Restructuring and Response

-- S Kumarswamy

The Journey from command economy to free market

We will begin our round-up of the working class movement and the restructuring taking place in the industrial and service sectors with two different statements from two different times.

Let us listen to some pre-independence voices. Nehru’s Congress appointed a national planning committee in 1938 and Mr. Shah reported on behalf of the committee: “Enterprise can not be left to profit-making individuals; employment cannot be left to be the plaything of demand and supply; national economy, social justice, and public welfare cannot be entrusted to laissez faire; they must be the concern of the State”.

Since then, we have had our independence. We have a “socialist republic” given unto ourselves. We have had the directive principles and the public sector at the commanding heights of the economy. We have had the 1st and then the 2nd generation of reforms of privatization, liberalization, and globalization. Much water has flown since 1938 under the Ganges, the Godavari and the Cauvery.

Let us now listen to the Second National Labor Commission (SNLC).

“Globalization will not permit us to remain in a state of isolation and stagnation. Horizons have expanded. New paradigms have emerged. Old clichés and mindsets have lost their relevance. We cannot negotiate the rapids before us unless we revise the mindsets of the days of isolation and confrontation. Attitudes of confrontation must give way to attitudes of genuine partnership”.

“The needs of the society can be met only if industry prospers. In the ambience of globalization, our industry can survive and our workers and employers can survive only if we fine-tune our ability to compete in the world market”.

Competition Holds Sway

Competition and the need to change the means of production continuously, are in-built in capitalism. While wars are generally fought by recruiting more and more soldiers to the armies, in capitalist wars of competition, they are fought only by discharging the soldiers. Let us see how the above observation of Marx operates in practice.

TI Diamond Chain Ltd., a blue-chip Company of the Murugappa Group, is urging the workers to join their wars of competition. The management confronts the workers with the following details:

Price Differential (PRICE OF A CHAIN)
Year   00-01 01-02 02-03
TIDC Rs. 53.44 48.45 46.67
China Rs. 46.49 39.05 31.53
Employee cost chart (In lakhs)
Total employee cost   574 622 669
Cost per employee   0.96 1.17 1.26

On the basis of the above figures, they argue that while the employee cost is continuously on the rise, they find it very difficult to compete with the Chinese as they hit the market with reduced prices. Now they come forward with a typical capitalist solution to the whole problem. They argue that outsourcing should take place in heavy pitch group, maintenance, tool room, forklift, finance and accounts and heat treatment from December 2002 to June 2003 and should result in the ousting of 87 workers. Likewise from December 2002 to June 2003, 38 workers should get out by way of changes in man-machine ratio. They have named another general category called ‘others’ and want 24 workers out, under the said category. Their ‘competitive’ solution is that 149 workers out of 433 should leave.

This is a company, wherein the last wage agreement was signed in April 2000 and the same is to remain in force up to 8 April 2004. A few rounds of Voluntary Retirement Scheme took place since the last wage negotiations. In the first round, the workers were offered 4 months wages per year of service as ex-gratia by way of VRS (including gratuity). Most of the seniors had left services accepting the scheme. Then, in the next round, to make things attractive to the juniors, who had then become the overwhelming majority, the management offered the 3/2 formula, i.e., 3 months wages for completed years of service (including gratuity) and 2 months wages for remaining years of service. With these rounds of VRS, 153 workers had left services. Now, citing the Chinese threat, the management wants us to sacrifice, at the altar of competition, 149 more workers.

TIDC Union takes a stand

The Union presided over by AICCTU comrades has taken a position that it will not allow the management to throw out a single worker. Any change in service conditions can be made only if the management is prepared to advance the settlement on wages and other benefits from April 2004 to April 2003. The union has raised an industrial dispute under Section 2K of the ID Act 1947 for violation of Sec 9A of the ID Act. And now because of the existence of this dispute, there is practically a stay under Sec 33 of the Act, for the management’s proposals, as these changes cannot be made without the written permission of the conciliation officer before whom the dispute is pending.

Competition vs. Solidarity

The story of TIDC is the story of competition. This is, precisely, ‘the fine-tuning of our ability to compete in the world market’, that they expect from us. It is, precisely on this aspect that they want us “to revise our mind-sets and give up attitudes of confrontation”. To sum up, the capitalist class wants us to give up class struggle in the name of competition. They want the working class to rally behind them in their fight against their capitalist competitors. Trade Union puts an end to competition among workers and promotes solidarity among them. Now, in the days of globalization in the name of competition, workers are made to compete among themselves inside the factory, and in the industry, at the national and international levels with the workers of other companies. Thus, globalization strikes out at the very basis of trade unionism.

Early Birds All

Reduction of permanent employment, in a very big way, has taken place throughout India, in the industrial as well as service sectors. The VRS route has claimed a few lakhs of permanent organized employment opportunities.

Ashok Leyland, the automobile giant, had one of its units in Ambattur. Certain crucial operations like drilling were carried out in the plant. Here again, in the name of competition, the management wanted to cut down the numbers, and as usual, the VRS route was taken. They put up a notice for VRS on 15 November, 2002. In addition to gratuity, they offered 3 months wages for completed years of service and 1½ months wages for remaining years of service. The last date was 30 November 2002. An Early Bird Scheme’ offered Rs.20,000 for any worker who opts for VRS before 6 pm. on 23 November. Well, all the birds flew. All the 143 workers availed the ‘Early Bird’ offer. The early birds, thus became the easy preys.

As far as the Indian trade union movement is concerned, the chicken have come home to roost. It is high time, the trade union movement says, ‘This far, and no further’.

Freedom to Hire and Fire

There is an organized attempt on the part of the government to pave way for flexibility in the labour market by amending Chapter V-B of the ID Act. The Nehruvian concern that ‘employment cannot be left to be the plaything of demand and supply’ has now given way to the dilution of Chapter V-B, allowing the employers freedom to lay off, retrench workers, and close down industrial units. This is definitely on expected lines, as the clamor for flexibility has culminated in a consensus over the years. Along with this, in a calculated planned manner they want to do way with Section 9-A of the ID Act 1947 which offers some protection for safeguarding existing service condition like wages allowances and other benefits.

The reconstituted Group of Ministers (GOM) meeting held on 12 March in New Delhi decided to do away with licensing and to do away with the distinction between core and non-core sectors, with regard to contract labour. It has recommended that the welfare of the workers will be the sole responsibility of the contractors and not that of the principal employer. While consensus was reached on the above points, no agreement could be reached on the issue of the welfare of the workers. Thus, a freedom to ‘fire and hire’ has been bestowed on the employers. Dilution of Chapter V-B will confer the right to fire and diluting the Contract Labour Act will confer the power to hire contract labour as they pleased.

Fight Disinvestment Politically

Organized employment has come under attack due to the policy decision of disinvestments. The looters and grabbers are selling away the nation’s assets, its wealth. On the one hand, foreign shareholding and private shareholding have entered in a big way in the government-owned financial and other sectors. On the other hand, disinvestments, even in profit making concerns like HPCL and BPCL, are being used as a fiscal instrument for earning revenue. Corruption is an integral part of this disinvestments process.

Sickness and Closures

Sickness, as an issue, has gone beyond redemption. Textile mills including NTC mills are allowed to sell their prime lands. Rehabilitation and revival are put on the backburner. Entire industrial towns and almost all units in some industries are wiped out. Closure due to sickness does not seem to shock anymore. Long years of sickness and closure without attempts at revival, effectively take away all the possibilities of reopening. The government has now decided that the best way to cure sickness is to kill the patient. SICA and BIFR will not exist anymore. Debts Recovery Tribunal will take precedence and recovery of the dues of the financial institutions will have priority not only over revival but also over settlement of dues to the workers. It is a matter for serious concern that loss of employment and wages due to sickness and resultant closure, in spite of being an all-pervasive phenomenon, does not occupy a prominent place in the agenda of the trade union movement.

The Changing Dynamics of Capital and Labour

Capitalist restructuring is all about maintaining and if possible increasing, the profit rates. Casualisation of labor, feminization of labor, more and more reliance on informal sector, closing down certain industries and moving away capital to other profitable areas, are all part of capitalist restructuring. It is true that there is a lot of sickness, closure of industries and loss of employment in a big way. But, in spite of all these, capital does not vanish into thin air and wage labour does not go back to the dust from whence it sprung.

New Labour New Type of Exploitation

Here, we shall deal with new labour and the vast untapped potential of unorganized labour of the informal sector.

There are claims of a veritable IT revolution in India. It is said that there is a very huge market waiting to be won over. What exactly is the nature of expansion of India IT industry? India is poised for a big growth, in call centers and business processes outsourcing (BPO). Call centers have started employing a few thousand graduates in Chennai. American calls to their credit cards firms, Banking, Insurance and telephone enquiry companies are now directed to the Chennai call centres. Chennai’s ‘Karpagam’ has become Christy George to the American Callers. Jagdish Ramamoorthy of ‘All Check Calls’, a Senior executive, says that these operators get paid a lakh of rupees per month in USA, whereas the Karpagams of Chennai will be too happy to work for Rs.10,000 per month. City Bank, World Bank, ABN Amro, Standard Chartered Bank are giving their salary registers, salary list preparation work etc., to the business process outsourcing centers in Chennai. The airline industry pioneered BPO in India. British Airways, Swiss Air and Lufthansa set up shops in the same road in Mumbai to process reservations. Delta Airlines of USA has outsourced to Spectramind in Delhi. After 11 September, United Airlines and American Airlines are also exploring outsourcing possibilities in India to cut down their costs. The industry sources claim that this is only a small beginning and the volume is bound to move into billions and the number of people employed to a few lakhs.

Very soon there will be 8.9 million seats in call centers around the world where the workers are using a mixture of telephone and computer communications generating $ 7 billion revenue. These call centers and BPOs are not industries by themselves. Rather they have been developed, only for the sake of other industries, to reduce costs and to maintain and improve profit margins. Subcontracting and outsourcing have come to IT industry in a big way. In garment industry, a US company is having 13,000 suppliers who in turn source them out to 78,000 subcontractors. In IT industry, the same reasons operate, for the call centers and BPOs to mushroom in India. Knowledge of English, computer skills and more importantly, the need to sell one’s labor cheaply for routine, monotonous jobs are the real factors behind this growth.

This phenomenon of computer operating knowledge workers is an illustration of the new labor emerging in India with the second-generation reforms. The organized working class is not completely wiped out. Even now, the banking, insurance, public sector, central and state government employees, if they concertedly go on a strike, can definitely pose a serious challenge. But still it remains a fact that their wings are clipped in terms of numerical strength, range of activities and impact of their actions. It is in this context, that the new labor throws up interesting prospects of adding a new vitality, a new dimension to the working class movement if they are unionized and if they are drawn into a movement.

Organising the Unorganised

According to the SNCL the total number of unorganized in India comes to 36.90 crores and those working in agriculture related activities number 23.70 crores. Even a fraction of the remaining 13.20 crores is not unionized. The overwhelming majority of them are outside the pale of labour laws and social security measures. The organized sector accounts for 19.42 millions in public sector and 8.70 millions in the private sector. Small scale units in India numbering 31.21 lakhs employ 171.6 lakh workers. They produce 8,000 items ranging from food products to sophisticated electronic equipment accounting for 40% of the industrial output and 35% of exports. They are also not unionized and hence are outside the protection of labour laws and social security. The SNLC, after having launched its attack on the organized working class, as a counterpoint waxes eloquent on the unorganized sector. It advocates an umbrella legislation for the unorganized sector. It says that their living conditions are very poor and there is every danger of their moving towards the naxalites unless some improvements are made in their living conditions. But in spite of all tall talks, it is not prepared to accept Rs. 4,500 as minimum wages which its own study group had recommended. The SNLC is very adept in paying lip service to the cause of the unorganized labour. It says that the developed West spends more that 40% of its GDP towards social security. It points out that India spends only 1.8%, whereas China and Sri Lanka spend 3.6% and 4.7% respectively.

Ultimately, this is what it states: “social security situation India is characterized by ambiguity in policy and responsibility.” “There is as a matter of fact no policy on social security, no plan for social security and the Five Year Plans are practically silent about this important aspect. However in the light of what has been said about the directive principles and so on, no one can argue that the Indian Constitution (State) does not visualize a regime of social security”. Tall talks and empty phrases indeed!

This line of thinking by the SNLC focuses on restructuring the welfare benefits, strengthening social security in tune with the new labor market conditions. But this is easier said than done. All the state governments are saying that their coffers are empty. In Tamil Nadu many a welfare board announced with a lot of fanfare are now virtually defunct. Rs.250 monthly relief scheme for the workers of sick and closed units is consciously not extended to any new eligible section. Even the drought relief announced now for the agrarian laborers, small and marginal farmers in 28 drought-affected districts in Tamil Nadu is deliberately restricted to 14 lakh people when the really affected will be more than a crore.

In spite of all its weaknesses the SNLC report throws up new possibilities for organizing the unorganized. A draft umbrella legislation calls for the constitution of welfare boards and cess funds to be collected. The SNLC is very clear that the whole welfare scheme would be contributory in nature and that the state will not pump in anything. But the creation of welfare boards and money for the same from cess funds make it advantageous for us to build movements on these issues.

Construction labourers are the second largest section of Indian working class after agrarian labourers. After many long years of struggle throughout India, the Central government was forced to pass a legislation for them. Many state governments are yet to frame rules or formulate welfare schemes. In Tamil Nadu the Manual Workers (construction labourers) Scheme, 1994 was formulated on 1 November 1994. According to this scheme, builders have to pay 0.3% of the cost of the construction to the fund. The total contribution on 0.3% stood at Rs.39,32,49,151 out of which the government departments and government undertakings contributed Rs.8,55,59,144. The Central Act provides for a cess fund at the rate of not exceeding 2% and not less than 1% of the cost of construction. Now as on 31 December 2001, 3,84,442 construction laborers are enrolled in the scheme and avail this benefits. A sum of Rs.96,11,050 has been collected as registration fees at the rate of Rs.25 per worker. Renewal should be done once in 2 years by payment of Rs.10 and identity cards are issued to all of them.

Some interesting statistics on construction laborers from SNLC

The details on construction labor are given to show the prospects, scope the possible reach of our work among the unorganized sector.

Our Response to Challenges

Disinvestments and privatization are the biggest threats to the public sector. The militant, powerful mobilization that the BALCO struggle attracted was quite encouraging. But still it could not be sustained and developed beyond a point. Illusions about Ajit Jogi were shattered as he capitulated, true to his class nature. After BALCO, now we have NALCO, BPCL, HPCL on the chopping block. A collective solidarity drive will have to be launched from the entire organized sector for a sustained consistent campaign.

On the issue of disinvestments in general, there is a political consensus among the major national and regional parties. But among NDA’s partners and its regional allies, there are contradictions for political, practical and pragmatic considerations. We should try our best to utilize the same while independently developing our struggles. The divorce between the live sectoral struggles and the general all India programs of central trade unions render the latter ineffective and also does not help in advancing the former. Joint/solidarity actions should be extended in a live manner to state/district levels and a mechanism and culture for combining the same with the sectoral struggles should be developed.

When confronted with the loss of substantial employment, it may be that some flexibility can be shown in cooperating with the managements when they tackle market imposed vagaries and technological changes. While demanding the best of what is possible for the workers in the given circumstances, we need not extend our rigidities to the level of principled positions. It should be our conscious and planned endeavor to make the workers put up a stiff resistance. So long as one makes systematic efforts to raise the ideological level, political consciousness and organizational preparations of the workers for putting up resistance, tactical compromises are never ruled out.

Capitalism has changed. Nehruvian socialism and the attendant social contract have fallen by the wayside. Improvement in collective bargaining rights, welfare measures, job security and progressive legislations are all passe. Globalization calls upon us not only to fight against the effects of capitalism but also against the very capitalist system itself. The need of the hour is to develop a contingent of vanguard anti-capitalist fighters and to build a network closely around them.

The ruling classes and their governments are forced to offer palliatives in the form of social security and welfare legislation to the unorganized workers. This condition is imposed on them by fast developing objective reality. We should seize this opportunity to pin down the governments on their promises. This will be a task comparable to the task of organizing a people’s movement. Our trade unions will have to play a social role and wage battles of political nature. One cannot advance these tasks from the safety and institutional comforts of typical trade union offices.

The working class suffers from a siege mentality as it is surrounded from all sides. The ruling party at the center, the main opposition, the centrist parties and the regional parties have consensus on economic reforms. Even the Left governments implement them in their own way. The juggernaut of economic reforms pushed by globalization moves on relentlessly and in India it has a very effective ally in communal fascism. As days pass, judgments become more retrograde and laws become more reactionary. The dice seems to be loaded against the working people. The trade union movement is neither able nor willing to take the bull by its horns. All these cause pessimism and frustration. But, it is equally true that the working class wants to hit back. There indeed is a duality in the working class. It is not as if the class as a whole is willing to take things lying down. The red flag of struggle passes on to different hands and is always kept high. Definitely the governments are also finding it very difficult to manage crisis after crisis. They find it increasingly difficult to come out with any durable and effective solutions to the problems of the people. The people try to settle scores in their own ways which include massive electoral defeats inflicted on by different governments at different junctures. Now is the time for us to advance on all fronts and lay siege to the anti-people governments. q