It is among the best bits of business news in recent times. The 12,000-member strong Air India Employees Guild has decided to support the privatisation of Air-India subject to certain conditions. The move has electrified India's investment and financial community and the financially savvy and e-enabled George Abraham, president of the AIEG is a hero. Abraham recognises that without quick infusion of funds and an expansion plan that takes into account global competition, Air-India is liable to sink with its load of 18,000 employees.
"It's better to support privatisation instead of losing the company to financial collapse," Abraham told the Indian Express recognising that a bail out from the exchequer was getting remote everyday. Abraham's biggest strength is not merely in recognising the need for privatisation, but in being the first to place a set of sensible demands in return for the union's support and co-operation.
The demands, made through a Microsoft PowerPoint presentation are simple - 10 per cent of the shareholding to be distributed to employees as Stock Options in order to create a sense of belonging, two seats on Air-India's board of directors, no retrenchment and finally safeguarding the percentage increase in wage settlements.
Of all the demands, only the last one seems a little unreasonable. If ownership of shares is expected to improve staff productivity and performance, then the logical rewards will be through an appreciation in the share price and a higher dividend. The two employee directors on the board will further protect employee interests and the minister for divestment, Arun Jaitley, has already assured protection against retrenchment. However, it could well be that Abraham, who has shown remarkable astuteness in making his demands, is aware that he may have to concede a little during the negotiations.
While Abraham is the first to present a precise set of conditions in order to support privatisation, he is not the only trade union leader to recognise the need for pragmatism or to realise that they are playing into the hands of the politicians and bureaucrats with their mindless opposition to privatisation. It is the neta and the babu who stand to benefit the most by retaining control over public sector undertakings and the employees' opposition give them the handle that they need.
The All India Bank Employees Association (AIBEA) representing more than half a million bank employees in this country has been campaigning for restructuring of the banking system since 1985. It recently decided to throw banking secrecy regulations to the wind and published a 1000-page compendium of all major business houses who had defaulted on repayment of loans.
With non performing assets of banks alone mounting to a huge Rs 520 billion, the AIBEA has been demanding an independent banking authority with complete autonomous powers, delinked from Reserve Bank of India to monitor the banks which is directly answerable to the Parliament. Nothing has happened so far.
It is only a matter of time before bank unions too come up with a set of conditions that will help turn around banks, increase accountability and protect their interests.
But an even more extraordinary example is that of the Maharashtra State Road Transport Corporation (MSRTC). The effort is spearheaded by MSRTC's managing director Ujwal Uke who has enlisted the employees' help in saving the corporation.
My first experience of the dramatic turnaround at MSRTC was at the Pune bus depot. With taxis on strike, we rushed to the depot to try and find a bus leaving for Bombay. We were amazed to see the driver and conductor of an MSRTC bus calling out its timing and welcoming us. In fact, we even got off to check if there was a catch somewhere. It was many weeks later that I learnt that this was all part of the new MSRTC, an organisation whose employees had joined managing director Uke in an incredibly unique effort to turnaround the company.
Uke, an alumnus of the Indian Institute of Management, Ahmedabad kicked off the effort after his appointment in June 1999. Until then the MSRTC chairman was a political appointee and the managing director a bureaucrat. The combination had brought the profitable organisation to its knees.
When diesel prices were hiked three times in 1996-97, MSRTC was not allowed to hike ticket rates for 13 months. Apart from lower revenues, MSRTC has been facing intense competition from private operators, particularly those plying jeeps and tempos. While the rickety buses of the MSRTC are forced to connect every village, these operators eat up business in the busiest and most lucrative routes.
The corporation's accumulated losses rose to several billions of rupees and it was not even breaking even. Uke, with the help of his public relations chief Shraddha Belsare, launched a state-wide drive to inform employees about the state of the corporation and enlist the support of its 120,000 employees. He asked each worker to contribute two ideas each to turn around the company. He also led by example. The effect has been electrifying.
Today, an inspector makes a little pamphlet comparing private services to those of MSRTC and spends his vacation canvassing support among the people of his village. At Satara district, the employees pooled in Rs 700,000 to buy a bus for the company to tide over the severe cash crunch and keep the service going. A drive named S R Shiek chose to make his contribution by repairing the buses himself and even painting them. Soon 14 of his colleagues joined the effort.
When Uke contributed a day's salary to the turnaround effort for six months, many employees followed his example. L K Madvi, a traffic controller, gave up six days' salary, vehicle inspector B P Kadam topped that with a whole month's pay cheque. And yet another gave up six months pay. Soon all employees agreed to give up a day's wages for six months in order to raise Rs 150 million for the company.
The turnaround has been slow and hard, but numbers coming in until January show a definite uptrend and the possibility of a breakeven sometime soon. The MSRTC story almost sounds like a fairy tale, and any savvy government would have feted the corporation and its employees and held it up as an example for others in the state.
If the MSRTC story remains unknown to most Maharashtrians, and certainly to most people in the country, it only proves that the neta-babu nexus which has a stranglehold on the economy remains uncomfortable at examples such as these which break carefully created stereotypes about public sector workers and managers. Clearly we have a long way to go.