Tension between labour and capital is as old as the hills. But during periods of accelerated growth, it can get exacerbated.
This is because some part, at least of the growth, comes from sharp jumps in productivity caused by the displacement of labour by technology-embedded capital.
In the short run, especially in the initial period of reform, this can result in heightened conflict between workers and owners.
The recent strike at the Maruti Suzuki plant in Manesar is a case in point. Although the strike was called off last month, the plant is yet again on the boil with the workers boycotting the management staged-elections on July 16.
What was interesting about the 13-day deadlock at Maruti's Manesar plant was that the permanent workers, contract labourers and trainees all stood united for a common cause.
MNCs AND LABOUR
The Maruti flare-up also drew attention to the issue of MNC labour standards versus the labour practices of domestic firms. Was the spotlight on Maruti more because of its Suzuki majority parentage?
Mr Gautam Mody, Secretary, National Trade Union Initiative, thinks so.
“I think there is a flaw in reportage which gives undue coverage to MNCs and that too around Delhi-NCR area,” he says. According to him, “The incidence of strike is irrespective of the employer. Tamil Nadu, as a state, leads in the number of strikes and it has a large number of indigenous capitalists.” The government seems to think that once a domestic firm attracts capital over a period of time there will be a level playing field between domestic firms and MNCs.
The argument according to conventional economics is that through cultural transformation, domestic firms will move along the learning curve and consequently improve labour standards. The agenda of employment generation is thus foremost.
“As a result, the state labour department does not interfere in industrial conflicts as much as it should,” says Dr Shyam Sundar, Associate Professor, University of Mumbai. On the other hand, trade unions argue that MNCs need to respect the ILO convention existing in their country of origin, in the country of destination as well.
The trouble is that India has ratified only 40 of the 188 ILO conventions and only four out of 8 core conventions. We haven't yet ratified convention 87, 98, 132 and 182, which pertain to freedom of associations, collective bargaining and child labour. Even Bangladesh, Pakistan and Sri Lanka have ratified conventions 87 and 98.
DIFFERENT VIEW
Holding a contrary view is Mr B. P. Pant, Director (Labour, Employment and Training), FICCI, who says, “MNCs are under no obligation to treat labourers across the globe on a level playing field. As long as they are observing the law of the land, no eyebrows need be raised.”
Meanwhile, it's not just the manufacturing sector that is plagued by industrial disputes, as commonly thought. The service sector is also increasingly showing an appetite for disputes despite the fact that it hits the consumer directly. “This is also a reason why service sector disputes last for only a couple of days,” observes Dr Sundar.
More disquieting is the new form that the labour protest is taking. Labour unrest, besides strikes and lockouts, today includes marches to the Parliament, go-slow, petitions, dharnas , fasting, and absenteeism. “The high degree of attrition in IT/retail is not only because of the buoyant labour market but also because of the seething resentment,” says Dr Sundar.
At times, the protests also take brutal forms. For instance, in September 2008, workers in Graziano Transmission physically attacked the CEO of the company, who later succumbed to injuries. In 2009, workers of Pricol brutally murdered the Vice President (Human Resources). These instances only imply a society of unequal power play.
BUSINESS DESTINATION
So, will these growing instances of labour unrest impact India's allure as a business destination?
India was ranked 51 on the Global Competitiveness Index for 2010-11. The index states that labour market efficiency is the seventh pillar. However, others do not see labour regulations as a major difficulty.
“If an industrialist has to channelize a work force of six departments into three departments because of want of electricity, he cannot do so without taking permission from the labour office and giving a 21-day notice. Such rigid regulations hinder productivity in a big way,” maintains Mr. Pant.
Between 1997 and 2003, in the organised manufacturing sector alone, around 1.3 million jobs were lost. Also, work stoppages due to lockouts have increased tremendously over the years. During 1991-93, lockouts accounted for only 57 per cent of the total work stoppages. In 2004-05 the number crossed 70 percent. This clearly points to a ‘flexibility-inducing' exercise on the part of capital.