Synopsis: Communication For Productivity
Letters written to some 7500 Workers / Managers /
Union Leaders, following a period of strike / Go slow / Murders (1979 -
1987), at Mumbai factory of Larsen & Toubro Ltd. This direct / open /
honest communication led to a remarkable atmosphere of trust between
Workers and Management, which, in turn, increased productivity at 3% per year
(ave).
|
4 Sep 1981
Dear Mr.
Grover,
Sub:
INDUSTRIAL RELATIONS PERSPECTIVE-PART-II
As far as I
can determine violence in industrial situations have occurred due to the
following reasons:
1.
Apparent
conflict of interest between the workmen and the management.
2.
Inter-Union
rivalry for power to control the workmen and to be in a position to bargain
with the Management.
First, we
must examine what are the interest of the workmen and the interest of the
management. Then, we may examine, if these interests are conflicting in nature.
Obviously, the management wants the company to grow and remain profitable. I
suppose, this is also what the workers want and therefore, there is no conflict
here.
The conflict
starts on the issue of the employees share of prosperity of the company. The
question that has remained unresolved so far is:
What is the
respective contribution of the labour and the management in the prosperity of
the company.
Then, there
are others who also have a share in the prosperity of the company, i.e.
the share-holders, the society and the
consumers.
Through
intricate laws on sales-tax, on excise, octroi, corporate taxes, etc. The Govt.
representing the society has already determined its own share. In most of the
companies neither the workmen nor the management consider it necessary for the
company to go beyond these Statutory obligations and share its prosperity with
the community or the society at large in terms of health care, education, rural
development etc. this is largely a voluntary effort on the part of a few
enlightened organisations. Even in this case, how much to share with the
society, is largely an unilateral management decision where workers do not have
much say.
As regards
the society and the shareholder’s there has not been much dis-agreement between
the workmen, management and the Government. They are being rewarded according
to fairly established traditions for the risk capital they made available for
running the organisation.
The
consumers, by and large, are a forgotton lot. A very few managements (and none
of the Unions) have bothered to protect the interest of the consumer. Under
highly protective market condition, most the managements have been able to sell
whatever they produce of whatever quality and at whatever cost. In their unholy
anxiety not to allow an unit to turn ‘sick’, the Govt. has encouraged
inefficiency. Such units, when made to dole out huge wage increase under
pressure from the unions, have merrily passed on the burden to the consumer
through increased product prices. The Indian consumer has not yet learned to
protest and the Union and the Management have not yet learned to care:
If we now
examine the workers aspirations (interest) we may find some clues to the causes
of the conflict. The worker aspirations can broadly be divided as :
i.
Physical
needs
ii.
Mental needs
Physical
needs themselves have two components – i.e. the short-term and the long-term.
The
short-term physical needs primarily centre around earning the cost of living
for oneself and one’s family. This would include food, clothing, shelter,
education, entertainment etc. these needs manifest themselves in demands for
better wages and higher bonus.
For the
employee himself, the short-term needs at the place of work are better working
conditions.
The
long-term physical needs comprise of –
i.
Improved
standard of living
ii.
Retirement
benefits
Whereas,
there can be no dis-agreement on the rights of the workmen to unite and bargain
collectively with the management, the fulfillment of their physical needs, the
question to be asked is:
-
Can a group
of individuals be allowed to take more out of society than what they give to
the society ?
-
If this is
allowed to happen, wealth cannot be created. It is only when each section of
the society gives more to the society than what it takes away, can the societal
wealth increase ? Under any other conditions, only some can live a better life
at the cost of impoverishment of the lives of many others.
From the
foregoing, it has become clear that any increase in the wealth of the society
directly depends upon similar increases in the individual and collective
productivity.
What,
therefore, a group may be allowed to take our from the Society should be
determined exclusively from the increase in productivity of that particular
group over a period of time. For the share in the prosperity brought about
through increased productivity, must always be after the productivity
increase has taken and not before. This is the crucial principle of sharing the
prosperity of an organisation by the people involved.
Whereas,
productivity-based collective bargaining has become an essential feature all
over the indudstrialised world, this has been sadly lacking in our country.
On the one
hand, there are thousands of small-scale manufacturing organisations employing
10/20 workmen where gain of all the productivity is cornered by the owner
manager. On the other hand there are hundreds of medium and large-scale
organisations employing between few hundreds to few thousands workmen where the
Unions have been able to extract wage increase far in excess of any increase in
the labour productivity and sometimes, even when the labour productivity has
actually fallen! And all of this, under the threat of strike and closing down
the organisation. These are the ‘high-wage islands’ where exploitation of
reverse kind is taking place!
One can
apportion some of the blames for this sad situation to the Management, to the
Government – the management for having giving in under such threats and the
Government for having failed to protect the management against such
unreasonable demands.
The system
of dearness allowance to neutralise the rising cost of living was first
introduced in our country more than 40 years ago. The DA system has taken deep
roots in our country and has become an inseparable part of the compensation
structure; but, does it have to be element of compensation plans even for
completely new undertakings coming up in backward areas of the country with no
tradition of industrial employment? Can we not encourage these units to do away
with the DA system and instead have an annual wage increase directly linked
with the actual increase in the physical productivity of the work force during
the preceding year?
As far as
the existing manufacturing units are concerned, the least, we could do is to
ensure that the long-term wage agreements which are negotiated once in ¾ years
are strictly based on the physical productivity improvements achieved during
the preceding period. I have particularly chosen to express productivity in
terms of ‘physical output per person’ so as not to be mislead by the
improvements in ‘sales turnover per person’. This is because any number of
companies have managed to substantially raise sales turnover by simply
increasing the selling prices of their products even when the real physical
productivity of the organisation continued to decline.
To implement
the proposal outlined by me above, the Government should ask each manufacturing
unit to submit for consideration by the Government as well as the Union, its
proposal for the measurement of physical productivity of the unit and the
proposed linkage of the future long term wage increases with the improvements
in the productivity of its work force. To my mind, it is unimportant whether
the Government and the Union accepts the management proposal in toto. What is
important is for all the parties concerned to accept the principle of ‘creation
of wealth before sharing the same’. It is only thro’ such a scheme that we
would be able to come out of the vicious circle of the wages and the prices
chasing each other. In a country where once upon a time ‘work was worship’ the
situation today is that workmen want to have more and more wages for working
less and less. This erosion of work ethics is the most serious matter before
the nation today. If productivity linked wage increases can restore some of the
work ethics, we would have won a major battle against inflation. If our trade
and industry have to survive in the world arena against fierce international
competition, we must be willing to reward efficiency and stop worrying about
the inefficient units which have to close down. This is because our
responsibility as a nation, does not end with worrying about the present work
force. We must necessarily worry about the millions of able bodied jobless
persons who cannot even secure one square meal per day. What kind of social
justice is that where an unskilled worker getting Rs. 800 per month is allowed
to agitate militantly for a wage increase of Rs. 200/- p.m. whereas, for every
one such person employed, there are 100 outside the factory gate who cannot get
a job even for Rs. 200 p.m.
As far as
the mental needs of the workmen are concerned, these are primarily in relation
to the job satisfaction and the status that participation in the process of
management brings. So far, this aspect has not become an issue of collective
bargaining – not at least in our country. Managements should however, ignore
this at their own peril! If managements do not come forward with satisfactory
schemes of worker participation, time will come soon when these items also
become matters of collective bargaining. At the same time, I strongly believe
that this is not a matter that should be legislated and I would earnestly
request the Government to keep away from framing any laws in this regard. A
genuine desired for allowing worker participation in the process of management
should come voluntarily form the Managements and arising out of a fundamental
conviction.
I enclose
herewith :
Some slides
on the subject which illustrate my own concept of how this model should be
built and implemented.
We may
discuss this in some more details should you so desire.
The
foregoing are my thoughts on the subject of ‘collective bargaining’
As far as
‘Go – slow’ is concerned, I agree that it worse than a strike. Given
willingness on the part of the state Labour Commissioner. It should not be
difficult for him to establish whether a management’s complaint of go-slow is
valid or not. All that he needs is to request the management to furnish
daily/weekly production records, of six months preceding the period of go-slow
and compare the same with similar figures for the period of go –slow. The Union
may be allowed to cross examine the management in the presence of Labour
Commissioner with regard to such other inputs as availability of raw materials,
electricity, manpower, machinery etc. the outputs for both the periods should
be of course, in the physical units only. Once the Labour Commissioner is
satisfied that a go-slow has actually taken place, he should be empowered to
direct the Union and the workmen concerned to step up the output to an average
of the monthly output of the preceding six months and simultaneously authorize
the management for a pro-rata reduction of wages for the period of the go-slow,
till such time the normal production is restored. I do agree that the solution may
not be as simple as I have tried to make out. However, given a desire on the
part of the Government to get rid of cancerous disease which is sucking the
life of many an industry, it should be possible to find a more acceptable
Solution.
In closing,
I would only like to add that sooner the Unions, the Managements and the
Government realize that ever-increasing labour legislation is not the solution
to the problem of strained industrial relations, the better it would be for all
concerned. Possibly, we already have more labour laws on our statutes than any
other country in the world! If labour laws by themselves could ensure
harmonious industrial relations, our industrial society should be the object of
envy for the rest of the world! What we find in reality is actually the
opposite. All these laws have incessantly talked about the ‘rights’ of the
workmen and how to protect these rights. If we must have one more law, it is
high time, it is about ‘the duties’ of the workmen.
Whereas, all
of the foregoing are my strictly personal views, we at L&T have tried to
move in the direction indicated therein. Over the years, we have had a strong
internal union of educated workmen.
Under the
constructive guidance of Bhartiya Kamgar Sena lead by Shri Dattaji Salvi, the
worker-leader have been responsive to some of the thoughts expressed earlier.
I also
enclose herewith :
a)
A write-up
from our internal house journal – powai pageant
b)
Translation
of an interview with Mr. Dattaji Salvi which appeared in Mumbai Sakal dt. 7.8.81.
H.C. PAREKH
