R. C. Jain: Can't Treat Contract Labour Unfairly

Image: Amit Verma

Ramesh C Jain
Age: 65
Designation: Chairman, Industrial relations task force, CII and Former group vice chairman of Eicher
Career: Mr. Jain is the former group vice chairman of Eicher and throughout his career he has held several top positions in CII’s industrial relations committees. Currently, he is working as an independent consultant and serves as director on boards of several companies like Hi-Tech Gears, Minda SAI and Graziano among others
Education: B.Tech (Hons) from IIT Kharagpur and M. Sc. (business administration) from Cranfield University, UK
Interests: Golf

Q: Were you surprised by the violence at Maruti’s Manesar plant?
A: Oh, I was absolutely surprised. While we all know that a year ago Maruti workers had issues with registration of their union but whatever we understood is that most of the issues were sorted out. As a matter of fact, I listened to their HR general manager in one of the conferences on industrial relations, and when I heard his presentations, it looked to me as if everything in Maruti is hunky dory. The communication initiative, grievance cell…it was so much from the book that nothing should have gone wrong. Obviously, now I can see that there is a difference between the ground realities and what the top management seemed to be discussing in the boardrooms. I think there is a huge communication gap between the first level of supervision and the top management.

Q: So how do you read the situation?
A: I understand that the Manesar union consists of very young people. I see that they lack maturity of a good union leader which is expected out of union leaders of any big company. Unions have the right to demand whatever they want and they negotiate very hard but ultimately it has to be a win-win situation. I also have a feeling that somewhere the external leadership, the senior people at trade unions which are at national level, I don’t think they are doing their bit in terms of mentoring the younger leaders. They must train them on their rights, duties and responsibilities. So while they have a right to demand, they have certain duties and responsibilities towards the companies in which they work in.

I think there has been a breakdown in the process of how to handle grievances and employee engagement. Supervisors should be the first ones to know the grievances of the workers even before a union does. And these should be escalated which should result in the formulation of a strategy.

Q: What is you view on contract labour? We understand that is a big issue in almost all manufacturing companies now?
A: Yes that is an issue. Let me first say that I am not against contract labour. Because there are fluctuations in the business cycle of a company. There has to be a way out in which you have to have a permanent workforce which is adequate to produce normal market demand. And you need a temporary workforce which meets the peaks of 20-30 percent growth rates. But that does not mean that you should treat the contract labour unfairly in terms of compensation, working conditions or what have you in terms of facilities for a permanent worker. In my mind, the flexibility premium which organizations enjoy should be paid out in compensation to temporary workforce. Obviously quite a few companies are not doing this today. If companies believe they can cut costs in this manner, I don’t think that is a fair thing to do. Managements have to learn how to handle the contract labour.

Q: What in your view is a solution to this issue of permanent workers Vs contract workers?
A: The Industrial Disputes Act, Section 5 B does not allow any company to either close or undergo any retrenchment. If you recall in 2001, the finance minister in his budget speech mentioned that they are going to change this clause. He said that the cut off from 100 persons will be increased to 1, 000 persons and retrenchment allowance which is about 15 days for every year of service would be increased to 45 days. I think this is something where a tripartite discussion can take place. That flexibility to retrench and add manpower should be there. I think somewhere we need to change the focus from job protection of a few to enhancement of jobs for many.

Q: What are the takeaways from this incident?
A: Good practices on employee engagement and communication is top priority. This should cover welfare, grievances, product line issues…everything. Second is training for supervisors and union leaders. Third is, we need a pro active labour department who do not take their role as going and inspecting companies and auditing labour unions and the antecedents of their leaders very seriously. Fourth is reforms in labour laws; every law is old. Factories Act is as old as 1948, contract labour act is as old as 1947, trade union act is as old as 1926, Industrial Disputes Act is 1947…each of these acts need modifications. I am not saying that changing the acts alone will change the culture. Education and training should happen and Acts are there to aid it.

Q: The last five years have seen increasing number of such incidents and mostly in the automobile sector. Why?
A: Somewhere we thought that with the service sector, trade unions had taken a back seat. But in the last few years the manufacturing sector has again starting seeing light of day, and the growth in the automobile sector is the most visible, which is why you are seeing many more incidents. But the fact is that in this country there are only 10 percent workers in the organized sector who have a union. 90 percent are not unionized at all, what about them? How do they resolve their problems? I think this is a million dollar question for our country.