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Right to sack a recalcitrant worker

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The brutal attacks on senior managers of Maruti-Suzuki's Manesar unit, leaving one of them dead and several others seriously injured, has again brought to the fore the matter of labour law reforms. During a TV discussion following the incident, Mr Rahul Bajaj, the respected industrialist - parliamentarian, brought to bear the practice of many industries (including apparently the Maruti plant) having just a small work force directly on their rolls, and upto 5 or more times that many on contract, all for the same kind of work. And, while these 'regular' workers are paid excellent salaries and accorded all kinds of benefits, the contract workers get just the government notified minimum wages, which at best matches just about one-third the salary levels of the regular workers. Mr Bajaj pointed out that such flagrant differentiation is amongst the biggest causes of disaffection amongst the workers

While such practices are rampant, particularly in the SME sector, in the Corporate sector however I had thought that contract workers were engaged only for non-core activities of a unit, like for house-keeping, security, canteen, transport, etc. So, if the Manesar plant was engaging contract workers for their core activities too, it is kind of unusual. Actually, government organisations are the biggest culprits in this regard, and, worse still, they don't even ensure the minimum wages for the contract workers - check this.

Mr Bajaj then went to add that the reason for this plainly is the fact that once you have a worker on your rolls, the process of terminating his services, if he turns recalcitrant, is so tortuous that the industries are forced to take the easier option of keeping them all on contract, leading to the kind of disparity, consequent disaffection, and perpetration of such incidents, though the cruelty meted out in this particular instance was beyond all comparison. The obvious answer Mr Bajaj stated was to make it easier for employers to terminate workers, who they have decided are not helping the overall cause any, against payment of a fair compensation package. When another panelist, Mr Anil Padmanabhan, a trade unionist, termed this the "hire & fire policy", Mr Bajaj responded that there was a difference in that a fair compensation, based on the years of service put in, was being paid, in addition to the regular benefits of gratuity and all such entitlements.

An outcome of adopting Mr Bajaj's suggestion would perhaps be that the bargaining power of the workers will then depend largely on their individual skills and thereby their usefulness to the company, as compared to the present situation where it depends mainly on the labour union's collective strength to hold the management to ransom (This is of course why it will not be acceptable to the Anil Padmanabhan's of this world). This will spurr a fair section of them to keep upgrading their skills, and thereby command high wages, particularly in a growing economy. On the other hand, however, there is also the fear that those unable to cope up with the demand may tend to get eased out, though of course they will then be simultaneously collecting their severance packages. Now, very orten, non-performance of an employee is the result of his having lost interest in the job, in which case, it would be in the fitness of things that, putting the severance package to good use, he finds himself something more meaningful to do.  

Another outcome would be that employers will no longer hesitate to add on more workers, as may be required, leading to huge alround employment generation, and, since they will all now be employed directly, they will also become eligible for all the benefits, thus ensuring a more egalitarian environment too.

The positives as such are too many, and it is time the government looked at all of them seriously, if it wants to prevent Manesar like incidents to happen again.

Apart from all of these, I would also venture to add that, when every kind of right is being claimed today by all and sundry, and many of them are being addressed by the government, shouldn't there be some basic rights for the employer too? Labour is an important component of any value addition exercise, and therefore every employer would do his best to cultivate his workers. But, for all his efforts, if an employee chooses to remain recalcitrant, why should the employer have to suffer him interminably? Many are the instances where a handful of recalcitrant workers have caused total ruination of industries, placing their own livelihoods, those of their colleagues, as also that of the employer too in jeopardy. The country has paid huge costs on this account already. It cannot afford them any longer.

Muralidhar Rao

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murali772's picture

status quo rules, inspite of a cabinet decision

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The findings of the recent survey of job trends across states by the labour bureau should serve as an eye-opener for all concerned. States like Gujarat and Himachal Pradesh, which have introduced labour reforms, have lesser unemployment than Kerala and West Bengal, which have been following pro-labour policies. In other words, labour reforms create jobs, not destroy them. Yet, the United Progressive Alliance government is wary of introducing reforms in the labour sector for fear that it would antagonise the working class and the vote-banks it represents. As a result, antiquated labour laws that prevent investment act as a dampener for job creation.

- - - The UPA government has not summoned up courage to introduce the national manufacturing plan, which the Union Cabinet had cleared nine months ago. It is nobody’s case that labour should be allowed to be exploited by vested interests. At the same time, an industrialist, who invests money in a project, should have the freedom to choose his staff and get work done by them and in the event of failure should have the ability to lay off staff and, if necessary, close down the factory. To put it differently, the labour laws need reforms so that they meet modern-day demands and create more jobs.


For the full report in the New Indian Express, click here.

Tragic inaction leading to tremendous costs, the worst sufferer being none other than the aam aadmi

Muralidhar Rao
das's picture

Nice article. A common excuse

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Nice article.

A common excuse for poor performance in public sector firms is that they have a social duty to perform while the private sector can afford to focus on profits alone.

Like Rahul Bajaj says, a lot of public sector firms too run their shop floors with contract or temporary labour. I started my career in BEML (Bharat Earth Movers Ltd.) on the shop floor. There used to be machine operators who used to be taken off the rolls every 3 months, reemployed after 2 days. Some of them had been working for BEML for 15-20 years. So much for the 'social responsibilty' of the public sector.

Firms like Tata Steel and the TVS group companies haven't had labour problems for decades, because they treat their people like people. Firms like Maruti import all their other processes and systems from their Japanese principals, except the ones relating to employees - lifetime employment, part of the family, etc.

murali772's picture

most harmful piece of legislation

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A sensible company in India will not hire a permanent worker today because of our senseless labour laws. Instead, it hires contract workers to which it denies long-term benefits. Meant to protect workers, the laws have harmed them. They are the main reason why India has not been able to create a manufacturing revolution and create more jobs. The spread of contract labour has reduced the bargaining power of unions as well, who now represent less than 4% of India's workers.

Nowhere in the world has so much harm been done by a piece of legislation.


For the full text of the essay by Gurcharan Das, in the Sunday ToI, click here.

Very true, Sir. And, will the government ever get down to correcting the anomalous situation?

Muralidhar Rao
abidpqa's picture

Around the same time Maruti

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Around the same time Maruti incident happened this news regarding Industrial Employment (Standing Orders) came.  If the labor law is wrong, industry should propose a new law, which they will not do.  They want to have no law. Even if they propose, it will be biased.  They say Indian labor law is not fit for globalization,  then will they bring US labor law here, or Japanese.  IS US and Japan not part of globalization? They say Japanese work more, and wants to bring Japnese working conditions there, then why not bring Japnese laws too.

Now the Industry is complaining because managers are hurt. What do they have to say when the union leaders are murdered. In Maruti itself in 2000 during strike many union leaders died, is that investigated? The management always have more power, illegal in most cases. When the workers, showed their power they are just playing victims. The job of the govt is not just defence, where they do a good job, but they are neglecting bringing equality and justice.

Industry wants hire and fire, but opposes subsidies and social security.  If there is hire and fire there should be choice available whether to work at all. Hire and fire can be allowed if everyone has house, medical insurance, and minimum social security payment to have a decent life.

They say that non permanent employees are more flexible, then why not pay them more.  They are paid about one-third, if the industry is sincere to their own argument, shouldnt they be paid double?

 

murali772's picture

urgent need for flexible labour laws

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Twenty million young people are enrolled in higher education - a figure comparable to the United States. The more qualified workforce that will be created each year is unlikely to settle for careers in the unorganised sector, which currently accounts for 93% of total employment in the country.

The primary reason for such excessive dominance of the unorganised sector is the rigid and cumbersome labour laws, which employers circumvent by setting up much smaller informal units which fall outside the purview of the law. The impact on productivity has been disastrous, as productivity of workers at high-end manufacturing units in the formal sector can be as much as 20 times higher than in low-end informal units.

- - - Evidence from states shows that regions with stringent employment protection, or where dispute settlements are ineffective and costly, have much lower employment. So flexible labour laws which allows workforce adjustments in tune with production requirements, is the only option to boost employment and scale up the organised sector.


For the full text of the ToI editorial piece, click here

@ abidpqa -

Hire and fire can be allowed if everyone has house, medical insurance, and minimum social security payment to have a decent life.

How do you pay for all of these without generating surplus in the economy? By printing currency? If you do that, without corresponding value additions through production of goods and providing of services, you will land up like Zimbabwe, with inflation of the order of 200 + %

They say that non permanent employees are more flexible, then why not pay them more.  They are paid about one-third, if the industry is sincere to their own argument, shouldnt they be paid double?

Here, you have a point. And, that's exactly what flexible laws are about.
 

Muralidhar Rao
murali772's picture

damaging dichotomy

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On the one hand, you have this

Not only has India witnessed jobless growth during the UPA's tenure, it has also seen millions pushed to become casual labour with little social security, the Institute of Applied Manpower Research (IAMR), a think-tank of the Planning Commission, has said in a recently published research paper, 'Joblessness and Informalization: Challenges to Inclusive Growth in India'.

- - - The report noted that 15 million workers shifted out of agriculture and into the manufacturing and services sector during 2005-10, leading to agriculture's share in total employment falling from 57% to 53%. In the same period, the construction sector added 18 million people as workers as the government made huge investments in infrastructure.

Most of those moving out of agriculture (during a period in which farm productivity was on the decline) ended up being casual labour in the construction industry with little or no social security, the study said.

"Out of 44 million total employment in construction by 2010, 42 million (informal labour) hardly have any kind of social security benefit attached with it. In other words, 95% of workers in construction sector hardly have any kind of social security coverage," the study said.


This explains why the report is not gung ho about the shift in employment away from agriculture towards manufacturing and services, a development that economists would normally see as positive and as an indicator of an economy in transition.

- - - India's track record on this front seems to be one of the worst among the developing countries. The study said "what makes India different is that the share of informal workers in the total workforce is well above the other emerging market economies - 93% of all workers compared to 55% in Brazil".

IAMR calculated that the prevalence of informal or casual labour has been increasing not only in the small and medium scale unorganized sector but also in the kind of labour big manufacturers hire. "While the informal nature of employment is predominant in the unorganized sector of the economy, its prevalence is increasing even within the organized segment as well," it said. Almost half of the organized sector labour too is of casual nature, the think tank added.

By 2010, 60% of the organized manufacturing employment was in the nature of informal contracts and 80% of the organized non-manufacturing employment was in the nature of informal contract, the study said.


For the full report in the ToI, click here

And, on the other, you have this

Workers negotiating a wage settlement at Hero MotoCorp have demanded doubling of monthly salary to near Rs 1 lakh, apart from other benefits like subsidized housing as well as interest-free loans running up to Rs 10 lakh. If met, the shop floor workers at the bike major will perhaps be the highest paid in the auto industry and even among other manufacturing units.

The company management, however, is in no mood to relent, fearing any "radical" change in increment levels will not only make the business of Hero MotoCorp unsustainable, but also that of its suppliers, dealers as well as other units in the Gurgaon-Dharuhera industrial belt in Haryana. An experienced shop floor worker at Hero MotoCorp currently has a CTC (cost-to-company) between Rs 47,000 and Rs 50,000. The labour union, now in process of thrashing out a new three-year wage agreement with the company management, has sought an increment of around Rs 45,000, sources in the Haryana labour department told TOI.


For the full report in the ToI, click here.

The inflexibility in the labour laws is very clearly the reason.

Muralidhar Rao
murali772's picture

inevitability of job-less growth

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Cumulative legislations — more than 50 of them at the Centre and three times that in the states — aimed at protecting the rights and interests of workers in the organised sector so terrorise entrepreneurs that few of them dare operate large-scale enterprises in labour-intensive sectors such as apparel and assembly activities.

These are precisely the enterprises that have created vast numbers of well-paid jobs for the Chinese workers migrating from the countryside to the cities in droves during the last three decades. Unlike their Chinese counterparts, Indian entrepreneurs either rush to the safety of the highly capital- or skilled-labour-intensive sectors such as automobiles, engineering goods and software, or become invisible in the swath of tiny firms in the unorganised sector.

The stark result: less than 5% of Indian workers benefit from the ultra-high protection that labour laws provide in the organised sector while more than 95% of them toil for a pittance and without any protection whatsoever in the unorganised sector.


For the full text of the column titled "Noble Intentions; ignoble outcomes" by Sri Arvind Panagaria in the ToI, click here.

And then, the leftists, who have been holding up labour reforms, will complain of job-less growth. Inevitable isn't it?

Muralidhar Rao
murali772's picture

telling commentary

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To give you some idea of the differences between China and India, according to a recent study by economists Rana Hasan and Karl Jandoc, 85% of Indian apparel workers were employed in tiny firms of seven workers or less in 2004-05. The same year, only 0.6% of apparel workers in China were employed in these tiny firms.

At the other extreme, 57% of Chinese apparel workers were employed in large firms of 200 workers or more. The corresponding figure for India was 5%. Medium-size firms with 50 to 199 workers flourished in China and were nearly entirely absent in India.

Sir, as UPA II winds up its term, you could still do much good to the country by asking industry leaders what it is that must be done to make it attractive for them to invest in large-scale firms in labour-intensive sectors and then begin implementing those policies. India can ill-afford to lose even the market for rakhis and Ganeshas at home to the Chinese.


For the full text of the column by Prof Arvind Panagariya, in the ToI, click here.

Indeed a telling commentary on the ironical situation we have landed ourselves in where we can't employ our teeming millions even for producing simple goods required by them.

Muralidhar Rao
murali772's picture

a give and take solution

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- - entrepreneurs need to be able to right size their company's bench strength from time to time, but only with good reason. What could these reasons be? They are principally three: indiscipline, bankruptcy and restructuring. All of them can be allowed if the management also undertakes to bear a portion of the cost of dismissal of the worker.

For the full text of the well-written column in the ToI, by Dipankar Gupta, click here.

One hopes the new government moves along these lines fast.
 

Muralidhar Rao
murali772's picture

sums it all up, precisely

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Democracies can rarely match the labour market flexibility of authoritarian regimes. But the past 60 years of experience shows that Indian labour laws and interventions have gone too far even by the standards of democracies. Today, Indian corporates avoid labour-intensive industries such as apparel like the bubonic plague. When they do invest, they go for machines for tasks that workers could readily perform. It is time we reconsidered our labour laws.
 
For the full text of the column by Prof Arvind Panagaria in the ToI, click here
 
Sums it all up, precisely. 
 
Muralidhar Rao
murali772's picture

"design in India" can flourish; "make in India" doubtful

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NOKIA story (for the full text in ToI, click here):
A combination of factors -poor strategising by the Finnish MNC; a tussle with Indian bureaucracy and taxmen; lack of support from government; and vociferous trade unionism -has resulted in Nokia announcing a stoppage of manufacture at the plant from November 1. 
 
More than the region's storied reputation as a manufacturing base, what's at stake is the future of 851 workmen employed at the factory and the electronics manufacturing system (EMS) ecosystem that grew around it. 
 
From the summer of 2005 when then chief minister J Jayalalitha rose in the state assembly to announce the setting up of Nokia's factory in Sriperumbudur, it became a showpiece of foreign investment in the state. Established in 2006 over a 200-acre site, Nokia wheeled out the `Made for India' 1100 model and then slowly ramped up production to make Chennai its single largest unit for handsets globally. Along with half a dozen component suppliers, the Nokia SEZ in Sriperumbudur, 40km from Chennai, became a source of employment for more than 31,000 persons directly and countless scores through indirect jobs
 
- - - - Lack of adequate power and rising trade unionism has turned the tide on investments into the EMS sector at Sriperumbudur. Foxconn which planned to make Apple phones and iPads shelved the plan. Intel, which considered setting up a chip manufacturing project, chose Vietnam, as government could not give them any concessions. "Sriperumbudur needs an evangelist. Nokia was the starting point for EMS here and was the hope for thousands of job seekers. The train appears to have left the station." said a former Cushman & Wakefield executive involved in bringing Nokia to Chennai. 
 
BOSCH story (for the full text in ToI, click here):
E: Volkmar Denner, chairman of the Euro 46-billion Bosch Group, said India needs to undertake urgent labour reforms to help boost productivity and enjoy a competitive edge in manufacturing, within the Asian landscape. 
 
Given the many free trade zones in Asia and many Asian economies entering into free trade agreements, Denner stressed the need for having a competitive manufacturing environment in the country. The message becomes particularly relevant in the context of Prime Minister Narendra Modi's `Make in India' campaign. Denner, who was on a visit to Bangalore, did not however elaborate on any specific measures. 
 
His statements came in the backdrop of Bosch India suffering yet another labour unrest at one of its manufacturing facilities in Bangalore. - - - -This is the fifth employee strike that Bosch is facing at its Bangalore facility in the last four years. - - - Our workers are already among the best compensated in the industry," said Denner. Since 2010, Bosch has invested Rs 5,400 crore in expanding its manufacturing and research facilities in India, of which Rs 1,200 crore was invested in this year alone. India is home to Bosch's largest research and development centre outside of Germany, employing 10,500 engineers. However, Denner cautioned that future investments in India may depend on how the government rolls out labour reforms. 
 
Where can "make in India" happen with this kind of militant trade unionism, resulting plainly out rigid labour laws which do not allow for sacking of workers except for the gravest of offences, which again can be challenged in courts and dragged on for years together?
 
As compared to that "design in India", where BOSCH itself is already employing 10,500 engineers, is perhaps set to flourish, given our inherent strengths in this area, as also the fact that there are no "job security" issues here. The employees can be re-deployed , or even given the "pink slip", alongwith a compensation package as per contract terms, without questions asked. Very recently, a techie friend, a PhD from an IIT, with a stint in the US to boot, had to go scurrying around for a job, when the reputed multi-national that he was working for, decided one fine morning to wind up the division he was working in, since the global scene pertaining to the field had changed abruptly. The levels of skill he had acquired in the meanwhile helped him find a job, in another multinational, though at a slightly lower salary level. 
 
The question that arises then is, in today's world where there's absolutely no security for an industry, given the competitive environment spread across the globe, how can the industry provide job security, like of the old times? As such, unless the government revises the labour laws in tune with the times, "make in India" is an unrealistic objective.
 
Constant upgradation of skills is clearly the way forward for employees, at whatever levles, and the government's job can be to help the process, rather than the present approach which is only perpetuating militant trade unionism. 
 
 
 
 
Muralidhar Rao
murali772's picture

fading notion of job permanence

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In recent months, India Inc has become more conscious of the bottom line.Companies are ruthlessly shedding flab to become more profitable. One estimate says that in Bengaluru alone, some 15,000 techies have been laid off in the past one year. "Organisations are becoming bolder in removing roles or people," says Aditya Narayan Mishra, President-Staffing, Ranstad India. 
 
For the full text of the report in the ToI, click here.
 
I had stated in my opening post that "very orten, non-performance of an employee is the result of his having lost interest in the job, in which case, it would be in the fitness of things that, putting the severance package to good use, he finds himself something more meaningful to do". Perhaps, I may add "make room for someone else to check out if he fits the bill, and in the process help everyone find his eventual calling".  
 
As such, the notion of "job permanence" is largely beginning to fade out, particularly so in today's world of fast-changing technologies (clearly illustrated in the case of Nokia - refer my post of 4th Nov, '14, by scrolloing up).
 
Given this scenario, permanence of government jobs (except perhaps at the higher levels) only tends to perpetuate the least productive and extremely costly "labour aristocracy" class (check here), which the country can ill afford. All the more reason why the government needs to down-size, and drastically so too - check here
 
Muralidhar Rao
murali772's picture

when breach is the norm, why not change the laws instead?

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1) Over 300 specialist doctors (attached to the Bangalore Medical College and Research Institute), who sweat it out for no less than 18 hours a day, are paid a pittance. Sometime, their work stretches for three days with out break. And for all the toil, they earn not a penny more than Rs 30,000 a month. The discrepancy is apparent in the fact that their counterparts at the All India Institute of Medical Sciences, New Delhi, take home Rs 75,000 to Rs 1.3 lakh a month; as central government employees, they come under a different pay scale.

This is even with their being the backbone of Victoria Hospital, Minto Regional Institute of Ophthalmology, Bowring & Lady Curzon Hospital, Vanivilas Hospital, PMSSY Super Speciality Hospital and Institute of NephroUrology that primarily cater to the poor.

- - - The problem faced by resident doctors in Karnataka is unusual, explains Dr Abhishek V, who is pursuing his MCh, an advanced post-graduate academic degree in surgery. "Medical post-graduates are exploited despite rules to protect them; government officials show total disregard towards existing rules. During MCI inspections, post-graduates are falsely shown as junior and senior residents. In the absence of employment letters and salary slips, the residency scheme is largely exploited. As stipends are non-taxable, we don't have income tax receipts either. Due to this, we are unable to apply for loans or even a credit card," says Abhishek.


For the full text in the ToI, click here

2) The Bangalore Water Supply and Sewerage Board (BWSSB) has been directed by the Safai Karamchari Aayog to pay 292 workers wages of Rs 7,757 per month henceforth with arrears from April 2014.

The workers were still being paid Rs 6,220 per month. After visiting BWSSB offices and going through the safety precautions implemented for the workers, Narayan, State Chairman of the Aayog on Tuesday said, “Minimum monthly wages should have been Rs 7,757. We have directed BWSSB to pay the difference with effect from 2014 April.

-- - Other recommendations of the Aayog include a health checkup every three months, issuing of ESI cards as well as ID cards to the workers.


For the full text of the report in the New Indian Express, click here.

3) Members of CITU and KIAL Service Providing Employees Union on Sunday alleged that Singapore Airlines Terminal Service (SATS), that employs 2,200 people, has failed to recognise the union and has also filed false charges against the union leaders to break the union.

Pratap Simha, State Secretary, CITU alleged, “The KIAL was formed after acquiring land from farmers and children of these farmers were appointed on contract basis as ground handling staff for jobs like providing ladders to passengers, packing, and security checking. They should be paid minimum wage of Rs 6,750 but are given only RS 5,500.”

CITU demanded that the workers union be recognised, workers paid minimum wages, and their services be regularised.


For the full text of this report in the New Indian Express, click here.

The difference in the case of SATS, as compared to the BWSSB position, is that there is a union trying to enter the scene, which, apart from demanding payment of minimum wages, is seeking regularisation of the services of the workers, as also recognition of its role. Now, if I understand a Singapore company correctly, there's no way it's going to accept a union, for all of the company's government affiliation through its partnership with Air-India. The best it'll do perhaps is to agree to pay the minimum wages.

What becomes evident in all of this is that, both BWSSB as well as SATS, while engaging labour contractors (which in itself is a contentious issue), are not even engaging the ones ( like TeamLease - arguably the biggest employers in the country - all on contract, though), who generally ensure compliance with the statutory requirements under labour and associated laws.

Essentially, non-compliance by government and government affiliated set-ups is quite the norm. As such, what is required of the political leadership is to set aside the hypocrisy, practiced all these years, to convey all of these correctly to the stake-holders involved, and thereby get their buy-in to the more practical "hire and fire" norms. Once that becomes acceptable, the employers, irrespective of whether government or private, will engage everyone directly, which anyway is already the case at the higher levels, as much as even at lower levels in Singapore (and even in quite a few democracies). And, with flexibility in the matter of tenure, compliance with statutory provisions by the employers will generally follow, since they will be saving the 12 to 15% mark up on the wage bills that was earlier going to the contractors. All of this can perhaps be monitored even through an appropriately constituted ombudsman mechanism.

Well, apparently, the very fact that companies like TeamLease have based their flourishing business model on government continuing in its hypocritical ways (like I have stated here, every government-created artificiality is a business opportunity for an entrepreneur), it's all going to take some doing. One wonders if even Modi-ji has the stuff to attempt that.

PS: Bangalore Medical College and Research Institute, and the management of its doctors, is another cup of tea altogether. I brought it in here essentially to point out the prevalence of governmental hypocrisy in the healthcare sector too. It is very much so in education, and most other sectors too.

Muralidhar Rao
xs400's picture

Privatization and the IT Industry vs Public Transport problems

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IF IT industry was NOT exempted from labour laws, employees could go home at the same time as government employees: i.e. well before quitting time to "catch the bus". Also BMTC would have provided buses to those "IT" companies, like they do to other organized labour.

Privatization did not do any good to the aam aadmi / aurat.  The <your list of choice  words here> of the self-styled dictators is as bad as that of government babus and politicians. Solution - get yourself a government job.

Karnataka exempts IT from labour law for another 5 years
Indu Nandakumar, ET Bureau Oct 21, 2013, 03.00AM IST
Tags:

BANGALORE: Karnataka will exempt information technology companies from an onerous labour law for a further five years, lifting a weight off software firms which have been campaigning against the legislation.

Top industry executives welcomed the decision of the cabinet last week, just ahead of the state's premier information technology event starting on Tuesday.

The IT sector in Karnataka was exempt from the Industrial Employment (Standing Orders) Act, 1946 for the past 11 years. But the state moved to bring the sector under the law this March, causing dread and despair among the software companies, which were just slowly recovering from a global economic slump.

"The cabinet approved the extension (of the IT sector being exempted from the law) on Thursday and it will continue for probably another five years," said SR Patil, the state's minister for information technology and biotechnology.

The state's information technology and business process outsourcing sector employs close to a million professionals and is expected to clock export revenues of around 1.5 lakh crore in the year to March 2014

The decision to prolong the exemption was welcomed by IT experts. They said the decision will free the sector from potential headaches. The experts pointed out that the complex and outdated labour laws were originally designed and more suited for manufacturing sector.

"This is a very prudent step," said Pratik Kumar, executive vice-president and global head of human resources at Wipro, which employs about 1.5 lakh people. "It is also a recognition that each sector is unique and so are the requirements. Law has to be flexible to recognise that."

Under the law, companies were required to define conditions of employment and details such as working hours, wages, attendance, grounds of termination and so on. The companies also had to make these known to employees by displaying the terms on a display board near the main entrance. The terms also had to be approved by labour unions.

Most executives in the industry feared this requirement will lead to unionisation of employees in the sector, which contributes to nearly a quarter of the state's GDP. "We were surprised when the previous government did not give an extension, which was like going back to 'licence raj'," said Ramdas Kamath, senior V-P and member of the executive council at Infosys.

murali772's picture

oh, for pro-employment labour law reforms!

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On the labour law front, the prime minister is looking at the wrong issue. He argues that any changes should not be just for businessmen, they should also be pro-labourer. This misses the point made repeatedly over the years that flexibility in the labour market is required in order to create new opportunities for work in the organised sector, especially in labour-intensive sectors like garments. The law on industrial labour should be pro-employment; whether it is pro-business or pro-labour is beside the point.

For the full text of the column by Mr T N Ninan, in the Business Standard, click here.

Reiterates the point I have been making all along.

Muralidhar Rao
murali772's picture

govt jobs creating a class divide

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A 41-year-old woman was assaulted by a BMTC bus conductor after she demanded to know why he hadn't given her the right change for her ticket. The woman was treated at KC General Hospital after the man reportedly slapped her, leaving her with a bleeding left ear and a broken earring. Her 3-year-old granddaughter was with her when the incident took place on Saturday last week. The conductor, G Uday Kumar, was arrested after she staged a protest and lodged a complaint.

For the full text of the report (emphasis added by me) in the ToI, click here.

This is not just a one-off case. Here the lady insisted on being returned the exact change. But, most commuters give up, and carry on with their journey rather than take on a conductor, more so when they realise that he is the difficult type.

These are regular occurances, pertaining to both a corruption (check here, for more), as well as arrogance (check here, for more on that). And, there's no solution to it all as long as the (dis)service remains the monopoly of the government, since there's no way a recalcitrant employee can be sacked, whatever his misdeed, as has been elaborated in this blog right from the beginning.

In stark comparison is the position in the IT industry, as brought out in the following excerpts from another ToI report, accessible here.

Cognizant appears set to cut at least 6,000 jobs, which represents 2.3% of its total workforce, as it struggles with growth in an IT environment that is fast shifting towards new digital services.

The variable payout to employees for 2016, too, is expected to be adversely affected, according to sources familiar with the matter.

The layoffs are likely to be more this year than the routine annual exercise that weeds out the bottom 1% of the workforce for non-performance as determined by the annual appraisal process that ends in March.

Cognizant is said to be looking to cut roles that have become redundant due to the impact of automation on lower-end IT jobs.


Last year, the layoffs were about 1-2% while two years ago, it was about 1%. Cognizant had 2,60,200 employees globally as on December 31, with 1,88,000, or 72%, based in India.

It was not immediately clear how many jobs in the country or which roles would be made redundant.

"As part of our workforce management strategy, we conduct regular performance reviews to ensure we have the right employee skill sets necessary to meet client needs and achieve our business goals. This process results in changes, including some employees transitioning out of the company," a Cognizant spokesperson said in an emailed response to TOI.

The company faced one of its most challenging times last year, with full-year growth down to single digits, 8.6%, after many years of strong double-digit industry leading growth.

And, it is not just in the case of the IT sector. No employee in the private sector (including of bus services operators like VRL, Ballal Motors, Kallada, etc, etc) can get away with the kind of behaviour of the BMTC conductor in question.

Essentially, government jobs have created a class divide - the aristocracy vs the rest.

Muralidhar Rao

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