Tuesday, February 11, 2014

Change or Perish



                                      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 Many of which have been almost totally modified or even repealed or replaced.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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