Friday , June 06, 2008 at 2117 hrs “Our goal is the unification of workers to advance class struggle and international solidarity to combat the advance of imperialism”. This quote could be circa 1917 Russia but came on May 5, 2008 from MK Pande, president of CITU (the Left-affiliated trade union). At a recent ILO consultation on employment policy, another Left national trade union leader told me that Chapter 5B of the Industrial Disputes Act (the freedom of companies to hire and fire) was a non-issue (I regret not asking the obvious question of why he opposed a non-issue). He challenged anybody to prove the adverse effects of current labour laws but felt that evidence of the exploding share of informal employment in total employment (93%) and informal temporary employment in total temporary employment (99%) was not enough.
The rhetoric worries and the agenda of trade union leaders and Left parties gives me little hope. They are choosing the status quo over change. They are choosing issues that matter to middle-aged men with a wife at home rather than embracing the issues of women. They fight for spending Rs 1,000 crore on higher provident fund interest rates rather than higher allocations on skill development. By choosing job preservation over job creation, they fight for issues dear to the labour aristocracy in organised employment rather than informal workers. Basically, they choose the past over the future.
Nobody likes informal employment. Policy-makers hate it because it is exploitative and does not yield taxes. Employees hate it because it does not have the corridor effect for skill development and higher wages. Informal employers don’t like it because they are unable to retain employees who jump at the first chance to the formal sector. Formal employers don’t like it because outsourcing manufacturing or services to the informal sector yields uneven quality, lower productivity and higher unpredictability. So, why do we perpetuate a labour regime which ensured informal employment accounted for all net job creation for the last decade? This tragedy is minority rule where trade unions have positioned the self-interest of their small membership as national interest and this represents regulatory capture at its worst.
Trade union leaders today focus their members (Bhartiya Mazdoor Sangh 6.2 million, INTUC 3.8 million, AITUC 3.3 million, Hind Mazdoor Sangh 3.2 million, and CITU 2.6 million) on serving their political masters and the small constituency of organised labour. If they want to remain relevant, they must focus on the three burning issues that affect most workers: a) increasing the share of organised employment, b) bringing in labour market outsiders (less skilled, less educated, first time jobseekers, women, retired people, students, etc), and c) fixing the crisis in skill development because employability is more important than employment.
Trade unions were not always so selfish and self referential. The Bombay mills labour association was formed in 1890 but the association worked with the government on behalf of workers. Gandhiji founded his textile labour association in Ahmedabad in 1917 and the All India Trade Union Congress was formed with Lala Lajpat Rai as its president in 1920. Labour leaders made considerable sacrifices in the Independence movement and have been at the forefront of building modern India.
But as with any special interest group, they began to lose the big picture around 1965. Egged on by anti-employer rhetoric often fanned by politicians, trade unions began to exercise powers far in excess of what was required by their original mandate. The loophole that allowed non-employees to take on trade union leadership positions led to part-time roles for professional politicians and unions whose core agenda of building political constituencies is mostly unrelated to workers welfare. Economist Mancur Olson’s work on “distributional coalitions” that describes how a vocal organised minority in a democracy can hijack the agenda at the expense of an unorganised majority seems almost written to describe India’s labour markets of today.
This “scope creep” and “leadership capture” of trade unions has sad consequences for the people they masquerade to protect. I recently spent some time in Kanpur; this once shining citadel of India’s textile power is now an open area museum of tragedy with 5.5 million people, only 10 hours of power a day and thousands of shuttered businesses. The romance of Datta Samant’s defiance was before my time but while it is unclear that the closure of central Mumbai mills got workers prosperity, it may actually have denied them participation in the upside of the current liquidation of the mill land.
Don’t get me wrong; unions have a key role to play in a civilised society. Worker representation and voice is a fundamental right. But their future relevance will come from “soft power” by taking on issues like employability, workplace safety, worker retraining and inclusiveness. Their current agenda of confrontation is bereft of imagination and does not represent the worries and issues of the unorganised sector, women and youth. Evidence is now overwhelming that our labour laws may not be hurting job creation but they ensure that job creation happens in the informal sector. To defend the status quo on labour laws deserves Indira Gandhi’s retort to Morarji Desai on the abolition of the privy purses “a moral façade to an indefensible argument”.
While I believe that the extreme Left does the wrong thing for the right reasons, I was fascinated by the statement of Maoist Prachanda after his recent election win in Nepal where he said that, “we are against feudalism, not capitalism”. To me this statement represents a profoundly developed sense of purpose, destination and reality. India is changing rapidly; 50% of CITU’s membership is unorganised labour that wants job creation (not job preservation). I read an unverified statistic that only 18% of members of the Communist Party of India are less than 30 years old. Are they really keeping up with a country that is growing younger, only has 25% of its women in the workforce and only 7% of its workforce in formal employment?
I am 38 years old and work for a company with 80,000 employees with an average age of 22. While I cannot claim to speak for all of them, I can confidently assert that the stand of trade unions on various issues conflicts with my generation’s confidence in our abilities, imaginations and our country. We believe that India’s superpower status will be built on our economic power. Anything that breeds poverty, or labour markets that are not inclusive, almost seems unpatriotic (and elitist).
—The author is chairman, Teamlease Services