and protest of the bank employees regarding the impending large-scale transfers and possible harassment due to private management practices. The unions had taken a commendable decision and the display of working class power during the strike was remarkable. Though it was a token strike for a day, this would undoubtedly be counted among the new generation working class actions of an offensive nature against globalisation. More importantly, the strike came during the height of war hysteria and full-scale mobilisation of the army at the borders, and defying appeals to the workers to desist from going on a strike, in the name of patriotism and war situation. An editorial in Indian Express branded it 'economic terrorism', and just stopped short of calling it an act of treason. But the bank workers showed that there would be no de-escalation in this class war. Apart from these two instances of notable working class action in 2001 and, of course, the BALCO struggle, there was an unexpected judicial googly from the Karnataka High Court against disinvestment, which keeps some avenues open for a fight in the courts, despite the blatantly pro-privatisation stance of the Supreme Court. The interesting judgement came in the Bharat Gold Mines Limited (BGML) [Kolar Gold Fields] case. The BIFR ordered the winding up of BGML. Subsequently, the AAIFR confirmed the BIFR orders. When the BGML sought permission, under Section 25[O] of the ID Act, 1947, to close down the undertaking, the permission was granted. When these orders were challenged in Karnataka High Court, the court gave a judgement [reported in Labor and Industrial Cases 2001] that these orders were arbitrary and quashed the same. The court lashed out at the Central Govt., BIFR and AAIFR and stated that all efforts should be made to revive the gold extracting unit when the country was importing gold. The court pointed out that the purpose of SICA is to revive sick companies and not to bury them once and for all. An entire township thus got a reprieve.

Even before privatisation – and to prepare for it – many PSUs are going in for massive job cuts. Over the last three years SAIL, CIL, BHEL, Hindustan Zinc and ONGC have, together, reportedly reduced their employee strength by over 1.2 lakh. Here the unions need to act before the units get Balco-ised.
Provident Fund and Pension Reforms —
Looting the last penny

IT IS well known that the multinational pension funds and insurance companies are hungrily coveting the large PF and pension funds of the Indian working class, the corpus of which was Rs.59,938 crore as on December 31, 2001. The latest attempt in this regard is a report by the Insurance Regulation and Developemnt Authority (IRDA) titled “Pension Reform in the Unorganised Sector”. Lamenting that 89% of the country’s workers are in the unorganised sector where they have no old-age pension benefit, the report proposes that they be brought under pension cover. Before you raise your brows in surprise at this insurance regulatory body acting as a seemingly pro-labour busybody, the mystery is revealed to you by the suggestion that the proposed expansion of pension coverage should be opened up to multiple pension providers from the private sector, including foreign pension funds. The report also hastens to add that the proposed pension scheme for the unorganised sector should be voluntary and not compulsory. Why? Because, in the opinion of the IRDA, the cost of “policing” compulsory contributions would be prohibitive for the government! Thus the IRDA has taken to business promotion activity for the industry, which it is supposed to regulate, and in the process, it goes well beyond its brief, advising the government to give up existing enforcement regulations. Good salesmanship indeed! Some background information on the IRDA committee is in order. It was Oasis Foundation, a consultancy firm, working for multinational pension funds which first came up with a report on pension sector reforms in India. The IRDA was asked by none other than Yashwant Sinha to prepare an implementation schedule for the Oasis report. Following the IRDA report, the World Bank and another private fund, Invest India have joined IRDA and Oasis Foundation to sponsor a series of lobbying events to speed up pension reforms in India. Some regulatory authority, this!

Where the interests of multinationals and private businesses are at stake the government acts with alacrity. The Labour Ministry has recently forwarded to the GoM and Law Ministry a proposal to cover units with 10 employees, as against 20 at present, under the PF Act. There has also been a proposal to delink the PF and pension schemes and extend the latter to cover all sections including self-employed workers. As it is, the EPFO scheme has been designed to cover only 10% of 40 million workers. But not even 50% of these 10% have been actually covered, and there has been very little penal action against the evading employers. Meanwhile, the Central Board of Trustees of the EPF has slashed the interest rate on pension funds which is now pegged at 9.5%, much below the rate offered by banks on savings. The PF scheme is also to be delinked from the current employer and made a running scheme no matter how many times the employers are changed. This means that the PF coverage would henceforth be the worker’s headache and not the employer’s legal obligation. The Labour Ministry, coming up with a host of ideas obliging private pension funds, is however, not willing to contemplate any action against thousands of employers defaulting on PF payments and to restore hundreds of crores of PF funds owed to the workers by the employers, including a good number of PSUs. Interestingly, another GoM set up in 1999 to come up with recommendations on a “strategy for liquidation of outstanding statutory dues to workers employed in central public sector undertakings” is still ‘seized of the matter’ and has not met even once since the new GoM was set up in October 2001, to reform the labour laws, which however, has promptly given its recommendations within three months.

The question of labour standards

THE DOHA Ministerial meet of the WTO once again brought alive the question of labour standards in 2001. The Doha outcome had two notable developments on the labour front. Firstly, India has agreed to discuss the inclusion of labour standards in the agenda of the next round of trade negotiations. Meanwhile, the negotiations on labour standards would be pursued at the ILO. Secondly, for the interregnum, the developed countries have announced tariff cuts ranging from 5% to 20% for some categories of imports from the Third World countries that conform to the ILO standards. Thus, not only the labour standards are not off the agenda, the time is running out for the Indian government before they show some pretence of establishing ILO-compatible labour standards. The left trade unions were quite justified in their opposition to the invoking of labour standards as a bargaining lever in trade negotiations, and their opposition stands vindicated, as it was exactly used as a bargaining chip at Doha. But neither Bush nor the EU would relent on labour standards beyond a point because of powerful domestic pressure. Hence it is better for the unions here to be on the guard and prevent the Indian government from reducing it to a token measure, a cursory and hollow exercise devoid of meaning and substance. Opposing imperialist trade tactics does not mean endorsing absence of minimum labour standards in the country. The unions must really be out of tune with the times, since even now, they have not evolved their own concisely formulated framework of collectively agreed upon minimum labour standards and forced negotiations with the government on the same. Coming up with a joint charter, and declaring a general strike to back it up, would dramatically force it onto the agenda and reverse the present offensive of the government and the employers through their one-sided labour reforms. The inertia of the unions is striking! It seems the trade union movement also needs a little bit of ’restructuring’ and revamp. One sure way of the government putting up a pretence would be a few token measures on issues like child labour, accompanied, of course, by a lot of crocodile tears. The unorganised sector is, of course, important. But, by unorganised sector, the government largely means informal, household or self-employed sector and it would pass off some welfare measures there as labour rights. It is important for the unions to maintain their focus on the condition of workers in the small-scale industry sector. For it is they who would bear the brunt of the proposed labour reforms, and it is not only because, here, even the existing labour laws remain unenforced and the workers remain mostly unorganised; rather, because this segment is also becoming the most significant in terms of production, export and employment. It is not without reason that the industry chambers and pink papers reacted sharply when the Second Labour Commission started separately considering measures to address the problems of workers in the SSI sector. Many path-breaking and heroic battles are waiting to be fought in this apparently gloomy sector, even to the extent of rediscovering, re-establishing and reasserting the very idea of ‘trade’ unionism and basic workers’ rights. For instance, if the post-MFA textile export projections do come true (of course, that is a big ‘if’ which requires China to be kept at bay), then the number of garment workers in the country is expected to double or even treble. It would then be difficult for the export garment units to go on maintaining the present abysmal labour standards.

When the IT bubble burst

THE BURSTING of the IT bubble has come as an eye-opener for the IT workforce in places like Bangalore, for example. Till then, most of them, especially at the upper ends of the IT job market, did not even acknowledge that they were part of the working class. Trade union was an alien word. The recent IT crash has for the first time turned the spotlight not only on labour relations and employment conditions but also on more intricate aspects of capitalism and globalisation. The silicon-collared “professionals” didn’t even have the solace of a golden handshake like their blue-collared brethren. The ‘pink slip’ phenomenon has rudely awakened them to the inhuman and ruthless management practices of capitalism, making them realise that they too are wage-labourers. Some of them have been forced to do hourly rated work depending on its availability, something worse than the condition of day labourers. Like construction labourers they get a job only when there is work. Job-hopping, a favourite pastime, is no longer the in-thing. With every (forced) job switchover the wages decrease rather than increase, as earlier. Many workers work in this stifling atmosphere, where every moment they are made to feel that they are no longer wanted. It is more like the plight of unwanted unemployed youth in middle class homes. Many of those surfing the Eldorado of Pizza-Hut lifestyle in luxury sedans have crashed to the ground only to find their dreams erased. The much talked about employee stock options became a joke after the crash, when the shares were not worth the value of the paper they were printed on. According to a survey, 73% of the options granted have gone underwater [The Economic Times, 26 December, 2001] Thousands of job seeking youngsters reportedly returned disappointed from the last Bangalore IT.Com mela where no one came to offer on-the-spot jobs, unlike in the earlier melas. Even though the industry may not be conducive for traditional trade unionism, conditions seem to be maturing for anti-capitalist activism, albeit in unconventional forms.


THE YEAR 2001 would also go down as a notable year for struggles of small-scale industry workers under conditions of globalisation. There was a major outburst by the workers of Peenya Industrial Estate, Bangalore. The police in this green city suddenly started seeing red everywhere, arresting AICCTU leaders and raiding the houses of worker activists at night. Similar outbursts have occurred in Faridabad, Ludhiana, Haldia and Delhi in the past four or five years. The administration just has no clue as to why such outbursts occur. Globalisation has put the workers’ mood permanently on the boil in these segments.

Some states have also come up with anti-labour policy pronouncements, notably Maharashtra and Kerala. The Kerala Labour Policy, 2001 proposes legislative measures to curb what it calls “undesirable labour practices”. As per the policy, entrepreneurs will have the right to engage labour “without being inhibited by claims from sons of soil, displaced persons from land acquired, contract and construction labour, or dependents of employees.” Most significantly, “restrictive labour practices including intimidation, gherao, harassment of managers and their families, and extortion of any kind will be treated as criminal offences and dealt with accordingly.” In Maharashtra all the unions came together and responded with a general strike. It would be interesting to see how the social-democratic unions in Kerala cope up with this offensive.

To sum up, the year 2001 has put industrial sickness and downsizing as major issues to be addressed by the trade unions. The year has also underlined the urgent need to do a little bit of restructuring within the trade union movement itself. Earlier the trade unions acted both as the fountainheads as well as barriers to a limited working class consciousness. Now a new consciousness needs to blossom, which can throw up new forms of organising – and organisations – and struggles, as well as revitalise and strengthen the existing trade unions.