“Things are really getting bad, aren’t they?” asked a retired captain of a ship, talking about how the economic downturn is forcing companies to cut costs. Two of his neighbours, both working in blue-chip listed companies, he says, were asked to leave after nearly two decades of being employed. One was from an engineering company and the other from an infrastructure company that has announced losses in the recent quarter. In both cases, there were no media reports because there was no mass retrenchment of the sort that happened after the 2008 financial crisis.
Instead, it is a slow on-going process of cost-cutting by shutting down branches, entire departments, or axing employees who are over 40 and tend to draw high salaries after two decades, and can be replaced at half the pay by younger persons. Since 2008, chopping and pruning in information technology, communications, retailing, capital market intermediary firms and real-estate companies has never stopped. Recently, a high-profile realty firm has asked 250 persons to go, although it publicly denies the action; HSBC Bank has sacked a few hundred people at Hyderabad; now, core sector manufacturers are pruning as well.
The mindless adoption of labour and human resource (HR) policies applicable to the US and developed countries is creating its own set of problems which need urgent attention. Disparities of wealth, education, lifestyle and basic amenities available to the urban rich and the middle class, and the lack of them in semi-urban and rural India, is beginning to show in different kinds of turmoil. Our policymakers and planners tend to operate in an isolated urban vacuum. It is reflected in decisions like mandatory e-filing of tax returns or fully-automated trading systems when most of the country does not have proper electricity or Internet connectivity and in the Planning Commission’s proposals for healthcare. It is reflected more starkly in the manner in which labour and employment issues are dealt with in public and private sector entities.
A very frank discussion appears in the August issue of Officers’ Voice, a newsletter of Corporation Bank Officers’ Organisation (CBOO). Corporation Bank has a unique work culture and sets high benchmarks for productivity and efficiency and is probably the only public sector bank (PSB) that has had merit-based promotions (not seniority) for over three decades. CBOO is also fiercely protective of the Bank’s profitability. Yet, CBOO calls for ‘urgent introspection’ with regard to HR policies after witnessing ‘a disturbing trend’, where only 575 clerks applied for the 825 vacancies for the officer cadre. Similarly, only 566 people wanted to be promoted from scale-I to scale-II, despite 855 vacancies, and only 506 wanted to be promoted from scale II to scale III, despite 664 vacancies. Why do clerks and officers at a bank that rewards merit, not want promotions? The answer applies to all PSBs (Moneylife had previously checked this out with other bank employees). It is simply because the branch manager is solely responsible for the success or failure of the branch. In order to compete with private banks, he is set tough targets; but the ‘men and materials’ to deliver the targets are not the same. With no power to get clerks and officers to stretch themselves, the enormous stress—of meeting financial targets, branch upkeep, customer complaints, loan over-dues and audit queries—is on the branch manager alone. The RBI (Reserve Bank of India) officials do not engage with these officers and only issue directives and circulars demanding compliance. And senior management is far too busy with meeting its own performance metrics (soft opening of branches without staff in place is one example) to worry about the issues of key operational staff. CBOO warns that this neglect can have a ‘devastating’ impact on the organisation. And, of course, on all PSBs.
Sensitising Labour After the heinous murder of a young lawyer in Mumbai, the recurring theme in comments from the police and the public was about the need to sensitise labour and domestic help (in this case a watchman from Kashmir) about urban lifestyles. Unfortunately, when it comes to hiring domestic help or security, cost is usually the only consideration, even if it leads to exploitation. Similarly, a Cover Story by PeopleMatters, an HR magazine, has compiled the views of several experts on what went wrong at Maruti. A fairly common theme is the need for ‘education and sensitization of the unionised workmen’ about the new labour-management engagement paradigm. HR expert Sujoy Banerjee paints a frank, but chilling picture. He says, “Over the last few years, the Indian Industry across sectors has gone into an overdrive of contractual engagement of workmen with a view to manage their cost of operations. What started initially as contract workmen being engaged in tertiary and non-core activities of the enterprise, have now become all pervasive across operations, even in the core areas of the organizations’ operations. While the number of contractual workmen in the country has gone up exponentially over the past few years and the dependency of corporations on them have increased manifold, the legislative framework to monitor and regulate their employment conditions is inadequate. There is also a lack of welfare and social security framework for the contract workmen. In this scenario, where employment terms are not clearly defined and the nature of the engagement is not permanent, there is bound to be doubt and misunderstanding between the employer and employee, unless there is a defined legal framework for contract workmen.”
In other words, while militant trade unionism of the 1970s and 1980s was rejected by all except the leftists, the pendulum may have swung the other way. This was fine as long as there was steady growth and competition offered newer opportunities (every new car company would have poached trained labour at the start-up stage from existing contract employees). But reports about the work situation at Maruti do sound more like bonded contract labour to the ordinary person.
The violent unrest at Manesar, aided by an unconcerned labour ministry, is bound to be repeated elsewhere, if manufacturing companies in the rest of India are forced to cut shifts and let go of contract employees all over India due to the economic downturn. Is the government even thinking about it? As Mr Banerjee says, all four stakeholders—“the government, the employers, the employees and the society need to seriously revisit and re-orient themselves to handle the sensitive issue of contract labor engagement.”
And, finally, this conflict and confusion is evident in how we treat growing lawlessness and incidents of murderous rage on our streets. Sean Paul Kelley, a travel writer and former Wall Street executive, sums up how the world views us in a blog that documents our filth (dirt, squalor, dung and excreta on the streets), lack of infrastructure (power or transport), corruption and bureaucracy. His scathing critique ends by saying, “India has a lot to offer the world, but I can’t see it happening, because Indians are too complacent and conservative.” Depressingly, this is true of a majority of urban, literate and privileged Indians, despite the massive support that a Baba Ramdev or an Anna Hazare has attracted in recent times.
Sucheta Dalalis the managing editor of Moneylife. Subscribers get free help in resolving their problems with select providers of financial services. She can be reached at[email protected]