Change or Perish
1. “I am convinced that if the rate of change inside the
institution is less than the rate of change outside, then the end is in sight.
The only question is the timing of the end.” Jack Welch was not forecasting but
stating a mere eventuality when he made this statement. What could be more
appropriate example to this statement than our industrial and labor laws, a
haphazard cluster of legislation followed by innumerable rules, notifications
and amendments? The beginning of these laws can be traced back
to 1850 when the Apprentice Act was placed on the statue books. In all over
hundred of these laws have been enacted by the Central and State governments.
Many of which have been almost totally modified or even repealed or replaced.
2. It is generally understood or rather misunderstood that
labor laws are meant for large size establishments only, with a large working
force. Undoubtedly, labor is a dominant factor of production in all units of
organization and therefore legislation have been made for all types of labor
employed in different types of establishments.
We in India
unfortunately are still living in the shadows of the laws enacted during the
colonial rule with only amendments being done in order to plug the legal
loopholes rather than to change them to suit to the changing world of business
competition. The time has come to do a rethinking or re engineering in these
laws, regulations, Rules, procedures and systems and unless we change that and
that too a revolutionary change, we will not be able to survive in the world
market. It is an accepted norm that when
a road has become too old and obsolete that it can no longer meet the present
day requirements then it would be better to relay the road or rather make a new
road rather than to put patches on it. Roberto Goizueta of Coca Cola was not
out of the mark when he said” If you think you are going to be successful in
running your business in the next ten years the way you did in the last ten
years, you are out of your mind. To succeed you have to disturb the present”. In
our case of Industrial laws it is not ten years but a multiple of ten years as
a unit.
3. “Look at China and then
look at our mess” says Arun Shourie, were the headlines of Indian express. It
highlighted the statement made by Mr. Arun Shourie in the Rajya Sabha on 20th
August 2001. Painting a dismal picture of the economy, he said that if steps
were not taken fast, we will fall into that abyss whose depth we do not know.
It took China
a few decades of isolation to come out and participate in the Olympics and look
at the results. They even threatened the sporting giants like USA and Russia for the top spot in medals
tally. Now they have opened another area-industry, and unless we wake up and wake
up fast we will be left so far behind that it would appear that we were never
part of the race at all. Will Rogers
was bang on the spot, when he said “Even if you are on the right track, you
will get run over if you just sit”.
4. The root cause of this spectacular success in such a
short time lies in their commitment to excel, to be a market leader, to produce
goods that are cheap and reliable. The success has come due to some basic
radical changes in their Industrial and Labor Laws, which have resulted in
shifting the focus from labor to industry itself. Some of the steps taken are:-
(a) No trade unions
are allowed in the special economic zones.
(b) Strikes are
banned in these zones.
© Labor can be
asked to go by giving 30 days notice or compensation in lieu of
notice.
(d) The strength of the civil servants has
been reduced to half in just two years
resulting
in a drastic decrease in government interference and regulation in
business
activities.
(e) Labor works for seven days a week and
takes two days off in a month.
(f) The normal shift is for eight hours but they
have to give in writing to their
employers
that they will work for 10 to 12 hours a day, when required at no
extra cost implying no overtime.
(g) Availability of electricity at a very low
cost.
(h) Change in appreciation that the emphasis is
to change from protection of labor
to the
protection and survival of Industry. They believe that if the industry can
not sustain
and grow, the workers and nation can not sustain and grow. It is just
change of
priority of what should come first.
5. We have a host of
industrial and labor laws and the situation is further complicated when each
legislation distinguishes between different types of industry and the number of
workers, not to mention the innumerable number pf notifications, departmental
clarifications and opinions. Some have limit of less than ten workers while
other have limit of 20 or more workers and this trend continues. It is humanly
impossible to be able to remember all these variations and their amendments.
This is compounded by the fact that the ignorance of law is no excuse. It is
essential that each person is familiar with these laws and in addition other
laws that govern his individual behavior. This aggravates when we take into
account the fact that our legal procedures are so lengthy and time consuming
and they take so long to decide that it is no wonder people try to bypass them,
find loopholes or even avoid them. The situation becomes especially depressing
when we take the case of small or tiny industries which are managed by a single
person or a couple of persons, who look after all the aspects pf purchase,
production, marketing, maintenance and personnel, not to mention the hosts of
visits, inspections by various government agencies and their return and
records.
6. The demand of the day is to simplify these laws, records
and returns to a bare minimum so that these can be effectively understood and implemented.
Unless we can cut then down and in turn cut down the time, effort and the cost
wasted in preparing, filing and maintaining them, we can not become competitive
in the world market. One simple way would be to divide them and issue a
consolidated labor and industrial law for:-
(a) Industries
employing less than hundred workers.
(b) Industries
employing less than thousand workers.
© Industries Employing more than thousand
workers.
7. Each law should contain a comprehensive list and
consolidation of all the laws, rules, regulations and notifications elated to
that particular category of industry including the records and returns
required. These are to be kept at a bare minimum and should only deal with what
is absolutely essential. No amendments or notifications can be issued in
respect of this law for the next five years and that too should require that
the whole laws is to be reproduced again and should not be confined to only
issue of amendments or notifications. The industrial and labor disputes are to
be reduced to just one that has the guarantee of payment of adequate
compensation as per the applicable law. In other words, the hire and fire
policy with a guaranteed compensation in case of removal is the requirement of
the day. Strikes and stoppages or go slow of production should be banned by law
with employees resorting to such measures to be removed from employment without
any compensation. This will help the
industry in not only cutting down the costs but will also cut down the time and
efforts and will lead to concentration of time and effort for higher production
and thus bringing down the cost of production even further. At present the
major emphasis of the laws is on policing. Civil servants act more like police
and the laws heavily tilting towards, punishment, penalty, etc. This emphasis
is to shift to that of an adviser, facilitator and guide.
8. In general among the workers there is a feeling that the
departments like Provident Fund, Employee state Insurance, etc are not
performing their functions as they are expected to but are plagued by
procedures, wastage of time and corruption. A number of problems between the
management and workers are due to these departments and arise due to non
transparency, lethargy, red tapism and the typical babu like attitude of civil
servants employed in these organizations, which lead to mistrust and fraud. We
can take examples from other countries like USA and European countries, where
provident fund, insurance, medical facilities are in the hands of private sector
and the workers are free to choose the organization or institutions to whom
they wish to entrust their funds with. Government does not act as a regulator
and administrator but as a facilitator.
9. The crux of the problem is that instead of government
deciding what is best for the workers let the workers decide what is best for
them. It is imperative for the government to change its attitude before the
attitude of the industry and workers can be changed. The first step in this
right direction would be the long awaited overhaul of the industrial and labor
laws. We should do away with the lengthy procedures, record maintenance,
returns, visits, inspections and a host of penalty charges. Give the business a
friendly environment to work in, an environment wherein the business can modify
or change its role, requirements, functions and procedures fast enough, if not
more, but at least equal to the rate of change taking place in the business
world. Give some protection to the industry, not in terms of subsidy, but in
terms of freedom to work as per the changing situation without any interference
or squeeze from the government or other civil bodies, a corruption free
environment. With due apologies to Archimedes we can say that “Give the
business a place to stand firmly and a long enough lever and we can met the
challenges of the world”.
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