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Thursday, 15 August 2013 00:00
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Both unions and managements need to work together

Given that a prolonged strike can neither be in the workers’ nor the management’s interest, it is just as well that the employees of Bajaj Auto’s Chakan plant have agreed to come back to work after having stayed away for nearly 50 days. To his credit, managing director Rajiv Bajaj stuck to his guns, warning them that production would be shifted to the Aurangabad and Pantnagar plants if workers didn’t resume their duties within a specified time—these were, he told the workers, difficult times, so no wage hikes could be expected. While the Bajaj problem has been resolved, there has been a rash of auto strikes in recent years, the most high-profile being the Maruti one where a manager was killed.


While unions clearly have played an unfortunate role in ensuring India’s rigid labour laws are not changed and, as a result, have also been reluctant to change, companies too need to relook their attitude—unless they invest in workers, they cannot improve their own profits. The best example of this being the IT industry where companies have invested hundreds of crores in training each year and reaped the benefits of this—the flip side of this, of course, is that the lack of unions probably played a big role, as well as the white collar nature of the workforce.

With rising inflation, workers are justified in wanting higher wage hikes—Hero MotoCorp just hiked wages by R9,000 per month; but regular wage hikes are not possible without greater worker productivity. A recent BCG study points to India’s worker productivity being a mere $3,000 per year as compared to Brazil’s $11,000 and China’s $67,000. Which is why, despite wages in these countries being higher than in India, and rising faster, their global competitiveness has not suffered the way India’s has. This is why manufacturing comprises 35% of GDP in China versus just 15% in India. A large part of this has to do with poor infrastructure but an equally large part has to do with poorer education levels in India as well as low in-service skilling. BCG reckons 70% of Chinese employees get skilling as compared to just 17% in the case of India’s manufacturing sector—this is as much a result of rigid and militant unions as it is because of short-sighted management. India could do with less rigid labour laws, but both trade unions and managements have to work together to improve productivity—till they don’t, the demand for higher wages will keep outpacing productivity, and the next big strike will always be around the corner.



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